UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-08629
HARTFORD SERIES FUND, INC.
(Exact name of registrant as specified in charter)
P. O. Box 2999, Hartford, Connecticut 06104-2999
(Address of Principal Executive Offices)
Edward P. Macdonald, Esquire
Life Law Unit
The Hartford Financial Services Group, Inc.
200 Hopmeadow Street
Simsbury, Connecticut 06089
(Name and Address of Agent for Service)
Registrant's telephone number, including area code: (860) 843-9934
Date of fiscal year end: 12/31
Date of reporting period: January 1, 2006 -- December 31, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
HARTFORD SERIES FUND, INC.
HARTFORD HLS SERIES FUND II, INC.
TABLE OF CONTENTS
<Table>
Manager Discussions (Unaudited) 1
Hartford Series Fund, Inc. and Hartford HLS Series Fund II,
Inc. Financial Statements:
Schedule of Investments as of December 31, 2006
Hartford Advisers HLS Fund 61
Hartford Capital Appreciation HLS Fund 67
Hartford Disciplined Equity HLS Fund 71
Hartford Dividend and Growth HLS Fund 73
Hartford Equity Income HLS Fund 75
Hartford Focus HLS Fund 77
Hartford Global Advisers HLS Fund 79
Hartford Global Communications HLS Fund 89
Hartford Global Financial Services HLS Fund 91
Hartford Global Health HLS Fund 93
Hartford Global Leaders HLS Fund 95
Hartford Global Technology HLS Fund 98
Hartford Growth HLS Fund 100
Hartford Growth Opportunities HLS Fund 102
Hartford High Yield HLS Fund 104
Hartford Index HLS Fund 110
Hartford International Capital Appreciation HLS Fund 116
Hartford International Opportunities HLS Fund 119
Hartford International Small Company HLS Fund 122
Hartford MidCap HLS Fund 126
Hartford MidCap Value HLS Fund 128
Hartford Money Market HLS Fund 130
Hartford Mortgage Securities HLS Fund 132
Hartford Small Company HLS Fund 135
Hartford SmallCap Growth HLS Fund 138
Hartford Stock HLS Fund 143
Hartford Total Return Bond HLS Fund 145
Hartford U.S. Government Securities HLS Fund 155
Hartford Value HLS Fund 158
Hartford Value Opportunities HLS Fund 160
Statements of Assets and Liabilities as of December 31,
2006 162
Statements of Operations for the Year Ended December 31,
2006 168
Statements of Changes in Net Assets for the Years Ended
December 31, 2006 and 2005 174
Notes to Financial Statements 184
Financial Highlights 200
Report of Independent Registered Public Accounting Firm 210
Directors and Officers (Unaudited) 211
How to Obtain a Copy of the Fund's Proxy Voting Policies
and Proxy Voting Records (Unaudited) 213
Shareholder Meeting Results (Unaudited) 213
Expense Example (Unaudited) 214
Approval of Investment Management, and Investment
Sub-Advisory Agreements (Unaudited) 217
</Table>
This report is prepared for the general information of contract owners
and is not an offer of contracts. It should not be used in connection
with any offer, except in conjunction with the appropriate prospectus
which contains all pertinent information including the applicable sales,
administrative and other charges.
The views expressed in each Fund's Manager Discussion under "Why did the
Fund perform this way?" and "What is the outlook?" are views of the
Fund's subadvisers and portfolio management team.
Hartford Advisers HLS Fund inception 3/31/1983
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND
ADVISERS IA S&P 500 INDEX INDEX
----------- ------------- ----------------------
12/96 10000 10000 10000
10437 10624 10012
10478 10708 10033
10182 10269 9914
10642 10881 10059
11118 11542 10153
11600 12060 10274
12321 13018 10589
11712 12289 10470
12208 12962 10635
11986 12529 10805
12344 13109 10862
12/97 12451 13334 10976
12631 13481 11130
13252 14453 11108
13755 15193 11142
13975 15346 11198
13855 15082 11318
14373 15695 11434
14474 15528 11443
13213 13283 11666
13754 14134 12000
14439 15283 11915
14989 16209 11986
12/98 15520 17143 12016
15862 17860 12101
15494 17305 11813
15967 17997 11872
16390 18694 11901
15990 18253 11779
16592 19266 11742
16256 18664 11709
16109 18571 11700
15929 18062 11805
16473 19205 11836
16604 19595 11829
12/99 17163 20749 11757
16566 19707 11754
16464 19334 11902
17579 21224 12074
17208 20586 12015
17000 20164 12004
17252 20661 12249
17091 20338 12379
17701 21601 12553
17239 20460 12601
17351 20374 12680
16789 18769 12896
12/00 17035 18861 13151
17389 19529 13371
16727 17750 13509
16045 16626 13571
16712 17916 13470
16837 18036 13547
16410 17598 13612
16429 17425 13951
15806 16335 14131
15187 15016 14261
15542 15303 14622
16199 16477 14382
12/01 16245 16622 14269
16031 16379 14374
15942 16063 14496
16228 16668 14202
15375 15658 14477
15279 15543 14610
14631 14436 14735
14133 13311 14912
14146 13398 15247
13216 11943 15574
13836 12993 15426
14496 13757 15435
12/02 14004 12949 15844
13759 12611 15843
13664 12422 16125
13690 12543 16104
14391 13575 16276
14982 14289 16739
15101 14472 16672
15181 14728 15973
15348 15014 16078
15296 14855 16588
15791 15695 16377
15901 15832 16420
12/03 16594 16662 16582
16688 16968 16733
16828 17204 16938
16669 16944 17093
16376 16679 16568
16512 16907 16484
16785 17236 16551
16395 16665 16726
16492 16732 17080
16468 16913 17140
16485 17172 17288
16792 17866 17096
12/04 17215 18474 17278
17047 18024 17398
17270 18403 17283
16909 18077 17162
16870 17735 17419
17317 18298 17637
17331 18325 17753
17795 19006 17553
17896 18832 17815
17971 18985 17582
17776 18668 17431
18300 19374 17521
12/05 18461 19380 17687
18825 19894 17655
18792 19947 17702
18868 20196 17508
19046 20467 17453
18662 19878 17443
18486 19905 17484
18563 20027 17711
19007 20503 17991
19349 21031 18167
19839 21716 18282
20310 22128 18496
12/06 20437 22439 18355
</Table>
<Table>
--- ADVISERS IA --- S&P 500 INDEX -- LEHMAN BROTHERS
$10,000 starting value $10,000 starting value GOVERNMENT/
$20,437 ending value $22,439 ending value CREDIT BOND INDEX
$10,000 starting value
$18,355 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX is an unmanaged,
market-value-weighted index of all debt obligations of the U.S. Treasury and
U.S. Government agencies (excluding mortgage-backed securities) and of all
publicly issued fixed-rate, nonconvertible, investment grade domestic corporate
debt.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------
Advisers IA 10.70% 4.70% 7.41%
- --------------------------------------------------------
Advisers IB(3) 10.43% 4.44% 7.17%
- --------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- --------------------------------------------------------
Lehman Brothers
Government/Credit Bond
Index 3.78% 5.17% 6.26%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA JOHN C. KEOGH CHRISTOPHER L. GOOTKIND, CFA
Senior Vice Vice President Senior Vice President, Vice President
President, Partner Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Advisers HLS Fund returned 10.70% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78%, and outperforming the Lehman Brothers
Government/Credit Bond Index, which returned 3.78% for the same period. The Fund
also underperformed the 11.67% return of the average fund in the Lipper VA
Mixed-Asset Target Allocation Growth Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Financial markets have been strong for the past twelve month period. Equity
markets as measured by the S&P 500 hit record highs and were up 15.78% while the
bond market as measured by the Lehman Brothers Government/Credit Bond Index
increased 3.78%. The Fund has three primary levers to generate investment
performance: equity investments, fixed income investments, and asset allocation
among stocks, bonds, and cash. During the past year both the equity portion and
the fixed income portion of the Fund underperformed their respective benchmarks.
Asset Allocation contributed positively to the Fund's performance as the Fund's
consistent overweight to equities helped during the year.
The Equity portion of the Fund underperformed due primarily to negative stock
selection within the Consumer Discretionary, Health Care and Materials sectors.
This was offset somewhat by strong stock selection within Information
Technology, Industrials and Financials.
Stocks that detracted the most from relative (i.e. performance of the Fund as
measured against the benchmark) returns included XM Satellite, Boston
Scientific, Marvell Technology and Dollar General. Media company XM Satellite
came under pressure as decelerating customer addition trends and regulatory
review of product compliance caused investors to question the market
opportunity. The Fund continues to hold the stock based on positive long-term
trends in satellite radio due to original equipment manufacturer (OEM) adoption.
Boston Scientific had a tough year, suffering from erosion of its Implantable
Cardioverter Defibrillator (ICD) market share, concerns surrounding its drug
eluting stent business, and continued issues with cardiac product recalls from
its recently acquired Guidant business. We retain our position as the
fundamentals of the company remain sound and the stock is attractively priced.
Chip maker Marvell declined on disruption in the hard disk drive market and
worries over stock option grants. Discount retailer Dollar General disappointed
due
1
- --------------------------------------------------------------------------------
to high gasoline prices hitting Dollar General customers and thus impacting the
company's top line. Additionally, Dollar General has been selling a greater
proportion of lower-margin "highly consumable products" than anticipated. These
are products like perishable foods and cleaning supplies that are used up
quickly by consumers and need to be replaced frequently, but carry thin margins.
The Fund's overweight (i.e. the Fund's sector position was more than the
benchmark position) allocation to Health Care, which posted positive absolute
(i.e. total return) returns but lagged the market, also hurt returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and Lexmark. The Fund also benefited from not owning
Intel, whose shares declined during the year. AT&T is benefiting from the
stabilization of its long distance pricing. Also, cost-cutting from its recent
acquisitions is going well. Cisco's revenue and earnings growth has surprised
the market on the upside. The strong secular move of enterprise and service
provider networks toward all-IP networks plays into Cisco's strength. We
continue to hold a position in the stock. UBS, the Swiss-based financial
institution, posted outstanding results due primarily to its well-performing
wealth management business. UBS remains one of our top holdings. We initiated a
position in Broadcom during a low in its share price during the summer after it
guided down estimates and faced pressures due to options investigations. Despite
its solid gains, Broadcom remains a material holding as we see strong business
prospects for many years to come and valuation is still reasonable. Shares in
Lexmark, a manufacturer and supplier of printing and imaging solutions, rose as
the company recovered from its product and distribution missteps last year.
Other positive contributors to absolute performance included Exxon Mobil, Bank
of America, Citigroup and Munich Re.
While absolute performance was positive in the fixed income portion of the Fund,
relative returns slightly lagged the benchmark. The bonds underperformed their
benchmark during the year due mainly to starting the year with a longer
duration. Additionally sector allocation produced mixed results. The benefit
derived from the Fund's overweight allocations to structured sectors such as
mortgage pass-throughs and commercial mortgage-backed securities (CMBS) was more
than offset by our out-of-benchmark allocation to Treasury Inflation Protected
Securities (TIPS). Weakness in the commodity markets, as well as several
below-trend reports on CPI (Consumer Price Index), caused TIPS to underperform
during the period. We believe an economic growth slowdown is apparent, but a
hard landing is unlikely. We continue to overweight the non-government sectors
with a preference towards structured securities and MBS. We view the current
environment, with strong balance sheets and solid earnings and cash flow
generation, as being favorable for investment grade credit. While we acknowledge
that the best is probably behind us, with corporations starting to increase
balance sheet leverage, the low default environment is likely to continue into
2007. While valuations are not compelling historically, they are likely fair for
the current environment. Security selection continues to be important given the
frequency of capital restructurings through Leveraged buyouts. We maintain an
underweight allocation to the credit sector.
WHAT IS THE OUTLOOK?
The stock portion of the Fund is managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio. We look for companies that exhibit some or all of the following
characteristics: industry leadership, strong balance sheets, solid management
teams, high return on equity, accelerating earnings, and/or attractive valuation
with a catalyst. At the end of the period, the equity portion of the Fund was
overweight positions in Information Technology and Health Care and underweight
positions in Energy and Financials.
The equity and fixed income managers will continue to work collaboratively to
make decisions regarding portfolio weights in stocks, bonds, and cash. As of
December 31, 2006, the Fund's equity exposure was at 68% compared to 60% in its
benchmark and at the upper end of the 50-70% range, as we expect equities to
continue to outperform bonds and cash.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.6%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 6.8
- -------------------------------------------------------------------
Consumer Staples 5.3
- -------------------------------------------------------------------
Energy 4.2
- -------------------------------------------------------------------
Finance 23.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 7.4
- -------------------------------------------------------------------
Other Direct Federal Obligations 2.2
- -------------------------------------------------------------------
Services 7.2
- -------------------------------------------------------------------
Technology 20.2
- -------------------------------------------------------------------
Transportation 0.1
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 10.1
- -------------------------------------------------------------------
Utilities 1.2
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Backed Securities 2.9%
- -------------------------------------------------------------------
Common Stock 67.8
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 0.1
- -------------------------------------------------------------------
Corporate Bonds: Non Investment Grade 10.5
- -------------------------------------------------------------------
Municipal Bonds 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 12.3
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
2
Hartford Capital Appreciation HLS Fund inception 4/2/1984
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
CAPITAL APPRECIATION IA S&P 500 INDEX RUSSELL 3000 INDEX
----------------------- ------------- ------------------
12/96 10000 10000 10000
10384 10624 10553
10185 10708 10565
9612 10269 10087
9857 10881 10584
10981 11542 11307
11456 12060 11777
12405 13018 12700
12258 12289 12185
13072 12962 12876
12289 12529 12443
12192 13109 12920
12/97 12234 13334 13178
12124 13481 13247
13271 14453 14194
13795 15193 14898
14039 15346 15044
13421 15082 14673
13681 15695 15169
13338 15528 14894
10683 13283 12612
11313 14134 13472
12418 15283 14495
13193 16209 15381
12/98 14128 17143 16359
14742 17860 16915
14091 17305 16317
15181 17997 16915
15897 18694 17678
15672 18253 17342
16543 19266 18218
16367 18664 17666
16168 18571 17465
15620 18062 17018
16672 19205 18085
17566 19595 18591
12/99 19420 20749 19777
19027 19707 19002
21963 19334 19179
22496 21224 20680
21315 20586 19951
20609 20164 19391
21893 20661 19965
21927 20338 19612
24144 21601 21067
23268 20460 20113
22602 20374 19827
20728 18769 17999
12/00 21988 18861 18301
23301 19529 18927
22253 17750 17197
21046 16626 16076
22677 17916 17365
22987 18036 17504
22315 17598 17182
21492 17425 16899
20417 16335 15902
18066 15016 14499
18590 15303 14837
19931 16477 15979
12/01 20463 16622 16205
19916 16379 16002
19493 16063 15674
20241 16668 16361
19151 15658 15502
19080 15543 15322
17389 14436 14219
15989 13311 13089
16364 13398 13150
15129 11943 11768
16254 12993 12705
17510 13757 13473
12/02 16432 12949 12712
16098 12611 12401
15922 12422 12196
15738 12543 12324
16920 13575 13331
18262 14289 14136
18744 14472 14327
19086 14728 14655
19803 15014 14981
19727 14855 14818
21275 15695 15715
21809 15832 15931
12/03 23395 16662 16660
23780 16968 17007
24648 17204 17236
24663 16944 17031
23731 16679 16679
24237 16907 16922
25264 17236 17258
24002 16665 16605
23641 16732 16674
24486 16913 16930
25049 17172 17208
26875 17866 18008
12/04 27925 18474 18650
27258 18024 18153
28286 18403 18553
27187 18077 18239
26353 17735 17842
27129 18298 18519
27647 18325 18648
29110 19006 19413
29380 18832 19228
30478 18985 19396
29917 18668 19033
31575 19374 19775
12/05 32267 19380 19791
34034 19894 20452
33679 19947 20489
34252 20196 20843
35243 20467 21069
33858 19878 20394
33464 19905 20430
33196 20027 20411
34023 20503 20911
34510 21031 21379
36064 21716 22148
37166 22128 22630
12/06 37628 22439 22901
</Table>
<Table>
--- CAPITAL APPRECIATION IA -- RUSSELL 3000 INDEX --- S&P 500 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$37,628 ending value $22,901 ending value $22,439 ending value
</Table>
RUSSELL 3000 INDEX is an unmanaged index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
The Fund has changed its benchmark from the S&P 500 Index to the Russell 3000
Index because the Fund's investment manager believes that the Russell 3000 Index
is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Capital Appreciation IA 16.61% 12.96% 14.17%
- ------------------------------------------------------
Capital Appreciation
IB(3) 16.32% 12.68% 13.92%
- ------------------------------------------------------
Russell 3000 Index 15.72% 7.16% 8.64%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SAUL J. PANNELL, CFA FRANK D. CATRICKES, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Capital Appreciation HLS Fund returned
16.61% for the twelve month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Index, which returned 15.72% for the same period.
The Fund also outperformed the 14.45% return of the average fund in the Lipper
VA Multi-Cap Core Funds peer group, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets posted a strong return for the year. US large cap equities
performed well (+15.5% as measured by the Russell 1000 Index) but continued to
lag smaller companies as the small cap Russell 2000 rose 18.4%. Value stocks
extended their lead over their growth oriented peers, with the broad market
Russell 3000 Value finishing ahead of the Russell 3000 Growth by nearly thirteen
percentage points. Every sector in the benchmark Russell 3000 finished with
positive returns, led by Telecommunication Services, Utilities, and Energy.
Health Care and Technology stocks had positive returns, but lagged the
benchmark.
Outperformance in this robust environment was driven by stock selection.
Performance was particularly positive in Financials, Industrials, and Materials
stocks. In Financials, Brazilian bank Unibanco rose over 54% during the year,
making it a top relative (i.e. performance of the Fund as measured against the
benchmark) and absolute (i.e. total return) contributor. Two other top relative
and absolute contributors, Citi Access India and JPM Access India, are so-called
"market access" products. These are securities that allow investors to obtain
the economic exposure of stock ownership through a counterparty without
obtaining direct ownership in the underlying security. Market access products
are subject to the same risks as direct investments in securities of foreign
issuers, as well as the risk that the counterparty issuing the security may
default. Both market access products held in the Fund take the form of warrants.
In the case of Citi Access India, the warrants are for Bharti Televentures, the
dominant wireless provider in India. The Indian wireless market is growing
rapidly, and Bharti is garnering most of the new subscriber growth. The JPM
Access India position represents warrants for ICICI bank, India's largest bank
by market capitalization. The company is benefiting from the growth of credit to
Indian consumers.
Other top absolute and relative contributors during the year included nickel
miner Inco, defense contractor Lockheed Martin, and telecommunications giant
AT&T. Inco rose on news that it was being acquired by CVRD. Shares in Lockheed
Martin gained throughout the year on continued strong defense spending by the US
and its allies. AT&T's stock rose on optimism surrounding its merger with
BellSouth, which closed at the end of the year.
3
- --------------------------------------------------------------------------------
Stock selection was weakest in the Energy and Health Care sectors. Within Health
Care, medical device company Boston Scientific fell on safety concerns regarding
the company's implantable defibrillators and a Wall Street Journal article
stating that drug-eluting stents could be linked to higher incidences of blood
clots. We have exited our position in the stock. Shares in Israeli generic drug
company Teva traded lower as the market absorbed news that Merck would be
pricing its Zocor drug competitively when it came off patent. We continue to
hold Teva as we believe the market is overestimating the impact of this
development. Lagging performance in Energy was primarily a result of not holding
a position in rising Exxon Mobil stock and owning shares of coal miner Arch
Coal, which fell during the year. Other negative relative and absolute
contributors included global semiconductor company Marvell, flash storage
company SanDisk, and credit card company Capital One Financial.
WHAT IS THE OUTLOOK?
Beginning January 8, 2007, the Fund will shift to a multiple portfolio manager
model consisting of two investment teams. The first team is comprised of the
Fund's current managers, Saul Pannell and Frank Catrickes. The second team will
be comprised of a combination of multiple Wellington Management investment
professionals with complementary investment approaches, each separately managing
a portion of the Fund in a distinct style and in combination seeking to achieve
the Fund's investment objective.
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on hold for interest rate
hikes over the next year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. At the end of the period, our stock-by-stock
investment process resulted in greater-than-benchmark weights in Materials,
Industrials, and Information Technology stocks and less-than-benchmark weights
in Financials, Consumer Staples, and Health Care. Our largest absolute sector
weights at year-end were in the Financials, Technology, and Industrials sectors.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 0.3
- -------------------------------------------------------------------
Brazil 4.5
- -------------------------------------------------------------------
Canada 3.3
- -------------------------------------------------------------------
China 0.7
- -------------------------------------------------------------------
France 1.2
- -------------------------------------------------------------------
Germany 1.2
- -------------------------------------------------------------------
India 0.7
- -------------------------------------------------------------------
Israel 0.9
- -------------------------------------------------------------------
Japan 3.9
- -------------------------------------------------------------------
Liberia 0.3
- -------------------------------------------------------------------
Luxembourg 0.7
- -------------------------------------------------------------------
Netherlands 0.3
- -------------------------------------------------------------------
Russia 0.7
- -------------------------------------------------------------------
South Africa 0.8
- -------------------------------------------------------------------
South Korea 1.0
- -------------------------------------------------------------------
Switzerland 1.9
- -------------------------------------------------------------------
Taiwan 0.7
- -------------------------------------------------------------------
Turkey 1.6
- -------------------------------------------------------------------
United Kingdom 4.5
- -------------------------------------------------------------------
United States 68.0
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 12.7%
- -------------------------------------------------------------------
Capital Goods 9.2
- -------------------------------------------------------------------
Consumer Cyclical 6.5
- -------------------------------------------------------------------
Consumer Staples 3.7
- -------------------------------------------------------------------
Energy 6.8
- -------------------------------------------------------------------
Exchange Traded Funds 3.2
- -------------------------------------------------------------------
Finance 14.4
- -------------------------------------------------------------------
Health Care 4.1
- -------------------------------------------------------------------
Services 5.5
- -------------------------------------------------------------------
Technology 27.3
- -------------------------------------------------------------------
Transportation 0.6
- -------------------------------------------------------------------
Utilities 3.7
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
4
Hartford Disciplined Equity HLS Fund inception 5/29/1998
(subadvised by Wellington Management Company, LLC)
PERFORMANCE OVERVIEW 5/29/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
DISCIPLINED EQUITY IA S&P 500 INDEX
--------------------- -------------
5/98 10000 10000
10406 10406
10407 10295
9003 8807
9619 9371
10516 10133
11109 10747
12/98 11905 11366
12305 11841
11852 11473
12415 11932
12802 12394
12558 12102
13373 12774
13112 12375
12929 12313
12540 11976
13100 12733
13461 12992
12/99 14503 13757
13701 13066
13672 12819
15171 14072
14555 13649
14203 13369
14747 13699
14646 13485
15646 14322
14717 13566
14645 13508
13472 12444
12/00 13684 12505
14370 12949
13209 11769
12481 11023
13512 11879
13631 11958
13352 11668
13066 11553
12303 10830
11282 9956
11641 10146
12478 10925
12/01 12587 11021
12301 10860
11946 10651
12391 11051
11543 10381
11432 10305
10482 9572
9752 8826
9821 8883
8754 7919
9545 8615
10049 9121
12/02 9484 8586
9178 8362
9043 8236
9091 8316
9803 9000
10333 9474
10431 9595
10581 9764
10813 9954
10815 9849
11447 10405
11619 10497
12/03 12217 11047
12415 11250
12556 11406
12368 11234
12206 11058
12200 11209
12483 11427
11980 11049
11986 11093
12119 11214
12202 11385
12726 11845
12/04 13245 12248
12999 11950
13263 12201
13012 11985
12784 11758
13247 12132
13400 12149
13890 12601
13859 12486
14001 12587
13618 12377
14138 12845
12/05 14116 12849
14467 13189
14458 13225
14605 13390
14758 13569
14351 13179
14365 13197
14387 13278
14704 13594
15002 13944
15363 14398
15631 14671
12/06 15874 14877
</Table>
<Table>
--- DISCIPLINED EQUITY IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$15,874 ending value $14,877 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION*
- --------------------------------------------------------
Disciplined Equity IA 12.45% 4.75% 5.52%
- --------------------------------------------------------
Disciplined Equity IB 12.17% 4.49% 5.28%
- --------------------------------------------------------
S&P 500 Index 15.78% 6.19% 4.73%
- --------------------------------------------------------
</Table>
* Return is from 05/31/98.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
JAMES A. RULLO, CFA MAMMEN CHALLY, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Disciplined Equity HLS Fund Class IA shares returned 12.45% for the
twelve-month period ended December 31, 2006, underperforming both its benchmark,
the S&P 500 Index, which returned 15.78% and the Lipper VA Large Cap Core
Average, a group of funds with investment strategies similar to those of the
Fund, which returned 13.29%.
WHY DID THE FUND PERFORM THIS WAY?
During the period, US equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return. Mid cap stocks trailed
small and larger cap stocks during the period, as measured by the S&P 400
Midcap, Russell 2000 and S&P 500 indices, respectively. Value stocks continued
to outperform growth during the period, as measured by the Russell 1000 Growth
and Russell 1000 Value indices. Within the S&P 500 Index, the Fund's benchmark,
the Telecommunication Services, Energy and Utilities sectors dominated posting
high double-digit returns.
The key driver of performance was poor stock selection within six of the ten
broad economic sectors of the market. In particular, stock selection was weakest
within Consumer Discretionary, Health Care, and Energy. At the margin, aggregate
sector allocation, a fall-out of stock selection, also detracted from
performance. Key detractors to relative (i.e. performance of the Fund as
measured against the benchmark) performance included D.R. Horton (Consumer
Discretionary), Motorola (Information Technology) and our below benchmark
position in Exxon Mobil (Energy). In addition, on an absolute basis, owning
Intel (Information Technology) and Amgen (Health Care) detracted from
performance.
D.R. Horton, a Southwest US homebuilder, experienced declines as sales of new
homes softened due to higher interest rates and high energy prices. We initiated
a position in Motorola after the stock launched its successful RAZR product
line. The stock fell on market concerns regarding their product pipeline as the
RAZR matures and as competitors gain traction. Our underweight position in Exxon
Mobil, relative to the benchmark, detracted as the company's stock price
continued to benefit from strong energy prices. Semiconductor chip-maker Intel's
shares struggled following news that the company sold its communications and
applications processing business to a competitor. Amgen faced near-term
challenges with Enbrel, a psoriasis drug, and with its pending lawsuit with
Roche (Health Care) over a patent issue with Epogen, a drug to treat anemia. We
eliminated Intel and D.R. Horton during the period.
Strong stock selection across several sectors, particularly Information
Technology and Financials, partially offset disappointments during the period.
Within Financials, Goldman Sachs was the top performer on both an absolute and
relative basis. The company's shares benefited from strong earnings results
during the year which were driven by their investment banking business. Bank of
America and Citigroup were also notable contributors to relative performance.
Bank of America's shares
5
- --------------------------------------------------------------------------------
increased due to the company's diversified business model, which insulated it
from a weakening consumer. Citigroup's share rose following company management's
announcement that they continue to be focused on organic growth and expansion
within the international markets. Within Information Technology, Cisco Systems
was additive to performance as the company's shares rose following market
expectations that they will benefit from increased broadband traffic which will
result in an increased demand for routing and transport services. We reduced our
position in Cisco during the period. In addition, aerospace and defense stock
Lockheed Martin contributed to absolute performance. Lockheed's shares increased
as the company continued to gain market share by winning key technical service
and intelligence contracts within the US government.
WHAT IS THE OUTLOOK?
The residential housing slowdown is well-advanced, with house prices declining
compared to a year ago. Still, the full adverse impact on consumption and the
labor market has yet to materialize. Consumption spending in the fall of 2006
was helped by lower energy prices and favorable comparisons. However, looking
into the first half of 2007, slowing employment and salary growth should support
real consumption growth of 2%. We believe that sometime this spring should mark
the trough in consumption and housing, as well as an inventory correction in
manufacturing. Once these brakes on the economy are removed, the stage will be
set for stronger activity in the later part of 2007.
In this environment, and in keeping with our bottom-up investment process, at
the end of the period the Fund was overweight the Health Care, Telecommunication
Services, Information Technology and Energy sectors and underweight the Consumer
Staples, Utilities, Materials, Financials, Industrials and Consumer
Discretionary sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.7%
- -------------------------------------------------------------------
Capital Goods 5.1
- -------------------------------------------------------------------
Consumer Cyclical 7.6
- -------------------------------------------------------------------
Consumer Staples 1.6
- -------------------------------------------------------------------
Energy 10.1
- -------------------------------------------------------------------
Finance 23.2
- -------------------------------------------------------------------
Health Care 12.6
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 21.7
- -------------------------------------------------------------------
Transportation 0.2
- -------------------------------------------------------------------
Utilities 2.4
- -------------------------------------------------------------------
Short-Term Investments 4.8
- -------------------------------------------------------------------
Other Assets & Liabilities (1.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
6
Hartford Dividend and Growth HLS Fund inception 3/9/1994
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
DIVIDEND AND GROWTH IA S&P 500 INDEX
---------------------- -------------
12/96 10000 10000
10524 10624
10680 10708
10280 10269
10635 10881
11330 11543
11954 12060
12665 13019
12068 12290
12797 12963
12419 12531
12938 13110
12/97 13189 13335
13380 13482
13975 14454
14736 15194
14666 15347
14630 15083
14630 15695
14529 15529
12688 13283
13533 14135
14476 15284
14913 16210
12/98 15354 17143
15223 17860
15002 17305
15387 17997
16331 18694
15918 18253
16463 19266
15947 18665
15535 18572
15136 18062
16025 19205
15948 19595
12/99 16170 20750
15519 19707
14665 19335
16286 21225
16090 20586
16431 20164
15926 20661
15924 20338
16849 21601
17007 20461
17363 20374
17016 18769
12/00 17941 18861
17684 19530
17511 17750
16954 16626
17826 17916
18146 18036
17688 17598
17818 17425
17239 16335
16115 15017
16123 15303
17020 16477
12/01 17216 16622
17257 16380
17540 16064
18029 16668
17273 15658
17437 15543
16506 14436
15179 13312
15075 13398
13412 11943
14431 12993
15425 13757
12/02 14767 12949
14265 12611
13974 12422
13949 12543
14993 13575
15959 14290
16104 14472
16265 14728
16627 15014
16436 14855
17219 15695
17544 15833
12/03 18724 16662
18781 16968
19138 17204
18897 16945
18723 16679
18740 16907
19230 17236
18806 16666
18957 16732
19290 16914
19505 17172
20332 17867
12/04 21050 18474
20539 18024
21280 18403
20862 18078
20427 17735
20788 18299
20895 18325
21638 19006
21644 18833
22039 18985
21529 18669
22195 19374
12/05 22305 19381
23105 19894
22988 19948
23363 20196
23985 20467
23468 19879
23509 19905
23942 20028
24389 20504
24842 21032
25697 21716
26309 22129
12/06 26846 22439
</Table>
<Table>
--- DIVIDEND AND GROWTH IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$26,846 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Dividend and Growth IA 20.36% 9.29% 10.38%
- -------------------------------------------------------
Dividend and Growth
IB(3) 20.06% 9.02% 10.13%
- -------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
EDWARD P. BOUSA, CFA
Senior Vice President, Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Dividend and Growth HLS Fund Class IA shares returned 20.36% for
the twelve-month period ended December 31, 2006. The Fund outperformed its
benchmark, the S&P 500 Index, which returned 15.78% over the same period and the
average return of the Lipper VA Equity Income Funds, a group of funds with
investment strategies similar to those of the Fund, which returned 18.19%.
WHY DID THE FUND PERFORM THIS WAY?
During the period, US equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) returns for the period. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's S&P 500
benchmark posted strong positive returns. Telecommunication Services, Energy and
Utilities were the top performers.
The Fund's outperformance relative (i.e. performance of the Fund as measured
against the benchmark) to the S&P 500 was attributable to a combination of
strong stock selection and sector allocation. Stock selection was strongest
within Industrials, Consumer Discretionary and Health Care. Additionally, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) position in Energy and underweight position in Information Technology
were additive to performance.
Key contributors to performance during the period were Exxon Mobil (Energy),
AT&T (Telecommunication Services) and Chevron (Energy). Exxon Mobil and
Chevron's shares were supported by the continued supply/demand imbalance in
energy and higher prices. AT&T benefited from its strongly anticipated merger
with BellSouth. All three stocks were held in the Fund at the end of the period.
In addition, not owning chip-maker Intel (Information Technology) for much of
the period was additive to relative performance, as shares struggled following
news that the company sold its communications and applications processing
business to a competitor.
The largest detractors from returns on an absolute basis included Sprint Nextel
(Telecommunication Services), Newmont Mining (Materials) and Eli Lilly (Health
Care). Sprint Nextel's shares struggled as the company continues to consolidate
their networks and convert subscribers from their merger. Newmont Mining's stock
fell as production declined while costs increased. Eli Lilly's shares declined
due to the negative story in the New York Times that alleged the company knew of
negative side effects from Zyprexa, the drug that treats both schizophrenia and
bipolar disorder. We held our positions in these stocks at the end of the
period. In addition, on a relative basis, not owning Cisco Systems (Information
Technology) and owning Motorola (Telecommunications Services) detracted from
performance. Cisco's shares rose due to the market's expectations that they will
7
- --------------------------------------------------------------------------------
benefit from increased broadband traffic which will result in an increased
demand for routing and transport services. Motorola's shares fell on concerns of
their product line as the RAZR matures and competitors gain traction in the cell
phone market. We held Motorola at the end of the period.
WHAT IS THE OUTLOOK?
The Fund takes a long-term view. Our discipline focuses primarily on the
supply/demand balance across sectors. While our long-term bet on Energy
continues to pay off, we are reducing our exposure to this sector on strength.
We are cautious of the US economy as consumer spending moderates, but we expect
modest growth to continue in 2007. Housing is a major concern for us, and as a
result, we are underweight in Regional Banks and Retail, where we believe there
is excess supply. That excess will become quite evident in the face of a
weakening consumer. We believe that our strategy of buying high quality
companies with above-average dividends will continue to be successful versus the
S&P 500 Index.
Based on these views and our bottom-up stock selection, at the end of the
period, the Fund was overweight Energy, Materials, Telecommunication Services,
Utilities and Consumer Staples and underweight Industrials, Health Care,
Consumer Discretionary, Financials and Information Technology, relative to the
S&P 500 Index.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.1%
- -------------------------------------------------------------------
Capital Goods 5.1
- -------------------------------------------------------------------
Consumer Cyclical 8.2
- -------------------------------------------------------------------
Consumer Staples 5.4
- -------------------------------------------------------------------
Energy 15.7
- -------------------------------------------------------------------
Finance 17.9
- -------------------------------------------------------------------
Health Care 9.3
- -------------------------------------------------------------------
Services 7.0
- -------------------------------------------------------------------
Technology 17.9
- -------------------------------------------------------------------
Transportation 0.5
- -------------------------------------------------------------------
Utilities 5.0
- -------------------------------------------------------------------
Short-Term Investments 16.9
- -------------------------------------------------------------------
Other Assets & Liabilities (16.0)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
8
Hartford Equity Income HLS Fund inception 10/31/2003
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 10/31/03 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
EQUITY INCOME IA RUSSELL 1000 VALUE INDEX
---------------- ------------------------
10/03 10000 10000
10070 10136
12/03 10765 10760
10695 10950
10900 11184
10801 11086
10603 10815
10644 10926
10805 11184
10577 11026
10788 11183
10917 11357
11009 11545
11439 12129
12/04 11780 12535
11604 12313
12037 12721
11746 12546
11704 12322
11764 12618
11831 12756
12167 13125
12131 13068
12320 13252
12069 12915
12327 13340
12/05 12347 13419
12681 13941
12895 14026
12908 14216
13403 14577
13118 14209
13212 14300
13570 14647
13776 14892
13976 15189
14336 15686
14526 16044
12/06 14915 16405
</Table>
<Table>
--- EQUITY INCOME IA --- RUSSELL 1000 VALUE INDEX
$10,000 starting value $10,000 starting value
$14,915 ending value $16,405 ending value
</Table>
RUSSELL 1000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 1000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
- -------------------------------------------------
Equity Income IA 20.79% 13.44%
- -------------------------------------------------
Equity Income IB 20.49% 13.16%
- -------------------------------------------------
Russell 1000 Value Index 22.25% 16.90%
- -------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
JOHN R. RYAN, CFA
Senior Vice President, Managing Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ending December 31, 2006, Hartford Equity Income HLS
Fund Class IA shares returned 20.79%, trailing the Russell 1000 Value Index
return of 22.25% but outperforming the Lipper VA Equity Income peer group
average return of 18.19%, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's Russell
1000 Value benchmark posted positive double-digit returns. In addition, small
cap stocks continued to dominate large and mid cap stocks. The Russell 2000
Small Cap Index returned 18.37%, compared to the S&P 500 Large Cap Index return
of 15.78% and the S&P 400 Mid Cap Index return of 10.32%.
While the Fund's investment strategy is based on bottom-up fundamental research,
the primary driver of the Fund's benchmark relative (i.e. performance of the
Fund as measured against the benchmark) underperformance was unfavorable stock
selection within Materials, Energy, Utilities, Consumer Discretionary and
Consumer Staples. In addition, the Fund's slight overweight (i.e. the Fund's
sector position was more than the benchmark position) to Energy and underweight
to Industrials detracted from returns. Key detractors on a relative basis were
Materials stocks Dow Chemical and Alcoa, and ConocoPhillips (Energy). Alcoa
continued to face cost pressures which were higher than their underlying
pricing, due to their aggressive acquisition program over the last several
years. Dow Chemical shares struggled due to increasing cost pressures.
ConocoPhillips underperformed primarily because of sliding commodity prices
combined with market fears of Conoco's ever-expanding capital expenditures
program and due to the company's leverage to the softening North American
natural gas market (which came with its recent acquisition of Burlington
Resources). In addition, on an absolute basis, Sprint Nextel (Telecommunication
Services) and Halliburton (Energy) disappointed. Sprint Nextel's shares
struggled as the company continues to try to consolidate their networks and
convert subscribers from their merger. Halliburton's shares continued to
struggle due to the political risk overhang from the company's former
relationship with Vice President Cheney and from its dealings in Iraq. We held
our positions in each of the stocks mentioned above at the end of the period.
Partially offsetting these results was a combination of strong stock performance
within Financials, Industrials, Telecommunication Services, and Health Care. Key
contributors on a relative basis were Caterpillar (Industrials) and AT&T
(Telecommunication Services). Caterpillar's stock rose during the year due to
strong demand for its agricultural products. AT&T's shares benefited from its
much anticipated merger with BellSouth. On an absolute
9
- --------------------------------------------------------------------------------
basis, Exxon Mobil (Energy), whose shares climbed due to high demand for energy
and higher prices, was additive to performance. Additionally, not owning Capital
One Financial (Financials) was beneficial. The company's stock declined on
market perception that they paid too much to acquire North Fork Bancorp. We sold
Caterpillar during the period.
WHAT IS YOUR OUTLOOK?
We expect the global economy to transition from slower activity in the first
half of 2007 to stronger activity in the second half and beyond. We believe
weakness in the U.S. and Continental Europe should be partially offset by more
robust growth in the United Kingdom and Japan, as well as ongoing strength in
the emerging economies. The temporary global growth pause will likely reduce
inflationary pressures and allow central banks to maintain a steady hand,
setting the stage for a resumed expansion in 2008. Moderate inflation, stable
monetary policies and the outlook for stronger global growth next year should
provide a favorable backdrop for financial markets.
In this environment, we favor industrials with exposure to international capital
spending growth and want to avoid consumer durables, which would be challenged
by a slowdown in consumer spending. Large caps seem particularly attractive,
with low relative valuations, greater access to capital, and in many cases,
globally diversified footprints. Additionally, if there is a reversal in the net
outflow of foreign investment in U.S. equities, the largest, most liquid
companies would benefit. At the end of the period, relative to the Russell 1000
Value Index, the Fund was overweight Industrials, Utilities, Materials, Consumer
Staples and Telecommunication Services, and underweight Health Care, Energy,
Information Technology, Financials and Consumer Discretionary.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 8.8%
- -------------------------------------------------------------------
Capital Goods 6.2
- -------------------------------------------------------------------
Consumer Cyclical 3.3
- -------------------------------------------------------------------
Consumer Staples 6.6
- -------------------------------------------------------------------
Energy 10.6
- -------------------------------------------------------------------
Finance 31.5
- -------------------------------------------------------------------
Health Care 6.4
- -------------------------------------------------------------------
Services 2.2
- -------------------------------------------------------------------
Technology 11.7
- -------------------------------------------------------------------
Utilities 11.1
- -------------------------------------------------------------------
Short-Term Investments 3.1
- -------------------------------------------------------------------
Other Assets & Liabilities (1.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
10
Hartford Focus HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
FOCUS IA S&P 500 INDEX
-------- -------------
4/01 10000 10000
10111 10067
9963 9822
9783 9726
9572 9117
8758 8381
9111 8542
9948 9197
12/01 10394 9278
10062 9142
9957 8966
10201 9303
9261 8739
9015 8675
8281 8058
7867 7430
7849 7478
6948 6666
7638 7252
8399 7678
12/02 7838 7228
7674 7039
7467 6933
7502 7001
8039 7577
8520 7976
8594 8078
8945 8220
9019 8380
8824 8291
9399 8760
9480 8837
12/03 10061 9300
10126 9471
10153 9602
9923 9457
9723 9309
9847 9437
10132 9620
9907 9302
9882 9339
9850 9440
9687 9584
10095 9972
12/04 10379 10311
10142 10060
10353 10271
9987 10090
9955 9898
10361 10213
10341 10228
10875 10608
10863 10511
11019 10596
10917 10420
11345 10813
12/05 11404 10817
11628 11103
11516 11134
11604 11272
11759 11423
11429 11095
11129 11110
10951 11178
11312 11444
11567 11738
11874 12121
12348 12351
12/06 12513 12524
</Table>
<Table>
--- FOCUS IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$12,513 ending value $12,524 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -----------------------------------------------
Focus IA 9.72% 3.78% 4.03%
- -----------------------------------------------
Focus IB 9.45% 3.53% 3.79%
- -----------------------------------------------
S&P 500 Index 15.78% 6.19% 4.05%
- -----------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Focus HLS Fund returned 9.72% for the
twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the S&P 500 Index, which returned 15.78% and the 13.29% return of the
average fund in the Lipper VA Large Cap Core Funds peer group, a group of funds
with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Robust merger and acquisition activity and a better-than-expected retail
environment helped equity markets end the year on a strong note, marking the
fourth straight year of positive returns for the S&P 500. The S&P 500 finished
the year at record levels, returning 15.78%, posting positive results in all ten
sectors. Sector results were led by Telecommunication Services, Energy,
Utilities, and Materials. Health Care, Information Technology, Industrials and
Consumer Staples all posted positive returns but lagged the general market.
The Fund's performance versus the benchmark was driven primarily by security
selection. Stock selection was weakest within the Consumer Discretionary, Health
Care and Telecommunications sectors. Stocks that detracted the most from
relative (i.e. performance of the Fund as measured against the benchmark)
returns included XM Satellite, Boston Scientific, Dollar General, Marvell
Technology and Sprint Nextel. Media company XM Satellite came under pressure as
decelerating customer addition trends and regulatory review of product
compliance caused investors to question the market opportunity. The Fund
continues to hold the stock based on positive long-term trends in satellite
radio due to original equipment manufacturer (OEM) adoption. Boston Scientific
had a tough year, suffering from erosion of its Implantable Cardioverter
Defibrillator (ICD) market share, concerns surrounding its drug eluting stent
business, and continued issues with cardiac product recalls from its recently
acquired Guidant business. We retain our position as the fundamentals of the
company remain sound and the stock is attractively priced. Discount retailer
Dollar General disappointed due to high gasoline prices hitting Dollar General
customers and thus impacting the company's top line. Additionally, Dollar
General has been selling a greater proportion of lower-margin "highly consumable
products" than anticipated. These are products like perishable foods and
cleaning supplies that are used up quickly by consumers and need to be replaced
frequently, but carry thin margins. Chip maker Marvell declined on disruption in
the hard disk drive market and worries over stock option grants. Sprint came
under pressure as it continues to lose ground to other wireless carriers.
Stock selection was strongest within the Information Technology and Financials
sectors. Top relative contributors to the Fund included Cisco Systems, Munich
Re, UBS, Accenture and Lexmark. Cisco's revenue and earnings growth has
surprised the market on the upside. The strong secular move of enterprise and
service provider networks toward all-IP networks plays into Cisco's strength. We
continue to hold a position in the stock. German reinsurance company Munich Re
reported better-than-expected
11
- --------------------------------------------------------------------------------
results due to higher profits from investments and fewer claims due to low
levels of natural catastrophes. The company continues to generate a good return
on capital and is improving its capital management. UBS, the Swiss-based
financial institution, posted outstanding results due primarily to its
well-performing wealth management business. UBS remains one of our top
positions. Shares in Lexmark, a manufacturer and supplier of printing and
imaging solutions, rose as the company recovered from its product and
distribution missteps last year. We have eliminated our position in Lexmark.
Accenture, a global management consulting company, has seen solid results due to
robust demand for its consulting and outsourcing services. Additionally, the
company has a solid pipeline of new bookings, is well run, and is aggressively
returning cash to shareholders. Other positive contributors to absolute (i.e.
total return) performance included ExxonMobil, AT&T and Citigroup.
WHAT IS THE OUTLOOK?
The Hartford Focus HLS Fund continues to be managed with a large cap, core
investment approach. We apply a bottom-up investment process in constructing the
portfolio and look for companies that exhibit industry leadership, strong
balance sheets, solid management, high return on equity, accelerating earnings,
and/or attractive valuation with a catalyst. Our bottom-up investment approach
resulted in the Fund being most overweight Health Care, Information Technology
and Telecommunications, and most underweight Financials, Energy and Utilities at
the end of the period.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.5%
- -------------------------------------------------------------------
Capital Goods 3.9
- -------------------------------------------------------------------
Consumer Cyclical 6.8
- -------------------------------------------------------------------
Consumer Staples 4.2
- -------------------------------------------------------------------
Energy 4.3
- -------------------------------------------------------------------
Finance 20.3
- -------------------------------------------------------------------
Health Care 11.5
- -------------------------------------------------------------------
Services 10.4
- -------------------------------------------------------------------
Technology 33.3
- -------------------------------------------------------------------
Short-Term Investments 0.8
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
12
Hartford Global Advisers HLS Fund inception 3/1/1995
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS GLOBAL
MSCI WORLD GROWTH AGGREGATE INDEX USD
GLOBAL ADVISERS IA INDEX HEDGED MSCI WORLD INDEX
------------------ ----------------- ---------------------- ----------------
12/96 10000 10000 10000 10000
9982 10142 10065 10122
10045 10257 10106 10240
10006 10020 10017 10040
10020 10482 10150 10370
10433 11097 10234 11011
10798 11711 10375 11562
11064 12255 10601 12097
10601 11345 10551 11289
11017 12001 10720 11904
10549 11236 10835 11280
10501 11523 10899 11481
12/97 10552 11631 11017 11623
10726 12088 11163 11948
11182 12945 11198 12759
11535 13394 11261 13299
11752 13474 11315 13431
11862 13327 11439 13265
11889 13898 11517 13582
12022 13877 11583 13562
10954 12254 11781 11755
10814 12531 12049 11965
11305 13622 12016 13049
11760 14502 12115 13827
12/98 11960 15562 12093 14505
12224 16112 12242 14824
12006 15472 12089 14432
12444 16045 12184 15035
12810 16020 12277 15630
12456 15462 12207 15061
12752 16414 12095 15765
12947 16233 12044 15720
12959 16435 12053 15694
13016 16463 12126 15544
13286 17542 12158 16355
13744 18572 12201 16817
12/99 14731 20699 12188 18180
14258 19402 12166 17141
14880 20078 12282 17189
14894 21275 12445 18380
14413 19849 12456 17605
14096 18673 12489 17161
14502 19815 12644 17741
14273 18819 12743 17244
14447 19488 12836 17807
14045 17763 12941 16862
13688 17017 13038 16582
13415 15706 13257 15577
12/00 13754 15411 13448 15832
13871 15877 13632 16139
13257 13853 13752 14777
12808 12736 13843 13809
13320 13768 13777 14833
13239 13494 13859 14649
13091 13025 13928 14192
12977 12833 14134 14005
12552 12044 14266 13336
11963 11046 14380 12162
12213 11517 14642 12397
12866 12394 14520 13132
12/01 12894 12457 14422 13216
12666 12052 14490 12817
12666 12086 14567 12709
12878 12389 14413 13298
12690 11863 14607 12827
12900 11805 14675 12857
12424 11126 14828 12079
11882 10343 14983 11062
11860 10343 15198 11085
11097 9319 15402 9868
11787 10046 15363 10598
12389 10413 15381 11171
12/02 11741 10015 15641 10632
11686 9655 15713 10311
11611 9554 15870 10134
11531 9641 15856 10107
12279 10335 15942 11009
12801 10766 16217 11644
12971 10920 16166 11850
13106 11132 15833 12093
13315 11358 15825 12356
13126 11424 16113 12435
13690 12106 15961 13174
13899 12280 15983 13378
12/03 14354 12871 16137 14221
14745 13136 16231 14452
15077 13298 16394 14699
15304 13167 16476 14608
14906 12910 16224 14316
15023 13044 16181 14446
15348 13224 16210 14760
14649 12591 16321 14282
14649 12556 16583 14350
15072 12810 16654 14626
15428 13125 16777 14988
15962 13792 16812 15782
12/04 16184 14314 16932 16389
15830 13929 17060 16023
15684 14289 16989 16538
15390 14017 17016 16225
15357 13718 17227 15882
15624 14082 17394 16176
15756 14151 17542 16323
16018 14738 17445 16897
16223 14874 17620 17032
16312 15205 17535 17479
15959 14883 17451 17059
16404 15370 17534 17637
12/05 16729 15707 17683 18032
17475 16433 17669 18840
17197 16269 17720 18820
17364 16680 17566 19243
17683 17070 17505 19837
17124 16424 17730 19177
17184 16400 17729 19179
16935 16269 17938 19303
17276 16704 18207 19814
17486 16855 18338 20056
17738 17457 18437 20796
18178 17902 18597 21316
12/06 18207 18138 18330 21755
</Table>
<Table>
--- GLOBAL ADVISERS IA --- MSCI WORLD GROWTH -- LEHMAN BROTHERS --- MSCI WORLD INDEX
$10,000 INDEX GLOBAL AGGREGATE $10,000
starting value $10,000 INDEX USD HEDGED starting value
$18,207 starting value $10,000 $21,755
ending value $18,138 starting value ending value
ending value $18,330
ending value
</Table>
MSCI WORLD GROWTH INDEX is a broad-based unmanaged market
capitalization-weighted total return index which measures the performance of
growth securities in 23 developed-country global equity markets including the
United States, Canada, Europe, Australia, New Zealand and the Far East.
LEHMAN BROTHERS GLOBAL AGGREGATE INDEX USD HEDGED provides a broad-based measure
of the global investment-grade fixed income markets (the three major components
of this index are the U.S. Aggregate, the Pan-European Aggregate, and the
Asian-Pacific Aggregate Indices; it also includes Eurodollar and Euro-Yen
corporate bonds, Canadian Government securities, and USD investment grade 144A
securities).
MSCI WORLD INDEX is a broad-based unmanaged market capitalization weighted total
return index which measures performance of 23 developed-country global stock
markets, including the United States, Canada, Europe, Australia, New Zealand and
the Far East.
The Fund has changed its benchmark from the MSCI World Index to the MSCI World
Growth Index because the fund's investment manager believes that the MSCI World
Growth Index is better suited to the growth strategy of the fund due to a
greater similarity in the characteristics of the securities in the Fund and this
index.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ----------------------------------------------------------------
Global Advisers IA 8.84% 7.14% 6.18%
- ----------------------------------------------------------------
Global Advisers IB(3) 8.56% 6.88% 5.93%
- ----------------------------------------------------------------
MSCI World Growth Index 15.48% 7.80% 6.14%
- ----------------------------------------------------------------
MSCI World Index 20.65% 10.48% 8.08%
- ----------------------------------------------------------------
Lehman Brothers Global Aggregate
Index USD Hedged 3.66% 4.91% 6.25%
- ----------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA ROBERT L. EVANS SCOTT M. ELLIOTT EVAN S. GRACE, CFA
Senior Vice President, Vice-President Vice President Senior Vice Senior Vice Vice President
Partner President, President, Partner
Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Advisers HLS Fund returned 8.84% for
the year ended December 31, 2006, underperforming the benchmark, the MSCI World
Growth Index, which returned 15.48%, while outperforming the Lehman Brothers
Global Aggregate Hedged Index, which returned 3.66% for the same period. The
Fund also underperformed the 15.77% return of the average fund in the Lipper
Global Flexible Portfolio VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Global markets rose with moderating inflation expectations in recent months,
helping to offset data suggesting a slowing global economy. The long-awaited
pause in the Federal Reserve Bank's (the "Fed") monetary tightening cycle
finally occurred, calming investor fears that the Fed would over tighten and tip
the US economy into recession. The drop in oil and gas prices from record highs
also bolstered optimism. The MSCI World Growth Index was up 15.5% for the year
while the Lehman Brothers Global Aggregate Hedged Index was up 3.7%. Within the
MSCI World Growth Index, Utilities, Materials, and Telecommunication Services
led all sectors, while Health Care and Information
13
- --------------------------------------------------------------------------------
Technology performed well but lagged the index returns for the period.
The Fund's underperformance versus its benchmark reflected weak performance in
the equity and fixed income sleeves of the Fund, partially offset by positive
asset allocation decisions, specifically an overweight in equities.
The equity portion of the Fund underperformed its benchmark for the year. Sector
allocation, which is primarily a result of bottom-up stock selection, was the
main source of underperformance relative (i.e. performance of the Fund as
measured against the benchmark) to the Index for the period. Underweight
positions in outperforming Materials and Consumer Staples stocks had a negative
impact on performance. Strong security selection, primarily in the Financials
and Industrials sectors, partially offset the impact of sector allocation.
However, stock selection was weak in the Consumer Discretionary sector.
Among the top detractors to the equity sleeve on a relative and absolute (i.e.
total return) basis were Rakuten, SanDisk, and Sirius Satellite. Although there
were no fundamental disappointments within Japanese online retailer Rakuten's
core business, the stock was negatively impacted by issues in its peripheral
business, rumors of its president being arrested, and a meltdown in JASDAQ
(Japan stock trading system) stocks as retail investors fled "new Japan"
companies in light of the Livedoor and Murakami Fund scandals. Shares in flash
storage device maker SanDisk fell as price declines in NAND flash memory raised
concerns about an over-supplied market. We expect pricing declines to moderate,
but we reduced the position to better reflect industry competition. Despite
these changing dynamics, the company stands to benefit from innovation in cell
phone features, which drives long-term memory growth. Shares of Sirius, a US
subscription-based satellite radio broadcaster, declined on signs that
subscriber growth will be less than anticipated and, importantly, that the cost
to retain and attract new customers will be greater than anticipated. True to
our investment process, we sold our shares after meeting with management and
determining that the drivers of earnings growth were no longer in place. Among
other detractors from absolute performance was global semiconductor company
Marvell Technology, which declined on weak earnings and lowered guidance.
The leading contributors to the equity portion of the sleeve on both an absolute
and relative basis during the twelve month period were Las Vegas Sands,
Nintendo, and America Movil. Casino owner and operator Las Vegas Sands was our
strongest performer for the year. It remains one of our largest holdings as good
results from its Macau operations and further planned expansion into mainland
China will provide significant opportunities for growth. Video game console and
software maker Nintendo successfully launched extremely popular Wii game
consoles this holiday season. The company also benefited from solid earnings
growth driven by robust sales of its touch-screen DS portable game player.
Mexican wireless provider America Movil reported strong earnings and benefited
from robust subscriber growth in Latin America. We also saw outperformance from
several global investment banks, including Goldman Sachs.
The fixed income portion of the fund underperformed its benchmark during the
period, largely due to our currency and country rotation strategies. This was
partially offset by positive performance in duration and credit strategies.
Major drivers of currency performance were our overweight positions in the US
dollar and underweight positions in the Canadian dollar. As the U.S. dollar lost
ground to several major currencies, and low-yielding currencies appreciated
relative to high-yielding currencies, our long US dollar bias suffered. In
Canada, we believed that the currency would depreciate due to the continued
narrowing of Canada's interest rate spread differential with the rest of the
world. In fact, we have believed for some time that Canadian asset values do not
reflect rising inflation in that country. We have expressed this view primarily
through underweight positions in the Canadian dollar. However, the recent
depreciation of the Canadian dollar should allow inflationary pressures to feed
through to the broader economy, and so we have rotated much of our underweight
position from the currency to Canadian bonds during the fourth quarter. In our
country rotation strategies, overweight positions in Germany, the United Kingdom
and the U.S. versus Sweden and Canada were also detractors. On a positive note,
our duration and credit strategies contributed positively to the portfolio's
results. In particular, long Japanese 7-year bonds, long Mexican 20-year bonds,
short German 5-year bonds, and short Japan 20-year bonds were all positions
which performed well in the year. Finally, the Fund's position in structured
mortgage backed securities helped performance during the year.
Asset allocation was a positive contributor to the Fund's overall performance
for the year as the Fund was consistently overweight strongly performing
equities and underweight the fixed income sector. Fixed income generated
positive absolute returns but lagged equity returns.
WHAT IS THE OUTLOOK?
In the equity portion of the Fund, positioning is the result of bottom-up stock
selection. At year-end, the Fund's largest overweight positions were in the
Information Technology and Financial sectors. The largest relative underweight
positions were in Health Care, Industrials and Materials.
In the fixed income component, we currently have a pro-cyclical bias and are
underweight duration as we believe the Fed is unlikely to be in a position to
validate the market's current rate cut expectations. In terms of country
rotation, the portfolio is overweight Australian bonds, primarily versus
Canadian bonds. The outlook for individual currency markets in the current
environment will depend on each country's position in the economic cycle. We
expect the US dollar will be range-bound the first half of 2007. We expect
select emerging market currencies to outperform given strong domestic growth and
positive external balances. We expect Asian currencies, excluding Japan, to
outperform as positive economic fundamentals, large trade surpluses, and foreign
exchange reserve accumulation support further appreciation. We continue to focus
our credit efforts in the non-government sectors. While credit fundamentals show
no sign of widespread deterioration, global credit spreads remain vulnerable
14
- --------------------------------------------------------------------------------
over the medium-term. We continue to focus our exposure on the US corporate
market, where valuations are most attractive. In the collateralized sector, we
continue to prefer commercial mortgage-backed securities to pass-through
securities.
While we remain constructive on the equity markets longer-term, we feel that
equity markets had a strong run this past year. Additionally, we believe bond
yields may continue to rise, causing near-term valuation concerns. Therefore,
from an asset allocation standpoint, the Fund ended the year with a neutral
equity position, an underweight to fixed income and an overweight to cash.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.9%
- -------------------------------------------------------------------
Austria 0.7
- -------------------------------------------------------------------
Belgium 2.3
- -------------------------------------------------------------------
Brazil 0.7
- -------------------------------------------------------------------
Canada 2.1
- -------------------------------------------------------------------
Chile 0.1
- -------------------------------------------------------------------
Denmark 0.2
- -------------------------------------------------------------------
Dutch Antilles 1.2
- -------------------------------------------------------------------
Finland 0.1
- -------------------------------------------------------------------
France 2.8
- -------------------------------------------------------------------
Germany 1.4
- -------------------------------------------------------------------
Ireland 1.3
- -------------------------------------------------------------------
Japan 7.5
- -------------------------------------------------------------------
Luxembourg 0.6
- -------------------------------------------------------------------
Mexico 2.1
- -------------------------------------------------------------------
Netherlands 1.9
- -------------------------------------------------------------------
Norway 0.3
- -------------------------------------------------------------------
Poland 0.1
- -------------------------------------------------------------------
Qatar 0.1
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
Singapore 0.3
- -------------------------------------------------------------------
South Korea 0.9
- -------------------------------------------------------------------
Sweden 0.1
- -------------------------------------------------------------------
Switzerland 2.5
- -------------------------------------------------------------------
Taiwan 0.8
- -------------------------------------------------------------------
United Kingdom 9.8
- -------------------------------------------------------------------
United States 52.2
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.5%
- -------------------------------------------------------------------
Capital Goods 1.3
- -------------------------------------------------------------------
Consumer Cyclical 6.6
- -------------------------------------------------------------------
Consumer Staples 4.2
- -------------------------------------------------------------------
Energy 3.3
- -------------------------------------------------------------------
Finance 27.0
- -------------------------------------------------------------------
Foreign Governments 4.0
- -------------------------------------------------------------------
Health Care 6.3
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 22.5
- -------------------------------------------------------------------
Transportation 0.5
- -------------------------------------------------------------------
U.S. Government Agencies 6.3
- -------------------------------------------------------------------
U.S. Government Securities 0.3
- -------------------------------------------------------------------
Utilities 0.9
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Common Stock 59.1%
- -------------------------------------------------------------------
Asset & Commercial Mortgage Backed Securities 10.3
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 18.0
- -------------------------------------------------------------------
U.S. Government Securities 0.3
- -------------------------------------------------------------------
U.S. Government Agencies 6.3
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
15
Hartford Global Communications HLS Fund inception 12/27/2000
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/27/00 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
MSCI ALL COUNTRY WORLD
FREE TELECOMMUNICATION
GLOBAL COMM IA SERVICES INDEX S&P 500 INDEX
-------------- ---------------------- -------------
12/27/2000 10000 10000 10000
12/00 9981 10000 10000
11996 10982 10355
9543 9280 9411
8023 8758 8815
8774 9425 9499
8075 8700 9563
7709 8128 9330
7569 8222 9239
6520 7344 8661
6210 7434 7962
5899 7163 8114
6216 7503 8736
12/01 6414 7547 8813
5610 6871 8684
5008 6559 8517
5200 6645 8837
4630 5921 8302
4643 5960 8241
4023 5341 7654
3800 5061 7058
4001 5056 7104
3499 4276 6332
4261 5248 6889
4736 5810 7294
12/02 4530 5466 6866
4490 5346 6687
4459 5069 6586
4393 5006 6650
4823 5608 7197
5256 6015 7576
5542 6065 7673
5564 5923 7808
5622 5905 7960
5851 5942 7876
6358 6227 8321
6584 6440 8394
12/03 7265 6966 8834
7461 7200 8996
7433 7252 9121
7425 7101 8984
7132 6981 8843
7062 6802 8964
7302 6929 9138
7070 6891 8836
6707 6958 8871
6895 7139 8967
7448 7477 9104
8648 8032 9472
12/04 8952 8345 9795
8583 7992 9556
8895 8123 9757
8329 7919 9584
8049 7777 9403
8322 7757 9702
9055 7835 9715
10015 8188 10077
9988 8174 9985
10419 8230 10065
10095 8010 9898
10453 7929 10272
12/05 10618 7934 10275
10932 8089 10547
11180 8127 10576
11381 8397 10707
11694 8708 10851
10561 8469 10539
10158 8503 10553
10014 8732 10618
10255 8924 10870
10585 9308 11150
11534 9932 11514
12252 10210 11732
12/06 12957 10649 11897
</Table>
<Table>
--- GLOBAL COMM IA --- MSCI ALL COUNTRY WORLD -- S&P 500 INDEX
$10,000 starting value FREE $10,000 starting value
$12,957 ending value TELECOMMUNICATION $11,897 ending value
SERVICES INDEX
$10,000 starting value
$10,649 ending value
</Table>
MSCI AC WORLD FREE TELECOMMUNICATIONS SERVICES INDEX is a free float-adjusted
market capitalization index of developed and emerging market countries that is
designed to measure international equity market performance.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -----------------------------------------------------
Global Comm IA 22.03% 15.10% 4.40%
- -----------------------------------------------------
Global Comm IB 21.72% 14.83% 4.16%
- -----------------------------------------------------
MSCI AC World Free
Telecommunication
Services Index 34.21% 7.13% 1.05%*
- -----------------------------------------------------
S&P 500 Index 15.78% 6.19% 2.93%*
- -----------------------------------------------------
</Table>
* Return is from 12/31/00.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ARCHANA BASI, CFA DAVID NINCIC, CFA
Vice President, Global Industry Analyst Vice President, Global Industry Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Communications HLS Fund returned
22.03% for the twelve-month period ended December 31, 2006, underperforming the
Fund's benchmark, the MSCI All Country World Free Telecommunication Services
Index, which returned 34.21% for the same period. The Fund outperformed the
10.02% return of the average fund in the Lipper VA Science & Technology peer
group, a group of funds with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Telecommunication Services stocks performed well during the period, outpacing
the broader market as represented by the S&P 500 Index and the MSCI World Index.
The Fund's holdings in Wireless Telecommunications Services contributed to the
Fund's strong absolute (i.e. total return) performance. However, security
selection within the Integrated Telecommunications Services sub-industry
detracted from benchmark relative-returns, as did the Fund's holdings in the
Communications Equipment and Application Software sub-industries. At the
regional level, strong stock selection in Europe, excluding the United Kingdom,
was more than offset by weak selection in North America and emerging markets.
Stocks that detracted from relative (i.e. performance of the Fund as measured
against the benchmark) and absolute performance included KongZhong, NeuStar and
Westell Technologies. Shares of KongZhong, a provider of interactive
entertainment services for wireless devices in China, suffered because of
announced regulatory changes that will hurt its revenues. NeuStar, a telephone
number database company, fell due to investor concerns about a contract
renegotiation that resulted in lower rates. Shares of Westell, a
telecommunications equipment company, fell after the company lowered third
quarter guidance because of anticipated changes in customer promotional activity
and pricing reductions amidst seasonal softness in several businesses. In
addition, Powerwave Technology was a key detractor on an absolute basis. The
company's shares fell after reporting weak quarterly results and lowering
guidance. We sold Westell and Powerwave during the year and held KongZhong and
NeuStar at the end of the period.
Top contributors to relative and absolute performance during the period included
Telenor, Mobile Telesystems and Vimpel Communications. Norwegian telecom company
Telenor benefited from strong growth, particularly in emerging markets. In
Russia, both Vimpel Communications and Mobile Telesystems reported strong
results and stable average revenues per user (ARPU), suggesting that price
competition was easing. On an absolute basis, Philippine
16
- --------------------------------------------------------------------------------
Long Distance Telephone was a key contributor. The company benefited from
better-than-expected wireless growth and improved cost efficiencies, which
resulted in increased margins. We held all four stocks at the end of the period.
WHAT IS THE OUTLOOK?
We remain optimistic on the performance of telecom stocks. Within the wireline
sector, we prefer stocks outside of North America. While many international
wireline carriers face access line declines and voice substitution to wireless,
these same carriers often have wireless operations that are performing well,
resulting in solid revenue growth.
For the wireless sector, we remain bullish on US stocks. The US wireless
industry is a telecom rarity because the sector is experiencing capacity
constraints, whereas the telecom norm is one of excess supply. We believe these
capacity constraints should result in pricing power and, ultimately, strong
financial results for the US wireless carriers.
While the telecom industry is highly competitive, we believe that there are many
attractive opportunities and that the Fund can continue to find underpriced
stocks of companies with improving business fundamentals. Often, these companies
are not well known among global investors, but we frequently find the best
opportunities in stocks unfamiliar to the investment community.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Brazil 8.5%
- -------------------------------------------------------------------
China 2.4
- -------------------------------------------------------------------
Egypt 1.0
- -------------------------------------------------------------------
France 6.3
- -------------------------------------------------------------------
Italy 0.4
- -------------------------------------------------------------------
Luxembourg 4.0
- -------------------------------------------------------------------
Morocco 0.1
- -------------------------------------------------------------------
Norway 5.8
- -------------------------------------------------------------------
Philippines 4.9
- -------------------------------------------------------------------
Russia 15.2
- -------------------------------------------------------------------
South Africa 7.1
- -------------------------------------------------------------------
Spain 4.2
- -------------------------------------------------------------------
Turkey 4.7
- -------------------------------------------------------------------
United States 33.4
- -------------------------------------------------------------------
Short-Term Investments 24.7
- -------------------------------------------------------------------
Other Assets & Liabilities (22.7)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Communications Equipment 3.9%
- -------------------------------------------------------------------
Other Telecommunications 30.5
- -------------------------------------------------------------------
Software Publishers 6.4
- -------------------------------------------------------------------
Telecommunications Resellers 0.1
- -------------------------------------------------------------------
Wired Telecommunications Carriers 19.8
- -------------------------------------------------------------------
Wireless Communications Services 3.7
- -------------------------------------------------------------------
Wireless Telecommunications Carriers 33.6
- -------------------------------------------------------------------
Short-Term Investments 24.7
- -------------------------------------------------------------------
Other Assets & Liabilities (22.7)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
17
Hartford Global Financial Services HLS Fund inception 12/27/2000
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/27/00 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
MSCI FINANCE EX REAL ESTATE
GLOBAL FINANCIAL SERVICES IA INDEX S&P 500 INDEX
---------------------------- --------------------------- -------------
12/27/2000 10000 10000 10000
12/00 9992 10000 10000
9866 10003 10355
9623 9351 9411
9267 8799 8815
9721 9173 9499
9963 9121 9563
10015 9041 9330
9913 8850 9239
9750 8753 8661
8861 7825 7962
8896 7837 8114
9149 8238 8736
12/01 9420 8332 8813
9002 8042 8684
8985 7901 8517
9443 8469 8837
9462 8495 8302
9345 8604 8241
9035 8132 7654
8149 7366 7058
8141 7461 7104
7204 6438 6332
7656 7061 6889
8062 7407 7294
12/02 7643 6976 6866
7297 6747 6687
7127 6604 6586
7102 6480 6650
7814 7387 7197
8211 7794 7576
8287 7949 7673
8555 8312 7808
8528 8224 7960
8687 8429 7876
9328 9100 8321
9378 9179 8394
12/03 9957 9748 8834
10154 9974 8996
10408 10199 9121
10385 10169 8984
9939 9811 8843
9978 9885 8964
10080 9991 9138
9637 9689 8836
9886 9938 8871
9964 10044 8967
10182 10317 9104
10650 10842 9472
12/04 11187 11400 9795
10916 11132 9556
11015 11337 9757
10713 11015 9584
10639 10831 9403
10773 10956 9702
10992 11121 9715
11229 11383 10077
11152 11414 9985
11495 11805 10065
11547 11872 9898
12135 12415 10272
12/05 12352 12748 10275
12881 13221 10547
13030 13550 10576
13168 13710 10707
13788 14297 10851
13246 13707 10539
13120 13666 10553
13166 13857 10618
13646 14273 10870
13839 14572 11150
14199 14995 11514
14427 15175 11732
12/06 14922 15676 11897
</Table>
<Table>
--- GLOBAL FINANCIAL SERVICES IA --- MSCI FINANCE EX -- S&P 500 INDEX
$10,000 starting value REAL ESTATE INDEX $10,000 starting value
$14,922 ending value $10,000 starting value $11,897 ending value
$15,676 ending value
</Table>
MSCI FINANCIAL EX REAL ESTATE INDEX includes only companies in both the MSCI
Developed Index and in the Banks, Diversified Financials or Insurance industry
groups. The constituents of this index will represent 85% of the market
capitalization of all companies in these specific countries and industry groups.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ---------------------------------------------------------------
Global Financial Services IA 20.81% 9.64% 6.88%
- ---------------------------------------------------------------
Global Financial Services IB 20.51% 9.37% 6.63%
- ---------------------------------------------------------------
MSCI Finance ex Real Estate
Index 22.96% 13.47% 7.76%*
- ---------------------------------------------------------------
S&P 500 Index 15.78% 6.19% 2.93%*
- ---------------------------------------------------------------
</Table>
* Return is from 12/31/00.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
<Table>
MARK T. LYNCH, CFA
Senior Vice President, Partner,
Global Industry Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Financial Services HLS Fund returned
20.81% for the twelve-month period ended December 31, 2006, underperforming the
Fund's benchmark, the MSCI Finance ex-Real Estate Index, which returned 22.96%
for the same period. The Fund outperformed the 18.18% return of the average fund
in the Lipper VA Financial Services Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Financial stocks have performed well over the last twelve months despite
interest rate uncertainty and inflation concerns. The Finance sector
outperformed both the S&P 500 and MSCI World Index during the twelve-month
period. Almost all industries within the Finance sector posted positive returns,
led by Capital Markets and Diversified Financial Services, while Consumer
Finance and Real Estate Management & Development companies trailed by the widest
margin.
The Fund's performance lagged the benchmark as a result of weak security
selection in the Consumer Finance, Insurance and Capital Markets industries as
well as slight overweights (i.e. the Fund's sector position was more than the
benchmark position) to the lagging Consumer Finance and Thrifts & Mortgage
Finance industries. Top detractors from relative (i.e. performance of the Fund
as measured against the benchmark) performance included Capital One Financial
(Diversified Financials), Aeon Credit Service (Diversified Financials), St. Paul
Travelers (Insurance) and American International Group (AIG) (Insurance).
Capital One Financial was down due to concerns about U.S. consumer credit and
the uncertainties and accounting confusion surrounding the closing of the North
Fork Bancorp acquisition. Aeon Credit Service shares fell due to intense
competition. AIG's shares were down throughout much of the year as the company's
new management team worked to gain investor confidence after an accounting
scandal, while St. Paul Travelers worked to recover from losses that resulted
from Hurricanes Katrina and Rita. We sold our positions in Aeon Credit Service,
St. Paul Travelers and AIG and held Capital One at the end of the period.
Partially offsetting these areas of weakness was strong security selection in
Diversified Financial Services and Commercial Banks. Hong Kong Exchanges
(Diversified Financials), Euronext
18
- --------------------------------------------------------------------------------
(Diversified Financials) and Banco Bilbao Vizcaya (Banks) were among top
contributors to relative and absolute (i.e. total return) performance during the
period. Hong Kong Exchanges benefited from the proliferation of Chinese IPOs as
well as rising trading volume for index futures, which hit a record number of
contracts during the period. The prospect of industry consolidation played a
part in driving up shares of other stock market companies such as Euronext.
Banco Bilbao Vizcaya benefited from strong growth in emerging markets.
Speculation that further consolidation was likely in the Italian banking market
drove up shares of Capitalia and Banca Intesa, two other major contributors to
performance. We eliminated our positions in Euronext, Banco Bilbao Vizcaya, and
Capitalia during the period.
WHAT IS THE OUTLOOK?
The Fund looks for stocks with low P/Es (Price/Earnings ratio), although we will
always keep an eye open for special situations. We will generally avoid
companies that are lacking strong customer franchises. In the near term, we
intend to move away from Japanese Banks and expect to reduce our exposure to
property & casualty. We currently find many Italian Banks attractive due to
increased takeover activity following a change in policy at the Central Bank. We
also favor the United Kingdom lenders due to their attractive valuations. At the
end of the period the Fund was overweight the Capital Markets and Thrifts &
Mortgage Finance industries and underweight Commercial Banks, Insurance,
Diversified Financial Services and Consumer Finance.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 2.0%
- -------------------------------------------------------------------
Canada 4.5
- -------------------------------------------------------------------
France 1.0
- -------------------------------------------------------------------
Germany 6.3
- -------------------------------------------------------------------
Hong Kong 2.8
- -------------------------------------------------------------------
Italy 8.3
- -------------------------------------------------------------------
Netherlands 4.0
- -------------------------------------------------------------------
Norway 1.0
- -------------------------------------------------------------------
Switzerland 14.8
- -------------------------------------------------------------------
United Kingdom 14.1
- -------------------------------------------------------------------
United States 40.7
- -------------------------------------------------------------------
Short-Term Investments 0.5
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Agencies, Brokerages, and other Insurance 5.1%
- -------------------------------------------------------------------
Commercial Banking 13.9
- -------------------------------------------------------------------
Consumer Lending 2.0
- -------------------------------------------------------------------
Depository Credit Banking 18.4
- -------------------------------------------------------------------
Insurance Carriers 17.6
- -------------------------------------------------------------------
International Trade Financing (Foreign Banks) 15.2
- -------------------------------------------------------------------
Nondepository Credit Banking 3.0
- -------------------------------------------------------------------
Other Financial Investment Activities 6.6
- -------------------------------------------------------------------
Real Estate Credit (Mortgage Banking) 5.3
- -------------------------------------------------------------------
Securities and Commodities Exchanges 3.7
- -------------------------------------------------------------------
Securities, Commodities and Brokerage 8.7
- -------------------------------------------------------------------
Short-Term Investments 0.5
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
19
Hartford Global Health HLS Fund inception 5/01/2000
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 5/1/00 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GOLDMAN SACHS HEALTH CARE
GLOBAL HEALTH IA INDEX S&P 500 INDEX
---------------- ------------------------- -------------
5/1/00 10000 10000 10000
5/00 10246 10391 9795
11908 11522 10036
12165 11132 9880
12828 11534 10493
13691 12043 9939
13911 12333 9897
14268 12507 9117
12/00 14818 12959 9162
13996 11763 9487
13953 11708 8622
13103 10664 8076
13814 11130 8703
14476 11375 8761
14548 11088 8548
14475 11392 8464
14259 11100 7935
13803 11014 7294
14128 11029 7434
14915 11619 8004
12/01 15120 11399 8074
14697 11094 7957
14770 11038 7803
15160 11176 8097
14647 10478 7606
14202 10274 7550
12923 9297 7013
12557 9093 6466
12342 9158 6508
11594 8669 5802
12341 9072 6311
13180 9325 6683
12/02 12554 9002 6290
12372 9007 6126
11987 8852 6034
12142 9121 6093
13194 9541 6594
14436 9986 6941
14762 10414 7030
14819 10455 7154
14700 10226 7293
15044 10241 7216
15379 10342 7624
15815 10529 7691
12/03 16610 11091 8094
17273 11417 8242
17382 11573 8357
17170 11239 8231
17330 11639 8102
17257 11624 8213
17484 11622 8372
16554 10895 8095
16749 11029 8128
16922 11000 8216
16955 10743 8341
17541 11018 8679
12/04 18736 11786 8974
18050 11428 8755
17863 11732 8939
17412 11742 8781
17939 12207 8615
18257 12432 8888
18497 12487 8901
19463 12919 9232
20075 12976 9148
20396 12891 9222
19760 12631 9068
20288 12902 9411
12/05 21065 13213 9414
21788 13372 9663
21812 13475 9689
21858 13324 9810
21573 12904 9942
21196 12675 9656
21285 12680 9669
21811 13211 9728
22203 13558 9959
22352 13693 10216
22926 13779 10549
22971 13758 10749
12/06 23421 13930 10900
</Table>
<Table>
--- GLOBAL HEALTH IA --- GOLDMAN SACHS HEALTH CARE INDEX -- S&P 500 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$23,421 ending value $13,930 ending value $10,900 ending value
</Table>
GOLDMAN SACHS HEALTH CARE INDEX is a modified capitalization-weighted index
based on United States headquartered health care companies. Stocks in the index
are weighted such that each stock is no more than 7.5% of the market
capitalization as of the most recent reconstitution date. The companies included
in the index must be common stocks and be traded on the American Stock Exchange,
Nasdaq or the New York Stock Exchange and meet certain established market
capitalization levels.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -------------------------------------------------------
Global Health IA 11.19% 9.15% 13.61%
- -------------------------------------------------------
Global Health IB 10.91% 8.88% 13.35%
- -------------------------------------------------------
Goldman Sachs Health
Care Index 5.42% 4.09% 5.09%*
- -------------------------------------------------------
S&P 500 Index 15.78% 6.19% 1.30%*
- -------------------------------------------------------
</Table>
* Return is from 4/30/00.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
JOSEPH H. SCHWARTZ, CFA JEAN M. HYNES, CFA ANN C. GALLO KIRK J. MAYER, CFA ROBERT L. DERESIEWICZ
Senior Vice President, Senior Vice Senior Vice Vice President, Vice President,
Partner, Global Industry President, Partner, President, Partner, Global Industry Global Industry
Analyst Global Industry Global Industry Analyst Analyst
Analyst Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Health HLS Fund returned 11.19% for
the twelve-month period ended December 31, 2006, outperforming the Fund's
benchmark, the Goldman Sachs Health Care Index, which returned 5.42% for the
same period. The Fund also outperformed the 5.65% return of the average fund in
the Lipper VA Health and Biotechnology peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The Health Care sector performed well during the period but lagged the broader
market, as represented by the S&P 500. The Fund's outperformance was driven by
superior security selection relative (i.e. performance of the Fund as measured
against the benchmark) to the benchmark, particularly within Pharmaceuticals and
Biotechnology. Industry allocation decisions, a result of our bottom-up security
selection, also positively impacted relative performance, especially the
underweight to Health Care Providers & Services.
The top contributors to absolute (i.e. total return) performance came from the
Pharmaceutical sub-sector; Daiichi Sankyo, Abbott Laboratories and Shionogi.
After the completion of the merger between Daiichi Pharmaceutical and Sankyo,
investor confidence grew in the combined entity's ability to grow earnings and
its long-term prospects from numerous synergies. In addition, Daiichi Sankyo's
research and development day boosted enthusiasm for its developmental projects
in diabetes, cancer, and cardiovascular disease. Abbott Laboratories benefited
from the acquisition of Guidant's interventional cardiology business from Boston
Scientific. The company also announced the acquisition of Kos Pharmaceuticals
during the period. In addition, sales of Abbott's arthritis drug Humira were
very strong as the FDA approved it for additional treatment of ankylosing
spondylitis, an inflammatory disease of the spine and spinal joints. Shionogi
shares performed well reflecting the company's profitable royalty stream from
sales of Crestor, a cholesterol lowering drug. We held all three stocks at the
end of the period. In addition, not owning Genentech, which was down for the
period, positively impacted relative performance.
20
- --------------------------------------------------------------------------------
Aetna was a top detractor of absolute and relative performance and we eliminated
the stock during the period. Aetna shares fell as the company experienced
pricing issues and an unanticipated increase in high acuity inpatient claims.
The company also faced increased competition in several regions including the
Northeast, Florida and the Mid-Atlantic. While our Pharmaceutical holdings
contributed strongly to overall performance, the Fund did not own strong
performers Pfizer and Johnson & Johnson, which detracted from relative
performance. Other detractors from absolute performance included Boston
Scientific and Amgen. Boston Scientific suffered from regulatory infractions,
increased competition and slower market growth. Amgen shares fell as investors
became concerned that the outcome of a Medicare congressional hearing would
negatively affect the company. We sold Boston Scientific and held Amgen at the
end of the period.
WHAT IS THE OUTLOOK?
With the stock market reaching new heights in the face of brewing difficult
economic conditions, we expect a more subdued market lies ahead with the Health
Care stocks performing somewhat better than the overall market. We will remain
diversified and focused on the long-term while shifting selectively to those
areas that seemingly offer the most value. At the end of the period the Fund was
overweight the Pharmaceuticals and Biotechnology sub-industries and underweight
Health Care Services.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Belgium 2.7%
- -------------------------------------------------------------------
Denmark 0.6
- -------------------------------------------------------------------
France 4.9
- -------------------------------------------------------------------
Germany 0.3
- -------------------------------------------------------------------
Ireland 1.5
- -------------------------------------------------------------------
Israel 1.0
- -------------------------------------------------------------------
Japan 13.2
- -------------------------------------------------------------------
United Kingdom 3.5
- -------------------------------------------------------------------
United States 71.2
- -------------------------------------------------------------------
Short-Term Investments 1.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Agencies, Brokerages, Other Insurance Activities 0.8%
- -------------------------------------------------------------------
Basic Chemical Manufacturing 0.3
- -------------------------------------------------------------------
Drugs & Druggists Sundries Wholesalers 6.6
- -------------------------------------------------------------------
General Medical and Surgical Hospitals 2.2
- -------------------------------------------------------------------
Health and Personal Care Stores 2.4
- -------------------------------------------------------------------
Insurance Carriers 5.4
- -------------------------------------------------------------------
Medical Equipment and Manufacturing 5.8
- -------------------------------------------------------------------
Navigate, Measure, Control Instruments 7.4
- -------------------------------------------------------------------
Pharmaceutical & Medicine Manufacturing 56.9
- -------------------------------------------------------------------
Professional Services Computer System Design &
Related 1.3
- -------------------------------------------------------------------
Scientific Research & Development Services 9.8
- -------------------------------------------------------------------
Short-Term Investments 1.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
21
Hartford Global Leaders HLS Fund inception 9/30/1998
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 9/30/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GLOBAL LEADERS IA MSCI WORLD GROWTH INDEX MSCI WORLD INDEX
----------------- ----------------------- ----------------
9/98 10000 10000 10000
11346 10871 10906
12212 11573 11556
12/98 13188 12419 12122
13799 12858 12389
13410 12348 12062
14140 12805 12566
14488 12784 13063
13962 12339 12587
14974 13099 13176
15199 12955 13138
15118 13115 13117
14930 13138 12991
15905 13999 13668
17087 14821 14055
12/99 19830 16518 15194
19086 15484 14326
21213 16023 14366
21161 16979 15361
20137 15840 14713
19563 14901 14342
20430 15813 14827
19746 15018 14412
20868 15552 14882
19982 14175 14093
18833 13581 13858
17723 12534 13019
12/00 18429 12299 13231
18436 12670 13488
16744 11055 12350
15624 10164 11541
16849 10987 12397
16516 10769 12243
16215 10394 11861
15819 10241 11705
14951 9612 11145
13654 8815 10165
14039 9191 10361
15284 9891 10975
12/01 15373 9941 11046
14870 9618 10712
14782 9645 10621
15250 9887 11114
14742 9467 10720
15056 9421 10745
14111 8879 10095
12961 8254 9245
12831 8254 9264
11285 7437 8247
12455 8017 8857
13558 8310 9337
12/02 12375 7992 8886
12089 7705 8617
11818 7624 8470
11656 7694 8447
12962 8247 9201
13754 8592 9731
14076 8715 9904
14418 8884 10106
14833 9064 10327
14454 9117 10392
15595 9661 11011
15972 9800 11181
12/03 16777 10272 11885
17427 10483 12078
18038 10612 12285
18358 10508 12208
17685 10302 11965
17934 10410 12073
18545 10553 12336
17124 10048 11936
17052 10020 11993
17918 10222 12224
18579 10474 12526
19598 11007 13190
12/04 19995 11423 13697
19263 11116 13391
18844 11403 13822
18183 11186 13560
17962 10947 13273
18405 11238 13519
18592 11293 13642
19236 11762 14122
19617 11870 14235
19735 12134 14609
19064 11877 14257
19923 12266 14740
12/05 20513 12535 15070
22095 13114 15746
21539 12983 15729
22011 13311 16082
22705 13623 16579
21430 13107 16027
21573 13088 16029
20936 12983 16132
21511 13331 16559
21902 13451 16762
22374 13931 17380
23322 14287 17815
12/06 23415 14475 18182
</Table>
<Table>
--- GLOBAL LEADERS IA --- MSCI WORLD INDEX -- MSCI WORLD GROWTH INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$23,415 ending value $18,182 ending value $14,475 ending value
</Table>
MSCI WORLD INDEX is a broad-based unmanaged market capitalization weighted total
return index which measures performance of 23 developed-country global stock
markets, including the United States, Canada, Europe, Australia, New Zealand and
the Far East.
MSCI WORLD GROWTH INDEX is a broad-based unmanaged market
capitalization-weighted total return index which measures the performance of
growth securities in 23 developed-country global equity markets including the
United States, Canada, Europe, Australia, New Zealand and the Far East.
The Fund has changed its benchmark from the MSCI World Index to the MSCI World
Growth Index because the fund's investment manager believes that the MSCI World
Growth Index is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- --------------------------------------------------
Global Leaders
IA 14.14% 8.78% 10.86%
- --------------------------------------------------
Global Leaders
IB 13.86% 8.51% 10.61%
- --------------------------------------------------
MSCI World
Growth Index 15.48% 7.80% 4.58%
- --------------------------------------------------
MSCI World Index 20.65% 10.48% 7.51%
- --------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA
Senior Vice President, Partner Vice President Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Global Leaders HLS Fund returned 14.14% for
the twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the MSCI World Growth Index, which returned 15.48% for the same
period. The Fund underperformed the 18.78% return of the average fund in the
Lipper VA Global Large Cap Growth Funds peer group, a group of funds with
investment strategies similar to those of the fund.
WHY DID THE FUND PERFORM THIS WAY?
Global equities rose with moderating inflation expectations in recent months,
helping to offset data suggesting a slowing global economy. The long-awaited
pause in the Federal Reserve's monetary tightening cycle finally occurred,
calming investor fears that the Fed would over tighten and tip the US economy
into recession. The drop in oil and gas prices from record highs also bolstered
optimism. Within the MSCI World Growth Index, Utilities, Materials, and
Telecommunication Services led all sectors, while Health Care and Information
Technology performed well but lagged the index returns for the twelve month
period ended December 31, 2006.
Sector allocation, which is primarily a result of bottom-up stock selection, was
the main source of underperformance relative (i.e. performance of the Fund as
measured against the benchmark) to the Index for the period. Underweight (i.e.
the Fund's sector position was less than the benchmark position) positions to
outperforming Materials and Consumer Staples stocks had a negative impact on
performance. Strong security selection, primarily in the Financials and
Industrials sectors, partially offset the impact of sector allocation. However,
stock selection was weak in the Consumer Discretionary sector.
Among the top detractors on a relative and absolute (i.e. total return) basis
were Rakuten, SanDisk, and Sirius Satellite. Although there were no fundamental
disappointments within Japanese online retailer Rakuten's core business, the
stock was negatively impacted by issues in its peripheral business, rumors of
its president being arrested, and a meltdown in JASDAQ (Japan stock trading
system) stocks as retail investors fled "new Japan" companies in light of the
Livedoor and Murakami Fund scandals. Shares in flash storage
22
- --------------------------------------------------------------------------------
device maker SanDisk fell as price declines in NAND flash memory raised concerns
about an over-supplied market. We expect pricing declines to moderate, but we
reduced the position to better reflect industry competition. Despite these
changing dynamics, the company stands to benefit from innovation in cell phone
features, which drives long-term memory growth. Shares of Sirius, a US
subscription-based satellite radio broadcaster, declined on signs that
subscriber growth will be less than anticipated and, importantly, that the cost
to retain and attract new customers will be greater than anticipated. True to
our investment process, we sold our shares after meeting with management and
determining that the drivers of earnings growth were no longer in place. Among
other detractors from absolute performance was global semiconductor company
Marvell Technology, which declined on weak earnings and lowered guidance.
The leading contributors to both absolute and relative performance during the
twelve month period were Las Vegas Sands, Nintendo, and America Movil. Casino
owner and operator Las Vegas Sands was our strongest performer for the year. It
remains one of our largest holdings as good results from its Macau operations
and further planned expansion into mainland China will provide significant
opportunities for growth. Video game console and software maker Nintendo
successfully launched extremely popular Wii game consoles this holiday season.
The company also benefited from solid earnings growth coming from robust sales
of its touch-screen DS portable game player. Mexican wireless provider America
Movil reported strong earnings and benefited from robust subscriber growth in
Latin America, while cell phone companies' increased spending to support
subscriber growth and enhanced coverage. We also saw outperformance from several
global investment banks, including Goldman Sachs.
WHAT IS THE OUTLOOK?
Our focus remains on stock and sector selections that result from intense
bottom-up research, diligently meeting with the managements of leading companies
globally, and leveraging the strong research capabilities of our firm. At the
end of the year, the Fund's largest overweights relative to the MSCI World
Growth Index were to the Information Technology, Financials, and
Telecommunication Services sectors. Within the Information Technology sector we
continue to like mobile equipment makers and companies with accelerating growth
from product upgrades or new product launches. Our largest underweights continue
to be to the Health Care sector, following the elimination of several
pharmaceutical companies due to development delays in key pipeline drugs, and to
Industrials stocks at the end of the twelve month period.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 1.3
- -------------------------------------------------------------------
Belgium 0.9
- -------------------------------------------------------------------
Brazil 1.1
- -------------------------------------------------------------------
Canada 2.7
- -------------------------------------------------------------------
Dutch Antilles 1.9
- -------------------------------------------------------------------
France 2.1
- -------------------------------------------------------------------
Germany 2.2
- -------------------------------------------------------------------
Ireland 2.0
- -------------------------------------------------------------------
Japan 11.6
- -------------------------------------------------------------------
Mexico 3.2
- -------------------------------------------------------------------
Netherlands 2.5
- -------------------------------------------------------------------
Norway 0.5
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
South Korea 1.3
- -------------------------------------------------------------------
Switzerland 4.2
- -------------------------------------------------------------------
Taiwan 1.4
- -------------------------------------------------------------------
United Kingdom 11.5
- -------------------------------------------------------------------
United States 46.6
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.7%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 8.8
- -------------------------------------------------------------------
Consumer Staples 6.6
- -------------------------------------------------------------------
Energy 3.7
- -------------------------------------------------------------------
Finance 15.8
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 9.7
- -------------------------------------------------------------------
Technology 34.8
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 0.4
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
Total 100.0%
- -------------------------------------------------------------------
</Table>
23
Hartford Global Technology HLS Fund inception 5/01/2000
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 5/1/00 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GOLDMAN SACHS TECHNOLOGY
GLOBAL TECHNOLOGY IA COMPOSITE INDEX S&P 500 INDEX
-------------------- ------------------------ -------------
5/1/00 10000 10000 10000
5/00 8904 8898 9795
10278 9992 10036
9657 9527 9880
10986 10766 10493
9406 9022 9939
8539 8341 9897
6473 6431 9117
12/00 6263 5880 9162
7249 6845 9487
5667 4947 8622
4896 4260 8076
5773 5073 8703
5508 4871 8761
5587 4884 8548
5233 4536 8464
4424 3946 7935
3446 3148 7294
3970 3653 7434
4662 4276 8004
12/01 4834 4200 8074
4780 4196 7957
4185 3635 7803
4497 3894 8097
3963 3417 7606
3728 3277 7550
3339 2814 7013
2992 2529 6466
2960 2497 6508
2428 2051 5802
2938 2499 6311
3432 2936 6683
12/02 2969 2509 6290
3031 2487 6126
3025 2525 6034
3029 2496 6093
3349 2756 6594
3718 3064 6941
3753 3056 7030
3957 3232 7154
4212 3455 7293
4161 3405 7216
4647 3737 7624
4740 3809 7691
12/03 4795 3868 8094
5004 4050 8242
4942 3935 8357
4809 3827 8231
4486 3604 8102
4792 3804 8213
4893 3897 8372
4341 3528 8095
4057 3352 8128
4241 3468 8216
4449 3652 8341
4720 3858 8679
12/04 4859 3981 8974
4579 3718 8755
4589 3725 8939
4385 3635 8781
4315 3449 8615
4711 3763 8888
4705 3690 8901
5012 3938 9232
5046 3908 9148
5084 3948 9222
5026 3878 9068
5382 4137 9411
12/05 5401 4062 9414
5856 4213 9663
5662 4148 9689
5783 4241 9810
5864 4213 9942
5442 3904 9656
5303 3850 9669
5099 3685 9728
5432 3974 9959
5602 4133 10216
5755 4298 10549
5984 4454 10749
12/06 5961 4426 10900
</Table>
<Table>
--- GLOBAL TECHNOLOGY IA -- GOLDMAN SACHS TECHNOLOGY --- S&P 500 INDEX
$10,000 starting value COMPOSITE INDEX $10,000 starting value
$5,961 ending value $10,000 starting value $10,900 ending value
$4,426 ending value
</Table>
GOLDMAN SACHS TECHNOLOGY COMPOSITE INDEX is a modified capitalization-weighted
index based on United States head quartered technology companies. Stocks in the
index are weighted such that each stock is no more than 8.5% of the market
capitalization as of the most recent reconstitution date. The companies included
in the index must be common stocks and be traded on the American Stock Exchange,
Nasdaq or the New York Stock Exchange and meet certain established market
capitalization levels.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -----------------------------------------------------------
Global Technology IA 10.35% 4.28% -7.46%
- -----------------------------------------------------------
Global Technology IB 10.08% 4.03% -7.67%
- -----------------------------------------------------------
Goldman Sachs Technology
Composite Index 8.96% 1.05% -11.50%*
- -----------------------------------------------------------
S&P 500 Index 15.78% 6.19% 1.30%*
- -----------------------------------------------------------
</Table>
* Return is from 4/30/00.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SCOTT E. SIMPSON JOHN F. AVERILL, CFA ERIC STROMQUIST BRUCE L. GLAZER
Senior Vice President, Partner, Senior Vice President, Partner, Senior Vice President, Partner, Senior Vice President, Partner,
Global Industry Analyst Global Industry Analyst Global Industry Analyst Global Industry Analyst
ANITA M. KILLIAN, CFA
Vice President,
Global Industry Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Technology HLS Fund returned 10.35%
for the twelve-month period ended December 31, 2006, outperforming the Fund's
benchmark, the Goldman Sachs Technology Composite Index, which returned 8.96%
for the same period. The Fund also outperformed the 10.02% return of the average
fund in the Lipper VA Science and Technology peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Technology stocks hit a rough patch earlier in the year but rebounded to end the
period with strong returns. The technology sector lagged the broader market
during the period, as measured by the MSCI World Index.
The Fund's outperformance during the period was the result of superior security
selection relative (i.e. performance of the Fund as measured against the
benchmark) to the Goldman Sachs Technology Composite Index. Selection was
strongest within the Electronic Manufacturing Services, Communications Equipment
and Semiconductor Equipment sub-industries. Top contributors to relative
performance during the period included Hon Hai Precision, Intel and Nokia. Hon
Hai, a Taiwan based manufacturer of electronics and communications products,
benefited from the high demand for consumer electronics, particularly mobile
phones. Similarly, Nokia benefited from mobile phone growth outside of the US as
it gained market share in emerging markets, Asia, and Latin America. We
eliminated Nokia at the end of the period. The Fund also benefited from an
underweight position in Intel, which was down throughout much of the period. We
initiated a position in Intel at the end of the period in anticipation of its
new product cycle. Hewlett-Packard, LAM Research and Research in Motion, all up
double-digits for the period, were key absolute contributors during the period.
Hewlett-Packard benefited from healthy IT
24
- --------------------------------------------------------------------------------
spending while Semiconductor LAM Research saw strong spending in memory.
Research in Motion, a leading manufacturer and provider of mobile communications
devices, experienced strong subscriber growth for its Blackberry email service
and had a successful launch of its multi-functional Pearl phone, which
demonstrated the company's ability to broaden its customer base beyond email. We
held all three stocks at the end of the period.
The Fund's Systems Software and Computer Hardware holdings detracted most from
benchmark-relative performance during the period. Our underweight positions in
Cisco and Oracle, both of which were up over 40% during the period, detracted
most from relative performance. Despite a large holding in Microsoft, our
underweight position also hurt relative performance. Microsoft shares declined
earlier in the year on news that the company planned to ramp up spending
aggressively to more effectively compete with Google. The shares recovered at
the end of the period as the delivery of Windows Vista approached. On an
absolute (i.e. total return) basis, Marvell Technology, Dell and Yahoo were the
largest detractors. Marvell Technology declined on disruption in the hard disk
drive market and worries over stock option grants. We purchased Dell on weakness
but later sold the stock when the company's outlook deteriorated. Yahoo faced
delays in the introduction of its new search software which led to concerns
about how effective the solution will be and the size of the performance gap
with Google. We sold all three stocks during the period (Marvell Technology,
Dell and Yahoo).
WHAT IS THE OUTLOOK?
We remain bullish on a number of secular growth trends which provide the
foundation for investing in a number of stocks in the Fund including:
accelerating LCD TV penetration, the explosion of NAND flash memory usage in
consumer and mobile applications, semiconductor manufacturing equipment sales to
support growth in semiconductor units -- memory chips in particular, and the
proliferation of consumer electronics that drives manufacturing services. The
demand for storage remains strong with the replication and archiving segments
providing considerable momentum. This trend should continue as companies focus
on data retention requirements and business continuity needs.
The semiconductor industry has been weakening as expected after a period of
excess inventory accumulation in the electronic supply chain. While weakness is
expected to continue at least through the first half of 2008, we are planning to
expand our holdings as growth rates reach the lows. While the wireless phone
industry remains healthy, the fourth quarter seasonal strength favored Europe
rather than the U.S. After 3 years of over 20% unit growth, growth seems to be
finally receding into the low teens range.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Canada 2.6%
- -------------------------------------------------------------------
France 2.0
- -------------------------------------------------------------------
Japan 1.2
- -------------------------------------------------------------------
Luxembourg 0.9
- -------------------------------------------------------------------
South Korea 2.6
- -------------------------------------------------------------------
Sweden 2.0
- -------------------------------------------------------------------
Taiwan 4.5
- -------------------------------------------------------------------
United States 83.5
- -------------------------------------------------------------------
Short-Term Investments 0.6
- -------------------------------------------------------------------
Other Assets & Liabilities 0.1
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Activities Related to Credit Banking 1.7%
- -------------------------------------------------------------------
Audio and Video Equipment 1.2
- -------------------------------------------------------------------
Business Support Services 1.1
- -------------------------------------------------------------------
Communications Equipment 4.5
- -------------------------------------------------------------------
Computer and Peripheral 20.0
- -------------------------------------------------------------------
Data Processing Services 1.9
- -------------------------------------------------------------------
Electrical Equipment Manufacturing -- Component
Other 3.0
- -------------------------------------------------------------------
Employment Services 3.1
- -------------------------------------------------------------------
Entertainment-Data Process, Hosting & Related
Services 0.8
- -------------------------------------------------------------------
Exchange-Traded Funds 0.9
- -------------------------------------------------------------------
Machinery Manufacturing -- Industrial Machinery 6.5
- -------------------------------------------------------------------
Management, Scientific, and Tech Consulting Services 4.3
- -------------------------------------------------------------------
On-Line Information Services 5.4
- -------------------------------------------------------------------
Professional Services -- Computer System Design &
Related 7.1
- -------------------------------------------------------------------
Retail -- Electronic Shopping and Mail-Order Houses 2.3
- -------------------------------------------------------------------
Semiconductor, Electronic Component 19.5
- -------------------------------------------------------------------
Software Publishers 13.6
- -------------------------------------------------------------------
Wholesalers -- Electrical Goods 1.0
- -------------------------------------------------------------------
Wireless Communications Services 1.4
- -------------------------------------------------------------------
Short-Term Investments 0.6
- -------------------------------------------------------------------
Other Assets & Liabilities 0.1
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
25
Hartford Growth HLS Fund inception 4/30/2002
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/02 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GROWTH IA RUSSELL 1000 GROWTH INDEX
--------- -------------------------
4/02 10000 10000
9774 9758
8954 8855
8406 8368
8559 8393
7939 7523
8722 8213
9204 8659
12/02 8657 8061
8455 7865
8311 7828
8577 7974
9282 8563
9741 8991
9968 9115
10144 9341
10378 9574
10355 9471
11156 10004
11303 10108
12/03 11497 10458
11878 10671
12023 10739
11987 10540
11833 10417
12331 10612
12596 10744
11624 10137
11335 10087
11838 10183
11953 10342
12400 10697
12/04 12934 11117
12387 10746
12236 10860
11950 10662
11873 10459
12589 10965
12730 10925
12988 11459
12900 11311
13103 11364
12848 11253
13438 11739
12/05 13537 11702
14002 11907
13689 11888
13850 12064
14194 12047
13197 11639
13154 11593
12776 11372
13139 11727
13455 12049
13745 12473
14146 12721
12/06 14162 12764
</Table>
<Table>
--- GROWTH IA --- RUSSELL 1000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$14,162 ending value $12,764 ending value
</Table>
RUSSELL 1000 GROWTH INDEX is an unmanaged index which measures the performance
of those Russell 1000 Index companies with higher price-to-book ratios and
higher forecasted growth values. (The Russell 1000 Index is an unmanaged index
that measures the performance of the 1,000 largest companies in the Russell 3000
Index, which measures the performance of the 3,000 largest U.S. companies based
on total market capitalization.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
- --------------------------------------------------
Growth IA 4.61% 7.73%
- --------------------------------------------------
Growth IB 4.35% 7.46%
- --------------------------------------------------
Russell 1000 Growth Index 9.07% 5.36%
- --------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW J. SHILLING, CFA JOHN A. BOSELLI, CFA
Senior Vice President, Partner Senior Vice President, Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Growth HLS Fund returned 4.61% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
Russell 1000 Growth Index, which returned 9.07% for the same period. The Fund
also underperformed the 6.31% return of the average fund in the Lipper VA Large
Cap Growth Funds peer group, a group of funds with investment strategies similar
to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets posted a strong return for the period. US large cap equities
performed well (+15.46% as measured by the Russell 1000 Index) but continued to
lag smaller companies as the small cap Russell 2000 rose 18.37%. Value stocks
extended their lead over their growth oriented peers, with the broad market
Russell 3000 Value finishing ahead of the Russell 3000 Growth by nearly thirteen
percentage points. Every sector in the benchmark Russell 1000 Growth finished
with positive returns, led by Utilities, Telecommunication Services and
Materials. Health Care and Energy stocks lagged.
The Fund's underperformance was mainly due to poor stock selection. Stock
selection focused predominately in the Technology, Health Care, and Consumer
Staples sectors. Allocations to sectors, which are primarily a result of
bottom-up stock selection, also had a negative impact, mostly due to an
underweight (i.e. the Fund's sector position was less than the benchmark
position) to outperforming Consumer Discretionary stocks and an overweight to
lagging Health Care stocks.
The top three detractors on a relative (i.e. performance of the Fund as measured
against the benchmark) and absolute (i.e. total return) basis were Marvell
Technology, Electronic Arts, and SanDisk. Global semiconductor company Marvell
Technology declined on weak earnings and lowered guidance. We eliminated our
position due to decelerating growth and lowered expectations in the disk drive
business. We also eliminated our position in video game retailer Electronic Arts
after video game stocks fell as consumers delayed purchases in anticipation of
next generation console launches. Shares in flash storage device maker SanDisk
fell as price declines in NAND flash memory raised concerns about an
over-supplied market. We expect pricing declines to moderate, but we reduced the
position to better reflect industry competition. Despite these changing
dynamics, the company stands to benefit from innovation in cell phone features,
which drives long-term memory growth.
Strong stock selection in the Industrials and Telecommunications Services
sectors partially mitigated the impact of weaker selection elsewhere. The Fund
also benefited from an overweight among high-returning Financials stocks. The
best performing stock for the
26
- --------------------------------------------------------------------------------
year on an absolute and relative basis was Network Appliance. Shares in the data
management firm rose in conjunction with strong revenue growth and a broadening
product lineup. Another strong relative and absolute contributor, Chicago
Mercantile Exchange, continued to move up due to rising trading volumes and
expansion of its electronic trading platform, Globex. Absolute performance in
the Industrials sector was lifted by strong orders for Boeing's new 787
"Dreamliner" plane, which boosted the company's stock. Finally, relative
performance benefited from not owning shares in Intel, a large benchmark
position that fell during the year.
WHAT IS THE OUTLOOK?
Our focus is on bottom up research to identify stocks with attractive
fundamentals and strong growth prospects. Based on stock-by-stock decisions, we
have recently increased exposure to the Industrials sector, where the
globalization of labor markets and strong, worldwide spending in infrastructure,
aerospace, and power generation are driving industry revenues. We established a
new position in Fluor to take advantage of these trends. Exposure to Financials
also rose during the year via a new position in State Street Bank.
The largest reduction in weight during the year was in Health Care, where we
eliminated Amgen and trimmed AstraZeneca, neutralizing our relative exposure to
pharmaceutical stocks. We also maintain a significant underweight to
consumer-related sectors, which we believe remain relatively unattractive.
At year-end our largest overweights relative to the Russell 1000 Growth Index
were in the Financials and Industrials sectors, while the greatest underweights
were among Consumer Discretionary and Consumer Staples stocks.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.2%
- -------------------------------------------------------------------
Capital Goods 4.9
- -------------------------------------------------------------------
Consumer Cyclical 1.8
- -------------------------------------------------------------------
Consumer Staples 1.1
- -------------------------------------------------------------------
Energy 2.8
- -------------------------------------------------------------------
Finance 19.4
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 18.0
- -------------------------------------------------------------------
Technology 31.8
- -------------------------------------------------------------------
Transportation 3.7
- -------------------------------------------------------------------
Utilities 1.4
- -------------------------------------------------------------------
Short-Term Investments 4.8
- -------------------------------------------------------------------
Other Assets & Liabilities (4.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
27
Hartford Growth Opportunities HLS Fund inception 3/24/1987
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GROWTH OPPORTUNITIES IA RUSSELL 3000 GROWTH INDEX
----------------------- -------------------------
12/96 10000 10000
10435 10657
9859 10532
9222 9946
9339 10539
10296 11367
10706 11815
11727 12818
11352 12174
11924 12811
11420 12306
11317 12745
12/97 11242 12874
11094 13205
12018 14214
12608 14784
12672 14978
12371 14491
13021 15312
12387 15106
10136 12739
10933 13741
11457 14815
11888 15944
12/98 13380 17382
13796 18385
12736 17483
13432 18383
13449 18517
13081 17992
14077 19229
14056 18618
14325 18850
14388 18505
15451 19838
17278 20977
12/99 20761 23262
20490 22233
26505 23622
24053 24958
22014 23675
20679 22422
23832 24201
23094 23118
26244 25233
26276 22922
24006 21783
19450 18523
12/00 21589 18047
21231 19309
18551 16075
16547 14347
18203 16157
18050 15965
18015 15657
17605 15200
16428 13976
13905 12523
14619 13214
16085 14473
12/01 16655 14505
16496 14231
15521 13618
16338 14136
15553 13041
15358 12693
13657 11525
12326 10813
12042 10843
11090 9739
11880 10607
12964 11213
12/02 12050 10438
11903 10182
11747 10121
12081 10307
13170 11083
14175 11680
14599 11845
14744 12182
15400 12510
15211 12362
16541 13084
17082 13243
12/03 17326 13670
17865 13982
18132 14063
18291 13827
17753 13624
18431 13880
19002 14075
17434 13240
17204 13158
18127 13330
18430 13547
19322 14070
12/04 20304 14617
19611 14115
19450 14269
19094 13985
18614 13666
19797 14352
20561 14342
21747 15069
21856 14873
22351 14946
21932 14765
22937 15419
12/05 23615 15373
25176 15749
24833 15718
25303 15999
25734 15975
24301 15378
23963 15323
23260 14988
23821 15453
24266 15851
25027 16447
26213 16779
12/06 26461 16827
</Table>
<Table>
--- GROWTH OPPORTUNITIES IA --- RUSSELL 3000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$26,461 ending value $16,827 ending value
</Table>
RUSSELL 3000 GROWTH INDEX is an unmanaged index that measures the performance of
those Russell 3000 Index companies with higher price-to-book ratios and higher
forecasted growth values. (The Russell 3000 Index is an unmanaged index that
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Growth Opportunities IA 12.05% 9.70% 10.22%
- -------------------------------------------------------
Growth Opportunities
IB(2) 11.79% 9.43% 9.95%
- -------------------------------------------------------
Russell 3000 Growth Index 9.46% 3.01% 5.34%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
MICHAEL T. CARMEN, CFA MARIO E. ABULARACH, CFA
Senior Vice President, Vice President and Equity
Partner Research Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Growth Opportunities HLS Fund returned
12.05% for the twelve-month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Growth Index, which returned 9.46% for the same
period. The Fund also outperformed the 7.70% return of the average fund in the
Lipper VA Multi-Cap Growth VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
As measured by the Russell 3000 Growth Index, equity markets ended higher for
the fourth fiscal year in a row. Three of the last four quarters were positive,
with the April -to- July period showing the only significant decline as
investors moved away from stocks in favor of less risky assets. Every sector in
the benchmark posted positive returns for the period, led by a disparate group
of sectors: Utilities, Telecommunication Services, and Materials. The laggards
were Health Care, Energy, and Information Technology. These positive returns
took place against a backdrop of a weakening housing market, declining energy
prices, and continued turmoil in Iraq. In addition, small cap stocks continued
to dominate large and mid cap stocks. The Russell 2000 Small Cap Index returned
18.37%, compared to the S&P 500 Large Cap Index return of 15.78% and the S&P 400
MidCap Index return of 10.32%.
The Fund outperformed by maintaining its focus on stock selection. Selection
within the Information Technology and Heath Care sectors contributed most to
relative (i.e. performance of the Fund as measured against the benchmark)
performance. Network Appliance (Information Technology), Redback Networks
(Information Technology), and Digene (Health Care) were among the top
contributors to relative and absolute (i.e. total return) performance. Network
Appliance benefited as sales of the company's mid-range storage solution,
FAS3000, remained strong. Redback Networks, a manufacturer of advanced
telecommunications networking equipment, advanced on a takeover offer from
Ericsson. Diagnostic test provider Digene rose on strong sales of its test to
detect HPV, a virus that is a known causative agent in cervical cancer.
Non-benchmark holding Melco International (Capital Goods) contributed most on a
relative basis. The Hong Kong-based conglomerate was up on news of a deal that
would positively impact the company's plans to open its first casino in Macau.
We sold our positions in Redback Networks and Melco International during the
period and continue to own Network Appliance and Digene.
The Fund's results in Financials and Consumer Discretionary stocks detracted
from relative performance. In the Consumer Discretionary sector, shares of
satellite radio providers XM Satellite and Sirius declined on concerns of rising
subscriber acquisition costs. We eliminated our positions in the stocks. Other
significant
28
- --------------------------------------------------------------------------------
detractors from relative and absolute performance included Marvell Technology
(Information Technology), St. Jude Medical (Health Care) and Cree (Information
Technology). Weakness in the disk drive industry led to an earnings miss at
Marvell, while St. Jude Medical fell on overall weakness in the implantable
cardiac defibrillator market. Cree, a semiconductor product manufacturer, fell
after management issued a profit warning reflecting weak light-emitting diode
(LED) sales, unfavorable LED mix shifts, and margin erosion from production
problems. We eliminated Marvell and Cree and continue to hold St. Jude Medical.
Cisco Systems (Information Technology) also detracted from relative performance
as we did not own the stock in the second half of the year when the company's
shares rebounded. Finally, the Fund's slight underweight to Energy also hurt
benchmark-relative performance.
WHAT IS YOUR OUTLOOK?
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on "hold" over the next
year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. Currently our largest exposure is to Information
Technology, followed by Health Care and Industrials. We would note that we have
reduced our exposure to the Energy sector, reflecting our recognition that our
bullish energy view has become more conservative. Our lowest weights are in the
Utilities, Telecommunication Services and Consumer Staples sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.6%
- -------------------------------------------------------------------
Capital Goods 2.7
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 2.2
- -------------------------------------------------------------------
Energy 1.9
- -------------------------------------------------------------------
Finance 8.5
- -------------------------------------------------------------------
Health Care 18.2
- -------------------------------------------------------------------
Services 12.3
- -------------------------------------------------------------------
Technology 30.4
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 2.6
- -------------------------------------------------------------------
Short-Term Investments 11.9
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
29
Hartford High Yield HLS Fund inception 9/30/1998
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 9/30/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS HIGH YIELD
HIGH YIELD IA CORPORATE INDEX
------------- --------------------------
9/98 10000 10000
9992 9795
10340 10202
12/98 10368 10213
10528 10364
10531 10303
10695 10402
10898 10603
10693 10460
10703 10437
10696 10479
10620 10363
10599 10289
10660 10221
10797 10341
12/99 10856 10457
10758 10412
10730 10431
10637 10212
10674 10229
10576 10123
10840 10330
10960 10408
11113 10479
11067 10388
10867 10056
10596 9657
12/00 10968 9844
11691 10581
11742 10722
11489 10469
11337 10339
11419 10525
11018 10230
11198 10381
11300 10503
10592 9797
11030 10039
11378 10406
12/01 11263 10363
11156 10436
10818 10290
10905 10538
11061 10706
10993 10647
10409 9862
9928 9431
10053 9700
9791 9573
9822 9489
10385 10077
12/02 10487 10218
10764 10558
10952 10688
11148 10995
11687 11647
11860 11768
12077 12106
11790 11973
11936 12111
12267 12442
12474 12693
12632 12886
12/03 12919 13177
13061 13429
13025 13395
13070 13486
12904 13394
12669 13168
12831 13356
13009 13538
13227 13803
13411 14004
13668 14257
13738 14429
12/04 13875 14644
13815 14625
14028 14840
13571 14408
13464 14268
13717 14521
13914 14806
14093 15065
14114 15094
13966 14943
13857 14839
14022 14916
12/05 14170 15045
14331 15285
14436 15387
14530 15479
14633 15574
14629 15572
14561 15517
14692 15669
14927 15923
15099 16149
15331 16369
15562 16644
12/06 15753 16827
</Table>
<Table>
--- HIGH YIELD IA --- LEHMAN BROTHERS HIGH YIELD CORPORATE
$10,000 starting value INDEX
$15,753 ending value $10,000 starting value
$16,827 ending value
</Table>
LEHMAN BROTHERS HIGH YIELD CORPORATE INDEX is an unmanaged broad-based market
value-weighted index that tracks the total return performance of non-investment
grade, fixed-rate, publicly placed, dollar denominated and nonconvertible debt
registered with the SEC.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ---------------------------------------------------------------
High Yield IA 11.17% 6.94% 5.66%
- ---------------------------------------------------------------
High Yield IB 10.89% 6.67% 5.42%
- ---------------------------------------------------------------
Lehman Brothers High
Yield Corporate Index 11.85% 10.18% 6.50%
- ---------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
MARK NILAND, CFA NASRI TOUTOUNGI JAMES SERHANT
Executive Vice President Managing Director Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford High Yield HLS Fund returned 11.17% for the
year, underperforming its benchmark, the Lehman Brothers High Yield Corporate
Index, which returned 11.85%. The Fund outpaced the 9.89% average return of the
Lipper VA High Yield Funds category, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The primary drivers of Fund performance during the year ended December 31, 2006
were security selection and sector allocation. Security selection added to
performance while sector allocation detracted.
From the sector perspective, the main challenge we faced was our underweight
(i.e. the Fund's sector position was less than the benchmark position) in the
Automobile sector, which outperformed the market significantly. Though the Fund
had more than 9% allocated to this sector at year end -- more than many peers
and up to a level we deemed prudent given the high degree of correlation within
the industry -- this was underweight the benchmark's 13.57% allocation. Many
automotive companies performed well, especially GM, Ford Motor Company and their
finance subsidiaries, as bankruptcy fears faded with each company taking major
steps in restructuring their operations. In the Media Cable sector, the Fund
benefited from both sector allocation and security selection outperformance, as
Charter Communications was a strong performer. Security selection also boosted
performance in the Wireline sector, specifically Citizens Communications and
Qwest Communications. Outperformance derived from security selection came from
many other sectors, including Electric, Food and Beverage, and Healthcare.
At the end of June, the Fund's investment guidelines eased with respect to
restrictions on allocations to CCC-rated securities, increasing the amount
allowed to 25% from 10% of the portfolio. The narrower restriction had hindered
performance during the first half of the year, as CCC-rated securities performed
well in the low default environment the market experienced. By year end, our
analysts had identified additional attractive opportunities and we increased
these securities to 16% of the portfolio.
WHAT IS YOUR OUTLOOK?
As we begin 2007, our main concern regarding the high yield market is current
valuation levels. The narrowing of credit risk premiums paid to investors
generated meaningful price appreciation in 2006. However, this has the effect of
reducing the income component investors will receive going forward. In addition,
the prospect for further price appreciation on top of last year's performance is
somewhat limited given the relatively tight levels of risk premiums (i.e.
difference between the risk associated with buying or holding a Treasury and
holding a high yield bond).
30
- --------------------------------------------------------------------------------
Mitigating these concerns is the fact that valuations do reflect the strong
fundamental backdrop the high yield market currently enjoys. Earnings and cash
flow generating capabilities remain quite strong, and equity market behavior and
private equity transactions are indicating that asset values are generally
sufficient to cover the debt being placed on many companies' balance sheets. As
a result, credit default experience is expected to remain below historical
averages. We will remain keenly focused on the prospect that the fundamental
picture remains relatively strong and sustainable, in a soft landing type of
context. To the extent that indications emerge that the economic backdrop either
slows down or accelerates to the point that the Federal Reserve begins to
aggressively tighten monetary policy, we will then have to revisit our
"soft-landing" economic assumptions and the implications for our asset class.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 12.1%
- -------------------------------------------------------------------
Capital Goods 1.7
- -------------------------------------------------------------------
Consumer Cyclical 13.9
- -------------------------------------------------------------------
Consumer Staples 2.5
- -------------------------------------------------------------------
Energy 3.7
- -------------------------------------------------------------------
Finance 13.8
- -------------------------------------------------------------------
Health Care 5.6
- -------------------------------------------------------------------
Services 18.9
- -------------------------------------------------------------------
Technology 19.5
- -------------------------------------------------------------------
Transportation 1.3
- -------------------------------------------------------------------
Utilities 6.1
- -------------------------------------------------------------------
Short-Term Investments 21.8
- -------------------------------------------------------------------
Other Assets & Liabilities (20.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
CREDIT QUALITY HOLDINGS
- -------------------------------------------------------------------
AAA 0.3%
- -------------------------------------------------------------------
BB 18.4
- -------------------------------------------------------------------
B 61.4
- -------------------------------------------------------------------
CCC 19.3
- -------------------------------------------------------------------
NR 0.6
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
31
Hartford Index HLS Fund inception 5/1/1987
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INDEX IA S&P 500 INDEX
-------- -------------
12/96 10000 10000
10615 10624
10695 10708
10246 10269
10857 10881
11516 11543
12022 12060
12973 13019
12243 12290
12909 12963
12474 12531
13041 13110
12/97 13261 13335
13404 13482
14364 14454
15093 15194
15241 15347
14970 15083
15577 15695
15405 15529
13172 13283
14014 14135
15148 15284
16056 16210
12/98 16982 17143
17680 17860
17124 17305
17803 17997
18482 18694
18034 18253
19035 19266
18431 18665
18338 18572
17832 18062
18951 19205
19329 19595
12/99 20461 20750
19427 19707
19052 19335
20902 21225
20267 20586
19843 20164
20326 20661
20001 20338
21235 21601
20108 20461
20016 20374
18433 18769
12/00 18518 18861
19166 19530
17412 17750
16304 16626
17564 17916
17674 18036
17236 17598
17060 17425
15986 16335
14683 15017
14960 15303
16102 16477
12/01 16237 16622
15992 16380
15678 16064
16263 16668
15271 15658
15150 15543
14069 14436
12967 13312
13047 13398
11625 11943
12646 12993
13383 13757
12/02 12592 12949
12258 12611
12070 12422
12183 12543
13188 13575
13875 14290
14045 14472
14288 14728
14560 15014
14400 14855
15209 15695
15337 15833
12/03 16135 16662
16423 16968
16647 17204
16390 16945
16128 16679
16341 16907
16649 17236
16096 16666
16158 16732
16326 16914
16570 17172
17233 17867
12/04 17812 18474
17373 18024
17730 18403
17413 18078
17073 17735
17613 18299
17633 18325
18281 19006
18111 18833
18251 18985
17940 18669
18611 19374
12/05 18614 19381
19106 19894
19152 19948
19387 20196
19639 20467
19069 19879
19091 19905
19204 20028
19657 20504
20159 21032
20809 21716
21201 22129
12/06 21491 22439
</Table>
<Table>
--- INDEX IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,491 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Index IA 15.46% 5.77% 7.95%
- ------------------------------------------------------
Index IB(3) 15.17% 5.51% 7.70%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
DEANE GYLLENHAAL
Vice President
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Index HLS Fund returned 15.46% on a net
basis for the year, underperforming its benchmark, the S&P 500 Index, which
returned 15.78%. The Fund outperformed the 15.35% return of the average fund in
the Lipper VA S&P 500 Index Objective Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Although economic data was mixed during the last quarter of 2006, the U.S.
economy appeared to be growing at a healthy pace. By year end, many were
forecasting that fourth quarter gross domestic product (GDP) growth would
ultimately be at or above the third-quarter growth rate of 2.2%. These
expectations were fueled by stronger-than-expected manufacturing, housing, and
consumer confidence reports released in the last week of December, which also
served to temper ongoing speculation that weakness in the housing and auto
sectors would exert a considerable drag on the economy and perhaps lead to an
ease in monetary policy by the Federal Open Market Committee (the "Fed").
Although the Fed maintained its target federal funds rate at 5.25% for the
second consecutive quarter, it continued to reiterate that although inflation
pressures had subsided somewhat, the rate of core inflation still remained
outside their comfort zone and any future actions regarding interest rates would
rely heavily on economic data.
The broad domestic stock market, as measured by the S&P 500 Index, increased for
the fourth consecutive year since the end of the bear market in 2002, returning
15.78% during 2006. The largest individual contributors to the benchmark's
performance were Exxon and Cisco Systems. Driven by the rise in oil prices,
Exxon returned 39.1%, which comprised 3.3% of the benchmark and added 1.2% to
the overall benchmark return. Cisco Systems returned 59.6%, was 1.1% of the
benchmark, and contributed 0.6% for the year. The two biggest detractors to the
benchmark's performance were Intel and Yahoo. Intel dropped 17.2% dragging
overall performance by 0.3%. Yahoo, the internet giant, lost 34.8% for the year,
detracting 0.2%.
By design, the Fund is managed to mimic the performance of the S&P 500 Index.
Due to this approach, the Fund is expected to perform in line with the Index.
The Fund may engage in futures trading to more efficiently maintain exposure to
the Index and also to offset brokerage commissions. This period these results
were insignificant. Early in the year, corporate action decisions had a positive
impact upon the Fund. The largest corporate action contribution came from the
Jefferson-Pilot/Lincoln National Corp. deal. The S&P 500 Index reflected Lincoln
National Corp.'s
32
- --------------------------------------------------------------------------------
acquisition of Jefferson-Pilot by removing Jefferson-Pilot from the Index at its
closing price on its last day of trading. Rather than selling the stock, the
Fund received a mix of stock and cash because it was a better value.
WHAT IS YOUR OUTLOOK?
Economic data continues to deliver mixed messages about the direction of the
U.S. economy. Employment and consumer spending data has been positive, helping
to offset some of the weakness seen in other sectors of the market. While there
are signs of improvement in the housing sector, the market will continue to be
highly sensitive to future housing data. Although some economists are
forecasting monetary easing, the Fed continues to acknowledge the potential for
inflation risks that may justify additional rate hikes. We believe current
market pricing reflects an overly pessimistic view about the underlying strength
of the economy and, while economic fundamentals warrant higher interest rates,
monetary policy is likely to remain steady through the first quarter of 2007.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 4.4
- -------------------------------------------------------------------
Consumer Cyclical 9.0
- -------------------------------------------------------------------
Consumer Staples 5.5
- -------------------------------------------------------------------
Energy 9.3
- -------------------------------------------------------------------
Finance 23.6
- -------------------------------------------------------------------
Health Care 10.4
- -------------------------------------------------------------------
Services 6.9
- -------------------------------------------------------------------
Technology 22.2
- -------------------------------------------------------------------
Transportation 1.3
- -------------------------------------------------------------------
Utilities 3.5
- -------------------------------------------------------------------
Short-Term Investments 7.6
- -------------------------------------------------------------------
Other Assets & Liabilities (6.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
33
Hartford International Capital Appreciation HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL CAPITAL
APPRECIATION IA MSCI EAFE INDEX MSCI EAFE GROWTH INDEX
--------------------- --------------- ----------------------
4/01 10000 10000 10000
9406 9655 9601
8978 9264 9137
8834 9096 8915
8353 8868 8509
7351 7971 7706
7710 8175 8013
8359 8477 8425
12/01 8602 8528 8474
8253 8076 8017
8394 8133 8125
8844 8616 8477
8727 8639 8488
8822 8756 8512
8407 8411 8295
7654 7582 7411
7563 7566 7355
6678 6756 6716
7229 7120 7097
7823 7443 7306
12/02 7121 7194 7138
7201 6894 6785
7062 6736 6639
6860 6609 6575
7675 7265 7151
8344 7711 7527
8574 7902 7661
8864 8095 7762
9242 8292 7905
9272 8549 8174
10059 9082 8645
10185 9286 8848
12/03 10755 10011 9457
11205 10154 9642
11730 10390 9826
12017 10452 9837
11437 10225 9600
11647 10256 9583
12028 10498 9714
11179 10159 9320
11212 10206 9331
11812 10474 9563
12313 10832 9883
13010 11575 10567
12/04 13413 12084 11015
12977 11863 10762
12846 12378 11195
12355 12072 10925
12249 11802 10723
12373 11820 10764
12429 11981 10853
12885 12349 11184
13262 12665 11507
13550 13232 11993
12993 12846 11666
13455 13164 11888
12/05 14239 13777 12517
15344 14624 13289
15119 14594 13140
15582 15082 13655
16339 15814 14282
15490 15219 13692
15337 15225 13712
15259 15377 13777
15673 15804 14111
15779 15832 14034
16349 16449 14513
17170 16945 14938
12/06 17668 17478 15358
</Table>
<Table>
--- INTERNATIONAL CAPITAL --- MSCI EAFE GROWTH INDEX -- MSCI EAFE
APPRECIATION IA $10,000 starting value INDEX
$10,000 starting value $15,358 ending value $10,000 starting value
$17,668 ending value $17,478 ending value
</Table>
MSCI EAFE GROWTH INDEX is a free float-adjusted market capitalization index that
is designed to measure developed market equity performance (excluding the U.S.
and Canada of growth securities with the MSCI EAFE Index.
MSCI EAFE INDEX is a free float-adjusted market capitalization index that is
designed to measure developed market equity performance, excluding the U.S. and
Canada.
The Fund has changed its benchmark from the MSCI EAFE Index to the MSCI EAFE
Growth Index because the Fund's investment manager believes that the MSCI EAFE
Growth Index is better suited to the investment strategy of the Fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -------------------------------------------------------
International Capital
Appreciation IA 24.08% 15.48% 10.55%
- -------------------------------------------------------
International Capital
Appreciation IB 23.77% 15.20% 10.29%
- -------------------------------------------------------
MSCI EAFE Growth
Index 22.69% 12.63% 7.85%
- -------------------------------------------------------
MSCI EAFE Index 26.86% 15.43% 10.34%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA
Senior Vice President, Vice President Vice President
Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford International Capital Appreciation HLS Fund
returned 24.08% for the twelve-month period ended December 31, 2006,
outperforming the benchmark, the MSCI EAFE Growth Index, which returned 22.69%
for the same period. The Fund underperformed the 24.61% return of the average
fund in the Lipper VA International Growth Funds peer group, a group of funds
with investment strategies similar to those of the fund.
WHY DID THE FUND PERFORM THIS WAY?
International equities advanced during the twelve-month period, led by
Utilities, Telecommunication Services, and Consumer Staples stocks. While all
sectors within the MSCI EAFE Growth Index advanced, Information Technology and
Health Care stocks were among the weakest performing areas of the market. The
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) allocations to traditional growth sectors such as Information
Technology and underweight allocations to more defensive sectors created a
headwind for the Fund during the past twelve months. However, strong stock
selection more than offset the impact of sector allocation.
The Fund's outperformance relative (i.e. performance of the Fund as measured
against the benchmark) to the benchmark reflected strong stock selection,
primarily within Financials, Information Technology and Industrials. Within
Financials, London Stock Exchange benefited from strong earnings growth due to
robust trading volumes. Within Industrials, Vallourec, a French maker of
seamless steel tubes used in the oil and gas industries, benefited from the
tight supply environment that afforded the company better pricing. Leading
manufacturer and provider of mobile communications devices Research In Motion
(Information Technology) reported better-than-expected subscriber growth for its
Blackberry email service. Video game console and software maker Nintendo
(Information Technology) successfully launched extremely popular Wii game
consoles this holiday season. The company also benefited from solid earnings
growth coming from robust sales of its touch-screen dual screen (DS) portable
game player. Veolia Environment (Utilities) was another top contributor to
performance. The world's largest water management company benefited from an
upsurge in global demand for clean water, pollution control, and energy saving
resources, particularly in China.
34
- --------------------------------------------------------------------------------
Partially offsetting these results was weaker stock selection in other areas,
particularly in the Consumer Discretionary sector. Within Consumer
Discretionary, Rakuten and SES Global were the greatest detractors from relative
performance. Rakuten was negatively impacted by volatility in Japanese internet
stocks but did not have any fundamental disappointments, thus we continued to
hold the stock as of the end of the period. We eliminated SES Global, Europe's
largest satellite operator. The Fund's performance was also hurt by Norwegian
oil and gas company Statoil, which reported lower-than-expected quarterly
profits and reduced guidance for full-year production volumes, and NAND flash
memory and flat panel component maker Samsung Electronics which was hurt by
fears of a consumer recession. Our view remains positive and we continue to hold
Samsung given the growth in the diversified array of devices requiring memory
chips and reducing cyclicality within the technology industry.
WHAT IS THE OUTLOOK?
We continue to pick stocks one at a time, focusing on fundamental bottom-up
research. As a result of our bottom-up research and stock analysis at the end of
the year the largest overweight allocations relative to the MSCI EAFE Growth
Index were to the Information Technology and Consumer Staples sectors. Within
Information Technology, we continue to like mobile communications equipment
makers and companies leveraged to product upgrade cycles. The largest
underweights were to Health Care and Industrials stocks. We increased our
underweight to Health Care following the elimination of several pharmaceutical
companies due to development delays in key pipeline drugs.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 1.5%
- -------------------------------------------------------------------
Austria 1.3
- -------------------------------------------------------------------
Belgium 1.3
- -------------------------------------------------------------------
Brazil 1.1
- -------------------------------------------------------------------
Canada 7.1
- -------------------------------------------------------------------
China 0.4
- -------------------------------------------------------------------
</Table>
<Table>
- -------------------------------------------------------------------
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
Denmark 0.5
- -------------------------------------------------------------------
Finland 1.0
- -------------------------------------------------------------------
France 9.6
- -------------------------------------------------------------------
Germany 6.7
- -------------------------------------------------------------------
Hong Kong 1.4
- -------------------------------------------------------------------
Ireland 2.5
- -------------------------------------------------------------------
Japan 19.4
- -------------------------------------------------------------------
Mexico 3.0
- -------------------------------------------------------------------
Netherlands 5.5
- -------------------------------------------------------------------
Norway 0.7
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
South Korea 1.0
- -------------------------------------------------------------------
Sweden 1.5
- -------------------------------------------------------------------
Switzerland 9.8
- -------------------------------------------------------------------
Taiwan 1.8
- -------------------------------------------------------------------
United Kingdom 18.0
- -------------------------------------------------------------------
Short-Term Investments 7.0
- -------------------------------------------------------------------
Other Assets & Liabilities (3.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 11.6%
- -------------------------------------------------------------------
Capital Goods 2.6
- -------------------------------------------------------------------
Consumer Cyclical 12.5
- -------------------------------------------------------------------
Consumer Staples 9.9
- -------------------------------------------------------------------
Energy 1.0
- -------------------------------------------------------------------
Finance 18.3
- -------------------------------------------------------------------
Health Care 7.2
- -------------------------------------------------------------------
Services 3.0
- -------------------------------------------------------------------
Technology 25.0
- -------------------------------------------------------------------
Transportation 2.1
- -------------------------------------------------------------------
Utilities 2.9
- -------------------------------------------------------------------
Short-Term Investments 7.0
- -------------------------------------------------------------------
Other Assets & Liabilities (3.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
35
Hartford International Opportunities HLS Fund inception 7/2/1990
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL OPP. IA MSCI AC WORLD FREE EX US INDEX
--------------------- ------------------------------
12/96 10000 10000
9899 9816
9942 9996
9951 9975
9889 10059
10538 10681
11027 11270
11353 11498
10519 10594
11092 11167
10253 10216
10091 10088
12/97 10034 10204
10151 10510
10837 11211
11353 11598
11615 11681
11693 11469
11713 11426
11836 11535
10112 9908
9724 9699
10436 10715
11042 11291
12/98 11355 11680
11682 11667
11401 11406
12052 11957
12512 12555
11994 11965
12581 12515
12903 12808
12922 12853
12999 12940
13434 13421
14204 13958
12/99 15880 15289
14988 14460
16076 14850
15930 15409
15051 14549
14420 14177
14982 14780
14520 14197
14717 14373
13954 13575
13285 13144
12686 12554
12/00 13164 12983
13243 13178
12182 12134
11316 11277
12163 12044
11692 11711
11320 11262
11072 11011
10765 10738
9629 9599
9885 9868
10473 10319
12/01 10698 10452
10219 10004
10250 10076
10821 10665
10771 10693
10902 10809
10424 10342
9365 9334
9257 9335
8161 8345
8767 8793
9179 9215
12/02 8780 8918
8394 8605
8152 8430
7986 8267
8719 9063
9221 9641
9371 9908
9644 10171
9999 10474
10083 10768
10686 11466
10906 11716
12/03 11686 12610
11833 12813
12111 13138
12195 13219
11864 12808
11948 12837
12248 13127
11692 12745
11711 12847
12064 13260
12515 13721
13284 14673
12/04 13799 15303
13558 15040
13955 15782
13630 15354
13388 14975
13458 15069
13725 15352
14402 15919
14792 16326
15321 17168
14715 16543
15030 17100
12/05 15816 17922
16936 19172
16627 19117
17190 19672
18156 20686
17357 19732
17285 19713
17346 19914
17794 20479
17621 20492
18298 21327
19002 22101
12/06 19684 22790
</Table>
<Table>
--- INTERNATIONAL OPPORTUNITIES IA --- MSCI AC WORLD EX US INDEX
$10,000 starting value $10,000 starting value
$19,684 ending value $22,790 ending value
</Table>
MSCI AC WORLD EX U.S. INDEX is a broad based, unmanaged, market capitalization
weighted, total return index that measures the performance of both developed and
emerging stock markets, excluding the U.S. The index is calculated to exclude
companies and share classes which cannot be freely purchased by foreigners.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------------
International Opportunities IA 24.46% 12.97% 7.01%
- -------------------------------------------------------------
International Opportunities
IB(3) 24.15% 12.69% 6.77%
- -------------------------------------------------------------
MSCI AC World ex US Index 27.16% 16.87% 8.59%
- -------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
<Table>
NICOLAS M. CHOUMENKOVITCH
Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford International Opportunities HLS Fund
returned 24.46% for the twelve-month period ended December 31, 2006,
underperforming its benchmark, the MSCI All Country World ex US Index, which
returned 27.16% for the same period. However, the Fund outperformed the 24.35%
return of the average fund in the Lipper VA International Large Cap Core Funds
peer group, a group of funds with investment strategies similar to those of the
Fund.
WHY DID THE FUND PERFORM THIS WAY?
International equity markets advanced in 2006 as corporate earnings growth
remained strong. Every sector in the benchmark rose in US dollar terms, led by
Utilities, Materials, and Telecommunication Services. Even the laggards in this
market posted attractive absolute (i.e. total return) returns. Technology
stocks, Health Care stocks and Energy stocks gained between twelve and twenty
percent.
The Fund's underperformance versus its benchmark reflected the cross currents of
positive overall stock selection offset by negative sector allocation results.
In particular, performance suffered as a result of the Fund's underweights (i.e.
the Fund's sector position was less than the benchmark position) in the
high-performing Utilities and Telecommunication sectors and an overweight in
lagging Health Care stocks.
Stock selection was strongest in the Materials, Financial, Technology and Health
Care sectors. New to the Fund in 2006, Xstrata (Materials) was the top
contributing stock to both relative (i.e. performance of the Fund as measured
against the benchmark) and absolute performance during the year. The value of
coal assets amid rising energy prices was finally recognized in the market,
boosting the company's stock price. Other top contributors in the Materials
sector included CVRD and Inco, mining companies that announced plans to merge
during the year. In the Financials sector, shares in Hong Kong Exchanges had
strong performance during the beginning of the year driven by higher trading
fees. Although market volumes are down, the company remains a proxy for growth
in China. Other positive contributors to relative and absolute returns included
Electricite de France, a French Utility, and Banco Bilbao Vizcaya, a Spanish
commercial bank.
Key detractors from relative and absolute performance included Seven & I
(Consumer Staples), Matsui Securities (Financials), and Rakuten (Consumer
Discretionary). Seven & I, operator of Denny's and Seven Eleven stores in Japan,
and consumer financial company Matsui Securities suffered a downdraft along with
other
36
- --------------------------------------------------------------------------------
Japanese consumer related stocks on concerns that the economy is not recovering
as quickly as hoped. Rakuten's stock price fell as a temporary rise in the costs
necessary to grow a healthy sales base of this Japanese internet retailer
disappointed investors. The company also had adverse press which hit the stock
hard. We remain confident in Rakuten's leading market position and added to our
holdings on weakness.
WHAT IS THE OUTLOOK?
Effective December 15, 2006, Nicolas Choumenkovitch took over as lead Portfolio
Manager of the Fund. He has been part of the portfolio management team on the
Fund since 2000.
Our emphasis is on bottom-up stock selection. We recently reduced our exposures
to Consumer Staples (Nestle, Carrefour and Seven & I) and Health Care (Daiichi
Sankyo and Terumo) and increased exposure to Materials (Freeport-McMoran, Impala
Platinum) and Consumer Discretionary. We increased our airline exposure and
reduced our weight in Financials by selling banking stocks. At the end of the
year, our largest overweight sectors were Consumer Staples and Materials and our
largest underweight sectors were Financials and Utilities.
Based on our bottom-up stock selection, we ended the year with overweight
positions in continental Europe and Latin America, offset by underweight
positions in the United Kingdom and Asia Pacific ex-Japan.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 16.6%
- -------------------------------------------------------------------
Consumer Cyclical 11.2
- -------------------------------------------------------------------
Consumer Staples 6.9
- -------------------------------------------------------------------
Energy 7.6
- -------------------------------------------------------------------
Finance 21.3
- -------------------------------------------------------------------
Health Care 8.7
- -------------------------------------------------------------------
Services 1.3
- -------------------------------------------------------------------
Technology 15.8
- -------------------------------------------------------------------
Transportation 7.1
- -------------------------------------------------------------------
Utilities 2.0
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Belgium 0.9%
- -------------------------------------------------------------------
Brazil 4.0
- -------------------------------------------------------------------
Canada 6.5
- -------------------------------------------------------------------
Egypt 1.5
- -------------------------------------------------------------------
France 11.1
- -------------------------------------------------------------------
Germany 7.3
- -------------------------------------------------------------------
Hong Kong 3.1
- -------------------------------------------------------------------
India 1.6
- -------------------------------------------------------------------
Ireland 1.9
- -------------------------------------------------------------------
Italy 5.4
- -------------------------------------------------------------------
Japan 17.2
- -------------------------------------------------------------------
Korea (Republic of) 0.8
- -------------------------------------------------------------------
Luxembourg 0.2
- -------------------------------------------------------------------
Mexico 2.0
- -------------------------------------------------------------------
Netherlands 4.1
- -------------------------------------------------------------------
Norway 1.0
- -------------------------------------------------------------------
Panama 0.7
- -------------------------------------------------------------------
Russia 3.3
- -------------------------------------------------------------------
Singapore 0.9
- -------------------------------------------------------------------
South Africa 1.2
- -------------------------------------------------------------------
Spain 0.9
- -------------------------------------------------------------------
Sweden 2.0
- -------------------------------------------------------------------
Switzerland 5.1
- -------------------------------------------------------------------
Taiwan 1.5
- -------------------------------------------------------------------
United Kingdom 12.0
- -------------------------------------------------------------------
United States 2.3
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
37
Hartford International Small Company HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
S&P/CITIGROUP EXTENDED MARKET
INTERNATIONAL SMALL COMPAY IA EURO-PACIFIC INDEX
----------------------------- -----------------------------
4/01 10000 10000
10356 10051
9781 9730
9610 9365
9631 9388
8374 8233
8926 8554
9559 8875
12/01 9402 8758
9241 8585
9229 8792
9643 9305
10043 9565
10328 9980
10222 9671
9621 9000
9384 8917
8412 8188
8487 8117
8750 8408
12/02 8924 8345
8673 8223
8635 8207
8611 8157
9629 8834
10403 9576
10562 10030
11039 10357
11564 11015
12315 11642
13064 12443
13114 12432
12/03 13719 13194
14045 13691
14379 14117
14948 14484
14691 14113
14417 14116
14859 14613
14046 14028
13932 14139
14133 14562
14638 15016
15433 16191
12/04 16047 16992
16470 17232
16891 18014
16425 17637
15922 17128
16041 17210
16444 17537
17108 18172
17463 18693
17910 19398
17461 18832
17823 19517
12/05 19031 20747
20478 22263
20477 22281
21331 23268
22397 24427
21411 23296
21074 23016
21251 22832
21885 23586
22168 23751
22760 24368
23782 25392
12/06 24614 26255
</Table>
<Table>
--- INTERNATIONAL SMALL COMPANY IA --- S&P/CITIGROUP EXTENDED MARKET
$10,000 starting value EURO-PACIFIC INDEX
$24,614 ending value $10,000 starting value
$26,255 ending value
</Table>
S&P/CITIGROUP EXTENDED MARKET EURO-PACIFIC INDEX is a global equity index
comprised of the smallest 20% of each country's market capitalization in the
S&P/Citigroup Broad Market Global Index. (The S&P/Citigroup Broad Market Global
Index captures all companies in developed and emerging markets with free float
market capitalization of at least $100 million as of the annual index
reconstitution.) All developed countries are included except the U.S. and
Canada.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ----------------------------------------------------------------
International Small Company IA 29.34% 21.23% 17.20%
- ----------------------------------------------------------------
International Small Company IB 29.01% 20.93% 16.93%
- ----------------------------------------------------------------
S&P/Citigroup Extended Market
Euro-Pacific Index 26.55% 24.56% 18.55%
- ----------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SIMON THOMAS DANIEL MAGUIRE
Vice President Equity Research Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford International Small Company HLS Fund Class IA shares returned
29.34% for the twelve-month period ended December 31, 2006, outperforming its
benchmark, the S&P/ Citigroup Extended Market Euro-Pacific Index, which returned
26.55% for the same period. The Fund also outperformed the 24.35% return of the
average fund in the Lipper International Core VP-UF peer group, a group of funds
with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
International small cap equity markets advanced markedly during the year. The
benchmark rose in nine of the twelve months with only the May -- July period
showing negative results as investors sold off riskier assets. Every sector in
the benchmark rose, led by Utilities, Energy, and Materials. Even the laggards
posted strong absolute (i.e. total return) returns as the bottom three sectors,
Technology, Consumer Discretionary, and Consumer Staples, all rose.
Fund returns during the period were helped by strong stock selection,
particularly among Industrials, Consumer Discretionary, and Health Care stocks.
Sector allocation, an outgrowth of the bottom-up stock selection process, was
negative due to underweights (i.e. the Fund's sector position was less than the
benchmark position) among strong Utilities and Financials stocks and an
overweight position in the lagging Technology sector.
From a country perspective, positive results also were driven by stock
selection. On a relative basis, Japan was the greatest source of stock selection
value-added, followed by South Korea and Germany. Selection was weakest in the
United Kingdom and Australia/New Zealand. Country allocation was negative for
the year, mostly due to an underweight to high-returning United Kingdom stocks
and an overweight among lagging Japanese shares.
The Fund's strongest relative (i.e. performance of the Fund as measured against
the benchmark) and absolute contributors to performance for the period included:
Cambridge Antibody, a United Kingdom biotechnology company, whose shares soared
on the news that pharmaceutical giant AstraZeneca would be buying the 80% of the
company it did not already own; GEA Group, a German engineering company that
supplies production equipment to chemical, oil, and industrial customers, whose
stock rose as the company continued to benefit from a recent restructuring and
increased profitability; Hellenic Technodomiki, Greece's largest construction
company, which benefited from strong new business wins; German aircraft engine
maker MTU Aero Engines, whose
38
- --------------------------------------------------------------------------------
shares gained on strong profitability trends; and Danish brewer Carlsberg, whose
shares moved up on robust revenue and earnings growth, in part due to the World
Cup in Germany and the successful integration of Russian breweries.
The largest detractors to relative and absolute performance included: GCAP
Media, a British media company that suffered in a weakening United Kingdom
advertising market and some concerns over a format change involving fewer ads
per minute; AWB, an Australian wheat exporter which was impacted by a weak
harvest and political concerns arising from contracts with middle eastern
clients; and Wolfson Microelectronics, a British supplier of mixed-signal
semiconductors for consumer electronic products whose shares fell when the
company lowered profit and revenue guidance unexpectedly.
WHAT IS THE OUTLOOK?
Our focus is on bottom-up research to identify stocks with attractive
fundamentals. Based on stock-by-stock decisions, we finished the period with the
largest overweight positions in Health Care, Industrials, and Technology. In
Health Care we are seeing opportunity in biotechnology stocks, with recent
purchases of Lundbeck, Ipsen, and Elan. We have recently reduced exposure in
Industrials and Technology as stocks hit our target prices, but remain
overweight versus the benchmark. Our largest underweights are in the Utilities,
Financials, and Consumer Discretionary sectors. We have reduced our underweight
in Financials following several company site visits, adding to Japanese regional
banks where we discovered a number of under-researched stocks with the potential
for significant upside as the Japanese economy normalizes. At year-end our
greatest underweight position was in Europe, mostly due to less than benchmark
exposures to the United Kingdom, Spain, and France, offset by overweight
positions in Asia ex-Japan and Japan.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 11.6%
- -------------------------------------------------------------------
Capital Goods 7.4
- -------------------------------------------------------------------
Consumer Cyclical 16.6
- -------------------------------------------------------------------
Consumer Staples 3.4
- -------------------------------------------------------------------
Energy 3.1
- -------------------------------------------------------------------
Finance 21.3
- -------------------------------------------------------------------
Health Care 11.3
- -------------------------------------------------------------------
Services 10.0
- -------------------------------------------------------------------
Technology 10.2
- -------------------------------------------------------------------
Transportation 3.6
- -------------------------------------------------------------------
Utilities 0.8
- -------------------------------------------------------------------
Short-Term Investments 23.9
- -------------------------------------------------------------------
Other Assets & Liabilities (23.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 5.5%
- -------------------------------------------------------------------
Belgium 1.6
- -------------------------------------------------------------------
Brazil 0.5
- -------------------------------------------------------------------
Canada 0.3
- -------------------------------------------------------------------
China 1.2
- -------------------------------------------------------------------
Denmark 4.2
- -------------------------------------------------------------------
Finland 1.5
- -------------------------------------------------------------------
France 7.3
- -------------------------------------------------------------------
Germany 10.6
- -------------------------------------------------------------------
Greece 1.3
- -------------------------------------------------------------------
Hong Kong 3.8
- -------------------------------------------------------------------
Ireland 0.6
- -------------------------------------------------------------------
Italy 5.8
- -------------------------------------------------------------------
Japan 19.7
- -------------------------------------------------------------------
Liechtenstein 1.2
- -------------------------------------------------------------------
Malaysia 0.8
- -------------------------------------------------------------------
Mexico 0.6
- -------------------------------------------------------------------
Netherlands 4.6
- -------------------------------------------------------------------
Portugal 0.7
- -------------------------------------------------------------------
South Korea 1.9
- -------------------------------------------------------------------
Spain 1.6
- -------------------------------------------------------------------
Sweden 3.8
- -------------------------------------------------------------------
Switzerland 6.0
- -------------------------------------------------------------------
United Kingdom 10.3
- -------------------------------------------------------------------
United States 3.9
- -------------------------------------------------------------------
Short-Term Investments 23.9
- -------------------------------------------------------------------
Other Assets & Liabilities (23.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
39
Hartford MidCap HLS Fund*** inception 7/14/1997
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 7/14/97 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
MIDCAP IA S&P MIDCAP 400 INDEX
--------- --------------------
7/97 10000 10000
10337 10465
10248 10453
10952 11053
10517 10573
10936 10730
12/97 11381 11146
11126 10934
12262 11839
12881 12373
13202 12598
12728 12032
13389 12108
13183 11639
10612 9474
11227 10358
12180 11283
12953 11846
12/98 14406 13276
14746 12759
14103 12092
15300 12430
16516 13409
16690 13468
17874 14190
17362 13888
17133 13412
16759 12998
17736 13661
18731 14378
12/99 21869 15232
21856 14802
25333 15839
26893 17163
25310 16563
23972 16358
26354 16598
26568 16860
29507 18742
29124 18615
28792 17983
25456 16627
12/00 27427 17898
27844 18297
26249 17254
24036 15972
26311 17734
26757 18147
26693 18075
26158 17805
24951 17223
22032 15081
23455 15749
25405 16921
12/01 26435 17794
25983 17703
26157 17724
27610 18991
27277 18903
27441 18584
25748 17224
23072 15553
22947 15632
20977 14372
22090 14995
24190 15863
12/02 22676 15211
22365 14767
22144 14415
22311 14537
24211 15592
26307 16884
26468 17100
26779 17706
28015 18510
27462 18226
29849 19604
30391 20287
12/03 31218 20630
31942 21077
32251 21583
32083 21674
31175 20963
31627 21398
32388 21885
30812 20864
30781 20809
32208 21425
32896 21768
34905 23064
12/04 36349 24030
35705 23417
36588 24202
36088 23934
34868 23004
36858 24390
38218 24955
39867 26266
39255 25973
39945 26173
39339 25610
41858 26862
12/05 42450 27047
44779 28641
44863 28401
45724 29110
46319 29520
44427 28188
43827 28195
42730 27391
43566 27704
43851 27890
45325 29050
47279 29984
12/06 47435 29838
</Table>
<Table>
--- MIDCAP IA --- S&P MIDCAP 400 INDEX
$10,000 starting value $10,000 starting value
$47,435 ending value $29,838 ending value
</Table>
S&P MIDCAP 400 INDEX is an unmanaged index of common stocks of companies chosen
by S&P designed to represent price movements in the midcap U.S. equity market.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------
MidCap IA 11.74% 12.40% 17.86%
- ------------------------------------------------------
MidCap IB(3) 11.46% 12.13% 17.59%
- ------------------------------------------------------
S&P MidCap 400 Index 10.32% 10.89% 12.23%*
- ------------------------------------------------------
</Table>
* Return is from 6/30/97.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
*** The Fund has restrictions on the purchase of shares. A
description of the restrictions can be found in the
prospectus.
PORTFOLIO MANAGER
PHILLIP H. PERELMUTER
Senior Vice President, Managing Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford MidCap HLS Fund returned 11.74% for the
twelve-month period ended December 31, 2006, outperforming the Fund's benchmark,
the S&P Midcap 400 Index, which returned 10.32% for the same period. The Fund
underperformed the 12.84% return of the average fund in the Lipper VA Mid-Cap
Core Funds peer group, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets got off to a slow start early in the year as investor concerns
about excessive monetary tightening by the Federal Reserve Bank (the "Fed") took
center stage. Falling energy prices and the long awaited pause in the Fed's rate
hikes provided some relief during the second half of the year. US equities
continued to rally through the end of the year on record merger and acquisition
activity and a surprisingly resilient consumer in the face of a slowing economy.
Employment held up well, while housing continued to weaken.
During the twelve-month period ended December 31, 2006, investor preferences
shifted to small (+18.37%) and large cap shares (+15.78%) versus mid cap stocks
(+10.32%) when measured by the Russell 2000, S&P 500 and S&P MidCap 400 Indices
respectively. Within the Russell 1000 indices, Value (+22.25%) comfortably
outperformed Growth (+9.07%) for the year. In a reversal from last year within
the S&P MidCap 400 Index, Telecommunication Services was the best-performing
sector, while Health Care was the only sector to post a negative return.
The Fund's outperformance versus its benchmark was driven primarily by positive
security selection in seven of the ten broad-based sectors, but was partially
offset by negative sector allocation decisions. The Fund benefited from Strong
stock selection within the Consumer Discretionary and Industrials sectors. This
more than offset weak stock selection in the Information Technology sector. The
Fund's underweight (i.e. the Fund's sector position was less than the benchmark
position) position to the strong performing Utilities sector also detracted from
performance, but was partially offset by an overweight in the top performing
Telecommunication Services sector.
40
- --------------------------------------------------------------------------------
On an absolute (i.e. total return) and relative (i.e. performance of the Fund as
measured against the benchmark) basis American Tower was among the
best-performing stocks for the year. Shares of the communications tower operator
rose as the company benefited from a high, predictable growth rate, operating
leverage, and strong free cash flow. The Telecommunications industry continues
to experience growth as cell phone companies increase spending to support both
new subscribers and new technologies. A number of the top contributors to
performance also came from the Industrials sector, including employment services
company Manpower, aerospace and defense company Rockwell Collins, and machinery
manufacturer PACCAR. Shares of aviation and electronics supplier Rockwell
Collins advanced after the company announced strong results and increased its
earnings forecast. The company also continued to benefit from Boeing's new 787
product cycle. Among other contributors was Information Technology (IT) services
provider Cognizant Technology Solutions.
Two of the top three detractors, on a relative and absolute basis, were Consumer
Discretionary names, Sirius Satellite and D.R. Horton. Shares of Sirius suffered
from a deceleration in demand, particularly in retail sales, and an up-tick in
customer turnover. We eliminated the stock due to concerns about the long-term
sustainability of customer growth at current monthly pricing levels. Homebuilder
D.R. Horton declined as the market reacted to increasing evidence of slower new
home demand within the US, and we exited our position. We also eliminated our
position in circuit board and computer component maker Jabil Circuit, which was
among other top detractors and declined on options backdating concerns and
disappointing guidance.
WHAT IS THE OUTLOOK?
We continue to manage the fund on a bottom-up basis, adjusting our positions
based on the opportunities we are finding. The largest increase in relative
weight during the year was in Industrials, with exposure to staffing and
employment companies such as Manpower and Monster Worldwide. Within this sector
we also like select engineering & construction stocks. We reduced our overweight
to Consumer Discretionary by eliminating consumer services stock Harrah's
Entertainment after a takeover offer. We also reduced our Media exposure. We
recently added to our Energy holdings via a new purchase of Murphy Oil. These
exploration & production purchases provide greater leverage to energy prices
following a period of price weakness.
At year-end our largest overweights relative to the S&P MidCap 400 were to the
Industrials and Health Care sectors, while the largest underweights were to
Financials and Utilities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.6%
- -------------------------------------------------------------------
Capital Goods 4.0
- -------------------------------------------------------------------
Consumer Cyclical 17.0
- -------------------------------------------------------------------
Consumer Staples 2.4
- -------------------------------------------------------------------
Energy 6.2
- -------------------------------------------------------------------
Finance 13.9
- -------------------------------------------------------------------
Health Care 9.5
- -------------------------------------------------------------------
Services 20.0
- -------------------------------------------------------------------
Technology 12.6
- -------------------------------------------------------------------
Transportation 1.8
- -------------------------------------------------------------------
Utilities 3.9
- -------------------------------------------------------------------
Short-Term Investments 4.3
- -------------------------------------------------------------------
Other Assets & Liabilities (1.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
41
Hartford MidCap Value HLS Fund* inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
MIDCAP VALUE IA RUSSELL 2500 VALUE INDEX
--------------- ------------------------
4/01 10000 10000
10092 10307
10139 10406
9950 10337
9640 10248
8234 9111
8476 9306
9208 10022
12/01 9959 10593
10012 10690
10207 10823
10776 11493
10790 11690
10597 11498
10032 11092
8968 9809
8972 9862
8014 9055
8404 9184
9100 9854
12/02 8663 9546
8472 9258
8271 9030
8229 9091
9000 9915
9831 10832
9936 11026
10296 11505
10798 11968
10749 11883
11472 12791
11880 13313
12/03 12413 13836
12629 14284
12875 14574
12865 14690
12426 13921
12653 14201
13178 14765
12606 14171
12411 14349
12865 14802
13155 15070
13885 16302
12/04 14436 16821
13902 16280
14494 16686
14304 16464
13605 15848
14332 16727
14658 17341
15304 18269
15278 17937
15205 17957
14700 17427
15600 18141
12/05 15878 18123
16907 19315
16883 19341
17133 20019
17538 20098
17004 19403
16915 19512
16548 19242
17035 19754
17168 19955
17941 20890
18537 21543
12/06 18717 21780
</Table>
<Table>
--- MIDCAP VALUE IA --- RUSSELL 2500 VALUE INDEX
$10,000 starting value $10,000 starting value
$18,717 ending value $21,780 ending value
</Table>
RUSSELL 2500 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 2500 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- --------------------------------------------------------
MidCap Value IA 17.88% 13.45% 11.68%
- --------------------------------------------------------
MidCap Value IB 17.59% 13.17% 11.42%
- --------------------------------------------------------
Russell 2500 Value Index 20.18% 15.51% 14.70%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
* The Fund has restrictions on the purchase of shares. A
description of the restrictions can be found in the
prospectus.
PORTFOLIO MANAGER
JAMES N. MORDY
Senior Vice President, Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford MidCap Value HLS Fund returned 17.88% for
the twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the Russell 2500 Value Index, which returned 20.18% for the same
period. The Fund outperformed the 14.39% return of the average fund in the
Lipper Mid Cap Value VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. equities posted strong positive returns, supporting the
Fund's positive absolute (i.e. total return) return. Mid cap stocks trailed
small and larger cap stocks during the period, as measured by the S&P 400
Midcap, Russell 2000 and S&P 500 indices, respectively. Value stocks continued
to outperform growth during the period, as measured by the Russell 1000 Growth
and Russell 1000 Value indices. Within the Russell 2500 Value Index the
Telecommunication Services, Materials, and Industrials sectors led the group
while Health Care, Energy and Consumer Discretionary lagged on a relative basis,
despite posting positive high single-to double-digit returns.
The Fund's performance trailed the benchmark as a result of weak stock selection
in the Health Care, Financials and Consumer Discretionary sectors. In addition,
the Fund's sector allocation decisions, which are a fallout of our bottom-up
stock selection process, detracted from performance relative to the benchmark
due to the Fund's overweights (i.e. the Fund's sector position was more than the
benchmark position) to the weaker performing Health Care and Consumer
Discretionary sectors. The top three detractors on a relative (i.e. performance
of the Fund as measured against the benchmark) basis were Cinram (Consumer
Discretionary), Barr Pharmaceuticals (Health Care) and Endo Pharmaceutical
(Health Care). Shares of Cinram, a compact disc maker, declined on concerns that
their largest shareholder, a failed hedge fund, would be forced into a
disorderly liquidation of their position. In addition, Cinram's largest DVD
customer, Time Warner, had a weak year in DVD's, which hurt volumes and profits.
Barr Pharmaceuticals shares fell sharply in the first half of the year as part
of the general malaise for generic drug stocks as well as concerns over
litigation settlements. The stock faced uncertainty due to a seven-month long
bidding war for Croatian drug maker Pliva. The company won out and completed the
acquisition in late October. Endo Pharmaceutical stock declined following an FDA
generics guideline release that increases the chances of competition for a key
pain management patch produced by Endo. The largest detractor on an absolute
basis was Powerwave Technology (Information Technology). Powerwave Technology,
which supplies wireless solutions for wireless communications networks, was down
after reporting disappointing results. We held all four stocks at the end of the
period.
42
- --------------------------------------------------------------------------------
Partially offsetting this weakness was strong stock selection in the Materials,
Information Technology and Utilities sectors. The top three contributors to
relative performance were Inco (Materials), Varian Semiconductor (Information
Technology) and Reynolds & Reynolds (Information Technology). Inco benefited
from a takeover bidding war between competitors Teck Cominco and Cia Vale do Rio
Doce (CVRD). Brazilian Iron ore company CVRD ended up winning Inco, increasing
its exposure to assets outside of Brazil. Varian Semiconductor rose with
expectations of continued market share gains and margin expansion. Reynolds &
Reynolds' share price soared following a buyout offer by Universal Computer
Systems, a privately-held industry peer. In addition, Terex (Industrials), up
triple-digits during the period, was a key contributor to absolute performance.
We held Varian Semiconductor and Terex at the end of the period.
WHAT IS THE OUTLOOK?
We continue to expect economic and corporate profits growth to slow in 2007 both
in the U.S. and major global regions, except for the China region. While the
U.S. housing recession is expected to take a significant bite out of GDP
expansion, the effect on consumer spending has, thus far, been muted by
continued healthy income and employment growth. While business spending has
slowed, corporate balance sheets remain very healthy and corporate management
will continue to feel the pressure from investors to produce attractive returns.
Excess inventories need to be worked down in many important sectors of the
economy. We believe the Federal Reserve (the "Fed") will remain on hold until
there is a more significant change in the employment picture.
In light of this outlook, the Fund is overweight the Industrials, Health Care,
Information Technology, Materials and Energy sectors. Going into 2007, a year
expected to be earmarked by lower inflation and lower growth versus 2006, we
prefer to be exposed to sectors that have already seen the early signs of a
slowdown (Industrials and Materials) or that have catalysts for appreciation
that do not depend directly on economic drivers (Health Care). Our most notable
underweights remain the Financials and Utilities sectors, which we do not deem
as undervalued. Other underweights include Consumer Staples, Telecommunications
Services, and Consumer Discretionary.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 14.7%
- -------------------------------------------------------------------
Capital Goods 11.9
- -------------------------------------------------------------------
Consumer Cyclical 8.8
- -------------------------------------------------------------------
Consumer Staples 3.5
- -------------------------------------------------------------------
Energy 4.3
- -------------------------------------------------------------------
Finance 17.5
- -------------------------------------------------------------------
Health Care 7.1
- -------------------------------------------------------------------
Services 10.8
- -------------------------------------------------------------------
Technology 12.8
- -------------------------------------------------------------------
Transportation 2.6
- -------------------------------------------------------------------
Utilities 5.0
- -------------------------------------------------------------------
Short-Term Investments 5.2
- -------------------------------------------------------------------
Other Assets & Liabilities (4.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
43
Hartford Mortgage Securities HLS Fund inception 1/1/1985
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS MORTGAGE BACKED
MORTGAGE SECURITIES IA SECURITIES INDEX
---------------------- -------------------------------
12/96 10000 10000
10063 10074
10088 10108
10002 10013
10157 10172
10247 10272
10359 10392
10557 10587
10533 10562
10662 10696
10778 10815
10806 10850
12/97 10901 10949
11010 11058
11025 11082
11067 11128
11129 11192
11215 11266
11267 11320
11326 11377
11441 11480
11564 11619
11537 11604
11592 11662
12/98 11634 11711
11706 11795
11668 11748
11741 11827
11791 11881
11711 11815
11660 11773
11600 11693
11611 11693
11782 11883
11826 11951
11839 11958
12/99 11810 11928
11732 11825
11849 11962
11964 12093
11969 12101
11987 12107
12206 12366
12279 12445
12447 12634
12564 12765
12637 12856
12844 13050
12/00 13025 13260
13207 13466
13286 13543
13365 13622
13360 13641
13423 13731
13445 13761
13682 14005
13783 14129
13960 14340
14144 14539
14046 14404
12/01 14001 14350
14117 14483
14245 14648
14109 14493
14359 14767
14452 14874
14550 14997
14727 15168
14855 15288
14985 15396
15003 15455
15004 15444
12/02 15143 15605
15201 15643
15284 15748
15275 15749
15333 15815
15366 15828
15370 15853
15057 15557
15158 15667
15375 15933
15334 15878
15378 15911
12/03 15490 16081
15601 16182
15724 16318
15791 16390
15526 16098
15482 16063
15582 16204
15724 16350
15951 16602
15985 16627
16104 16762
16030 16720
12/04 16128 16837
16216 16926
16133 16848
16101 16816
16281 17003
16393 17137
16453 17199
16376 17113
16518 17265
16426 17174
16335 17053
16383 17109
12/05 16509 17277
16541 17332
16600 17413
16485 17265
16482 17267
16462 17234
16486 17267
16697 17514
16913 17768
17048 17892
17163 18023
17337 18229
12/06 17281 18179
</Table>
<Table>
--- MORTGAGE SECURITIES IA --- LEHMAN BROTHERS MORTGAGE BACKED
$10,000 starting value SECURITIES INDEX
$17,281 ending value $10,000 starting value
$18,179 ending value
</Table>
LEHMAN BROTHERS MORTGAGE BACKED SECURITIES INDEX is an index of mortgage backed
pass-through securities of the Government National Mortgage Association, Federal
National Mortgage Association and Federal Home Loan Mortgage Corporation.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ----------------------------------------------------
Mortgage Securities IA 4.68% 4.30% 5.62%
- ----------------------------------------------------
Mortgage Securities
IB(3) 4.41% 4.04% 5.37%
- ----------------------------------------------------
Lehman Brothers
Mortgage Backed
Securities Index 5.23% 4.84% 6.16%
- ----------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
CHRISTOPHER HANLON, CFA RUSSELL M. REGENAUER
Senior Vice President Senior Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford Mortgage Securities HLS Fund gained 4.68%
for the year, underperforming the Lehman Brothers Mortgage Backed Securities
Index, which gained 5.23%. The Fund outpaced the 4.39% average return of the
Lipper VA U.S. Mortgage Funds category, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
In keeping with the Fund's regulatory mandate for diversification, we held
significant weightings outside of the traditional Mortgage-Backed Securities
(MBS) sector, though these holdings were consistent with our emphasis on
maintaining the highest credit quality. Specifically, the Fund ended the period
with a 14% weighting in Commercial Mortgage-Backed Securities (CMBS) and a 10%
weighting in Asset-Backed Securities (ABS). While both sectors outperformed
Treasuries during the period, ABS did not keep pace with the returns of the MBS
sector. CMBS, on the other hand, contributed positively to the Fund's returns.
Within MBS, the vast majority of the portfolio's exposure was to Agency
Mortgage-Backed Securities. Overweights (i.e. the Fund's sector position was
more than the benchmark position) to 30-year agency MBS relative to 15-year MBS
contributed to performance as longer-term yields fell more than intermediates
during the period. Holdings of newly issued mortgage pools performed the best
and added to performance while underweights to 5.50% coupon mortgages hurt
performance as these securities were favored by Asian investors for much of the
year.
WHAT IS YOUR OUTLOOK?
We believe that the Federal Reserve Bank (the "Fed") has been successful in
laying the groundwork for a likely "soft landing," characterized by a moderately
slower economy and easing inflation pressures. Several key supports remain
intact for the economy to stay out of recession, including continued strength in
employment, softening oil prices and what appears to be a stabilizing housing
market. Growth also looks strong in the rest of the world, a necessary
development to address the twin budget and trade deficits in the U.S.
Within this environment, we anticipate keeping the portfolio's duration (i.e.
sensitivity to changes in interest rates) modestly conservative, with a neutral
to slightly short duration relative to the benchmark. Should longer-term yields
reach attractive levels
44
- --------------------------------------------------------------------------------
(a development development we see as likely in the first quarter of 2007), we
would take the opportunity both to lengthen the portfolio's duration and to
reposition the portfolio along the yield curve. We believe that Mortgage-Backed
Securities should continue to do well in such an environment, though we have
also positioned the Fund conservatively with regard to volatility and housing
turnover until the market and economic environment become clearer.
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Mortgage Backed Securities 25.8%
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 86.2
- -------------------------------------------------------------------
U.S. Government Securities 0.8
- -------------------------------------------------------------------
Short-Term Investments 1.6
- -------------------------------------------------------------------
Other Assets & Liabilities (14.6)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY RATING
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
RATING HOLDINGS
- -------------------------------------------------------------------
AAA 86.0%
- -------------------------------------------------------------------
AA 6.6
- -------------------------------------------------------------------
A 1.0
- -------------------------------------------------------------------
NR 6.4
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
45
Hartford Small Company HLS Fund inception 8/9/1996
(subadvised by: Wellington Management Company, LLP,
Hartford Investment Management Company*)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
SMALL COMPANY IA RUSSELL 2000 GROWTH INDEX
---------------- -------------------------
12/96 10000 10000
10029 10250
9847 9631
9328 8951
9415 8848
10434 10177
11047 10523
11520 11062
11776 11394
12925 12303
12132 11564
11923 11288
12/97 11838 11295
11459 11144
12766 12128
13301 12636
13432 12714
12733 11790
12890 11911
12431 10916
9464 8396
10349 9248
11109 9730
11840 10485
12/98 13213 11433
13863 11948
12377 10855
13456 11241
14576 12234
14875 12253
16125 12899
16100 12500
15761 12033
16120 12265
16663 12579
18478 13909
12/99 21911 16360
21201 16208
24971 19979
24526 17879
22355 16074
19861 14666
22708 16561
20822 15142
22492 16734
21518 15903
20200 14612
17721 11959
12/00 19036 12691
18240 13718
16242 11838
14856 10761
16893 12079
16687 12359
16955 12696
16055 11613
15387 10887
12955 9131
14016 10009
15367 10844
12/01 16197 11520
15938 11110
15204 10391
16343 11294
15942 11050
15322 10404
14282 9521
11966 8058
11729 8054
11250 7472
11660 7850
12383 8628
12/02 11301 8033
11008 7815
10808 7606
11186 7721
12366 8451
13730 9404
14166 9585
15170 10310
15922 10863
15367 10588
16803 11503
17281 11878
12/03 17614 11931
18337 12558
18371 12539
18735 12597
17771 11965
18099 12203
18507 12609
16987 11477
16279 11230
17545 11851
17879 12139
18918 13165
12/04 19760 13638
18657 13024
19306 13203
19056 12708
18221 11899
19481 12738
20585 13150
21839 14069
21922 13870
22533 13980
21976 13464
23332 14226
12/05 23911 14205
26057 15575
25888 15492
27042 16245
27591 16198
26168 15058
25503 15067
24471 14285
24751 14703
24869 14802
25864 15762
26888 16139
12/06 27360 16101
</Table>
<Table>
--- SMALL COMPANY IA --- RUSSELL 2000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$27,360 ending value $16,101 ending value
</Table>
RUSSELL 2000 GROWTH INDEX is an unmanaged index of those Russell 2000 Index
growth companies with higher price-to-book ratios and higher forecasted growth
values. (The Russell 2000 Index is a broad-based unmanaged index comprised of
2,000 of the smallest U.S. domiciled company common stocks (on the basis of
capitalization) that are traded in the United States on the New York Stock
Exchange, American Stock Exchange and Nasdaq.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ---------------------------------------------------------
Small Company IA 14.43% 11.06% 10.59%
- ---------------------------------------------------------
Small Company IB(3) 14.14% 10.78% 10.34%
- ---------------------------------------------------------
Russell 2000 Growth Index 13.35% 6.93% 4.88%
- ---------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
* Effective June 12, 2006, Hartford Investment Management
Company was added as a sub-adviser to the Fund. As of the same
date, the Fund's Class IA and IB shares were re-opened to new
investors.
PORTFOLIO MANAGERS
<Table>
<Caption>
WELLINGTON MANAGEMENT COMPANY, LLP HARTFORD INVESTMENT MANAGEMENT COMPANY
STEVEN C. ANGELI, CFA STEPHEN MORTIMER MARIO E. ABULARACH MARK WATERHOUSE
Senior Vice President, Partner Vice President Vice President Executive Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Small Company HLS Fund Class IA shares returned 14.43% for the
twelve-month period ended December 31, 2006, outperforming its benchmark, the
Russell 2000 Growth Index which returned 13.35% for the same period. The Fund
also outperformed the 11.12% return of the average fund in the Lipper Small Cap
Growth VA-UF Funds peer group, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. Equities posted strong positive returns, supporting the
Fund's positive absolute (i.e. total return) return for the year. The small cap
benchmarks have now beaten the S&P 500 seven out of the last eight years. All
sectors within the Russell 2000 Growth Index posted positive returns for the
period. The best performing sectors were Utilities, Consumer Staples and
Materials, while Healthcare, Information Technology and Consumer Discretionary
rose the least.
Favorable security selection within several sectors drove the Fund's
outperformance during the period, as we remained steadfast in our focus on
individual stock selection as opposed to macro or sector allocation decisions.
Information Technology, Financials and Materials were areas of particular
strength relative to the benchmark. Copa Holdings (Industrials), Equinix Plc
(Software & Services), Admiral Group (Insurance) and Corrections Corporation of
America (Commercial Services) were among top contributors to relative (i.e.
performance of the Fund as measured against the benchmark) and absolute
performance. Panamanian airline Copa Holdings rose with strong traffic and
passenger load factors. The company is benefiting from Panama's rise as a
north-south hub complex and the successful restructuring of a recently acquired
Colombian airline. Equinix Plc delivered solid top and bottom line results
during the period, driven by share gains in already fast growing markets.
Admiral Group, a United Kingdom insurance company, saw strong growth despite a
soft market cycle. Corrections Corporation of America's private correctional
facilities benefited from high occupancy rates, rising capacity, and margin
expansion. There has also been a continuing industry-wide
46
- --------------------------------------------------------------------------------
capacity imbalance due to strong demand and limited new supply from the
government. However, we sold our position as we believed the capacity crisis was
largely reflected in the stock's 50% increase.
Stocks that detracted from performance during the period included Arch Coal
(Energy), Frontier Oil Corp (Energy), and Netflix (Consumer Discretionary). Arch
Coal suffered due to lower prices and higher operating costs as coal stock
prices fell in tandem with sharp declines in the natural gas market. Similarly,
Frontier Oil fell with oil prices and was eliminated from the Fund. On-line DVD
rental firm Netflix declined as results fell short of expectations, despite its
foray into mass market, low-priced subscription plans. The company faced higher
subscriber acquisition costs and growing competition from the proliferation of
on-line media options. Given these headwinds, we eliminated the position. The
Fund's sector allocations, which are fallout of our bottom-up investment
approach, detracted from relative performance at the margin, particularly our
underweight (i.e. the Fund's sector position was less than the benchmark
position) in Energy.
On June 12, 2006, Hartford Investment Management Company was added as an
additional sub-adviser to the Fund.
WHAT IS THE OUTLOOK?
While neither decidedly bullish or bearish about the economy, we are cautious
about the prospects for growth in the first half of 2007. Our caution may force
us to pare back our exposure to more economically sensitive sectors.
Although the market seems to teeter on every new macroeconomic data point, we
expect our relative performance will be driven by stock selection as opposed to
sector allocation. We are focused on companies that have unique business models,
special market opportunities, and can deliver growth regardless of the economic
cycle.
As a result of our bottom-up stock selection process we ended the period with
overweight positions in the Information Technology, Consumer Discretionary and
Telecommunication Services sectors and were most underweight Health Care and
Financials.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.1%
- -------------------------------------------------------------------
Capital Goods 3.9
- -------------------------------------------------------------------
Consumer Cyclical 9.3
- -------------------------------------------------------------------
Consumer Staples 0.6
- -------------------------------------------------------------------
Energy 4.7
- -------------------------------------------------------------------
Finance 9.0
- -------------------------------------------------------------------
Health Care 10.4
- -------------------------------------------------------------------
Services 15.9
- -------------------------------------------------------------------
Technology 30.5
- -------------------------------------------------------------------
Transportation 6.0
- -------------------------------------------------------------------
Short-Term Investments 9.8
- -------------------------------------------------------------------
Other Assets & Liabilities (7.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
47
Hartford SmallCap Growth HLS Fund inception 5/2/1994
(subadvised by: Wellington Management Company, LLP
Hartford Investment Management Company*)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
SMALLCAP GROWTH IA RUSSELL 2000 GROWTH INDEX
------------------ -------------------------
12/96 10000 10000
9889 10250
8771 9631
8086 8951
7851 8848
9178 10177
9447 10523
9966 11062
9733 11394
10379 12303
9927 11564
9906 11288
12/97 10143 11295
9942 11144
11019 12128
11728 12636
11698 12714
11093 11790
11529 11911
10679 10916
8479 8396
9010 9247
9631 9730
10820 10485
12/98 12290 11433
13182 11948
11533 10855
12416 11241
12882 12234
13002 12253
14724 12899
14994 12500
15332 12033
16000 12265
18287 12579
20487 13909
12/99 25717 16360
26111 16208
36120 19979
32599 17879
27295 16074
23413 14666
28812 16561
26690 15142
31949 16734
30140 15903
27409 14612
19734 11959
12/00 21839 12691
22181 13718
18181 11838
16353 10761
17943 12079
17942 12359
18629 12696
17292 11613
16172 10887
13195 9131
14532 10009
16165 10844
12/01 17433 11520
16878 11110
15948 10391
17596 11294
16857 11050
15678 10403
14220 9521
12297 8058
12266 8054
11252 7472
12133 7850
13457 8628
12/02 12406 8033
12004 7815
11469 7606
11618 7721
12693 8452
14182 9404
14552 9585
15544 10310
16618 10864
16633 10589
17892 11504
18351 11879
12/03 18616 11932
19732 12559
19704 12539
19553 12598
18691 11966
18899 12204
19533 12610
17967 11478
17717 11231
18681 11852
19281 12140
20615 13166
12/04 21489 13639
20542 13024
21122 13203
20866 12708
19926 11899
21393 12738
22029 13150
23538 14069
23135 13871
23118 13981
22348 13464
23691 14227
12/05 23857 14205
25693 15576
25305 15493
26090 16246
25725 16199
23932 15059
24012 15068
22844 14285
23193 14703
23528 14803
25153 15762
25606 16139
12/06 25493 16101
</Table>
<Table>
--- SMALLCAP GROWTH IA --- RUSSELL 2000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$25,493 ending value $16,101 ending value
</Table>
RUSSELL 2000 GROWTH INDEX is an unmanaged index of those Russell 2000 Index
growth companies with higher price-to-book ratios and higher forecasted growth
values. (The Russell 2000 Index is a broad-based unmanaged index comprised of
2000 of the smallest U.S. domiciled company common stocks (on the basis of
capitalization) that are traded in the United States on the New York Stock
Exchange, American Stock Exchange and NASDAQ.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
SmallCap Growth IA 6.86% 7.90% 9.81%
- -------------------------------------------------------
SmallCap Growth IB(2) 6.59% 7.64% 9.54%
- -------------------------------------------------------
Russell 2000 Growth Index 13.35% 6.93% 4.88%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
* Effective November 13, 2006, Hartford Investment Management
Company was added as a sub-adviser to the Fund.
PORTFOLIO MANAGERS
<Table>
<Caption>
WELLINGTON MANAGEMENT COMPANY, LLP HARTFORD INVESTMENT MANAGEMENT COMPANY
DAVID J. ELLIOTT, CFA DORIS T. DWYER HUGH WHELAN
Vice President Vice President Executive Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Small Cap Growth HLS Fund returned 6.86%
for the twelve-month period ended December 31, 2006, underperforming its
benchmark, the Russell 2000 Growth Index, which returned 13.35% for the period.
The Fund also underperformed the 11.12% return of the average fund in the
Lipper VA Small Cap Growth Funds peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
US equity markets rose during the period, led by small cap stocks. The small cap
Russell 2000 Index moved up 18.37%, outpacing the 15.37% return for the large
cap Russell 1000 Index and the 10.32% return for the S&P Mid Cap Index. Value
again led growth; the broad market Russell 3000 Value Index bested the Russell
3000 Growth Index by nearly 13 percentage points.
The Fund's lagging performance was driven by stock selection; allocation among
sectors had a negligible effect during the year. Stock selection was
particularly weak within Health Care, Consumer Discretionary, and Financials.
Scottish Re (Insurance), NPS Pharmaceuticals (Pharmaceutical Biotechnology),
Standard Pacific (Consumer Durables), and Onyx Pharmaceuticals (Pharmaceutical
Biotechnology) were the largest relative (i.e. performance of the Fund as
measured against the benchmark) and absolute (i.e. total return) detractors from
the Fund during the year. Shares of Bermuda-based reinsurer Scottish Re fell
after a series of earnings shortfalls, following which we exited the position.
Biotechnology company NPS saw its shares tumble on concerns about its
experimental osteoporosis drug Preos after the FDA requested a new clinical
trial. Shares in homebuilder Standard Pacific fell on investor worries about a
deteriorating housing market. Shares of Onyx Pharmaceuticals ratcheted lower
after data showed that its kidney cancer drug Nexavar was not efficacious in
patients with advanced skin cancer.
Stock selection added to relative performance in the Energy, Technology, and
Materials sectors. Skechers (Consumer Discretionary), Imergent (Technology),
Frontier Oil (Energy), and Digital River (Technology) were the top absolute and
relative contributors for the year. Shoe company Skechers, which posted above
consensus quarterly results on a strong back to school season, provided
favorable guidance for the remainder of 2006 and
48
- --------------------------------------------------------------------------------
into 2007. Energy company Frontier Oil saw its shares gain with rising oil
prices earlier in the year. Shares of eCommerce software providers iMergent and
Digital River pushed higher throughout the year on favorable operating and
financial performance.
On November 13, 2006, Hartford Investment Management Company was added as an
additional sub-adviser to the Fund.
WHAT IS THE OUTLOOK?
A mid-cycle slowdown is underway, led by a housing correction. We expect further
housing price and transaction weakness ahead. Consumers continue to face
headwinds and fading sources of stimulus. In this environment we will continue
to employ a combination of fundamental and quantitative research to identify the
most attractive stocks, while maintaining appropriate risk controls relative to
the benchmark. The result is a portfolio built one stock at a time that is well
diversified across all sectors of the Russell 2000 Growth Index.
As a result of the Fund's investment approach, sector positioning is in-line
with the Russell 2000 Growth Index, resulting in the greatest exposure to
Information Technology, Health Care, and Consumer Discretionary sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.7%
- -------------------------------------------------------------------
Capital Goods 4.8
- -------------------------------------------------------------------
Consumer Cyclical 13.2
- -------------------------------------------------------------------
Consumer Staples 0.1
- -------------------------------------------------------------------
Energy 4.6
- -------------------------------------------------------------------
Finance 11.2
- -------------------------------------------------------------------
Health Care 15.7
- -------------------------------------------------------------------
Services 14.0
- -------------------------------------------------------------------
Technology 24.4
- -------------------------------------------------------------------
Transportation 4.3
- -------------------------------------------------------------------
Short-Term Investments 8.5
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
49
Hartford Stock HLS Fund inception 8/31/1977
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
STOCK IA S&P 500 INDEX
-------- -------------
12/96 10000 10000
10629 10624
10682 10708
10316 10269
10914 10881
11570 11543
12206 12060
13091 13019
12260 12290
12908 12963
12487 12531
13029 13110
12/97 13138 13335
13302 13482
14311 14454
15112 15194
15448 15347
15183 15083
15944 15695
16095 15529
13739 13283
14353 14135
15647 15284
16611 16210
12/98 17535 17143
18073 17860
17668 17305
18467 17997
19234 18694
18635 18253
19825 19266
19259 18665
19025 18572
18545 18062
19556 19205
19837 19595
12/99 21004 20750
19866 19707
19550 19335
21570 21225
20931 20586
20554 20164
20801 20661
20395 20338
21402 21601
20445 20461
20562 20374
19318 18769
12/00 19525 18861
20046 19530
18642 17750
17366 16626
18645 17916
18800 18036
17993 17598
17788 17425
16558 16335
15405 15017
15779 15303
17011 16477
12/01 17137 16622
16715 16380
16476 16064
17076 16668
15607 15658
15385 15543
14299 14436
13413 13312
13302 13398
11825 11943
12898 12993
13871 13757
12/02 12981 12949
12643 12611
12393 12422
12445 12543
13398 13575
14056 14290
14266 14472
14625 14728
14818 15014
14580 14855
15353 15695
15496 15833
12/03 16418 16662
16505 16968
16629 17204
16342 16945
16127 16679
16340 16907
16700 17236
16103 16666
16116 16732
16064 16914
16042 17172
16555 17867
12/04 17102 18474
16802 18024
17158 18403
16669 18078
16516 17735
17083 18299
17050 18325
17821 19006
17872 18833
18068 18985
17848 18669
18587 19374
12/05 18748 19381
19336 19894
19270 19948
19501 20196
19822 20467
19223 19879
18925 19905
18932 20028
19464 20504
19914 21032
20606 21716
21207 22129
12/06 21495 22439
</Table>
<Table>
--- STOCK IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,495 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------
Stock IA 14.65% 4.64% 7.95%
- -------------------------------------------
Stock IB(3) 14.37% 4.38% 7.71%
- -------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Stock HLS Fund returned 14.65% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78% for the same period. However, the Fund
outperformed the 13.29% return of the average fund in the Lipper VA Large Cap
Core Funds peer group, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Robust merger and acquisition activity and a better-than-expected retail
environment helped equity markets end the year on a strong note, marking the
fourth straight year of positive returns for the S&P 500. The S&P 500 finished
the year at record levels, returning 15.78%, posting positive results in all ten
sectors. Sector results were led by Telecommunication Services, Energy,
Utilities, and Materials. Health Care, Information Technology, Industrials and
Consumer Staples all posted positive returns but lagged the general market.
The Fund's performance versus the benchmark was driven by both security
selection and aggregate sector allocations which results from our bottom-up
stock picking. Stock selection was weakest within the Consumer Discretionary,
Health Care and Materials sectors. Stocks that detracted the most from relative
(i.e. performance of the Fund as measured against the benchmark) returns
included XM Satellite, Boston Scientific, Marvell Technology and Dollar General.
Media company XM Satellite came under pressure as decelerating customer addition
trends and regulatory review of product compliance caused investors to question
the market opportunity. The Fund continues to hold the stock based on positive
long-term trends in satellite radio due to OEM adoption. Boston Scientific had a
tough year, suffering from erosion of its Implantable Cardioverter Defibrillator
(ICD) market share, concerns surrounding its drug eluting stent business and
continued issues with cardiac product recalls from its recently acquired Guidant
business. We retain our position as the fundamentals of the company remain sound
and the stock is attractively priced. Chip maker Marvell declined on disruption
in the hard disk drive market and worries over stock option grants. Discount
retailer Dollar General disappointed due to high gasoline prices hitting Dollar
General customers and thus impacting the company's top line. Additionally,
Dollar General has been selling a greater proportion of lower-margin "highly
consumable products" than anticipated. These are products like perishable foods
and cleaning supplies that are used up quickly by consumers and need to be
replaced frequently, but carry thin margins. In terms of sector allocations, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) in Health Care,
50
- --------------------------------------------------------------------------------
which posted positive absolute returns. However, it lagged the market, and hurt
relative returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and Lexmark. The Fund also benefited from not owning
Intel, whose shares declined during the year. AT&T is benefiting from the
stabilization of its long distance pricing. Also, cost-cutting from its
acquisitions is going well. Cisco's revenue and earnings growth has surprised
the market on the upside. The strong secular (i.e. long term) move of enterprise
and service provider networks toward all-IP networks plays into Cisco's
strength. We continue to hold a position in the stock. UBS, the Swiss-based
financial institution, posted outstanding results due primarily to its
well-performing wealth management business. UBS remains one of our top holdings.
We initiated a position in Broadcom during a low in its share price during the
summer after it guided down estimates and faced pressures due to options
investigations. Despite its solid gains, Broadcom remains a material holding as
we see strong business prospects for many years to come and valuation is still
reasonable. Shares in Lexmark, a manufacturer and supplier of printing and
imaging solutions, rose as the company recovered from its product and
distribution missteps last year. Other positive contributors to performance
included ExxonMobil, Bank of America and Citigroup.
WHAT IS THE OUTLOOK?
Hartford Stock HLS Fund continues to be managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio and look for companies that exhibit industry leadership, strong
balance sheets, solid management, high return on equity, accelerating earnings,
and/or attractive valuation with a catalyst. Our bottom-up investment approach
resulted in the Fund being most overweight Information Technology, Health Care
and Materials, and most underweight Energy, Utilities and Financials at the end
of the period.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.1%
- -------------------------------------------------------------------
Capital Goods 2.6
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 6.2
- -------------------------------------------------------------------
Energy 6.2
- -------------------------------------------------------------------
Finance 22.4
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 8.9
- -------------------------------------------------------------------
Technology 28.3
- -------------------------------------------------------------------
Utilities 1.0
- -------------------------------------------------------------------
Short-Term Investments 0.5
- -------------------------------------------------------------------
Other Assets & Liabilities (0.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
51
Hartford Total Return Bond HLS Fund inception 8/31/1977
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS U.S AGGREGATE BOND
TOTAL RETURN BOND IA INDEX
-------------------- ----------------------------------
12/96 10000 10000
10042 10031
10087 10056
9981 9944
10112 10094
10224 10190
10371 10311
10722 10589
10610 10499
10778 10655
10915 10809
10985 10859
12/97 11135 10968
11288 11109
11278 11100
11333 11138
11382 11196
11502 11302
11611 11398
11608 11422
11710 11608
12020 11880
11892 11817
12012 11884
12/98 12042 11920
12137 12004
11828 11794
11899 11859
11962 11897
11803 11792
11733 11755
11708 11705
11686 11700
11800 11835
11846 11879
11854 11878
12/99 11799 11821
11777 11782
11920 11924
12103 12082
12083 12047
12091 12041
12368 12291
12446 12403
12603 12583
12682 12662
12716 12746
12907 12955
12/00 13214 13196
13521 13411
13596 13527
13631 13595
13607 13538
13686 13619
13670 13671
13995 13977
14171 14138
14206 14302
14461 14601
14406 14399
12/01 14361 14307
14415 14423
14476 14563
14273 14321
14569 14599
14725 14723
14722 14850
14754 15029
15038 15283
15169 15531
15244 15459
15415 15455
12/02 15809 15775
15942 15789
16195 16007
16216 15994
16425 16126
16803 16427
16794 16394
16295 15843
16424 15948
16860 16370
16751 16218
16828 16257
12/03 17049 16422
17200 16555
17340 16734
17442 16859
17031 16420
16971 16355
17054 16447
17200 16610
17499 16927
17574 16973
17749 17115
17682 16979
12/04 17837 17135
17928 17243
17873 17141
17769 17053
18003 17284
18152 17471
18285 17566
18171 17406
18377 17629
18198 17447
18047 17309
18118 17386
12/05 18274 17551
18303 17552
18342 17610
18191 17438
18175 17406
18148 17387
18173 17424
18392 17660
18668 17930
18819 18088
18976 18207
19204 18419
12/06 19152 18312
</Table>
<Table>
--- TOTAL RETURN BOND IA --- LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX
$10,000 starting value $10,000 starting value
$19,152 ending value $18,312 ending value
</Table>
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is an unmanaged index and is composed
of securities from the Lehman Brothers Government/Credit Bond Index,
Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial
Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------------
Total Return Bond IA 4.80% 5.93% 6.71%
- ------------------------------------------------------------
Total Return Bond IB(3) 4.54% 5.67% 6.48%
- ------------------------------------------------------------
Lehman Brothers U.S. Aggregate
Bond Index 4.33% 5.06% 6.24%
- ------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
NASRI TOUTOUNGI
Managing Director
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford Total Return Bond HLS Fund gained 4.80% for
the year, vs. the Lehman Brothers U.S. Aggregate Bond Index which gained 4.33%.
The Fund also outpaced the 4.14% average return of the Lipper VA Intermediate
Investment Grade Funds category, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Sector allocation, duration (i.e. sensitivity to changes in interest rates)
positioning and security selection all contributed to Fund outperformance during
2006. Sector allocation accounted for more than half of the Fund's
outperformance during the period. The Fund was underweight (i.e. the Fund's
sector position was less than the benchmark position) Treasuries versus the
benchmark, which proved beneficial, as Treasuries underperformed the overall
market. Our positions in the High Yield sector, driven largely by exposure to
industrial issuers in the automotive industry (GMAC and Ford Motor Company),
boosted performance. The Fund's underweight to mortgages detracted from
performance, as this sector had positive excess returns.
Interest rate positioning accounted for more than a quarter of outperformance,
with most of the value added during the first six months of the year. Early in
the year, the strong economy, core inflation numbers and upward pressure on
energy prices led to our view that the Federal Reserve Bank (the "Fed") would
continue to raise rates, which proved accurate. Thus, the Fund's shorter
duration (i.e. sensitivity to changes in interest rates) position during this
period enhanced returns.
Security selection within the Investment Grade Corporate sector was also a
positive performance driver. Leading this outperformance was the Fund's
overweight to the hybrid sector of the corporate bond market. Research by our
analyst team led to investment in these securities, which have generally
provided superior yields with high liquidity. Also beneficial were tactical
purchases on the long end (i.e. longer maturity) of the Industrial Investment
Grade Corporate sector, as well as Technology, Media and Telecommunication
holdings which underperformed early in the year but outperformed during the
second half. Although spread tightening (i.e. the difference between short and
long term interest rates narrowing) reduced overall attractiveness for emerging
markets, we were able to identify a number of opportunities in specific issuers
within the sector that added to the Fund's excess returns.
52
- --------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK?
Economic leading indicators suggest that we are entering an environment of
sub-par, though non-recessionary, growth. Employment and income data have offset
weakness in housing. Monetary policy should remain on hold in the near future
given the Fed's cautious outlook on inflation amidst moderating growth. As such,
we have positioned the portfolio to be neutral on interest rates, but anticipate
adding duration over the coming weeks and months. Having increased our
allocations to investment grade corporate bonds and to high yield in the third
quarter, we will maintain this stance unless more evidence arises that either
inflation is out of hand or that leading indicators of growth point to a
recession. If either of these unlikely scenarios becomes more apparent, we would
seek to protect the portfolio's performance by migrating toward safer bonds such
as Treasuries and Agencies. In the interim, given the amount of excess liquidity
driven by foreign demand for U.S. assets, we remain optimistic on the prospects
for credit to perform. We find little value in non-dollar (i.e. foreign)
denominated sovereigns and corporates, as rates are expected to rise in Europe
and Asia more so than in the U.S. That said, we view the dollar as overvalued,
in particular versus the Japanese Yen. As a result, we may opportunistically
invest in short duration, Yen-denominated securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 0.9
- -------------------------------------------------------------------
Consumer Cyclical 3.4
- -------------------------------------------------------------------
Consumer Staples 0.7
- -------------------------------------------------------------------
Energy 2.2
- -------------------------------------------------------------------
Finance 31.5
- -------------------------------------------------------------------
Foreign Governments 0.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 2.0
- -------------------------------------------------------------------
Services 4.3
- -------------------------------------------------------------------
Technology 5.5
- -------------------------------------------------------------------
Transportation 0.8
- -------------------------------------------------------------------
U.S. Government Agencies 31.8
- -------------------------------------------------------------------
U.S. Government Securities 5.6
- -------------------------------------------------------------------
Utilities 1.9
- -------------------------------------------------------------------
Short-Term Investments 20.8
- -------------------------------------------------------------------
Other Assets & Liabilities (15.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
CREDIT QUALITY HOLDINGS
- -------------------------------------------------------------------
AAA 54.7%
- -------------------------------------------------------------------
AA 4.5
- -------------------------------------------------------------------
A 10.0
- -------------------------------------------------------------------
BBB 14.2
- -------------------------------------------------------------------
BB 10.8
- -------------------------------------------------------------------
B 5.7
- -------------------------------------------------------------------
NR 0.1
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</Table>
53
Hartford U.S. Government Securities HLS Fund inception 3/24/1987
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS INTERMEDIATE GOV'T
U.S. GOVERNMENT SECURITIES IA BOND INDEX
----------------------------- ----------------------------------
12/96 10000 10000
10034 10038
10051 10054
9935 9997
10089 10110
10173 10189
10291 10276
10551 10465
10465 10426
10620 10539
10760 10662
10791 10686
12/97 10908 10772
11061 10913
11040 10901
11080 10934
11124 10987
11240 11063
11348 11137
11359 11179
11600 11390
11869 11656
11807 11676
11850 11639
12/98 11876 11685
11927 11737
11687 11577
11750 11653
11788 11684
11666 11613
11621 11631
11580 11632
11567 11648
11709 11748
11724 11772
11713 11780
12/99 11647 11743
11596 11703
11717 11801
11862 11935
11840 11930
11844 11963
12065 12153
12160 12233
12344 12370
12448 12478
12542 12564
12767 12748
12/00 13022 12973
13174 13145
13305 13266
13367 13362
13294 13319
13344 13374
13369 13416
13648 13667
13789 13789
14043 14084
14274 14304
14072 14133
12/01 13999 14066
14092 14126
14251 14243
14069 14028
14336 14291
14458 14391
14586 14571
14864 14844
15077 15014
15350 15272
15311 15261
15214 15141
12/02 15501 15421
15514 15387
15707 15561
15694 15564
15767 15608
15993 15853
15974 15827
15442 15443
15504 15470
15796 15806
15692 15651
15713 15652
12/03 15834 15774
15918 15859
16058 16011
16147 16122
15790 15762
15734 15711
15793 15751
15898 15865
16111 16101
16115 16107
16209 16206
16073 16055
12/04 16161 16142
16200 16163
16120 16073
16086 16033
16247 16220
16350 16349
16398 16403
16281 16263
16458 16444
16340 16317
16257 16249
16315 16315
12/05 16412 16414
16425 16413
16441 16416
16380 16365
16390 16380
16385 16385
16410 16415
16583 16587
16775 16773
16890 16895
16970 16975
17127 17110
12/06 17071 17045
</Table>
<Table>
--- U.S. GOVERNMENT SECURITIES IA --- LEHMAN BROTHERS INTERMEDIATE GOV'T
$10,000 starting value BOND INDEX
$17,071 ending value $10,000 starting value
$17,045 ending value
</Table>
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX is an unmanaged index of
government bonds with maturities of between one and ten years.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
U.S. Government
Securities IA 4.01% 4.05% 5.49%
- -------------------------------------------------------
U.S. Government
Securities IB(2) 3.75% 3.79% 5.23%
- -------------------------------------------------------
Lehman Brothers
Intermediate Gov't Bond
Index 3.84% 3.92% 5.48%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
CHRISTOPHER HANLON, CFA RUSSELL M. REGENAUER
Senior Vice President Senior Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford U.S. Government Securities HLS Fund gained
4.01% for the year, outperforming the Lehman Brothers Intermediate Government
Bond Index, which gained 3.84%. The Fund also outperformed the 2.81% average
return of the Lipper VA U.S. Government Securities Funds category, a group of
funds with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The primary driver of the Fund's outperformance was its above-benchmark exposure
to Mortgage-Backed Securities (MBS), a posture we maintained throughout 2006. We
continued to emphasize MBS in the portfolio in the belief that long-term rates
would remain in a narrow trading range, providing a supportive environment for
the sector. While there were brief periods of volatility in the markets, this
environment largely came to pass, and MBS strongly outperformed other AAA
sectors.
Within MBS, the vast majority of the portfolio's exposure was to agency
Mortgage-Backed Securities. Overweights (i.e. the Fund's sector position was
more than the benchmark position) to 30-year agency MBS relative to 15-year MBS
contributed to performance as longer-term yields fell more than intermediates
during the period. Holdings of newly issued mortgage pools performed the best
and added to performance while underweights to 5.50% coupon mortgages hurt
performance as these securities were favored by Asian investors for much of the
year. Finally, the addition of high quality floating-rate Commercial
Mortgage-Back Securities (CMBS) added to returns.
In addition to the CMBS, we also continued to add to the Fund's agency exposure
as part of a broader effort to supplement the portfolio's exposure to highly
rated securities with a yield advantage over Treasuries. We increased the Fund's
exposure to U.S. Government guaranteed Small Business Administration (SBA) loans
during the period and funded these purchases with the sale of Treasuries.
Other positions were less beneficial for performance. Duration (i.e. sensitivity
to changes in interest rates) positioning ranged between defensive to slightly
neutral to the benchmark over the course of the year and, as a result, was
slightly negative in terms of relative (i.e. performance of the Fund as measured
against the benchmark) gains. Although the portfolio benefited from an
underweight to Treasuries, our security selection within that sector muted
returns. We also largely eliminated the Fund's small exposure to Treasury
54
- --------------------------------------------------------------------------------
inflation protected securities (TIPS) during the period in order to avoid
further losses in this underperforming sector. We would, however, anticipate
adding more of these securities should their prices reach attractive levels.
WHAT IS YOUR OUTLOOK?
We believe that the Federal Reserve Bank (the "Fed") has been successful in
laying the groundwork for a likely "soft landing," characterized by a moderately
slower economy and easing inflation pressures. Several key supports remain
intact for the economy to stay out of recession, including continued strength in
employment, softening oil prices and what appears to be a stabilizing housing
market. Growth also looks strong in the rest of the world, a necessary
development to address the twin budget and trade deficits in the U.S.
Within this environment, we anticipate keeping the portfolio's duration modestly
conservative, with a neutral to slightly short duration relative to the
benchmark. Should longer-term yields reach attractive levels (a development we
see as likely in the first quarter of 2007), we would take the opportunity both
to lengthen the portfolio's duration and to reposition the portfolio along the
yield curve. We believe that mortgage-backed securities should continue to do
well in such an environment and expect to maintain an overweight in MBS to
capture any outperformance.
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
RATING HOLDINGS
- -------------------------------------------------------------------
AAA 95.9%
- -------------------------------------------------------------------
AA 3.9
- -------------------------------------------------------------------
NR 0.2
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Mortgage Backed Securities 14.7%
- -------------------------------------------------------------------
Corporate Bonds -- Investment Grade 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 74.1
- -------------------------------------------------------------------
U.S. Government Securities 15.8
- -------------------------------------------------------------------
Short-Term Investments 14.5
- -------------------------------------------------------------------
Other Assets & Liabilities (19.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
55
Hartford Value HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
VALUE IA RUSSELL 1000 VALUE INDEX
-------- ------------------------
4/01 10000 10000
10116 10225
10070 9998
10103 9977
9795 9577
9140 8903
9130 8826
9720 9339
12/01 10006 9559
9831 9486
9806 9501
10026 9950
9559 9609
9597 9657
9030 9103
8298 8256
8144 8319
7253 7394
7807 7942
8246 8442
12/02 7741 8076
7473 7881
7365 7670
7406 7683
8024 8359
8552 8899
8630 9010
8708 9144
8885 9286
8742 9196
9267 9759
9416 9891
12/03 9955 10501
10030 10685
10169 10914
10062 10819
9885 10554
10043 10662
10244 10914
9872 10760
9934 10913
10049 11082
10242 11267
10644 11836
12/04 11021 12233
10830 12016
11279 12414
11024 12243
10904 12024
11109 12314
11185 12448
11590 12809
11575 12753
11754 12932
11475 12603
11864 13018
12/05 11917 13096
12383 13604
12529 13687
12660 13873
12998 14225
12724 13866
12826 13954
13154 14294
13405 14533
13645 14823
13923 15308
14166 15657
12/06 14518 16009
</Table>
<Table>
--- VALUE IA --- RUSSELL 1000 VALUE INDEX
$10,000 starting value $10,000 starting value
$14,518 ending value $16,009 ending value
</Table>
RUSSELL 1000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 1000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ----------------------------------------------------------
Value IA 21.82% 7.73% 6.79%
- ----------------------------------------------------------
Value IB 21.52% 7.47% 6.54%
- ----------------------------------------------------------
Russell 1000 Value Index 22.25% 10.86% 8.65%
- ----------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
JOHN R. RYAN, CFA
Senior Vice President, Managing Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ending December 31, 2006, Hartford Value HLS Fund Class
IA shares returned 21.82%, slightly underperforming the Russell 1000 Value Index
return of 22.25%, but outperforming the Lipper Large Cap Value VA-UF peer group
average return of 19.00%, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's Russell
1000 Value benchmark posted positive double-digit returns, with
Telecommunication Services and Energy leading the way. In addition, small cap
stocks continued to dominate large and mid cap stocks in each of the last seven
years. The Russell 2000 Small Cap Index returned 18.37%, compared to the S&P 500
Index return of 15.78% and the S&P 400 Mid Cap Index return of 10.32%.
Stock selection within Financials, Industrials, Telecommunication Services, and
Energy was the primary driver of the Fund's benchmark relative (i.e. performance
of the Fund as measured against the benchmark) performance. The top three
contributors on a relative basis were Caterpillar (Industrials), BellSouth
(Telecommunication Services) and Goldman Sachs (Diversified Financials). In
addition, Exxon Mobil (Energy) and AT&T (Telecommunication Services) were also
large absolute (total return) contributors to performance. We eliminated our
position in Caterpillar by taking profits given concerns that future earnings
growth would be below expectations. BellSouth and AT&T benefited from the
strongly anticipated merger of the two companies. Strong capital markets along
with robust investment banking prospects resulted in rising earning expectations
and strong stock performance for Goldman Sachs. Exxon Mobil's shares were
supported by the continued supply/demand imbalance in energy. We held our
position in Goldman Sachs and Exxon Mobil at the end of the period.
Key detractors on both a relative and an absolute basis were Wellpoint Health
(Health Care), whose shares traded on volatility within the managed care
industry despite strong results; PepsiCo (Consumer Staples), whose shares lagged
over concerns that input cost pressures will weigh on earnings; Nike (Consumer
Discretionary), whose shares struggled due to weakness in the marquee athletic
footwear; and Sprint Nextel (Telecommunication Services) whose stock declined as
the company continued to find difficulty in combining two different networks
following their merger and migrating its customer base onto its new CDMA
platform. At the end of the period, we had eliminated Nike and significantly
reduced our position in Wellpoint Health.
56
- --------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK?
We expect the global economy to transition from slower activity in the first
half of 2007 to stronger activity in the second half and beyond. Weakness in the
U.S. and Continental Europe should be partially offset by more robust growth in
the United Kingdom and Japan, as well as ongoing strength in the emerging
economies. The temporary global growth pause will likely reduce inflationary
pressures and allow central banks to maintain a steady hand, setting the stage
for a resumed expansion in 2008. Moderate inflation, stable monetary policies
and the outlook for stronger global growth next year should provide a favorable
backdrop for financial markets.
In this environment, we have reduced further the cyclicality of our portfolios,
which has been ongoing for several consecutive quarters. We methodically
decreased our exposure to the Consumer, Energy, and mortgage-related Financial
Institutions and increased our exposure to less cyclical areas, including
Telecommunications, Consumer Non-Durables, and non-credit sensitive Financial
Institutions.
At the end of the period, relative to the Russell 1000 Value Index, the Fund was
overweight (i.e. the Fund's sector position was more than the benchmark
position) Consumer Staples, Industrials, Information Technology, Health Care and
Telecommunication Services and underweight Financials, Consumer Discretionary,
Energy, Utilities and Materials.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.6%
- -------------------------------------------------------------------
Capital Goods 6.7
- -------------------------------------------------------------------
Consumer Cyclical 6.1
- -------------------------------------------------------------------
Consumer Staples 5.7
- -------------------------------------------------------------------
Energy 9.6
- -------------------------------------------------------------------
Finance 30.4
- -------------------------------------------------------------------
Health Care 7.4
- -------------------------------------------------------------------
Services 2.7
- -------------------------------------------------------------------
Technology 16.0
- -------------------------------------------------------------------
Transportation 3.1
- -------------------------------------------------------------------
Utilities 4.8
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (3.7)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
57
Hartford Value Opportunities HLS Fund inception 5/1/1996
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
VALUE OPPORTUNITIES IA RUSSELL 3000 VALUE INDEX
---------------------- ------------------------
12/96 10000 10000
10344 10450
10478 10598
10105 10227
10461 10628
11063 11247
11350 11738
11960 12583
11552 12196
12102 12941
11770 12580
12282 13095
12/97 12523 13483
12613 13287
13355 14172
13889 15011
13943 15109
13645 14855
13820 15020
13329 14673
11367 12480
11837 13195
12580 14165
13304 14802
12/98 13731 15303
13933 15388
13572 15108
13950 15388
14943 16823
14589 16688
15175 17181
14713 16684
14260 16066
13651 15522
14217 16329
14266 16215
12/99 14961 16321
14360 15796
13512 14766
15612 16437
15722 16265
15945 16407
14959 15740
15313 15959
16465 16836
16064 16973
17268 17359
16700 16733
12/00 17728 17633
18539 17728
18049 17267
17165 16680
18449 17495
18459 17892
18327 17573
17835 17510
16898 16853
15017 15619
15232 15521
16382 16438
12/01 17277 16869
16822 16765
16673 16797
17232 17626
16128 17115
15747 17148
14319 16211
13083 14637
13293 14735
11695 13138
12744 14055
13777 14956
12/02 12966 14307
12671 13956
12270 13578
12286 13609
13716 14813
14798 15808
14995 16011
15194 16290
15849 16571
15833 16407
16842 17436
17402 17706
12/03 18395 18761
18991 19116
19293 19522
19082 19386
18612 18870
18795 19065
19345 19556
18663 19228
18743 19494
19106 19835
19655 20162
20765 21247
12/04 21867 21940
21219 21511
21964 22200
21629 21882
20864 21428
21771 22008
22225 22311
22895 23012
22853 22873
22606 23162
21930 22575
23185 23332
12/05 23687 23443
24636 24444
24709 24579
25001 24989
25769 25571
24985 24888
24824 25060
24615 25580
25137 26038
25730 26533
26847 27446
27801 28086
12/06 28193 28681
</Table>
<Table>
--- VALUE OPPORTUNITIES IA --- RUSSELL 3000 VALUE INDEX
$10,000 starting value $10,000 starting value
$28,193 ending value $28,681 ending value
</Table>
RUSSELL 3000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 3000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------
Value Opportunities IA 19.02% 10.29% 10.92%
- --------------------------------------------------------
Value Opportunities
IB(2) 18.73% 10.02% 10.65%
- --------------------------------------------------------
Russell 3000 Value Index 22.34% 11.20% 11.11%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
JAMES H. AVERILL DAVID R. FASSNACHT, CFA JAMES N. MORDY DAVID W. PALMER, CFA
Senior Vice President, Senior Vice President, Senior Vice President, Vice President
Partner Partner Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ended December 31, 2006, the Class IA shares of the
Hartford Value Opportunities HLS Fund returned 19.02%, underperforming the
Russell 3000 Value Index return of 22.34% but outperforming the Lipper Multi Cap
Value VA-UF average return of 17.30%, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The U.S. equity markets posted strong double-digit returns for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 3000 Value Index (22.34%) versus the Russell
3000 Growth Index (9.46%). All ten broad industry sectors of the Fund's Russell
3000 Value benchmark posted positive double-digit returns, with
Telecommunication Services and Energy leading the way. In addition, small cap
stocks also continued to dominate large and mid cap stocks in each of the last
seven years. In 2006, the Russell 2000 Small Cap Index returned 18.37%, compared
to the S&P 500 Index return of 15.78% and the S&P 400 MidCap Index return of
10.32%.
The Fund's underperformance relative to the benchmark was due to poor stock
selection within six of the ten broad industry sectors of the market. The Fund's
holdings within Financials, Consumer Discretionary, and Health Care were among
the weakest contributors. Key detractors from relative (i.e. performance of the
Fund as measured against the benchmark) performance included Foot Locker
(Retailing), Cinram (Media) and Capital One Financial (Diversified Financials).
Foot Locker's shares declined following management's indication that they have
no interest in selling to a private equity buyer as has been rumored for some
time. In addition, sales within the U.S. and Europe continued to be weak.
Cinram's shares declined on concerns that their largest shareholder, a failed
hedge fund, would be forced into a disorderly liquidation of their position. In
addition, Cinram's largest DVD customer, Time Warner (Consumer Discretionary),
had a weak year in DVD sales which hurt volumes and profits. Capital One
Financial's shares struggled due to their merger with North Fork Bancorp earlier
in the year. In addition, on an absolute (i.e. total return) basis, YRC
Worldwide (Industrials), which suffered from merger-related indigestion and
Boston Scientific (Health Care), whose stock struggled with softer sales of
implantable cardiac defibrillators, also detracted from performance. We did not
own either of these stocks at the end of the period. The Fund's underweight
(i.e. the Fund's sector position was less than the benchmark position) position
in Telecommunication Services, the top performing sector during the period, and
an overweight in Information Technology, a relative underperformer, also
detracted from performance.
Key contributors to relative and absolute performance were Cisco Systems
(Information Technology), Comcast (Consumer Discretionary) and UAL Corp.
(Transportation). Cisco benefited from
58
- --------------------------------------------------------------------------------
the strong secular (i.e. long term) move of enterprise and service provider
networks toward all-Internet Protocol networks, which plays into the company's
strength. Comcast's shares rose due to its continued success in offering
customers with the "triple play" -- cable, internet and wireline services. UAL's
shares rose due to the normalization of travel following the London bombing
threat in August and lower jet fuel cost. We held all three stocks at the end of
the period.
WHAT IS THE OUTLOOK?
We expect to see continued moderation of U.S. economic growth in the early part
of 2007 as inventory corrections continue throughout a number of industries,
including those tied to the weak residential housing market. As a result, we
believe earnings growth will moderate in 2007, though there is room for stock
valuation multiples to expand given the continued low level of interest rates.
Given this environment and as a result of our bottom-up stock picking, our most
significant overweight positions relative to the Russell 3000 Value Index are:
Information Technology, Consumer Discretionary, Materials, Industrials and
Health Care. Despite the likelihood of a softening economy next year, we think
our stocks are undervalued and have solid catalysts for appreciation. By far our
largest benchmark relative underweight remains Financials due to expectations
for continued earnings pressure from the flat yield curve, probable worsening of
credit conditions, and valuations that are not compensatory. Utilities, Consumer
Staples, Telecommunications Services and Energy are also notably underweight,
given their high valuations relative to earnings growth potential.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 9.0%
- -------------------------------------------------------------------
Capital Goods 5.3
- -------------------------------------------------------------------
Consumer Cyclical 8.3
- -------------------------------------------------------------------
Consumer Staples 2.1
- -------------------------------------------------------------------
Energy 9.2
- -------------------------------------------------------------------
Finance 29.0
- -------------------------------------------------------------------
Health Care 7.2
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 17.4
- -------------------------------------------------------------------
Transportation 4.4
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (9.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
59
(This page intentionally left blank)
60
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- 67.8%
BASIC MATERIALS -- 3.5%
3,205 Alcoa, Inc. ...................................... $ 96,194
834 Cameco Corp. ..................................... 33,719
1,588 Companhia Vale do Rio Doce ADR.................... 47,233
929 Dow Chemical Co. ................................. 37,092
609 E.I. DuPont de Nemours & Co. ..................... 29,645
1,148 Mittal Steel Co. ................................. 48,402
-----------
292,285
-----------
CAPITAL GOODS -- 1.8%
1,046 American Standard Cos., Inc. ..................... 47,977
644 Boeing Co. ....................................... 57,177
513 Deere & Co. ...................................... 48,799
-----------
153,953
-----------
CONSUMER CYCLICAL -- 6.0%
1,335 Altria Group, Inc. ............................... 114,604
3,128 Circuit City Stores, Inc. ........................ 59,373
2,198 D.R. Horton, Inc. ................................ 58,212
1,434 eBay, Inc. (D).................................... 43,105
1,390 Gap, Inc. ........................................ 27,113
1,289 Home Depot, Inc. ................................. 51,758
1,177 Lowe's Cos., Inc. ................................ 36,657
443 Toyota Motor Corp. (A)............................ 29,669
1,898 Wal-Mart Stores, Inc. ............................ 87,640
-----------
508,131
-----------
CONSUMER STAPLES -- 4.3%
441 Bunge Ltd. ....................................... 31,984
520 Clorox Co. ....................................... 33,384
6 Japan Tobacco, Inc. (A)........................... 30,968
1,457 PepsiCo, Inc. .................................... 91,154
1,488 Procter & Gamble Co. ............................. 95,653
1,345 Tyson Foods, Inc. Class A......................... 22,119
2,133 Unilever N.V. NY Shares........................... 58,113
-----------
363,375
-----------
ENERGY -- 4.2%
342 CNOOC Ltd. ADR.................................... 32,392
1,321 EnCana Corp. ..................................... 60,714
1,227 ExxonMobil Corp. ................................. 94,040
2,911 Halliburton Co. .................................. 90,380
997 Occidental Petroleum Corp. ....................... 48,659
73 Ultra Petroleum Corp (D).......................... 3,476
611 XTO Energy, Inc. ................................. 28,752
-----------
358,413
-----------
FINANCE -- 15.1%
3,126 Aegon N.V. (A).................................... 59,323
5,032 Akbank T.A.S. (A)................................. 30,194
1,929 American International Group, Inc. ............... 138,246
2,435 Bank of America Corp. ............................ 130,020
1,268 Bank of New York Co., Inc. ....................... 49,929
709 Capital One Financial Corp. ...................... 54,450
2,984 Citigroup, Inc. .................................. 166,234
1,789 Countrywide Financial Corp. ...................... 75,960
2,341 E*Trade Financial Corp. (D)....................... 52,474
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
667 Federal Home Loan Mortgage Corp. ................. $ 45,316
571 ING Groep N.V. ................................... 25,239
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 62,500
361 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 61,955
960 State Street Corp. ............................... 64,709
1,850 UBS AG............................................ 111,582
2,221 UnitedHealth Group, Inc. ......................... 119,318
1,522 Western Union Co.................................. 34,123
-----------
1,281,572
-----------
HEALTH CARE -- 7.0%
1,732 Abbott Laboratories............................... 84,366
4,278 Boston Scientific Corp. (D)....................... 73,498
3,088 Bristol-Myers Squibb Co. ......................... 81,274
344 Cardinal Health, Inc. ............................ 22,183
3,808 Elan Corp. plc ADR (D)............................ 56,161
1,735 Eli Lilly & Co. .................................. 90,399
1,897 Sanofi-Aventis S.A. ADR........................... 87,589
2,542 Schering-Plough Corp. ............................ 60,088
1,790 Shionogi & Co. Ltd. (A)........................... 35,154
-----------
590,712
-----------
SERVICES -- 6.2%
1,511 Accenture Ltd. Class A............................ 55,783
503 Fluor Corp. ...................................... 41,062
699 Monster Worldwide, Inc. (D)....................... 32,601
5,542 Sun Microsystems, Inc. (D)(G)..................... 30,039
2,357 Time Warner, Inc. ................................ 51,327
1,800 United Parcel Service, Inc. Class B............... 134,957
1,715 Viacom, Inc. Class B (D).......................... 70,375
1,235 Walt Disney Co. .................................. 42,337
4,415 XM Satellite Radio Holdings, Inc. Class A (D)..... 63,803
-----------
522,284
-----------
TECHNOLOGY -- 19.0%
1,287 Adobe Systems, Inc. (D)........................... 52,901
3,852 AT&T, Inc. ....................................... 137,716
1,659 Broadcom Corp. Class A (D)........................ 53,615
5,343 Cisco Systems, Inc. (D)........................... 146,030
2,914 Corning, Inc. (D)................................. 54,519
8,432 EMC Corp. (D)..................................... 111,297
4,433 First Data Corp. ................................. 113,125
4,793 Flextronics International Ltd. (D)................ 55,025
7,219 General Electric Co. ............................. 268,630
194 Google, Inc. (D).................................. 89,517
2,525 Maxim Integrated Products, Inc. .................. 77,309
2,512 Medtronic, Inc. .................................. 134,390
2,697 Microsoft Corp. .................................. 80,523
1,121 Motorola, Inc. ................................... 23,046
1,140 Sharp Corp. (A)................................... 19,601
4,347 Sprint Nextel Corp. .............................. 82,113
1,677 Texas Instruments, Inc. .......................... 48,303
2,368 Yahoo!, Inc. (D).................................. 60,476
-----------
1,608,136
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
61
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 0.7%
2,588 British Energy Group plc (D)(A)................... $ 27,432
221 E.On AG (A)....................................... 29,802
-----------
57,234
-----------
Total common stock
(cost $5,293,269)............................... $ 5,736,095
-----------
<Caption>
PRINCIPAL
AMOUNT
- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 10,000 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 9,080
10,000 State of Illinois, Taxable Pension,
5.10%, 06/01/2033............................... 9,584
-----------
Total municipal bonds
(cost $19,888).................................. $ 18,664
-----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 2.9%
FINANCE -- 2.9%
17,200 Asset Securitization Corp.,
6.93%, 02/14/2043............................... $ 18,513
7,301 Asset Securitization Corp.,
7.49%, 04/14/2029............................... 7,314
4,590 Banc of America Commercial Mortgage, Inc.,
5.35%, 09/10/2047 (L)........................... 4,561
9,575 Bear Stearns Commercial Mortgage Securities, Inc.,
5.30%, 10/12/2042 (L)........................... 9,511
676 Capital Auto Receivables Asset Trust,
2.00%, 11/15/2007............................... 676
3,255 Centex Home Equity,
4.72%, 10/25/2031............................... 3,227
16,000 Citibank Credit Card Issuance Trust,
2.55%, 01/20/2009............................... 15,980
15,000 Citigroup/Deutsche Bank Commercial Mortgage Trust,
5.40%, 07/15/2044 (L)........................... 14,966
15,000 Commercial Mortgage Pass Through Certificates,
5.12%, 06/10/2044............................... 14,789
5,322 Connecticut RRB Special Purpose Trust CL&P,
5.73%, 03/30/2009............................... 5,323
3,952 Countrywide Home Loans,
5.29%, 11/25/2035 (L)........................... 3,931
7,365 Credit Suisse Mortgage Capital Certificates,
5.47%, 09/15/2039............................... 7,422
6,945 Credit Suisse Mortgage Capital Certificates,
5.61%, 02/15/2039 (L)........................... 7,057
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 10,385 Greenwich Capital Commercial Funding Corp.,
5.22%, 04/10/2037 (L)........................... $ 10,311
9,327 Harley-Davidson Motorcycle Trust,
2.53%, 11/15/2011............................... 9,100
9,125 Household Automotive Trust,
5.28%, 09/17/2011............................... 9,152
6,305 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.34%, 12/15/2044 (L)........................... 6,282
7,755 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.48%, 12/12/2044............................... 7,829
2,894 Marriott Vacation Club Owner Trust,
5.36%, 10/20/2028 (I)........................... 2,888
3,963 Merrill Lynch Mortgage Investors Trust,
5.89%, 03/25/2036 (L)........................... 3,996
15,000 Merrill Lynch Mortgage Trust,
5.05%, 07/12/2038............................... 14,711
9,580 Morgan Stanley Capital I,
5.23%, 09/15/2042............................... 9,505
10,853 Residential Accredit Loans, Inc.,
5.27%, 02/25/2035 (L)........................... 10,778
12,910 Susquehanna Auto Lease Trust,
5.21%, 03/16/2009 (I)........................... 12,891
182 USAA Auto Owner Trust,
2.06%, 04/15/2008............................... 181
10,000 Wachovia Bank Commercial Mortgage Trust,
5.12%, 07/15/2042............................... 9,839
9,918 Wells Fargo Mortgage Backed Securities Trust,
4.55%, 03/25/2035 (L)........................... 9,774
14,130 Wells Fargo Mortgage Backed Securities Trust,
5.54%, 04/25/2036 (L)........................... 14,091
-----------
Total asset & commercial
mortgage backed securities
(cost $243,470)................................. $ 244,598
-----------
CORPORATE BONDS: INVESTMENT GRADE -- 10.5%
BASIC MATERIALS -- 0.1%
10,000 Alcan, Inc.,
7.25%, 11/01/2028............................... $ 11,181
-----------
CONSUMER CYCLICAL -- 0.8%
9,400 DaimlerChrysler N.A. Holdings Corp.,
5.88%, 03/15/2011............................... 9,435
9,550 DaimlerChrysler N.A. Holdings Corp.,
6.50%, 11/15/2013............................... 9,805
3,084 Federated Retail Holdings, Inc.,
5.90%, 12/01/2016............................... 3,079
12,946 SCL Term Aereo Santiago S.A.,
6.95%, 07/01/2012 (I)........................... 13,158
</Table>
The accompanying notes are an integral part of these financial statements.
62
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
$ 14,200 Target Corp.,
5.88%, 11/01/2008............................... $ 14,369
15,000 Wal-Mart Stores, Inc.,
6.88%, 08/10/2009............................... 15,627
-----------
65,473
-----------
CONSUMER STAPLES -- 1.0%
6,500 Coca-Cola Enterprises, Inc.,
6.75%, 09/15/2028............................... 7,137
500 Coca-Cola Enterprises, Inc.,
8.50%, 02/01/2022............................... 634
13,140 Colgate-Palmolive Co.,
5.58%, 11/06/2008............................... 13,245
13,037 ConAgra Foods, Inc.,
7.88%, 09/15/2010............................... 14,108
9,825 Diageo Capital plc,
4.38%, 05/03/2010............................... 9,557
13,400 PepsiAmericas, Inc.,
6.38%, 05/01/2009............................... 13,633
20,775 Procter & Gamble Co.,
9.36%, 01/01/2021............................... 26,021
2,975 Weyerhaeuser Co.,
7.38%, 03/15/2032............................... 3,105
-----------
87,440
-----------
FINANCE -- 5.5%
16,800 Ace INA Holdings, Inc.,
5.88%, 06/15/2014............................... 17,123
10,500 AMBAC Financial Group, Inc.,
5.95%, 12/05/2035............................... 10,456
500 American General Finance Corp.,
6.63%, 02/15/2029............................... 552
20,000 AXA Financial, Inc.,
7.00%, 04/01/2028............................... 22,511
20,000 Bank of America Corp.,
5.88%, 02/15/2009............................... 20,281
4,830 BB&T Corp.,
4.90%, 06/30/2017............................... 4,568
17,000 Berkshire Hathaway Finance Corp.,
4.85%, 01/15/2015............................... 16,472
12,585 Brandywine Operating Partnership,
6.00%, 04/01/2016............................... 12,804
3,750 Capital One Bank,
6.50%, 06/13/2013............................... 3,953
3,900 Capital One Financial Corp.,
5.70%, 09/15/2011............................... 3,958
10,000 Cincinnati Financial Corp.,
6.92%, 05/15/2028............................... 11,068
6,500 Citigroup, Inc.,
3.63%, 02/09/2009............................... 6,308
8,800 Citigroup, Inc.,
6.00%, 10/31/2033............................... 9,013
1,000 Citigroup, Inc.,
6.50%, 01/18/2011............................... 1,046
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 8,920 Credit Suisse First Boston USA, Inc.,
4.88%, 01/15/2015............................... $ 8,650
7,900 Developers Diversified Realty Corp.,
5.38%, 10/15/2012............................... 7,824
13,500 EOP Operating L.P.,
4.75%, 03/15/2014............................... 13,374
16,355 ERAC USA Finance Co.,
7.35%, 06/15/2008 (I)........................... 16,764
4,525 Everest Reinsurance Holdings, Inc.,
5.40%, 10/15/2014............................... 4,431
8,000 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 7,989
11,550 HSBC Bank USA,
3.88%, 09/15/2009............................... 11,199
10,500 International Lease Finance Corp.,
5.00%, 09/15/2012............................... 10,287
12,650 Jackson National Life Insurance Co.,
8.15%, 03/15/2027 (I)........................... 15,679
8,320 John Deere Capital Corp.,
4.88%, 10/15/2010............................... 8,175
14,375 JP Morgan Chase & Co.,
5.13%, 09/15/2014............................... 14,135
750 KeyCorp Capital II,
6.88%, 03/17/2029............................... 788
7,880 Kimco Realty Corp.,
5.78%, 03/15/2016............................... 7,980
8,750 Liberty Mutual Group, Inc.,
5.75%, 03/15/2014 (I)........................... 8,718
20,000 Liberty Property L.P.,
7.25%, 08/15/2007............................... 20,109
6,875 National City Corp.,
6.88%, 05/15/2019............................... 7,571
30,000 New England Mutual Life Insurance Co.,
7.88%, 02/15/2024 (I)........................... 36,308
6,500 Prologis Trust,
5.63%, 11/15/2016............................... 6,451
11,000 Prudential Financial, Inc.,
5.50%, 03/15/2016............................... 10,997
500 Republic New York Capital I,
7.75%, 11/15/2006............................... 519
1,250 Santander Central Hispano Issuances Ltd.,
7.63%, 11/03/2009............................... 1,325
15,100 Simon Property Group L.P.,
6.10%, 05/01/2016............................... 15,652
7,250 Sovereign Capital Trust IV,
7.91%, 06/13/2036............................... 8,155
14,600 Torchmark Corp.,
8.25%, 08/15/2009............................... 15,586
9,000 Toyota Motor Credit Corp.,
5.50%, 12/15/2008............................... 9,026
21,400 U.S. Bank NA,
4.95%, 10/30/2014............................... 20,839
5,500 UnitedHealth Group, Inc.,
4.75%, 02/10/2014............................... 5,278
5,345 Wachovia Capital Trust III,
5.80%, 08/29/2049............................... 5,389
</Table>
The accompanying notes are an integral part of these financial statements.
63
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 10,000 Wachovia Corp.,
5.25%, 08/01/2014............................... $ 9,878
2,725 Wellpoint, Inc.,
5.00%, 01/15/2011............................... 2,692
1,000 Wells Fargo Bank NA,
6.45%, 02/01/2011............................... 1,044
2,760 Willis North America, Inc.,
5.63%, 07/15/2015............................... 2,642
-----------
455,567
-----------
HEALTH CARE -- 0.4%
9,000 Becton, Dickinson & Co.,
6.70%, 08/01/2028............................... 9,872
7,725 CVS Corp.,
6.13%, 08/15/2016............................... 7,971
8,575 Pharmacia Corp.,
6.60%, 12/01/2028............................... 9,708
8,000 Wyeth,
7.25%, 03/01/2023............................... 9,069
-----------
36,620
-----------
SERVICES -- 0.9%
13,500 COX Communications, Inc.,
5.45%, 12/15/2014............................... 13,152
15,000 FedEx Corp.,
3.50%, 04/01/2009............................... 14,407
7,850 Harrah's Operating Co., Inc.,
6.50%, 06/01/2016............................... 7,028
10,900 Harvard University,
8.13%, 04/15/2007............................... 10,983
10,800 News America, Inc.,
6.40%, 12/15/2035............................... 10,729
5,530 Time Warner, Inc.,
5.50%, 11/15/2011............................... 5,516
15,020 Viacom, Inc.,
6.88%, 04/30/2036............................... 14,850
-----------
76,665
-----------
TECHNOLOGY -- 1.2%
10,000 BellSouth Telecommunications,
6.38%, 06/01/2028............................... 10,011
15,000 Comcast Cable Communications, Inc.,
6.88%, 06/15/2009............................... 15,517
1,000 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027............................... 1,228
8,500 Deutsche Telekom International Finance B.V.,
8.25%, 06/15/2030............................... 10,449
3,400 Embarq Corp.,
7.08%, 06/01/2016............................... 3,461
19,425 General Electric Co.,
5.00%, 02/01/2013............................... 19,209
14,325 Siemens Finance,
5.75%, 10/17/2016 (I)........................... 14,518
15,000 Telecom Italia Capital,
5.25%, 10/01/2015............................... 14,012
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
TECHNOLOGY -- (CONTINUED)
$ 5,000 Verizon Communications, Inc.,
5.35%, 02/15/2011............................... $ 5,008
4,400 Verizon Communications, Inc.,
5.55%, 02/15/2016............................... 4,385
500 Verizon Global Funding Corp.,
7.25%, 12/01/2010............................... 533
500 Verizon Global Funding Corp.,
7.75%, 12/01/2030............................... 586
-----------
98,917
-----------
TRANSPORTATION -- 0.1%
8,700 Southwest Airlines Co.,
5.75%, 12/15/2016............................... 8,526
-----------
UTILITIES -- 0.5%
1,000 Alabama Power Co.,
7.13%, 10/01/2007............................... 1,012
4,605 Consolidated Edison,
5.30%, 12/01/2016............................... 4,525
7,800 Midamerican Energy Holdings Co.,
6.13%, 04/01/2036............................... 7,863
17,285 Northern Border Pipeline Co.,
7.75%, 09/01/2009............................... 18,280
8,000 Southern Cal Edison Co.,
5.55%, 01/15/2037............................... 7,646
3,335 Taqa Abu Dhabi National,
5.88%, 10/27/2016 (I)........................... 3,359
750 TransCanada Pipelines Ltd.,
6.49%, 01/21/2009............................... 766
-----------
43,451
-----------
Total corporate bonds: investment grade
(cost $866,744)................................. $ 883,840
-----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.1%
SERVICES -- 0.1%
10,400 Times Mirror Co.,
7.50%, 07/01/2023............................... $ 9,222
3,100 Wyndham Worldwide,
6.00%, 12/01/2016 (I)........................... 3,045
-----------
Total corporate bonds: non-investment grade
(cost $14,233).................................. $ 12,267
-----------
U.S. GOVERNMENT SECURITIES -- 12.3%
OTHER DIRECT FEDERAL OBLIGATIONS -- 2.2%
FEDERAL HOME LOAN BANK
61,000 4.875% 2011....................................... $ 60,758
-----------
FINANCING CORPORATION
17,617 Zero Coupon Strip,
4.44% 2013 (M).................................. 12,502
-----------
TENNESSEE VALLEY AUTHORITY
64,300 4.375% 2015....................................... 61,652
50,000 6.00% 2013........................................ 52,675
-----------
114,327
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
64
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
U.S. GOVERNMENT SECURITIES -- (CONTINUED)
U.S. TREASURY SECURITIES -- 10.1%
$ 63,075 2.00% 2016 (O).................................... $ 61,921
64,600 2.375% 2025 (O)................................... 68,854
171,300 3.50% 2010........................................ 165,278
201,225 3.875% 2010....................................... 195,896
100,175 4.375% 2010....................................... 99,021
171,875 4.875% 2011....................................... 172,989
44,700 5.375% 2031....................................... 47,881
38,650 6.25% 2023........................................ 44,487
-----------
856,327
-----------
Total U.S. government securities
(cost $1,048,030)............................... $ 1,043,914
-----------
U.S. GOVERNMENT AGENCIES -- 2.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
9,345 2.50% 2013........................................ $ 9,125
59,656 6.50% 2035 -- 2036................................ 60,761
-----------
69,886
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.0%
131 6.50% 2036........................................ 134
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.7%
26,622 5.50% 2036........................................ 26,487
10,393 6.00% 2024 -- 2035................................ 10,558
3,764 6.50% 2026 -- 2035................................ 3,869
14,146 7.00% 2031 -- 2033................................ 14,618
132 7.50% 2035........................................ 137
2,474 8.00% 2026 -- 2031................................ 2,620
191 9.00% 2016 -- 2023................................ 205
-----------
58,494
-----------
OTHER GOVERNMENT AGENCIES -- 0.5%
35,028 Postal Square L.P.,
8.95% 2022...................................... 43,239
-----------
Total U.S. government agencies
(cost $168,333)................................. $ 171,753
-----------
Total long-term investments
(cost $7,653,967)............................... $ 8,111,131
-----------
SHORT-TERM INVESTMENTS -- 24.3%
FINANCE -- 2.2%
90,000 FHLB Discount Note,
5.26%, 01/12/2007 (M)........................... $ 89,845
100,000 FNMA Discount Note,
5.17%, 01/30/2007 (M)........................... 99,571
-----------
189,416
-----------
REPURCHASE AGREEMENTS -- 1.0%
19,171 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... 19,171
26,436 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 26,436
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
REPURCHASE AGREEMENTS -- (CONTINUED)
$ 287 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... $ 287
16,548 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 16,548
5,651 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,651
16,548 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 16,548
-----------
84,641
-----------
<Caption>
SHARES
- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.1%
1,781,676 BNY Institutional Cash Reserve Fund............... $ 1,781,676
-----------
Total short-term investments
(cost $2,055,733)............................... $ 2,055,733
-----------
Total investments in securities
(cost $9,709,700) (C)........................... $10,166,864
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 12.52% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $386,598, which represents 4.57% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $9,740,353 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 598,962
Unrealized depreciation....................... (172,451)
---------
Net unrealized appreciation................... $ 426,511
=========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $127,328, which represents 1.51% of total net
assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
The accompanying notes are an integral part of these financial statements.
65
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(O)U.S. Treasury inflation-protection securities (TIPS) are securities
in which the principal amount is adjusted for inflation and the semiannual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Japanese Yen Sell $793 $794 1/05/2007 $1
==
</Table>
The accompanying notes are an integral part of these financial statements.
66
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- 94.3%
BASIC MATERIALS -- 12.7%
2,008 Aracruz Celulose S.A. ADR......................... $ 122,987
2,013 Arch Coal, Inc. .................................. 60,438
1,819 BHP Billiton Ltd. ADR (G)......................... 72,285
5,787 Cameco Corp. ..................................... 234,100
7,247 Companhia Vale do Rio Doce ADR.................... 215,530
5,506 Dow Chemical Co. ................................. 219,902
1,198 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 66,759
501 Peabody Energy Corp. ............................. 20,241
832 Phelps Dodge Corp. ............................... 99,547
586 Potash Corp. of Saskatchewan...................... 84,022
2,695 Rio Tinto plc (A)................................. 142,816
2,221 Teck Cominco Ltd. Class B......................... 167,433
5,306 Vedanta Resources plc (A)......................... 126,374
4,263 Xstrata plc (A)................................... 212,122
-----------
1,844,556
-----------
CAPITAL GOODS -- 9.2%
2,200 3M Co. ........................................... 171,462
10,810 ABB Ltd. ADR...................................... 194,362
1,887 Boeing Co. ....................................... 167,641
1,500 Caterpillar, Inc. ................................ 91,995
1,655 Deere & Co. ...................................... 157,369
4,959 Ingersoll-Rand Co. Class A........................ 194,050
1,752 ITT Corp. ........................................ 99,520
1,509 Joy Global, Inc. ................................. 72,950
500 National Oilwell Varco, Inc. (D).................. 30,590
9,411 Xerox Corp. (G)(D)................................ 159,511
-----------
1,339,450
-----------
CONSUMER CYCLICAL -- 6.5%
7,237 Federated Department Stores, Inc. ................ 275,962
7,438 Gap, Inc. ........................................ 145,033
795 Lotte Shopping Co. GDR (G)(D)..................... 16,134
5,972 Toyota Motor Corp. (A)............................ 399,688
2,375 Wal-Mart Stores, Inc. ............................ 109,678
-----------
946,495
-----------
CONSUMER STAPLES -- 3.7%
3,049 Bunge Ltd. ....................................... 221,068
3,383 Constellation Brands, Inc. Class A (D)............ 98,167
2,373 Cosan S.A. Industria E Comercio (D)............... 49,652
-- Japan Tobacco, Inc. (A)........................... 711
2,012 Procter & Gamble Co. ............................. 129,336
2,208 Tyson Foods, Inc. Class A......................... 36,320
-----------
535,254
-----------
ENERGY -- 6.8%
6,900 Halliburton Co. .................................. 214,245
1,247 Occidental Petroleum Corp. ....................... 60,911
2,312 RAO Gazprom Class S ADR (K)....................... 106,353
2,985 Sasol Ltd. ADR.................................... 110,139
1,000 Valero Energy Corp. .............................. 51,160
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
ENERGY -- (CONTINUED)
4,960 Weatherford International Ltd. (D)................ $ 207,258
5,000 XTO Energy, Inc. (G).............................. 235,250
-----------
985,316
-----------
FINANCE -- 14.2%
4,720 ACE Ltd. ......................................... 285,896
20,590 Akbank T.A.S. (A)................................. 123,547
1,400 American International Group, Inc. ............... 100,324
926 Assurant, Inc. ................................... 51,150
209 Augsburg Re AG (H)(A)(D).......................... --
1,750 Capital One Financial Corp. ...................... 134,435
4,778 Citigroup, Inc. (G)............................... 266,118
975 Eurocastle Investment Ltd. ....................... 49,696
4,400 European Capital Ltd. (D)(H)(A) PFIC.............. 57,304
382 ICICI Bank Ltd. (D) (I)........................... 7,729
646 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 110,819
391 ORIX Corp. (A) PFIC............................... 113,242
259 Raiffeisen International Bank-Holding AG (A)...... 39,453
3,515 Reliance Zero (D) (I)............................. 100,940
1,401 UBS AG............................................ 84,522
2,885 Uniao de Bancos Brasileiros S.A. GDR (G).......... 268,208
3,614 Wellpoint, Inc. (D)............................... 284,401
-----------
2,077,784
-----------
HEALTH CARE -- 4.1%
2,440 Eli Lilly & Co. .................................. 127,114
1,151 Sanofi-Aventis S.A. (A)........................... 106,080
817 Sierra Health Services, Inc. (G)(D)............... 29,445
4,394 Teva Pharmaceutical Industries Ltd. ADR........... 136,562
3,980 Wyeth............................................. 202,667
-----------
601,868
-----------
SERVICES -- 5.5%
527 Fluor Corp. (G)................................... 43,046
30 Harvey Weinstein Master L.P. (D)(H)(A)............ 37,543
313 Melco PBL Entertainment Limited ADR (D)........... 6,661
5,900 News Corp. Class A................................ 126,732
1,610 Starwood Hotels & Resorts......................... 100,650
9,448 Sun Microsystems, Inc. (D)........................ 51,208
2,899 Viacom, Inc. Class B (D).......................... 118,942
9,066 Walt Disney Co. .................................. 310,692
-----------
795,474
-----------
TECHNOLOGY -- 27.3%
3,323 Adobe Systems, Inc. (D)........................... 136,649
2,332 Amdocs Ltd. (D)................................... 90,357
4,106 AT&T, Inc. (G).................................... 146,779
5,579 Broadcom Corp. Class A (G)(D)..................... 180,264
9,032 Cisco Systems, Inc. (D)........................... 246,855
5,133 Citigroup Global Certificate -- Bharti
Televentures (D)................................ 73,197
2,473 Cognex Corp. (G).................................. 58,912
4,787 Corning, Inc. (D)................................. 89,556
22,643 EMC Corp. (D)(G).................................. 298,888
10,939 General Electric Co. ............................. 407,029
541 Google, Inc. (D).................................. 249,304
</Table>
The accompanying notes are an integral part of these financial statements.
67
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
5,133 Hewlett-Packard Co. .............................. $ 211,420
13,953 Hon Hai Precision Industry Co., Ltd. (A).......... 99,274
1,558 Intel Corp. ...................................... 31,554
1,462 International Business Machines Corp. ............ 142,033
1,352 L-3 Communications Holdings, Inc. (G)............. 110,575
3,200 Lockheed Martin Corp. ............................ 294,661
7,003 Medtronic, Inc. (G)............................... 374,747
10,631 Motorola, Inc. ................................... 218,565
6,483 Oracle Corp. (D).................................. 111,110
106 Rakuten, Inc. (D)(A).............................. 49,400
2,244 Raytheon Co. ..................................... 118,483
254 S.O.I. Tec, S.A. (D)(A)........................... 8,987
200 Samsung Electronics Co., Ltd. (A)................. 131,202
5,502 Turkcell Iletisim Hizmetleri ADR.................. 73,614
6,757 Turkcell Iletisim Hizmetleri AS (A)............... 33,119
-----------
3,986,534
-----------
TRANSPORTATION -- 0.6%
57,507 Air China Ltd. (A)................................ 30,992
993 Royal Caribbean Cruises Ltd. ..................... 41,078
245 US Airways Group, Inc. (D)(J)..................... 13,182
-----------
85,252
-----------
UTILITIES -- 3.7%
3,017 American Electric Power Co., Inc. ................ 128,468
15,945 British Energy Group plc (D)(A)................... 169,012
1,872 Suntech Power Holdings Co. Ltd. ADR (G)(D)........ 63,671
2,016 TXU Corp. ........................................ 109,266
835 Veolia Environment S.A. (A)....................... 63,702
-----------
534,119
-----------
Total common stock
(cost $11,241,252).............................. $13,732,102
-----------
EXCHANGE-TRADED FUNDS -- 3.2%
INVESTMENT POOLS AND FUNDS -- 3.2%
1,280 Ishares MSCI EAFE Index Fund (G).................. $ 93,765
4,259 Nasdaq 100 Shares (G)............................. 183,831
1,309 S&P 500 Depositary Receipt (G).................... 185,540
-----------
Total exchange-traded funds
(cost $465,380)................................. $ 463,136
-----------
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
$ 26,500 UBS Luxembourg S.A.,
6.23%, 02/11/2015............................... $ 26,962
-----------
Total corporate bonds: investment grade
(cost $26,909).................................. $ 26,962
-----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.0%
FINANCE -- 0.0%
412 Augsburg Re AG,
0.00%, 12/31/2049 (H)(A)+....................... $ 226
-----------
Total corporate bonds: non-investment grade
(cost $767)..................................... $ 226
-----------
Total long-term investments
(cost $11,734,308).............................. $14,222,426
-----------
SHORT-TERM INVESTMENTS -- 6.6%
REPURCHASE AGREEMENTS -- 2.5%
83,702 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 83,702
115,419 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 115,419
1,254 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 1,254
72,248 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 72,248
24,670 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 24,670
72,248 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 72,248
-----------
369,541
-----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.1%
596,978 Mellon GSL DBTII Collateral Fund.................. $ 596,978
-----------
Total short-term investments
(cost $966,519)................................. $ 966,519
-----------
Total investments in securities
(cost $12,700,827) (C).......................... $15,188,945
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 29.66% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at
The accompanying notes are an integral part of these financial statements.
68
- --------------------------------------------------------------------------------
December 31, 2006, was $2,055,613, which represents 14.12% of total net
assets.
<Table>
PFIC -- Passive Foreign Investment Company
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $12,726,354 and the aggregate gross unrealized appreciation
and depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $2,592,857
Unrealized depreciation....................... (130,266)
----------
Net unrealized appreciation................... $2,462,591
==========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
June, 2006 209 Augsburg Re AG -- 144A $ 67
June, 2006 $ 412 Augsburg Re AG -- 144A,
0.00%, 12/31/2049 766
October,
2005 --
December,
2006 4,400 European Capital Ltd. --
Reg D 55,431
October, 2005 30 Harvey Weinstein Master
L.P. -- Reg D 27,951
</Table>
The aggregate value of these securities at December 31, 2006 was
$95,073, which represents 0.65% of total net assets.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $106,353 or 0.73% of net assets.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $108,669, which represents 0.75% of total net
assets.
(J) Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $13,182, which
represents 0.09% of total net assets.
+ Convertible debt security.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ---------------------------------------------------------------
Australia 0.5%
- ---------------------------------------------------------------
Austria 0.3
- ---------------------------------------------------------------
Brazil 4.5
- ---------------------------------------------------------------
Canada 3.3
- ---------------------------------------------------------------
China 0.7
- ---------------------------------------------------------------
France 1.2
- ---------------------------------------------------------------
Germany 1.2
- ---------------------------------------------------------------
India 0.7
- ---------------------------------------------------------------
Israel 0.9
- ---------------------------------------------------------------
Japan 3.9
- ---------------------------------------------------------------
Liberia 0.3
- ---------------------------------------------------------------
Luxembourg 0.7
- ---------------------------------------------------------------
Netherlands 0.3
- ---------------------------------------------------------------
Russia 0.7
- ---------------------------------------------------------------
South Africa 0.8
- ---------------------------------------------------------------
South Korea 1.0
- ---------------------------------------------------------------
Switzerland 1.9
- ---------------------------------------------------------------
Taiwan 0.7
- ---------------------------------------------------------------
Turkey 1.6
- ---------------------------------------------------------------
United Kingdom 4.5
- ---------------------------------------------------------------
United States 68.0
- ---------------------------------------------------------------
Short-Term Investments 6.6
- ---------------------------------------------------------------
Other Assets & Liabilities (4.3)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
69
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- ---------- --------------
British Pound Buy $ 413 $ 413 1/2/2007 $ --
British Pound Buy 688 690 1/2/2007 (2)
Euro Buy 7,995 7,951 1/2/2007 44
Euro Buy 1,210 1,207 1/3/2007 3
Euro Sell 668,286 661,948 12/20/2007 (6,338)
New Turkish Lira Buy 1,023 1,023 1/4/2007 --
New Turkish Lira Buy 1,138 1,139 1/5/2007 (1)
-------
$(6,294)
=======
</Table>
The accompanying notes are an integral part of these financial statements.
70
HARTFORD DISCIPLINED EQUITY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.5%
BASIC MATERIALS -- 4.7%
844 Alcoa, Inc. (U)................................... $ 25,322
152 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 8,460
256 Goodyear Tire & Rubber Co. (D)(G)................. 5,380
568 Kimberly-Clark Corp. ............................. 38,582
200 Lyondell Chemical Co. (G)......................... 5,124
----------
82,868
----------
CAPITAL GOODS -- 5.1%
128 3M Co. ........................................... 10,006
111 Black & Decker Corp. (G).......................... 8,869
218 Hasbro, Inc. ..................................... 5,949
771 Lam Research Corp. (D)#........................... 39,048
280 Parker-Hannifin Corp. ............................ 21,496
72 Terex Corp. (D)(U)................................ 4,643
----------
90,011
----------
CONSUMER CYCLICAL -- 7.6%
695 Altria Group, Inc. #.............................. 59,643
272 Dillard's, Inc. (G)............................... 9,515
449 Gap, Inc. ........................................ 8,750
531 Kohl's Corp. (D).................................. 36,302
473 Office Depot, Inc. (D)(G)......................... 18,047
----------
132,257
----------
CONSUMER STAPLES -- 1.6%
202 General Mills, Inc. .............................. 11,630
36 Kraft Foods, Inc. ................................ 1,285
239 Reynolds American, Inc. (G)....................... 15,634
----------
28,549
----------
ENERGY -- 10.1%
562 Chevron Corp. .................................... 41,346
761 ConocoPhillips (U)................................ 54,740
348 ExxonMobil Corp. ................................. 26,667
198 Hess Corp. (U).................................... 9,795
33 Marathon Oil Corp. ............................... 3,089
841 Occidental Petroleum Corp. ....................... 41,056
----------
176,693
----------
FINANCE -- 23.2%
556 ACE Ltd. ......................................... 33,677
617 Assurant, Inc. ................................... 34,084
239 Axis Capital Holdings Ltd. ....................... 7,962
1,208 Bank of America Corp. ............................ 64,500
1,335 Citigroup, Inc. .................................. 74,340
73 Comerica, Inc. ................................... 4,284
480 Countrywide Financial Corp. (G)................... 20,380
43 Everest Re Group Ltd. ............................ 4,248
209 Goldman Sachs Group, Inc. ........................ 41,604
426 Lehman Brothers Holdings, Inc. #.................. 33,240
94 MBIA, Inc. (G).................................... 6,875
103 PNC Financial Services Group, Inc. (G)............ 7,634
85 Ryder System, Inc. ............................... 4,330
289 St. Paul Travelers Cos., Inc. .................... 15,538
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
419 TD Ameritrade Holding Corp. ...................... $ 6,771
387 UnitedHealth Group, Inc. ......................... 20,810
394 US Bancorp........................................ 14,262
593 Western Union Co. ................................ 13,299
----------
407,838
----------
HEALTH CARE -- 12.6%
850 Abbott Laboratories............................... 41,413
322 Amgen, Inc. (D)#.................................. 21,975
394 Amylin Pharmaceuticals, Inc. (D)(G)............... 14,227
1,458 Bristol-Myers Squibb Co. ......................... 38,377
208 Cephalon, Inc. (D)(G)............................. 14,673
401 Forest Laboratories, Inc. (D)..................... 20,306
86 Gilead Sciences, Inc. (D)......................... 5,610
746 McKesson Corp. ................................... 37,843
562 Schering-Plough Corp. ............................ 13,295
260 Wyeth #........................................... 13,219
----------
220,938
----------
SERVICES -- 7.3%
520 Accenture Ltd. Class A #.......................... 19,215
208 Comcast Corp. Class A (D)(U)#(G).................. 8,824
420 EchoStar Communications Corp. Class A (D)......... 15,965
60 Manpower, Inc. ................................... 4,526
234 McGraw-Hill Cos., Inc. ........................... 15,883
108 Omnicom Group, Inc. (G)........................... 11,243
440 United Parcel Service, Inc. Class B............... 33,014
171 Walt Disney Co. .................................. 5,870
357 Waste Management, Inc. ........................... 13,138
----------
127,678
----------
TECHNOLOGY -- 21.7%
1,166 AT&T, Inc. (G).................................... 41,681
366 BellSouth Corp. .................................. 17,242
154 CenturyTel, Inc. ................................. 6,706
268 Cisco Systems, Inc. (D)........................... 7,334
543 Dover Corp. ...................................... 26,638
593 First Data Corp. ................................. 15,138
422 General Electric Co. ............................. 15,703
802 Hewlett-Packard Co. .............................. 33,026
304 International Business Machines Corp. ............ 29,563
436 Lockheed Martin Corp. ............................ 40,133
385 MEMC Electronic Materials, Inc. (D)............... 15,057
1,475 Microsoft Corp. .................................. 44,044
1,722 Motorola, Inc. ................................... 35,411
305 Oracle Corp. (D).................................. 5,226
690 Qwest Communications International, Inc. (D)(G)... 5,774
365 Sprint Nextel Corp................................ 6,885
620 Symantec Corp. (D)(G)............................. 12,925
281 Whirlpool Corp. .................................. 23,304
----------
381,790
----------
TRANSPORTATION -- 0.2%
52 General Dynamics Corp. ........................... 3,829
----------
</Table>
The accompanying notes are an integral part of these financial statements.
71
HARTFORD DISCIPLINED EQUITY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 2.4%
156 FirstEnergy Corp. ................................ $ 9,387
180 NRG Energy, Inc. (D)(G)........................... 10,065
432 TXU Corp. ........................................ 23,440
----------
42,892
----------
Total common stock
(cost $1,466,049)............................... $1,695,343
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 4.8%
REPURCHASE AGREEMENTS -- 3.1%
$12,340 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 12,340
17,016 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 17,016
185 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 185
10,651 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 10,651
3,637 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 3,637
10,651 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 10,651
----------
54,480
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.7%
30,653 BNY Institutional Cash Reserve Fund............... $ 30,653
----------
Total short-term investments
(cost $85,133).................................. $ 85,133
----------
Total investments in securities
(cost $1,551,182) (C)........................... $1,780,476
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,552,490 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $245,144
Unrealized depreciation........................ (17,158)
--------
Net unrealized appreciation.................... $227,986
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(U)At December 31, 2006, securities valued at $103,324 were
designated to cover open call options written as follows (see Note 2 to
accompanying Notes to Financial Statements):
<Table>
<Caption>
NUMBER OF EXERCISE EXPIRATION MARKET PREMIUMS
ISSUER CONTRACTS* PRICE DATE VALUE (W) RECEIVED
------ ---------- -------- ---------- --------- --------
Alcoa, Inc. 860 $32.50 Jan-07 $ 13 $ 38
Comcast Corp. 487 45.00 Feb-07 33 31
ConocoPhillips 604 80.00 Feb-07 30 60
Hess Corp. 409 55.00 Jan-07 6 41
Terex Corp. 162 70.00 Feb-07 29 38
---- ----
Total $111 $208
==== ====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
S&P 500 Mini 600 Long Mar-07 $618
====
</Table>
Cash of $2,498 was pledged as initial margin deposit for open
futures contracts at December 31, 2006.
The accompanying notes are an integral part of these financial statements.
72
HARTFORD DIVIDEND AND GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- 99.1%
BASIC MATERIALS -- 7.1%
3,440 Alcoa, Inc. ...................................... $ 103,240
454 Bowater, Inc. (G)................................. 10,208
1,330 Companhia Vale do Rio Doce ADR (G)................ 39,564
2,602 E.I. DuPont de Nemours & Co. (G).................. 126,740
1,726 International Paper Co. (G)....................... 58,846
1,263 Kimberly-Clark Corp. ............................. 85,848
755 Newmont Mining Corp. (G).......................... 34,084
114 Rio Tinto plc ADR................................. 24,288
653 Rohm & Haas Co. .................................. 33,387
----------
516,205
----------
CAPITAL GOODS -- 5.1%
1,151 American Standard Cos., Inc. ..................... 52,783
1,200 Deere & Co. ...................................... 114,036
779 KLA-Tencor Corp. (G).............................. 38,775
571 Parker-Hannifin Corp. ............................ 43,929
1,276 Pitney Bowes, Inc. ............................... 58,920
3,578 Xerox Corp. (D)................................... 60,654
----------
369,097
----------
CONSUMER CYCLICAL -- 8.2%
1,491 Altria Group, Inc. ............................... 127,966
888 Avery Dennison Corp. ............................. 60,294
153 Genuine Parts Co. ................................ 7,271
593 Home Depot, Inc. (G).............................. 23,819
1,012 Limited Brands, Inc. (G).......................... 29,273
2,120 McDonald's Corp. ................................. 93,993
359 NIKE, Inc. Class B (G)............................ 35,562
1,854 Sysco Corp. (G)................................... 68,146
3,219 Wal-Mart Stores, Inc. (G)......................... 148,649
----------
594,973
----------
CONSUMER STAPLES -- 5.4%
732 Bunge Ltd. (G).................................... 53,063
1,630 Coca-Cola Co. .................................... 78,628
789 Nestle S.A. ADR................................... 69,923
750 Procter & Gamble Co. (G).......................... 48,190
2,526 Tyson Foods, Inc. Class A (G)..................... 41,556
884 Unilever N.V. NY Shares........................... 24,084
1,145 Weyerhaeuser Co. (G).............................. 80,887
----------
396,331
----------
ENERGY -- 15.7%
677 BP plc ADR........................................ 45,400
3,282 Chevron Corp. .................................... 241,318
1,649 ConocoPhillips.................................... 118,638
1,832 EnCana Corp. ..................................... 84,165
3,482 ExxonMobil Corp. ................................. 266,815
1,168 Royal Dutch Shell plc............................. 82,669
833 Schlumberger Ltd. (G)............................. 52,587
2,514 Total S.A. ADR.................................... 180,814
1,475 XTO Energy, Inc. ................................. 69,380
----------
1,141,786
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
FINANCE -- 17.9%
1,081 ACE Ltd. ......................................... $ 65,482
1,186 Allstate Corp. ................................... 77,188
1,352 American International Group, Inc. ............... 96,891
4,116 Bank of America Corp. ............................ 219,731
3,942 Citigroup, Inc. .................................. 219,556
1,000 Federal Home Loan Mortgage Corp. ................. 67,927
466 JP Morgan Chase & Co. ............................ 22,515
977 MBIA, Inc. (G).................................... 71,409
980 Merrill Lynch & Co., Inc. ........................ 91,247
758 Metlife, Inc. (G)................................. 44,700
370 PNC Financial Services Group, Inc. ............... 27,380
530 Prudential Financial, Inc. (G).................... 45,463
1,292 State Street Corp. (G)............................ 87,133
1,471 Synovus Financial Corp. .......................... 45,357
1,766 UBS AG............................................ 106,519
463 Western Union Co. (G)............................. 10,372
----------
1,298,870
----------
HEALTH CARE -- 9.3%
2,879 Abbott Laboratories............................... 140,231
1,004 AstraZeneca plc ADR............................... 53,764
3,694 Bristol-Myers Squibb Co. ......................... 97,223
2,855 Eli Lilly & Co. (G)............................... 148,761
967 Sanofi-Aventis S.A. ADR........................... 44,665
5,267 Schering-Plough Corp. ............................ 124,510
806 Teva Pharmaceutical Industries Ltd. ADR........... 25,047
889 Wyeth............................................. 45,248
----------
679,449
----------
SERVICES -- 7.0%
1,634 Accenture Ltd. Class A............................ 60,355
726 Automatic Data Processing, Inc. .................. 35,755
1,647 CBS Corp. Class B................................. 51,343
1,386 Comcast Corp. Class A (D)(G)...................... 58,680
946 Comcast Corp. Special Class A (D)(G).............. 39,602
1,234 New York Times Co. Class A (G).................... 30,055
2,026 Time Warner, Inc. (G)............................. 44,128
765 United Parcel Service, Inc. Class B (G)........... 57,390
1,109 Viacom, Inc. Class B (D).......................... 45,492
705 Warner Music Group Corp. ......................... 16,175
1,873 Waste Management, Inc. ........................... 68,852
----------
507,827
----------
TECHNOLOGY -- 17.9%
6,465 AT&T, Inc. (G).................................... 231,124
851 BellSouth Corp. .................................. 40,105
3,922 EMC Corp. (D)..................................... 51,772
1,695 First Data Corp. (G).............................. 43,259
5,738 General Electric Co. ............................. 213,525
1,531 International Business Machines Corp. ............ 148,727
678 Lockheed Martin Corp. ............................ 62,460
1,536 Maxim Integrated Products, Inc. .................. 47,027
1,745 Medtronic, Inc. .................................. 93,364
3,178 Microsoft Corp. .................................. 94,898
3,750 Motorola, Inc. ................................... 77,098
846 SanDisk Corp. (D)(G).............................. 36,386
2,795 Sprint Nextel Corp. (G)........................... 52,788
</Table>
The accompanying notes are an integral part of these financial statements.
73
HARTFORD DIVIDEND AND GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
2,021 Verizon Communications, Inc. ..................... $ 75,271
388 Whirlpool Corp. (G)............................... 32,220
----------
1,300,024
----------
TRANSPORTATION -- 0.5%
2,595 Southwest Airlines Co. (G)........................ 39,762
----------
UTILITIES -- 5.0%
1,136 Dominion Resources, Inc. ......................... 95,217
2,047 Exelon Corp. (G).................................. 126,659
1,615 FPL Group, Inc. (G)............................... 87,872
618 Progress Energy, Inc. (G)......................... 30,307
324 Veolia Environment ADR (G)........................ 24,384
----------
364,439
----------
Total common stock
(cost $5,686,706)............................... $7,208,763
----------
<Caption>
PRINCIPAL
AMOUNT
- ----------
SHORT-TERM INVESTMENTS -- 16.9%
REPURCHASE AGREEMENTS -- 1.0%
$ 17,123 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 17,123
23,612 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 23,612
256 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 256
14,780 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 14,780
5,047 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,047
14,780 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 14,780
----------
75,598
----------
<Caption>
MARKET
SHARES VALUE U
- ---------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 15.9%
1,155,920 BNY Institutional Cash Reserve Fund............... $1,155,920
----------
Total short-term investments
(cost $1,231,518)............................... $1,231,518
----------
Total investments in securities
(cost $6,918,224) (C)........................... $8,440,281
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.79% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $6,923,219 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $1,578,478
Unrealized depreciation....................... (61,416)
----------
Net unrealized appreciation................... $1,517,062
==========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
74
HARTFORD EQUITY INCOME HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 98.4%
BASIC MATERIALS -- 8.8%
86 Air Products and Chemicals, Inc. ................. $ 6,016
229 Alcoa, Inc. ...................................... 6,866
233 Dow Chemical Co. ................................. 9,304
128 E.I. DuPont de Nemours & Co. ..................... 6,244
56 International Paper Co. (G)....................... 1,901
90 Kimberly-Clark Corp. ............................. 6,096
70 PPG Industries, Inc. ............................. 4,495
--------
40,922
--------
CAPITAL GOODS -- 6.2%
56 3M Co. ........................................... 4,380
120 American Standard Cos., Inc. ..................... 5,520
61 Deere & Co. ...................................... 5,790
96 Goodrich Corp. ................................... 4,391
192 Pitney Bowes, Inc. ............................... 8,854
--------
28,935
--------
CONSUMER CYCLICAL -- 3.3%
182 Altria Group, Inc. ............................... 15,631
--------
CONSUMER STAPLES -- 6.6%
100 Campbell Soup Co. (G)............................. 3,905
71 Colgate-Palmolive Co. ............................ 4,645
51 Diageo plc ADR.................................... 4,068
112 General Mills, Inc. .............................. 6,425
131 Kellogg Co. ...................................... 6,545
83 PepsiCo, Inc. .................................... 5,167
--------
30,755
--------
ENERGY -- 10.6%
188 Chevron Corp. .................................... 13,846
74 ConocoPhillips.................................... 5,347
291 ExxonMobil Corp. ................................. 22,298
142 Halliburton Co. .................................. 4,418
53 Royal Dutch Shell plc ADR......................... 3,774
--------
49,683
--------
FINANCE -- 31.5%
107 ACE Ltd. ......................................... 6,505
102 Allstate Corp. ................................... 6,635
410 Bank of America Corp. ............................ 21,912
129 Bank of New York Co., Inc. ....................... 5,075
155 Chubb Corp. ...................................... 8,211
384 Citigroup, Inc. .................................. 21,394
268 Host Hotels & Resorts, Inc. ...................... 6,582
236 JP Morgan Chase & Co. ............................ 11,404
89 Merrill Lynch & Co., Inc. ........................ 8,295
145 PNC Financial Services Group, Inc. ............... 10,771
65 SunTrust Banks, Inc. ............................. 5,476
213 UBS AG............................................ 12,850
379 US Bancorp........................................ 13,702
69 Wachovia Corp. ................................... 3,955
129 Wells Fargo & Co. ................................ 4,586
--------
147,353
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
HEALTH CARE -- 6.4%
131 Abbott Laboratories............................... $ 6,361
156 Baxter International, Inc. ....................... 7,216
167 Bristol-Myers Squibb Co. ......................... 4,406
230 Wyeth............................................. 11,708
--------
29,691
--------
SERVICES -- 2.2%
52 Gannett Co., Inc. ................................ 3,164
62 R.R. Donnelley & Sons Co. ........................ 2,203
129 Waste Management, Inc. ........................... 4,740
--------
10,107
--------
TECHNOLOGY -- 11.7%
401 AT&T, Inc. (G).................................... 14,345
121 BellSouth Corp. .................................. 5,684
106 Chunghwa Telecom Co., Ltd. ADR.................... 2,094
532 General Electric Co. ............................. 19,807
145 Sprint Nextel Corp. .............................. 2,739
273 Verizon Communications, Inc. ..................... 10,172
--------
54,841
--------
UTILITIES -- 11.1%
116 American Electric Power Co., Inc. ................ 4,952
104 Consolidated Edison, Inc. ........................ 4,995
125 Dominion Resources, Inc. ......................... 10,442
24 Entergy Corp. .................................... 2,244
103 Exelon Corp. ..................................... 6,357
225 FPL Group, Inc. .................................. 12,252
81 PPL Corp. ........................................ 2,885
90 SCANA Corp. ...................................... 3,640
105 Southern Co. ..................................... 3,858
--------
51,625
--------
Total common stock
(cost $398,191)................................. $459,543
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 3.1%
REPURCHASE AGREEMENTS -- 1.6%
$1,683 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,683
2,321 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,321
25 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 25
1,453 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,453
</Table>
The accompanying notes are an integral part of these financial statements.
75
HARTFORD EQUITY INCOME HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
REPURCHASE AGREEMENTS -- (CONTINUED)
$ 496 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... $ 496
1,453 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,453
--------
7,431
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.5%
7,211 BNY Institutional Cash Reserve Fund............... $ 7,211
--------
Total short-term investments
(cost $14,642).................................. $ 14,642
--------
Total investments in securities
(cost $412,833) (C)............................. $474,185
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 4.88% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $412,940 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation $63,759
Unrealized depreciation......................... (2,514)
-------
Net unrealized appreciation..................... $61,245
=======
</Table>
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
76
HARTFORD FOCUS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 4.5%
56 Alcoa, Inc. ...................................... $ 1,678
28 Cameco Corp. ..................................... 1,133
33 Companhia Vale do Rio Doce ADR.................... 972
-------
3,783
-------
CAPITAL GOODS -- 3.9%
15 Boeing Co. ....................................... 1,341
20 Deere & Co. ...................................... 1,854
-------
3,195
-------
CONSUMER CYCLICAL -- 6.8%
72 Circuit City Stores, Inc. ........................ 1,374
69 D.R. Horton, Inc. ................................ 1,836
14 Home Depot, Inc. ................................. 566
40 Wal-Mart Stores, Inc. ............................ 1,829
-------
5,605
-------
CONSUMER STAPLES -- 4.2%
26 Clorox Co. ....................................... 1,681
67 Unilever N.V. NY Shares........................... 1,834
-------
3,515
-------
ENERGY -- 4.3%
43 EnCana Corp. ..................................... 1,985
50 Halliburton Co. .................................. 1,553
-------
3,538
-------
FINANCE -- 20.3%
79 Citigroup, Inc. .................................. 4,411
57 Countrywide Financial Corp. ...................... 2,415
70 E*Trade Financial Corp. (D)....................... 1,578
16 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 2,691
57 UBS AG............................................ 3,445
43 UnitedHealth Group, Inc. ......................... 2,316
-------
16,856
-------
HEALTH CARE -- 11.5%
75 Boston Scientific Corp. (D)....................... 1,289
52 Bristol-Myers Squibb Co. ......................... 1,379
109 Elan Corp. plc ADR (D)............................ 1,612
51 Eli Lilly & Co. .................................. 2,647
57 Sanofi-Aventis S.A. ADR........................... 2,641
-------
9,568
-------
SERVICES -- 10.4%
27 Accenture Ltd. Class A............................ 1,004
42 United Parcel Service, Inc. Class B............... 3,119
56 Viacom, Inc. Class B (D).......................... 2,310
150 XM Satellite Radio Holdings, Inc. Class A (D)..... 2,173
-------
8,606
-------
TECHNOLOGY -- 33.3%
31 Adobe Systems, Inc. (D)........................... 1,262
64 AT&T, Inc. ....................................... 2,288
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
TECHNOLOGY -- (CONTINUED)
37 Broadcom Corp. Class A (D)........................ $ 1,186
106 Cisco Systems, Inc. (D)........................... 2,902
221 EMC Corp. (D)..................................... 2,913
86 First Data Corp. ................................. 2,197
108 General Electric Co. ............................. 4,001
67 Maxim Integrated Products, Inc. .................. 2,055
76 Medtronic, Inc. .................................. 4,056
113 Sprint Nextel Corp. .............................. 2,138
29 Texas Instruments, Inc. .......................... 821
70 Yahoo!, Inc. (D).................................. 1,788
-------
27,607
-------
Total common stock
(cost $78,005).................................. $82,273
-------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 0.8%
REPURCHASE AGREEMENTS -- 0.8%
$141 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 141
194 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 194
2 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 2
122 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 122
42 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 42
122 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 122
-------
Total short-term investments
(cost $623)..................................... $ 623
-------
Total investments in securities
(cost $78,628) (C).............................. $82,896
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 19.68% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $2,691, which represents 3.25% of total net assets.
The accompanying notes are an integral part of these financial statements.
77
HARTFORD FOCUS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $78,722 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 7,236
Unrealized depreciation......................... (3,062)
-------
Net unrealized appreciation..................... $ 4,174
=======
</Table>
(D)Currently non-income producing.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
78
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
COMMON STOCK -- 59.1%
BASIC MATERIALS -- 3.4%
56 Cameco Corp. ..................................... $ 2,277
88 Companhia Vale do Rio Doce ADR.................... 2,614
37 Freeport-McMoRan Copper & Gold, Inc. Class B...... 2,062
12 Vallourec (A)..................................... 3,603
40 Xstrata plc (A)................................... 2,008
--------
12,564
--------
CAPITAL GOODS -- 1.0%
41 Boeing Co. # ..................................... 3,642
--------
CONSUMER CYCLICAL -- 5.2%
55 Best Buy Co., Inc. # ............................. 2,698
586 Carphone Warehouse Group plc (A)#................. 3,592
81 eBay, Inc. (D).................................... 2,433
18 Nintendo Co. Ltd. (A)............................. 4,608
767 Tesco plc (A)..................................... 6,064
--------
19,395
--------
CONSUMER STAPLES -- 3.9%
21 Fomento Economico Mexicano S.A. de C.V. ADR #..... 2,431
1 Japan Tobacco, Inc. (A)........................... 3,127
8 Nestle S.A. (A)................................... 2,698
74 Reckitt Benckiser plc (A)......................... 3,382
55 Royal Numico N.V. (A)............................. 2,937
--------
14,575
--------
ENERGY -- 2.3%
23 Noble Corp. ...................................... 1,744
50 RAO Gazprom Class S ADR (K)....................... 2,291
70 Schlumberger Ltd. # .............................. 4,440
--------
8,475
--------
FINANCE -- 9.3%
26 Deutsche Boerse AG (A)#........................... 4,828
148 E*Trade Financial Corp. (D)#...................... 3,307
34 Erste Bank Der Oesterreichischen Sparkassen AG
(A)#............................................ 2,621
20 Goldman Sachs Group, Inc. # ...................... 4,007
14 KBC Groep N.V. (A)................................ 1,758
397 Man Group plc (A)................................. 4,053
11 ORIX Corp. (A) PFIC............................... 3,190
53 Standard Chartered plc (A)#....................... 1,552
-- Sumitomo Mitsui Financial Group, Inc. (A)(Q) ..... 1,710
116 Sumitomo Realty & Development Co., Ltd. (A) ...... 3,719
62 UBS AG (A)........................................ 3,730
--------
34,475
--------
HEALTH CARE -- 6.1%
24 Celgene Corp. (D)#................................ 1,352
72 Eisai Co., Ltd. (A)............................... 3,950
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
HEALTH CARE -- (CONTINUED)
165 Elan Corp. plc ADR (D)............................ $ 2,437
71 Monsanto Co. # ................................... 3,709
199 Schering-Plough Corp. # .......................... 4,695
90 St. Jude Medical, Inc. (D)........................ 3,294
64 Wyeth #........................................... 3,269
--------
22,706
--------
SERVICES -- 6.1%
118 Comcast Corp. Class A (D)#........................ 4,986
1,148 EMI Group plc (A)#................................ 5,952
78 Las Vegas Sands Corp. (D)#........................ 6,988
29 United Parcel Service, Inc. Class B............... 2,152
116 Warner Music Group Corp. # ....................... 2,651
--------
22,729
--------
TECHNOLOGY -- 21.0%
162 ABB Ltd. (A)...................................... 2,903
130 Activision, Inc. (D).............................. 2,241
111 Adobe Systems, Inc. (D)#.......................... 4,568
98 America Movil S.A. de C.V. ADR #.................. 4,432
132 American Tower Corp. Class A (D)#................. 4,932
112 ASML Holding N.V. (A)(D).......................... 2,755
117 Brambles Ltd. (A)(D).............................. 1,179
82 Broadcom Corp. Class A (D)........................ 2,659
155 Cisco Systems, Inc. (D)#.......................... 4,236
163 Corning, Inc. (D)#................................ 3,052
39 Danaher Corp. #................................... 2,805
210 EMC Corp. (D)#.................................... 2,769
14 Google, Inc. (D)#................................. 6,447
93 Hewlett-Packard Co. # ............................ 3,818
431 Hon Hai Precision Industry Co., Ltd. (A).......... 3,067
120 Intel Corp. # .................................... 2,424
79 Motorola, Inc. # ................................. 1,632
84 Network Appliance, Inc. (D)#...................... 3,315
132 Oracle Corp. (D)#................................. 2,269
6 Rakuten, Inc. (A)(D).............................. 2,902
26 Research In Motion Ltd. (D)....................... 3,335
4 Samsung Electronics Co., Ltd. (A)................. 2,837
64 SanDisk Corp. (D)#................................ 2,732
162 Sharp Corp. (A)................................... 2,785
67 Telenor ASA (A)................................... 1,246
--------
77,340
--------
TRANSPORTATION -- 0.5%
25 Ryanair Holdings plc ADR (D)(G)................... 2,029
--------
UTILITIES -- 0.3%
12 Veolia Environment S.A. (A)....................... 941
--------
Total common stock
(cost $184,054)................................. $218,871
--------
</Table>
The accompanying notes are an integral part of these financial statements.
79
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ----------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 10.3%
FINANCE -- 10.3%
$ 445 Advanta Business Card Master Trust,
5.15%, 10/20/2010............................... $ 444
900 Advanta Business Card Master Trust,
5.42%, 04/20/2011 (L)#.......................... 901
521 American Express Credit Account Master Trust,
5.35%, 01/18/2011 (L)#.......................... 520
1,130 American Honda Finance Corp.,
5.40%, 07/23/2007 (I)(L)#....................... 1,130
127 ARMS II,
5.58%, 09/10/2034 (L)........................... 127
1,415 Arran Residential Mortgages Funding,
5.34%, 04/12/2036 (I)(L)........................ 1,415
916 Asset Backed Securities Corp. Home Equity Loan
Trust,
5.41%, 07/25/2036 (L)#.......................... 916
660 Banc of America Commercial Mortgage, Inc.,
5.35%, 09/10/2047 (L)........................... 656
500 Bank One Issuance Trust,
5.46%, 06/15/2011 (L)........................... 501
595 Bear Stearns Commercial Mortgage Securities, Inc.,
4.68%, 08/13/2039 #............................. 576
1,025 Bear Stearns Commercial Mortgage Securities, Inc.,
5.48%, 10/12/2041 (L)#.......................... 1,034
450 Bear Stearns Commercial Mortgage Securities, Inc.,
5.61%, 11/15/2033 #............................. 456
540 Capital Auto Receivables Asset Trust,
5.23%, 02/15/2009 #............................. 539
1,507 Capital One Auto Finance Trust,
5.31%, 05/15/2009 #............................. 1,507
620 Capital One Prime Auto Receivables Trust,
5.37%, 04/15/2011 (L)#.......................... 620
1,195 Caterpillar Financial Asset Trust,
5.59%, 02/25/2009 #............................. 1,196
265 Chase Issuance Trust,
5.37%, 07/15/2010 (L)........................... 265
270 Chase Manhattan Auto Owner Trust,
5.37%, 01/15/2009............................... 270
446 Collegiate Funding Services Education Loan Trust
I,
5.37%, 09/28/2017 (L)........................... 446
149 Collegiate Funding Services Education Loan Trust
I,
5.38%, 09/29/2014 (L)........................... 149
124 Credit-Based Asset Servicing and Securitization,
5.47%, 08/25/2035 (L)........................... 125
219 Crusade Global Trust,
5.42%, 06/17/2037 (L)#.......................... 219
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
FINANCE -- (CONTINUED)
$ 65 Crusade Global Trust,
5.52%, 01/16/2035 (L)........................... $ 65
147 Crusade Global Trust,
5.55%, 09/18/2034 (L)#.......................... 147
83 Crusade Global Trust,
5.57%, 01/17/2034 (L)........................... 83
450 CS First Boston Mortgage Securities Corp.,
3.94%, 05/15/2038 #............................. 418
802 DaimlerChrysler Auto Trust,
2.58%, 04/08/2009 #............................. 792
670 DaimlerChrysler Master Owner Trust,
5.36%, 08/17/2009 (L)#.......................... 670
400 Discover Card Master Trust I,
5.37%, 05/15/2010 (L)#.......................... 400
285 Discover Card Master Trust I,
5.38%, 04/16/2010 (L)#.......................... 285
645 Discover Card Master Trust I,
5.49%, 04/16/2010 (L)#.......................... 646
GBP 116 European Loan Conduit,
5.42%, 11/01/2029 (I)(L)........................ 228
931 First Union-Chase Commercial Mortgage,
6.65%, 06/15/2031 #............................. 951
700 Ford Credit Floorplan Master Owner Trust,
5.50%, 05/15/2010 (L)#.......................... 700
500 GE Capital Credit Card Master Note Trust,
5.39%, 09/15/2010 (L)#.......................... 500
1,135 GE Capital Credit Card Master Note Trust,
5.40%, 06/15/2010 (L)#.......................... 1,135
1,099 GE Commercial Loan Trust,
5.43%, 04/19/2015 (I)(L)........................ 1,099
1,267 GE Commercial Loan Trust,
5.96%, 07/19/2015 (I)(L)#....................... 1,267
208 GE Corporate Aircraft Financing LLC,
5.52%, 09/25/2013 (I)(L)........................ 208
114 Granite Master Issuer plc,
5.38%, 06/20/2030 (L)........................... 114
75 Granite Mortgages plc,
5.66%, 07/20/2019 (L)........................... 75
835 Greenwich Capital Commercial Funding Corp.,
5.22%, 04/10/2037 (L)........................... 829
516 Harley-Davidson Motorcycle Trust,
5.06%, 06/15/2010 (I)........................... 515
1,340 Household Affinity Credit Card Master Note Trust
I,
5.47%, 02/15/2010 (L)#.......................... 1,342
16 Household Automotive Trust,
4.16%, 09/17/2008............................... 16
453 Household Automotive Trust,
5.40%, 06/17/2009............................... 453
835 Household Automotive Trust,
5.61%, 06/17/2009............................... 836
730 Hyundai Auto Receivables Trust,
5.25%, 09/15/2009............................... 730
1,130 John Deere Owner Trust,
5.41%, 11/17/2008 #............................. 1,130
</Table>
The accompanying notes are an integral part of these financial statements.
80
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 143 Medallion Trust,
5.50%, 05/25/2035 (L)........................... $ 143
154 Medallion Trust,
5.56%, 12/21/2033 (L)........................... 154
375 Morgan Stanley Capital I,
5.23%, 09/15/2042 #............................. 372
590 Morgan Stanley Capital I,
5.91%, 08/12/2041 (L)#.......................... 603
196 Morgan Stanley Dean Witter Capital I,
6.20%, 07/15/2033............................... 197
1,025 Morgan Stanley Dean Witter Capital I,
6.51%, 04/15/2034 #............................. 1,076
478 National RMBS Trust,
5.47%, 03/20/2034 (L)........................... 478
101 New Century Home Equity Loan Trust,
5.64%, 03/25/2035 (L)........................... 101
455 Nissan Auto Receivables Owner Trust,
5.18%, 08/15/2008 #............................. 455
496 Nomura Asset Securities Corp.,
6.59%, 03/15/2030 #............................. 502
226 Option One Mortgage Loan Trust,
5.51%, 08/25/2035 (L)........................... 226
383 Permanent Financing plc,
5.50%, 06/10/2011 (L)#.......................... 383
570 Prudential Commercial Mortgage Trust,
4.49%, 02/11/2036 #............................. 548
59 Residential Asset Securities Corp.,
5.45%, 08/25/2035 (L)........................... 59
530 SLM Student Loan Trust,
5.54%, 07/25/2012 (L)........................... 530
895 Volkswagen Credit Auto Master Trust,
5.37%, 07/20/2010 (L)#.......................... 895
830 Wachovia Auto Owners Trust,
5.41%, 04/20/2009 #............................. 830
500 Wachovia Bank Commercial Mortgage Trust,
5.12%, 07/15/2042 #............................. 494
343 Westpac Securitisation Trust,
5.46%, 03/23/2036 (L)........................... 345
--------
Total asset & commercial
mortgage backed securities
(cost $38,020).................................. $ 38,037
--------
CORPORATE BONDS: INVESTMENT GRADE -- 18.0%
BASIC MATERIALS -- 0.1%
490 Vale Overseas Ltd.,
6.25%, 01/23/2017 #............................. $ 492
--------
CAPITAL GOODS -- 0.3%
EUR 500 Rolls-Royce plc,
6.38%, 06/14/2007 #............................. 667
595 United Technologies Corp.,
5.47%, 06/01/2009 (L)#.......................... 596
--------
1,263
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CONSUMER CYCLICAL -- 1.4%
$ 670 Altria Group, Inc.,
7.20%, 02/01/2007 #............................. $ 671
485 DaimlerChrysler N.A. Holdings Corp.,
4.88%, 06/15/2010 #............................. 473
EUR 580 Marks and Spencer plc,
4.19%, 01/16/2007 (L)#.......................... 766
750 Staples, Inc.,
7.13%, 08/15/2007 #............................. 756
EUR 1,300 Volkswagen Group Services AG,
3.74%, 09/27/2007 (L)#.......................... 1,714
730 Wal-Mart Stores, Inc.,
5.25%, 09/01/2035 #............................. 670
--------
5,050
--------
CONSUMER STAPLES -- 0.3%
300 Cia Brasileira de Bebidas,
10.50%, 12/15/2011 #............................ 363
EUR 520 Imperial Tobacco Finance,
6.25%, 06/06/2007 #............................. 692
--------
1,055
--------
ENERGY -- 1.0%
1,020 Anadarko Petroleum Corp.,
5.76%, 09/15/2009 (L)#.......................... 1,024
320 Citigroup Global Markets,
9.13%, 04/25/2007 #............................. 323
900 ConocoPhillips,
5.37%, 04/11/2007 (L)#.......................... 900
900 ConocoPhillips Australia Funding Co.,
5.47%, 04/09/2009 (L)........................... 901
415 Nakilat Inc.,
6.07%, 12/31/2033 (I)........................... 412
--------
3,560
--------
FINANCE -- 7.4%
660 Abbey National Treasury Service,
5.37%, 06/29/2007 (L)#.......................... 660
660 Avalon Properties, Inc.,
6.88%, 12/15/2007............................... 667
EUR 785 Bank of America Corp.,
3.72%, 11/20/2008 (L)#.......................... 1,037
1,300 Bank of America Corp.,
5.53%, 03/06/2007 (L)........................... 1,300
EUR 500 Banque PSA Finance,
3.40%, 06/21/2007 (L)........................... 660
500 Berkshire Hathaway Finance Corp.,
5.42%, 01/11/2008 (L)#.......................... 501
450 Boeing Capital Corp.,
4.75%, 08/25/2008............................... 447
1,300 Caterpillar Financial Services Corp.,
5.39%, 02/12/2007 (L)#.......................... 1,300
400 Countrywide Home Loans,
6.94%, 07/16/2007 #............................. 403
EUR 1,000 Credit Agricole,
3.48%, 10/17/2007 (L)........................... 1,320
EUR 880 Credit Agricole,
3.57%, 07/11/2007 (L)#.......................... 1,162
</Table>
The accompanying notes are an integral part of these financial statements.
81
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 810 EOP Operating L.P.,
6.76%, 06/15/2007 #............................. $ 815
425 ERAC USA Finance Co.,
5.63%, 04/30/2009 (I)(L)#....................... 426
1,150 HBOS Treasury Services plc,
4.00%, 09/15/2009 (I)#.......................... 1,115
395 HSBC Finance Corp.,
5.41%, 02/28/2007 (L)#.......................... 395
920 International Lease Finance Corp.,
5.40%, 02/15/2012 (G)........................... 921
430 Korea Development Bank,
4.63%, 09/16/2010 #............................. 420
EUR 800 Lloyds TSB Bank plc,
5.25%, 07/14/2008 #............................. 1,072
904 MBNA Credit Card Master Note Trust,
5.35%, 12/15/2010 (L)#.......................... 904
GBP 360 Metlife Global Funding,
5.25%, 01/09/2014 #............................. 693
525 Mizuho Financial Group, Inc.,
5.79%, 04/15/2014 (I)#.......................... 528
EUR 570 Morgan Stanley,
4.03%, 05/29/2008 (L)#.......................... 756
665 Morgan Stanley,
5.41%, 04/25/2008 (L)#.......................... 665
700 Nationwide Building Society,
2.63%, 01/30/2007 (I)#.......................... 699
EUR 225 Nordea Bank Finland plc,
5.75%, 03/26/2014 (L)........................... 307
GBP 350 Northern Trust Co.,
5.38%, 03/11/2015............................... 672
215 Prudential Financial, Inc.,
5.10%, 12/14/2011............................... 213
EUR 500 RCI Banque,
3.58%, 03/05/2007 (L)........................... 660
EUR 1,000 Royal Bank of Canada,
3.62%, 02/27/2008 (L)#(Q)....................... 1,319
EUR 500 Royal Bank of Canada,
3.72%, 09/28/2007 (L)#.......................... 660
680 Simon Property Group L.P.,
6.38%, 11/15/2007 #............................. 685
121 Southern Capital Corp.,
5.70%, 06/30/2022 (I)........................... 120
1,330 St. Paul Travelers Cos., Inc.,
5.75%, 03/15/2007 #............................. 1,331
1,145 Temasek Financial I Ltd.,
4.50%, 09/21/2015 (I)#.......................... 1,086
EUR 300 Unicredito Italiano Bank of Ireland,
3.55%, 01/25/2008 (L)........................... 396
795 VTB Capital (Vneshtorgbank),
5.97%, 08/01/2008 (I)(L)#....................... 795
670 VTB Capital (Vneshtorgbank),
6.11%, 09/21/2007 (I)(L)#....................... 672
--------
27,782
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
FOREIGN GOVERNMENTS -- 4.0%
AUD 410 Australian Government,
5.25%, 03/15/2019............................... $ 306
EUR 2,155 Belgium Treasury Bill,
3.46%, 02/15/2007 (M)........................... 2,833
EUR 1,585 Belgium Treasury Bill,
3.59%, 03/15/2007 (M)........................... 2,078
CAD 740 Canadian Government,
5.50%, 06/01/2010 #............................. 665
CAD 825 Canadian Government,
5.75%, 06/01/2033 #............................. 889
470 Chile (Republic of),
5.78%, 01/28/2008 (L)........................... 471
EUR 400 French Government,
4.00%, 04/25/2013 #............................. 529
EUR 685 French Government,
5.00%, 10/25/2016 #............................. 976
JPY 34,540 Japanese Government,
1.00%, 06/10/2016............................... 285
JPY 178,700 Japanese Government,
1.40%, 09/20/2011............................... 1,515
DKK 3,676 Kingdom of Denmark,
6.00%, 11/15/2009............................... 687
PLN 580 Poland Government,
6.25%, 10/24/2015............................... 214
1,270 Russian Federation,
10.00%, 06/26/2007 (I)#......................... 1,300
SGD 1,350 Singapore Government,
4.38%, 01/15/2009 #............................. 904
SEK 2,545 Swedish Government,
4.50%, 08/12/2015............................... 390
1,000 United Mexican States,
6.07%, 01/13/2009 (L)#.......................... 1,010
--------
15,052
--------
HEALTH CARE -- 0.2%
EUR 520 Alliance Boots plc,
3.85%, 10/19/2007 (L)........................... 687
--------
SERVICES -- 1.2%
530 Comcast Corp.,
5.45%, 11/15/2010 #............................. 532
800 Comcast Corp.,
5.67%, 07/14/2009 (L)#.......................... 802
GBP 165 ITV plc,
7.63%, 06/06/2007 #............................. 325
495 News America, Inc.,
6.40%, 12/15/2035 #............................. 492
490 Time Warner, Inc.,
5.88%, 11/15/2016 #............................. 489
355 Time Warner, Inc.,
6.50%, 11/15/2036 #............................. 353
1,320 Time Warner, Inc.,
8.18%, 08/15/2007 #............................. 1,342
--------
4,335
--------
</Table>
The accompanying notes are an integral part of these financial statements.
82
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- 1.5%
$ 1,080 AT&T, Inc.,
5.10%, 09/15/2014 #............................. $ 1,049
475 Cingular Wireless Services, Inc.,
7.88%, 03/01/2011 #............................. 518
630 General Electric Co.,
5.00%, 02/01/2013............................... 623
1,330 Siemens Finance,
5.42%, 08/14/2009 (I)(L)#....................... 1,330
890 Sprint Nextel Corp,
6.00%, 12/01/2016 #............................. 867
EUR 445 Telecom Italia Finance S.A.
6.58%, 07/30/2009 #............................. 616
375 Verizon New England, Inc.,
6.50%, 09/15/2011 #............................. 386
--------
5,389
--------
UTILITIES -- 0.6%
350 FPL Group Capital, Inc.,
6.13%, 05/15/2007 #............................. 351
810 Midamerican Energy Holdings Co.,
6.13%, 04/01/2036 #............................. 817
300 Nstar,
8.00%, 02/15/2010 #............................. 322
EUR 310 Veolia Environment,
4.00%, 02/12/2016............................... 387
195 Virginia Electric & Power Co.,
5.38%, 02/01/2007 #............................. 196
--------
2,073
--------
Total corporate bonds: investment grade
(cost $65,844).................................. $ 66,738
--------
U.S. GOVERNMENT SECURITIES -- 0.3%
OTHER DIRECT FEDERAL OBLIGATIONS -- 0.3%
1,200 Federal Home Loan Bank
5.75%, 2012....................................... $ 1,245
--------
Total U.S. government securities
(cost $1,202)................................... $ 1,245
--------
U.S. GOVERNMENT AGENCIES -- 6.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.7%
437 5.50% 2019 -- 2020 #.............................. $ 437
1,861 5.70% 2036 (L)#................................... 1,865
424 6.66% 2029 (L)#................................... 438
--------
2,740
--------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 5.0%
1,392 4.78% 2014 #...................................... 1,362
1,600 4.98% 2013 (L)#................................... 1,582
5,342 5.00% 2019 -- 2036 #.............................. 5,219
7,443 5.50% 2034 -- 2036 #.............................. 7,354
455 5.75% 2036 (L).................................... 456
2,131 6.50% 2013 -- 2036 #.............................. 2,172
7 7.00% 2029........................................ 8
--------
18,153
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ----------- ---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.6%
$ 1,329 5.00% 2035 #...................................... $ 1,292
435 6.00% 2028 -- 2035................................ 440
80 6.50% 2028........................................ 83
485 7.50% 2035........................................ 505
51 8.00% 2029 -- 2030................................ 54
--------
2,374
--------
Total U.S. government agencies
(cost $23,245).................................. $ 23,267
--------
Total long-term investments
(cost $312,365)................................. $348,158
--------
SHORT-TERM INVESTMENTS -- 6.9%
FINANCE -- 1.2%
1,345 Abbey National Treasury Service,
5.17%, 04/03/2007 #............................. $ 1,344
1,360 ANZ Delaware, Inc.,
4.81%, 01/29/2007 #............................. 1,360
1,345 Barclays Bank plc NY,
5.20%, 04/03/2007 #............................. 1,345
540 Societe Generale,
4.77%, 01/17/2007 #............................. 540
--------
4,589
--------
REPURCHASE AGREEMENTS -- 4.5%
3,776 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... 3,776
5,206 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 5,206
57 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 57
3,259 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 3,259
1,113 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,113
3,259 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 3,259
--------
16,670
--------
U.S. GOVERNMENT SECURITIES -- 0.4%
1,375 U.S. Treasury Bill,
4.84%, 03/15/2007 (M)(S)........................ 1,362
--------
</Table>
The accompanying notes are an integral part of these financial statements.
83
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 0.8%
2,991 Mellon GSL DBTII Collateral Fund.................. $ 2,991
--------
Total short-term investments
(cost $25,612).................................. $ 25,612
--------
Total investments in securities
(cost $337,977) (C)............................. $373,770
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 41.83% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $89,697, which represents 24.20% of total net assets.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
AUD -- Australian Dollar
CAD -- Canadian Dollar
DKK -- Danish Krone
EUR -- EURO
GBP -- British Pound
JPY -- Japanese Yen
PLN -- Polish Zloty
SEK -- Swedish Krona
SGD -- Singapore Dollar
PFIC -- Passive Foreign Investment Company
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $340,404 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $36,811
Unrealized depreciation......................... (3,445)
-------
Net unrealized appreciation..................... $33,366
=======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $2,291 or 0.62% of net assets.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $14,345, which represents 3.87% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $1,896.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
5 Year U.S. Treasury Note 86 Short March 2007 $ 35
10 Year Australian Bond 78 Long March 2007 (47)
10 Year Canadian Bond 36 Short March 2007 23
10 Year Japanese Bond 6 Short March 2007 5
10 Year U.S. Treasury Note 27 Short March 2007 14
DJ EURO 46 Short March 2007 (22)
Eurex EURO-BOBL 13 Short March 2007 3
Eurex EURO-BUND 28 Short March 2007 14
Eurex EURO-BUXL 2 Long March 2007 (7)
Eurex EURO-SCHATZ 21 Long March 2007 (16)
FTSE 100 Index 15 Short March 2007 3
Long Gilt 24 Short March 2007 5
S&P 500 Index 123 Short March 2007 (8)
SPE SPI 200 Index 8 Short March 2007 (11)
Topix Index 11 Short March 2007 (66)
U.S. Long Bond 14 Short March 2007 17
----
$(58)
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
The accompanying notes are an integral part of these financial statements.
84
- --------------------------------------------------------------------------------
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Australia 0.9%
- ------------------------------------------------------------------
Austria 0.7
- ------------------------------------------------------------------
Belgium 2.3
- ------------------------------------------------------------------
Brazil 0.7
- ------------------------------------------------------------------
Canada 2.1
- ------------------------------------------------------------------
Chile 0.1
- ------------------------------------------------------------------
Denmark 0.2
- ------------------------------------------------------------------
Dutch Antilles 1.2
- ------------------------------------------------------------------
Finland 0.1
- ------------------------------------------------------------------
France 2.8
- ------------------------------------------------------------------
Germany 1.4
- ------------------------------------------------------------------
Ireland 1.3
- ------------------------------------------------------------------
Japan 7.5
- ------------------------------------------------------------------
Luxembourg 0.6
- ------------------------------------------------------------------
Mexico 2.1
- ------------------------------------------------------------------
Netherlands 1.9
- ------------------------------------------------------------------
Norway 0.3
- ------------------------------------------------------------------
Poland 0.1
- ------------------------------------------------------------------
Qatar 0.1
- ------------------------------------------------------------------
Russia 1.0
- ------------------------------------------------------------------
Singapore 0.3
- ------------------------------------------------------------------
South Korea 0.9
- ------------------------------------------------------------------
Sweden 0.1
- ------------------------------------------------------------------
Switzerland 2.5
- ------------------------------------------------------------------
Taiwan 0.8
- ------------------------------------------------------------------
United Kingdom 9.8
- ------------------------------------------------------------------
United States 52.2
- ------------------------------------------------------------------
Short-Term Investments 6.9
- ------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
85
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD BOND CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
MARKET CONTRACT DELIVERY MATURITY
DESCRIPTION TRANSACTION VALUE AMOUNT DATE DATE
- ----------- ----------- ------- -------- --------- ----------
Australian Government, 6.00% Buy $ 597 $ 606 1/30/2007 2/15/2017
Bundesobligation, 3.25% Sell 716 720 1/15/2007 4/17/2009
Canadian Government, 3.75% Sell 6,617 6,772 2/15/2007 9/1/2011
Canadian Government, 4.00% Sell 3,880 3,947 2/15/2007 6/1/2016
Deutscheland Bundesrepublic,
3.75% Buy 9,892 9,936 2/28/2007 1/4/2015
Deutscheland Bundesrepublic,
4.00% Buy 5,057 5,077 2/28/2007 7/4/2016
Deutscheland Bundesrepublic,
4.00% Buy 4,346 4,414 1/29/2007 1/4/2037
Deutscheland Bundesrepublic,
5.00% Buy 10,978 10,979 2/28/2007 1/4/2012
Deutscheland Bundesrepublic,
5.50% Buy 367 376 1/29/2007 1/4/2031
French Treasury Note, 3.50% Buy 7,424 7,263 1/8/2007 7/12/2011
Japanese Government, 1.00% Buy 1,899 1,970 1/10/2007 6/10/2016
Japanese Government, 1.20% Buy 2,803 2,819 1/31/2007 9/20/2011
Japanese Government, 1.40% Buy 6,443 6,490 1/31/2007 6/22/2009
Japanese Government, 1.40% Buy 3,372 3,408 1/31/2007 12/20/2015
Japanese Government, 1.50% Sell 510 513 1/31/2007 9/20/2013
Japanese Government, 1.60% Buy 2,929 2,949 1/31/2007 6/20/2008
Japanese Government, 1.70% Sell 1,217 1,226 1/31/2007 9/20/2016
Japanese Government, 1.90% Sell 2,253 2,271 1/31/2007 6/20/2016
Japanese Government, 2.10% Buy 2,789 2,811 1/31/2007 9/20/2025
Singapore Government, 3.63% Buy 1,452 1,431 1/22/2007 7/1/2014
Swedish Government, 5.25% Sell 7,462 7,498 2/27/2007 3/15/2011
U.S. Treasury Notes, 3.50% Sell 3,621 3,644 1/31/2007 1/15/2011
U.S. Treasury Notes, 4.38% Sell 5,853 5,897 1/26/2007 8/15/2012
U.S. Treasury Notes, 4.50% Buy 5,214 5,256 1/26/2007 11/15/2015
U.S. Treasury Notes, 4.88% Buy 8,405 8,434 1/26/2007 8/15/2009
U.S. Treasury Notes, 4.88% Sell 947 960 1/10/2007 8/15/2016
U.S. Treasury Notes, 5.00% Buy 3,670 3,692 1/31/2007 2/15/2011
U.S. Treasury Notes, 5.38% Buy 964 976 1/26/2007 2/15/2031
UK Gilt Forward, 4.00% Buy 2,123 2,175 1/9/2007 9/7/2016
UK Gilt Forward, 4.25% Buy 2,445 2,465 2/28/2007 3/7/2036
United Kingdom Treasury,
5.00% Buy 1,206 1,211 2/28/2007 3/7/2012
<Caption>
UNREALIZED
APPRECIATION
DESCRIPTION (DEPRECIATION)
- ----------- --------------
Australian Government, 6.00% $ (9)
Bundesobligation, 3.25% 4
Canadian Government, 3.75% 155
Canadian Government, 4.00% 67
Deutscheland Bundesrepublic,
3.75% (44)
Deutscheland Bundesrepublic,
4.00% (20)
Deutscheland Bundesrepublic,
4.00% (68)
Deutscheland Bundesrepublic,
5.00% (1)
Deutscheland Bundesrepublic,
5.50% (9)
French Treasury Note, 3.50% 161
Japanese Government, 1.00% (71)
Japanese Government, 1.20% (16)
Japanese Government, 1.40% (47)
Japanese Government, 1.40% (36)
Japanese Government, 1.50% 3
Japanese Government, 1.60% (20)
Japanese Government, 1.70% 9
Japanese Government, 1.90% 18
Japanese Government, 2.10% (22)
Singapore Government, 3.63% 21
Swedish Government, 5.25% 36
U.S. Treasury Notes, 3.50% 23
U.S. Treasury Notes, 4.38% 44
U.S. Treasury Notes, 4.50% (42)
U.S. Treasury Notes, 4.88% (29)
U.S. Treasury Notes, 4.88% 13
U.S. Treasury Notes, 5.00% (22)
U.S. Treasury Notes, 5.38% (12)
UK Gilt Forward, 4.00% (52)
UK Gilt Forward, 4.25% (20)
United Kingdom Treasury,
5.00% (5)
----
$ 9
====
</Table>
The accompanying notes are an integral part of these financial statements.
86
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------- -------- --------- --------------
Australian Dollar Buy $ 1,869 $ 1,867 3/20/2007 $ 2
Australian Dollar Buy 4,433 4,438 3/20/2007 (5)
Australian Dollar Sell 884 876 3/15/2007 (8)
Australian Dollar Sell 1,671 1,672 3/20/2007 1
Australian Dollar Sell 2,632 2,613 3/20/2007 (19)
British Pound Buy 3,295 3,322 3/20/2007 (27)
British Pound Buy 333 332 3/20/2007 1
British Pound Sell 477 477 1/2/2007 --
British Pound Sell 628 629 1/3/2007 1
British Pound Sell 495 494 1/4/2007 (1)
British Pound Sell 490 489 3/16/2007 (1)
British Pound Sell 7,418 7,465 3/20/2007 47
Canadian Dollar Buy 4,544 4,624 3/20/2007 (80)
Canadian Dollar Sell 4,869 4,973 3/20/2007 104
Chilian Peso Buy 826 835 3/20/2007 (9)
Chilian Peso Sell 826 836 3/20/2007 10
Chinese Yuan Renminbi Buy 183 183 3/21/2007 --
Chinese Yuan Renminbi Buy 1,054 1,036 6/20/2007 18
Chinese Yuan Renminbi Sell 183 182 3/21/2007 (1)
Chinese Yuan Renminbi Sell 1,054 1,052 6/20/2007 (2)
Danish Krone Sell 754 760 3/20/2007 6
Euro Buy 57 57 1/4/2007 --
Euro Buy 1,325 1,316 1/4/2007 9
Euro Buy 5,182 5,164 3/20/2007 18
Euro Buy 44,583 44,934 3/20/2007 (351)
Euro Sell 586 582 1/2/2007 (4)
Euro Sell 300 299 1/3/2007 (1)
Euro Sell 220 219 3/16/2007 (1)
Euro Sell 64,102 64,618 3/20/2007 516
Euro Sell 7,903 7,870 3/20/2007 (33)
Hong Kong Dollars Sell 64 64 1/2/2007 --
Hungarian Forint Buy 174 171 3/20/2007 3
Iceland Krona Sell 171 171 3/20/2007 --
Israeli Shekel Buy 1,763 1,752 3/20/2007 11
Israeli Shekel Buy 677 679 3/20/2007 (2)
Israeli Shekel Sell 1,414 1,417 3/20/2007 3
Israeli Shekel Sell 718 717 3/20/2007 (1)
Japanese Yen Buy 497 498 1/5/2007 (1)
Japanese Yen Buy 7,881 8,149 3/20/2007 (268)
Japanese Yen Sell 1,363 1,419 3/8/2007 56
Japanese Yen Sell 142 142 3/8/2007 --
Japanese Yen Sell 9,642 9,982 3/20/2007 340
Japanese Yen Sell 557 556 3/20/2007 (1)
Malaysian Ringgit Buy 3,579 3,571 3/20/2007 8
Malaysian Ringgit Sell 1,486 1,476 3/20/2007 (10)
Mexican Peso Buy 71 69 3/20/2007 2
Mexican Peso Sell 258 256 3/20/2007 (2)
New Zealand Dollar Buy 3,079 3,009 3/20/2007 70
New Zealand Dollar Buy 316 316 3/20/2007 --
New Zealand Dollar Sell 3,670 3,588 3/20/2007 (82)
Norwegian Krone Buy 1,398 1,426 3/20/2007 (28)
Norwegian Krone Sell 1,398 1,421 3/20/2007 23
Polish Zloty Sell 216 219 3/20/2007 3
Polish Zloty Sell 173 172 3/20/2007 (1)
Singapore Dollar Buy 3,981 3,969 3/20/2007 12
</Table>
The accompanying notes are an integral part of these financial statements.
87
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------- -------- --------- --------------
Singapore Dollar Sell $ 5,759 $ 5,736 3/20/2007 $ (23)
South Korean Won Buy 1,032 1,042 3/20/2007 (10)
South Korean Won Sell 3,302 3,333 3/20/2007 31
Swedish Krona Buy 3,518 3,548 3/20/2007 (30)
Swedish Krona Sell 3,917 3,964 3/20/2007 47
Swiss Franc Buy 7,754 7,894 3/20/2007 (140)
Swiss Franc Sell 4,069 4,129 3/20/2007 60
Swiss Franc Sell 1,855 1,849 3/20/2007 (6)
Taiwan Dollar Sell 665 672 3/20/2007 7
-----
$ 261
=====
</Table>
The accompanying notes are an integral part of these financial statements.
88
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 94.4%
BRAZIL -- 4.9%
70 Brasil Telecom S.A. ADR (G)....................... $ 1,045
23 Tele Norte Leste Participacoes S.A. ADR (G)....... 349
-------
1,394
-------
CHINA -- 2.4%
1,260 China Telecom Corp. Ltd. (A)...................... 688
-------
EGYPT -- 1.0%
9 Mobinil-Egyptian Mobile Service................... 292
-------
FRANCE -- 6.3%
65 France Telecom S.A. (A)(G)........................ 1,789
-------
ITALY -- 0.4%
47 Telecom Italia S.p.A. (A)......................... 120
-------
LUXEMBOURG -- 4.0%
48 Citigroup Global Certificate -- Bharti
Televentures (D)................................ 687
7 Millicom International Cellular S.A. (D).......... 456
-------
1,143
-------
MOROCCO -- 0.1%
2 Maroc Telecom (A)(G).............................. 25
-------
NORWAY -- 5.8%
86 Telenor ASA (A)................................... 1,619
-------
PHILIPPINES -- 4.9%
27 Philippine Long Distance Telephone Co. (A)........ 1,398
-------
RUSSIA -- 15.2%
36 AFK Sistema GDR................................... 1,139
38 Mobile Telesystems OJSC ADR....................... 1,927
16 Vimpel-Communications ADR (D)..................... 1,224
-------
4,290
-------
SOUTH AFRICA -- 7.1%
88 MTN Group Ltd. (A)................................ 1,070
11 Telkom South Africa Ltd. ADR (G).................. 924
-------
1,994
-------
SPAIN -- 4.2%
19 Telefonica S.A. ADR (G)........................... 1,186
-------
TURKEY -- 4.7%
100 Turkcell Iletisim Hizmet ADR (G).................. 1,334
-------
UNITED STATES -- 33.4%
12 AT&T, Inc. ....................................... 422
26 Atlantic Tele-Network, Inc. ...................... 759
184 KongZhong Corp. ADR (D)(G)........................ 1,800
33 Leap Wireless International, Inc. (D)............. 1,974
78 Neustar, Inc. (D)................................. 2,521
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
UNITED STATES -- (CONTINUED)
52 Sprint Nextel Corp. .............................. $ 984
43 Syniverse Holdings, Inc. (D)...................... 649
44 Vonage Holdings Corp. (D)(G)...................... 305
-------
9,414
-------
Total common stock
(cost $21,188).................................. $26,686
-------
PREFERRED STOCKS -- 3.6%
BRAZIL -- 3.6%
45 Telemar Norte Leste S.A. ......................... $ 1,019
-------
Total preferred stocks
(cost $1,017)................................... $ 1,019
-------
Total long-term investments
(cost $22,205).................................. $27,705
-------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 24.7%
REPURCHASE AGREEMENTS -- 1.2%
$ 79 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 79
110 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 110
1 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 1
69 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 69
23 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 23
69 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 69
-------
351
-------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 23.5%
6,626 BNY Institutional Cash Reserve Fund............... $ 6,626
-------
Total short-term investments
(cost $6,977)................................... $ 6,977
-------
Total investments in securities
(cost $29,182) (C).............................. $34,682
=======
</Table>
The accompanying notes are an integral part of these financial statements.
89
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 64.74% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $6,709, which represents 23.74% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $29,215 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation.......................... $6,051
Unrealized depreciation.......................... (584)
------
Net unrealized appreciation...................... $5,467
======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Communications Equipment 3.9%
- ---------------------------------------------------------------
Other Telecommunications 30.5
- ---------------------------------------------------------------
Software Publishers 6.4
- ---------------------------------------------------------------
Telecommunications Resellers 0.1
- ---------------------------------------------------------------
Wired Telecommunications Carriers 19.8
- ---------------------------------------------------------------
Wireless Communications Services 3.7
- ---------------------------------------------------------------
Wireless Telecommunications Carriers 33.6
- ---------------------------------------------------------------
Short-Term Investments 24.7
- ---------------------------------------------------------------
Other Assets & Liabilities (22.7)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
90
HARTFORD GLOBAL FINANCIAL SERVICES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.5%
AUSTRALIA -- 2.0%
41 Westpac Banking Corp. (A)......................... $ 782
-------
CANADA -- 4.5%
10 Bank of Montreal.................................. 568
7 Canadian Imperial Bank of Commerce................ 565
12 Canadian Western Bank............................. 531
5 Gluskin Sheff + Associates, Inc................... 68
-------
1,732
-------
FRANCE -- 1.0%
13 Natixis (A)....................................... 372
-------
GERMANY -- 6.3%
4 Deutsche Boerse AG (A)............................ 802
9 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 1,607
-------
2,409
-------
HONG KONG -- 2.8%
99 Hong Kong Exchanges & Clearing Ltd. (A)........... 1,084
-------
ITALY -- 8.3%
117 Banca Monte dei Paschi di Siena S.p.A. (A)........ 752
17 Banche Popolari Unite Scpa (A).................... 464
107 Intesa Sanpaolo (A)............................... 826
128 UniCredito Italiano S.p.A. (A).................... 1,121
-------
3,163
-------
NETHERLANDS -- 4.0%
30 Aegon N.V. (A).................................... 573
22 ING Groep N.V. (A)................................ 956
-------
1,529
-------
NORWAY -- 1.0%
30 Sparebanken Midt-Norge (A)........................ 396
-------
SWITZERLAND -- 14.8%
17 Credit Suisse Group (A)........................... 1,159
14 Julius Baer Holding Ltd. (A)...................... 1,541
2 Swiss Life Holding (A)............................ 608
38 UBS AG (A)........................................ 2,313
-------
5,621
-------
UNITED KINGDOM -- 14.1%
205 Aberdeen Asset Management plc (A)................. 760
66 AMVESCAP plc (A).................................. 774
67 Barclays plc (A).................................. 962
50 Kensington Group plc (A).......................... 764
61 Old Mutual plc (A)................................ 209
57 Paragon Group Companies plc (A)................... 750
29 Royal Bank of Scotland Group plc (A).............. 1,141
-------
5,360
-------
UNITED STATES -- 40.7%
13 ACE Ltd. ......................................... 763
2 Alleghany Corp. (D)............................... 764
31 Bank of America Corp. ............................ 1,676
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
UNITED STATES -- (CONTINUED)
15 Capital One Financial Corp. ...................... $ 1,143
28 Citigroup, Inc. .................................. 1,579
16 Countrywide Financial Corp. ...................... 675
41 E*Trade Financial Corp. (D)....................... 928
9 Federal Home Loan Mortgage Corp. ................. 591
16 MBIA, Inc. ....................................... 1,147
11 Nasdaq Stock Market, Inc. (D)..................... 345
7 Nuveen Investments, Inc. Class A.................. 363
13 PNC Financial Services Group, Inc. ............... 963
14 Reinsurance Group of America, Inc. ............... 774
14 Signature Bank (D)................................ 418
17 State Street Corp. ............................... 1,120
42 UnumProvident Corp. .............................. 881
13 Wachovia Corp. ................................... 755
13 Webster Financial Corp. .......................... 650
-------
15,535
-------
Total common stock
(cost $31,069).................................. $37,983
-------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 0.5%
REPURCHASE AGREEMENTS -- 0.5%
$ 45 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 45
63 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 63
1 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 1
39 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 39
13 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 13
39 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 39
-------
Total short-term investments
(cost $200)..................................... $ 200
-------
Total investments in securities
(cost $31,269) (C).............................. $38,183
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 58.82% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $20,716, which represents 54.28% of total net assets.
The accompanying notes are an integral part of these financial statements.
91
HARTFORD GLOBAL FINANCIAL SERVICES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $31,346 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation.......................... $6,943
Unrealized depreciation.......................... (106)
------
Net unrealized appreciation...................... $6,837
======
</Table>
(D)Currently non-income producing.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Agencies, Brokerage and Other Insurance 5.1%
- ---------------------------------------------------------------
Commercial Banking 13.9
- ---------------------------------------------------------------
Consumer Lending 2.0
- ---------------------------------------------------------------
Depository Credit Banking 18.4
- ---------------------------------------------------------------
Insurance Carriers 17.6
- ---------------------------------------------------------------
International Trade Financing (Foreign Banks) 15.2
- ---------------------------------------------------------------
Nondepository Credit Banking 3.0
- ---------------------------------------------------------------
Other Financial Investment Activities 6.6
- ---------------------------------------------------------------
Real Estate Credit (Mortgage Banking) 5.3
- ---------------------------------------------------------------
Securities and Commodities Exchanges 3.7
- ---------------------------------------------------------------
Securities, Commodities and Brokerage 8.7
- ---------------------------------------------------------------
Short-Term Investments 0.5
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
92
HARTFORD GLOBAL HEALTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 98.9%
AGENCIES, BROKERAGES, OTHER INSURANCE ACTIVITIES -- 0.8%
62 Medco Health Solutions, Inc. (D).................. $ 3,313
--------
BASIC CHEMICAL MANUFACTURING -- 0.3%
25 Bayer AG (A)...................................... 1,332
--------
DRUGS & DRUGGISTS SUNDRIES WHOLESALERS -- 6.6%
173 Cardinal Health, Inc. ............................ 11,127
354 McKesson Corp. ................................... 17,922
--------
29,049
--------
GENERAL MEDICAL AND SURGICAL HOSPITALS -- 2.2%
136 Triad Hospitals, Inc. (D)......................... 5,685
72 Universal Health Services, Inc. Class B........... 4,002
--------
9,687
--------
HEALTH AND PERSONAL CARE STORES -- 2.4%
189 CVS Corp. ........................................ 5,827
52 Longs Drug Stores Corp. .......................... 2,200
485 Rite Aid Corp. (D)................................ 2,641
--------
10,668
--------
INSURANCE CARRIERS -- 5.4%
31 eHealth, Inc. (D)................................. 631
348 UnitedHealth Group, Inc. ......................... 18,714
55 Wellpoint, Inc. (D)............................... 4,296
--------
23,641
--------
MEDICAL EQUIPMENT & SUPPLIES MANUFACTURING -- 5.8%
221 Baxter International, Inc. ....................... 10,271
109 Biomet, Inc. ..................................... 4,486
349 Smith & Nephew plc (A)............................ 3,644
189 St. Jude Medical, Inc. (D)........................ 6,899
--------
25,300
--------
NAVIGATE, MEASURE, CONTROL INSTRUMENTS -- 7.4%
123 Beckman Coulter, Inc. ............................ 7,373
470 Medtronic, Inc. .................................. 25,171
--------
32,544
--------
PHARMACEUTICAL & MEDICINE MANUFACTURING -- 56.9%
502 Abbott Laboratories............................... 24,433
128 Amgen, Inc. (D)................................... 8,751
216 Amylin Pharmaceuticals, Inc. (D).................. 7,791
305 Astellas Pharma, Inc. (A)......................... 13,808
219 AstraZeneca plc ADR............................... 11,727
130 AtheroGenics, Inc. (D)(G)......................... 1,287
72 Barr Pharmaceuticals, Inc. (D).................... 3,589
445 Bristol-Myers Squibb Co. ......................... 11,723
130 Cephalon, Inc. (D)................................ 9,167
447 Cytokinetics, Inc. (D)............................ 3,340
499 Daiichi Sankyo Co., Ltd. (A)...................... 15,566
284 Eisai Co., Ltd. (A)............................... 15,618
458 Elan Corp. plc ADR (D)............................ 6,760
138 Eli Lilly & Co. .................................. 7,200
146 Forest Laboratories, Inc. (D)..................... 7,367
203 Gilead Sciences, Inc. (D)......................... 13,168
91 H. Lundbeck A/S (A)............................... 2,496
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
PHARMACEUTICAL & MEDICINE MANUFACTURING -- (CONTINUED)
74 Ipsen (A)......................................... $ 3,454
98 Merck & Co., Inc. ................................ 4,282
379 MGI Pharma, Inc. (D).............................. 6,977
107 NPS Pharmaceuticals, Inc. (D)..................... 485
388 Sanofi-Aventis S.A. ADR........................... 17,920
791 Schering-Plough Corp. ............................ 18,695
651 Shionogi & Co., Ltd. (A).......................... 12,785
147 Teva Pharmaceutical Industries Ltd. ADR........... 4,581
173 UCB S.A. (A)...................................... 11,847
148 Vertex Pharmaceuticals, Inc. (D).................. 5,526
--------
250,343
--------
PROFESSIONAL SERVICES COMPUTER SYSTEM DESIGN & RELATED --1.3%
200 IMS Health, Inc. ................................. 5,491
--------
SCIENTIFIC RESEARCH & DEVELOPMENT SERVICES -- 9.8%
304 Applera Corp. -- Celera Group (D)................. 4,250
725 Ciphergen Biosystems, Inc. (D).................... 646
202 CV Therapeutics, Inc. (D)......................... 2,814
299 Exelixis, Inc. (D)................................ 2,688
357 Human Genome Sciences, Inc. (D)(G)................ 4,445
81 ICOS Corp. (D).................................... 2,730
276 Incyte Corp. (D).................................. 1,614
222 Medicines Co. (D)................................. 7,035
782 Millennium Pharmaceuticals, Inc. (D).............. 8,528
166 Regeneron Pharmaceuticals, Inc. (D)............... 3,340
308 Zymogenetics, Inc. (D)............................ 4,788
--------
42,878
--------
Total common stock
(cost $364,237)................................. $434,246
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 1.9%
REPURCHASE AGREEMENT -- 0.7%
$ 724 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 724
999 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 999
11 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 11
625 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 625
214 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 214
625 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 625
--------
3,198
--------
</Table>
The accompanying notes are an integral part of these financial statements.
93
HARTFORD GLOBAL HEALTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.2%
5,221 BNY Institutional Cash Reserve Fund............... $ 5,221
--------
Total short-term investments
(cost $8,419)................................... $ 8,419
--------
Total investments in securities
(cost $372,656) (C)............................. $442,665
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 27.69% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $80,550, which represents 18.35% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $374,129 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 79,531
Unrealized depreciation........................ (10,995)
--------
Net unrealized appreciation.................... $ 68,536
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ---------------------------------------------------------------
Belgium 2.7%
- ---------------------------------------------------------------
Denmark 0.6
- ---------------------------------------------------------------
France 4.9
- ---------------------------------------------------------------
Germany 0.3
- ---------------------------------------------------------------
Ireland 1.5
- ---------------------------------------------------------------
Israel 1.0
- ---------------------------------------------------------------
Japan 13.2
- ---------------------------------------------------------------
United Kingdom 3.5
- ---------------------------------------------------------------
United States 71.2
- ---------------------------------------------------------------
Short-Term Investments 1.9
- ---------------------------------------------------------------
Other Assets & Liabilities (0.8)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
94
HARTFORD GLOBAL LEADERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BASIC MATERIALS -- 5.7%
341 Cameco Corp. ..................................... $ 13,793
472 Companhia Vale do Rio Doce ADR.................... 14,040
197 Freeport-McMoRan Copper & Gold, Inc. Class B...... 10,990
69 Vallourec (A)..................................... 20,050
218 Xstrata plc (A)................................... 10,854
----------
69,727
----------
CAPITAL GOODS -- 1.8%
248 Boeing Co. ....................................... 21,997
----------
CONSUMER CYCLICAL -- 8.8%
331 Best Buy Co., Inc. ............................... 16,289
3,121 Carphone Warehouse Group plc (A).................. 19,128
464 eBay, Inc. (D).................................... 13,943
98 Nintendo Co. Ltd. (A)............................. 25,319
4,230 Tesco plc (A)..................................... 33,426
----------
108,105
----------
CONSUMER STAPLES -- 6.6%
120 Fomento Economico Mexicano S.A. de C.V. ADR....... 13,891
4 Japan Tobacco, Inc. (A)........................... 17,869
40 Nestle S.A. (A)................................... 14,316
412 Reckitt Benckiser plc (A)......................... 18,780
294 Royal Numico N.V. (A)............................. 15,812
----------
80,668
----------
ENERGY -- 3.7%
123 Noble Corp. ...................................... 9,336
269 RAO Gazprom Class S ADR (K)....................... 12,363
378 Schlumberger Ltd. ................................ 23,862
----------
45,561
----------
FINANCE -- 15.8%
144 Deutsche Boerse AG (A)............................ 26,476
798 E*Trade Financial Corp. (D)....................... 17,889
208 Erste Bank Der Oesterreichischen Sparkassen AG
(A)............................................. 15,939
121 Goldman Sachs Group, Inc. ........................ 24,181
88 KBC Groep N.V. (A)(G)............................. 10,751
2,138 Man Group plc (A)................................. 21,822
59 ORIX Corp. (A)(G) PFIC............................ 17,052
297 Standard Chartered plc (A)........................ 8,649
1 Sumitomo Mitsui Financial Group, Inc. (A)......... 9,245
616 Sumitomo Realty & Development Co., Ltd. (A)(G).... 19,749
352 UBS AG (A)........................................ 21,295
----------
193,048
----------
HEALTH CARE -- 10.2%
132 Celgene Corp. (D)(G).............................. 7,577
401 Eisai Co., Ltd. (A)(G)............................ 22,007
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
877 Elan Corp. plc ADR (D)............................ $ 12,931
387 Monsanto Co. ..................................... 20,334
1,091 Schering-Plough Corp. ............................ 25,791
486 St. Jude Medical, Inc. (D)........................ 17,757
367 Wyeth............................................. 18,688
----------
125,085
----------
SERVICES -- 9.7%
639 Comcast Corp. Class A (D)(G)...................... 27,062
5,391 EMI Group plc (A)................................. 27,952
418 Las Vegas Sands Corp. (D)......................... 37,358
153 United Parcel Service, Inc. Class B............... 11,494
629 Warner Music Group Corp. ......................... 14,440
----------
118,306
----------
TECHNOLOGY -- 34.8%
873 ABB Ltd. (A)...................................... 15,630
703 Activision, Inc. (D).............................. 12,115
611 Adobe Systems, Inc. (D)........................... 25,133
549 America Movil S.A. de C.V. ADR.................... 24,844
757 American Tower Corp. Class A (D).................. 28,206
597 ASML Holding N.V. (D)(A).......................... 14,726
627 Brambles Ltd. (D)(A).............................. 6,329
437 Broadcom Corp. Class A (D)........................ 14,116
852 Cisco Systems, Inc. (D)........................... 23,285
883 Corning, Inc. (D)................................. 16,523
212 Danaher Corp. .................................... 15,365
1,133 EMC Corp. (D)..................................... 14,950
78 Google, Inc. (D).................................. 35,917
524 Hewlett-Packard Co. .............................. 21,579
2,370 Hon Hai Precision Industry Co., Ltd. (A).......... 16,866
683 Intel Corp. ...................................... 13,839
447 Motorola, Inc. ................................... 9,196
455 Network Appliance, Inc. (D)....................... 17,888
717 Oracle Corp. (D).................................. 12,295
33 Rakuten, Inc. (D)(A)(G)........................... 15,604
150 Research In Motion Ltd. (D)....................... 19,103
23 Samsung Electronics Co., Ltd. (A)................. 15,361
349 SanDisk Corp. (D)................................. 15,009
874 Sharp Corp. (A)(G)................................ 15,028
356 Telenor ASA (A)................................... 6,669
----------
425,576
----------
TRANSPORTATION -- 1.0%
143 Ryanair Holdings plc ADR (D)(G)................... 11,687
----------
UTILITIES -- 0.4%
67 Veolia Environment S.A. (A)....................... 5,097
----------
Total common stock
(cost $1,002,968)............................... $1,204,857
----------
</Table>
The accompanying notes are an integral part of these financial statements.
95
HARTFORD GLOBAL LEADERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- 9.7%
REPURCHASE AGREEMENTS -- 0.7%
$ 1,801 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,801
2,483 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,483
27 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 27
1,554 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,554
531 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 531
1,554 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,554
----------
7,950
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 9.0%
110,395 Navigator Prime Portfolio......................... $ 110,395
----------
Total short-term investments
(cost $118,345)................................. $ 118,345
----------
Total investments in securities
(cost $1,121,313) (C)........................... $1,323,202
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 51.88% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $487,801, which represents 39.90% of total net assets.
<Table>
PFIC -- Passive Foreign Investment Company
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,133,658 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation................................ $200,569
Unrealized depreciation................................ (11,025)
--------
Net unrealized appreciation............................ $189,544
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(K)Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $12,363 or 1.01% of net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Australia 0.5%
- ------------------------------------------------------------------
Austria 1.3
- ------------------------------------------------------------------
Belgium 0.9
- ------------------------------------------------------------------
Brazil 1.1
- ------------------------------------------------------------------
Canada 2.7
- ------------------------------------------------------------------
Dutch Antilles 1.9
- ------------------------------------------------------------------
France 2.1
- ------------------------------------------------------------------
Germany 2.2
- ------------------------------------------------------------------
Ireland 2.0
- ------------------------------------------------------------------
Japan 11.6
- ------------------------------------------------------------------
Mexico 3.2
- ------------------------------------------------------------------
Netherlands 2.5
- ------------------------------------------------------------------
Norway 0.5
- ------------------------------------------------------------------
Russia 1.0
- ------------------------------------------------------------------
South Korea 1.3
- ------------------------------------------------------------------
Switzerland 4.2
- ------------------------------------------------------------------
Taiwan 1.4
- ------------------------------------------------------------------
United Kingdom 11.5
- ------------------------------------------------------------------
United States 46.6
- ------------------------------------------------------------------
Short-Term Investments 9.7
- ------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
96
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- -------- -------- -------- --------------
British Pound Sell $2,660 $2,658 1/2/2007 $ (2)
British Pound Sell 3,497 3,508 1/3/2007 11
British Pound Sell 2,756 2,755 1/4/2007 (1)
Euro Sell 3,133 3,116 1/2/2007 (17)
Euro Sell 1,584 1,579 1/3/2007 (5)
Euro Buy 306 306 1/4/2007 --
Hong Kong Dollar Sell 367 367 1/2/2007 --
Japanese Yen Buy 815 817 1/5/2007 (2)
----
$(16)
====
</Table>
The accompanying notes are an integral part of these financial statements.
97
HARTFORD GLOBAL TECHNOLOGY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 97.5%
ACTIVITIES RELATED TO CREDIT BANKING -- 1.7%
111 Western Union Co.................................. $ 2,484
--------
AUDIO AND VIDEO EQUIPMENT -- 1.2%
42 Sony Corp. (A).................................... 1,816
--------
BUSINESS SUPPORT SERVICES -- 1.1%
41 Iron Mountain, Inc. (D)........................... 1,678
--------
COMMUNICATIONS EQUIPMENT -- 4.5%
30 Research In Motion Ltd. (D)....................... 3,795
722 Telefonaktiebolaget LM Ericsson (A)............... 2,903
--------
6,698
--------
COMPUTER AND PERIPHERAL -- 20.0%
503 EMC Corp. (D)..................................... 6,638
272 Hewlett-Packard Co. .............................. 11,220
939 Hon Hai Precision Industry Co., Ltd. (A).......... 6,681
92 Integrated Device Technology, Inc. (D)............ 1,417
36 Network Appliance, Inc. (D)....................... 1,402
56 SanDisk Corp. (D)................................. 2,388
--------
29,746
--------
DATA PROCESSING SERVICES -- 1.9%
111 First Data Corp. ................................. 2,828
--------
ELECTRICAL EQUIPMENT MANUFACTURING -- COMPONENT OTHER -- 3.0%
235 Corning, Inc. (D)................................. 4,391
--------
EMPLOYMENT SERVICES -- 3.1%
42 Manpower, Inc. ................................... 3,147
40 Robert Half International, Inc. .................. 1,477
--------
4,624
--------
ENTERTAINMENT -- DATA PROCESS, HOSTING & RELATED
SERVICES -- 0.8%
37 MoneyGram International, Inc. .................... 1,154
--------
MACHINERY MANUFACTURING -- INDUSTRIAL
MACHINERY -- 6.5%
56 KLA-Tencor Corp. ................................. 2,786
137 Lam Research Corp. (D)............................ 6,925
--------
9,711
--------
MANAGEMENT, SCIENTIFIC, AND TECHNOLOGY CONSULTING
SERVICES -- 4.3%
98 Accenture Ltd. Class A............................ 3,612
59 Monster Worldwide, Inc. (D)....................... 2,747
--------
6,359
--------
ON LINE INFORMATION SERVICES -- 5.4%
18 Google, Inc. (D).................................. 8,058
--------
PROFESSIONAL SERVICES -- COMPUTER SYSTEM DESIGN &
RELATED -- 6.2%
64 Automatic Data Processing, Inc. .................. 3,147
119 BISYS Group, Inc. (D)............................. 1,542
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
PROFESSIONAL SERVICES -- COMPUTER SYSTEM DESIGN &
RELATED -- (CONTINUED)
56 DST Systems, Inc. (D)............................. $ 3,526
67 Foundry Networks, Inc. (D)........................ 996
--------
9,211
--------
RETAIL -- ELECTRONIC SHOPPING AND MAIL-ORDER HOUSES -- 2.3%
114 eBay, Inc. (D).................................... 3,437
--------
SEMICONDUCTOR, ELECTRONIC COMPONENT -- 19.5%
107 Altera Corp. (D).................................. 2,096
66 Broadcom Corp. Class A (D)........................ 2,129
213 Intel Corp. ...................................... 4,315
34 International Rectifier Corp. (D)................. 1,326
295 Maxim Integrated Products, Inc. .................. 9,039
65 QLogic Corp. (D).................................. 1,431
82 S.O.I. Tec, S.A. (D)(A)........................... 2,899
6 Samsung Electronics Co., Ltd. (A)................. 3,838
34 Semtech Corp. (D)................................. 441
77 Trident Microsystems, Inc. (D).................... 1,391
--------
28,905
--------
SOFTWARE PUBLISHERS -- 13.6%
172 Activision, Inc. (D).............................. 2,957
102 Adobe Systems, Inc. (D)........................... 4,174
79 Electronic Arts, Inc. (D)......................... 3,973
171 Microsoft Corp. .................................. 5,097
86 Oracle Corp. (D).................................. 1,471
109 Red Hat, Inc. (D)................................. 2,507
--------
20,179
--------
WHOLESALERS -- ELECTRICAL GOODS -- 1.0%
117 Arris Group, Inc. (D)............................. 1,462
--------
WIRELESS COMMUNICATIONS SERVICES -- 1.4%
313 Sonus Networks, Inc. (D).......................... 2,065
--------
Total common stock
(cost $124,546)................................. $144,806
--------
EXCHANGE-TRADED FUNDS -- 0.9%
INVESTMENT POOLS AND FUNDS -- 0.9%
26 Ishares Goldman Sachs Tech I Index Fund........... $ 1,342
--------
Total exchange-traded funds
(cost $1,336)................................... $ 1,342
--------
WARRANTS -- 0.9%
OTHER PERSONAL SERVICES -- 0.9%
25 Tata Consultancy Services Ltd. Warrants (D) (I)... $ 1,386
--------
Total warrants
(cost $741)..................................... $ 1,386
--------
Total long-term investments
(cost $126,623)................................. $147,534
--------
</Table>
The accompanying notes are an integral part of these financial statements.
98
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- 0.6%
REPURCHASE AGREEMENTS -- 0.6%
$200 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 200
276 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 276
3 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 3
172 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 172
59 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 59
172 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 172
--------
Total short-term investments
(cost $882)..................................... $ 882
--------
Total investments in securities
(cost $127,505) (C)............................. $148,416
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.70% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $18,137, which represents 12.21% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $128,355 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $22,226
Unrealized depreciation......................... (2,165)
-------
Net unrealized appreciation..................... $20,061
=======
</Table>
(D)Currently non-income producing.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $1,386, which represents 0.93% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Canada 2.6%
- ------------------------------------------------------------------
France 2.0
- ------------------------------------------------------------------
Japan 1.2
- ------------------------------------------------------------------
Luxembourg 0.9
- ------------------------------------------------------------------
South Korea 2.6
- ------------------------------------------------------------------
Sweden 2.0
- ------------------------------------------------------------------
Taiwan 4.5
- ------------------------------------------------------------------
United States 83.5
- ------------------------------------------------------------------
Short-Term Investments 0.6
- ------------------------------------------------------------------
Other Assets & Liabilities 0.1
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
99
HARTFORD GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.3%
BASIC MATERIALS -- 4.2%
320 Cameco Corp. ..................................... $ 12,929
121 Companhia Vale do Rio Doce ADR.................... 3,589
57 Freeport-McMoRan Copper & Gold, Inc. Class B...... 3,173
29 Potash Corp. of Saskatchewan...................... 4,190
--------
23,881
--------
CAPITAL GOODS -- 4.9%
119 ABB Ltd. ADR...................................... 2,146
205 Boeing Co. ....................................... 18,241
69 International Game Technology..................... 3,165
96 Joy Global, Inc. ................................. 4,628
--------
28,180
--------
CONSUMER CYCLICAL -- 1.8%
68 Coach, Inc. (D)................................... 2,910
213 eBay, Inc. (D).................................... 6,393
20 Whole Foods Market, Inc. (G)...................... 936
--------
10,239
--------
CONSUMER STAPLES -- 1.1%
1 Japan Tobacco, Inc. (A)........................... 2,997
51 PepsiCo, Inc. .................................... 3,195
--------
6,192
--------
ENERGY -- 2.8%
288 Halliburton Co. .................................. 8,955
58 Murphy Oil Corp. ................................. 2,960
36 Occidental Petroleum Corp. ....................... 1,736
62 Sasol Ltd. ADR.................................... 2,280
--------
15,931
--------
FINANCE -- 19.4%
98 AMVESCAP plc ADR.................................. 2,418
14 Chicago Mercantile Exchange Holdings, Inc. ....... 6,938
54 Citigroup, Inc. .................................. 3,023
313 Commerce Bancorp, Inc. (G)........................ 11,024
127 Countrywide Financial Corp. ...................... 5,375
56 First Marblehead Corp. ........................... 3,080
115 Franklin Resources, Inc. ......................... 12,655
16 Goldman Sachs Group, Inc. ........................ 3,132
281 Nasdaq Stock Market, Inc. (D)(G).................. 8,657
105 State Street Corp. ............................... 7,108
311 UBS AG............................................ 18,777
372 UnitedHealth Group, Inc. ......................... 20,006
34 Wellpoint, Inc. (D)............................... 2,650
263 Western Union Co.................................. 5,905
--------
110,748
--------
HEALTH CARE -- 10.2%
136 AstraZeneca plc ADR............................... 7,267
57 Eisai Co., Ltd. (A)............................... 3,108
223 Elan Corp. plc ADR (D)............................ 3,287
43 Gilead Sciences, Inc. (D)......................... 2,820
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
HEALTH CARE -- (CONTINUED)
79 Monsanto Co. ..................................... $ 4,172
303 Sanofi-Aventis S.A. ADR........................... 14,010
719 Schering-Plough Corp. ............................ 16,993
161 Shionogi & Co., Ltd. (A).......................... 3,156
82 Vertex Pharmaceuticals, Inc. (D).................. 3,074
--------
57,887
--------
SERVICES -- 18.0%
186 Accenture Ltd. Class A............................ 6,879
72 Alliance Data Systems Corp. (D)................... 4,503
332 Autodesk, Inc. (D)................................ 13,424
99 Automatic Data Processing, Inc. .................. 4,891
40 Corporate Executive Board Co. .................... 3,538
167 Equifax, Inc. (D)................................. 6,777
130 Fluor Corp. ...................................... 10,640
49 Manpower, Inc. ................................... 3,692
184 Monster Worldwide, Inc. (D)....................... 8,590
87 Moody's Corp. .................................... 6,023
49 Starwood Hotels & Resorts......................... 3,071
150 United Parcel Service, Inc. Class B............... 11,228
79 Viacom, Inc. Class B (D).......................... 3,242
262 Walt Disney Co. .................................. 8,981
125 Waste Management, Inc. ........................... 4,582
162 XM Satellite Radio Holdings, Inc. Class A (D)(G).. 2,343
--------
102,404
--------
TECHNOLOGY -- 31.8%
330 Adobe Systems, Inc. (D)........................... 13,562
142 Altera Corp. (D).................................. 2,789
72 America Movil S.A. de C.V. ADR.................... 3,235
153 American Tower Corp. Class A (D).................. 5,709
118 AT&T, Inc. ....................................... 4,224
725 Cisco Systems, Inc. (D)........................... 19,805
173 Danaher Corp. (G)................................. 12,547
434 EMC Corp. (D)..................................... 5,722
342 General Electric Co. ............................. 12,726
34 Google, Inc. (D).................................. 15,854
164 Hewlett-Packard Co. .............................. 6,741
253 Linear Technology Corp. .......................... 7,684
466 Medtronic, Inc. .................................. 24,941
360 Motorola, Inc. ................................... 7,401
432 Network Appliance, Inc. (D)....................... 16,984
672 Oracle Corp. (D).................................. 11,518
12 Roper Industries, Inc. ........................... 582
111 SanDisk Corp. (D)................................. 4,786
187 Symantec Corp. (D)(G)............................. 3,899
--------
180,709
--------
TRANSPORTATION -- 3.7%
171 General Dynamics Corp. ........................... 12,743
116 GOL Linhas Aereas Inteligentes S.A. ADR........... 3,315
74 Harley-Davidson, Inc. ............................ 5,248
--------
21,306
--------
</Table>
The accompanying notes are an integral part of these financial statements.
100
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 1.4%
149 TXU Corp. ........................................ $ 8,074
--------
Total common stock
(cost $520,827)................................. $565,551
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 4.8%
REPURCHASE AGREEMENTS -- 0.3%
$ 435 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 435
601 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 601
7 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 7
376 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 376
128 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 128
376 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 376
--------
1,923
--------
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.5%
25,747 Mellon GSL DBTII Collateral Fund.................. $ 25,747
--------
Total short-term investments
(cost $27,670).................................. $ 27,670
--------
Total investments in securities
(cost $548,497) (C)............................. $593,221
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.22% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $9,261, which represents 1.63% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $548,792 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 57,415
Unrealized depreciation........................ (12,986)
--------
Net unrealized appreciation.................... $ 44,429
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
101
HARTFORD GROWTH OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.3%
BASIC MATERIALS -- 7.6%
459 Cameco Corp. ..................................... $ 18,558
666 Companhia Vale do Rio Doce ADR.................... 19,810
213 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 11,865
517 Jarden Corp. (D).................................. 17,991
133 Potash Corp. of Saskatchewan...................... 19,083
55 Rio Tinto plc ADR................................. 11,772
----------
99,079
----------
CAPITAL GOODS -- 2.7%
217 Boeing Co. (G).................................... 19,314
314 Joy Global, Inc. ................................. 15,193
----------
34,507
----------
CONSUMER CYCLICAL -- 8.9%
153 Altria Group, Inc. ............................... 13,166
398 California Pizza Kitchen, Inc. (D)................ 13,264
190 Children's Place Retail Stores, Inc. (D).......... 12,062
295 Foster Wheeler Ltd. (D)........................... 16,261
383 Hot Topic, Inc. (D)............................... 5,113
364 Kohl's Corp. (D).................................. 24,888
611 Mosaic Co. (D).................................... 13,053
451 Tiffany & Co. (G)................................. 17,685
----------
115,492
----------
CONSUMER STAPLES -- 2.2%
59 Avon Products, Inc. .............................. 1,936
223 Bunge Ltd. ....................................... 16,191
625 Tyson Foods, Inc. Class A......................... 10,281
----------
28,408
----------
ENERGY -- 1.9%
408 Chesapeake Energy Corp. .......................... 11,852
426 Halliburton Co. .................................. 13,238
----------
25,090
----------
FINANCE -- 8.5%
188 Covanta Holding Corp. (D)......................... 4,148
336 Dade Behring Holdings, Inc. ...................... 13,380
717 E*Trade Financial Corp. (D)....................... 16,080
512 Nasdaq Stock Market, Inc. (D)..................... 15,768
333 Nuveen Investments, Inc. Class A.................. 17,256
243 State Street Corp. ............................... 16,374
200 UBS AG............................................ 12,090
684 Western Union Co.................................. 15,338
----------
110,434
----------
HEALTH CARE -- 18.2%
410 Alkermes, Inc. (D)................................ 5,480
339 Amylin Pharmaceuticals, Inc. (D).................. 12,231
251 Astellas Pharma, Inc. (A)......................... 11,391
270 AtheroGenics, Inc. (D)(G)......................... 2,673
458 Auxilium Pharmaceuticals, Inc. (D)(G)............. 6,729
265 Cephalon, Inc. (D)(G)............................. 18,623
228 Charles River Laboratories International, Inc.
(D)............................................. 9,852
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
106 Covance, Inc. (D)................................. $ 6,256
322 Digene Corp. (D).................................. 15,413
234 Eisai Co., Ltd. (A)............................... 12,838
591 Elan Corp. plc ADR (D)(G)......................... 8,714
243 Eli Lilly & Co. .................................. 12,660
147 Encysive Pharmaceuticals, Inc. (D)(G)............. 619
252 Forest Laboratories, Inc. (D)..................... 12,756
239 Kyphon, Inc. (D)(G)............................... 9,664
209 Medicines Co. (D)................................. 6,617
290 Merck & Co., Inc. ................................ 12,649
279 Pharmaceutical Product Development, Inc. ......... 8,986
1,232 Schering-Plough Corp. ............................ 29,128
793 Shionogi & Co., Ltd. (A).......................... 15,578
366 St. Jude Medical, Inc. (D)........................ 13,377
127 Vertex Pharmaceuticals, Inc. (D).................. 4,752
----------
236,986
----------
SERVICES -- 12.3%
509 Allied Waste Industries, Inc. (D)................. 6,256
182 Corporate Executive Board Co. .................... 15,996
559 DreamWorks Animation SKG, Inc. (D)................ 16,473
352 Equifax, Inc. (D)................................. 14,303
182 Fluor Corp. ...................................... 14,819
269 Focus Media Holding Ltd. ADR (D).................. 17,839
193 Manpower, Inc. ................................... 14,491
426 MoneyGram International, Inc. .................... 13,351
184 Stericycle, Inc. (D).............................. 13,922
915 Tetra Technologies, Inc. (D)...................... 16,554
478 Walt Disney Co. .................................. 16,364
----------
160,368
----------
TECHNOLOGY -- 30.4%
1,475 Activision, Inc. (D).............................. 25,429
566 Adobe Systems, Inc. (D)........................... 23,257
296 Amdocs Ltd. (D)................................... 11,482
336 American Tower Corp. Class A (D).................. 12,534
147 Baidu.com ADR (D)(G).............................. 16,536
392 Broadcom Corp. Class A (D)........................ 12,678
1,076 Corning, Inc. (D)................................. 20,126
593 General Electric Co. ............................. 22,054
34 Google, Inc. (D).................................. 15,656
490 Hewlett-Packard Co. .............................. 20,200
295 Leap Wireless International, Inc. (D)............. 17,526
452 Medtronic, Inc. .................................. 24,198
679 Microsoft Corp. .................................. 20,276
1,880 Move, Inc. (D).................................... 10,359
968 Network Appliance, Inc. (D)....................... 38,003
262 NVIDIA Corp. (D).................................. 9,711
1,362 O2Micro International Ltd. ADR (D)................ 11,649
942 Oracle Corp. (D).................................. 16,142
372 Red Hat, Inc. (D)................................. 8,563
21 Samsung Electronics Co., Ltd. (A)................. 13,591
2,920 Tencent Holdings Ltd. (A)......................... 10,367
720 VeriFone Holdings, Inc. (D)(G).................... 25,495
289 Verint Systems, Inc. (D).......................... 9,907
----------
395,739
----------
</Table>
The accompanying notes are an integral part of these financial statements.
102
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
@v TRANSPORTATION -- 1.0%
446 GOL Linhas Aereas Inteligentes S.A. ADR (G)....... $ 12,778
----------
UTILITIES -- 2.6%
510 Suntech Power Holdings Co. Ltd. ADR (D)(G)........ 17,342
216 Veolia Environnment S.A. (A)(G)................... 16,460
----------
33,802
----------
Total common stock
(cost $1,065,520)............................... $1,252,683
----------
PRINCIPAL
AMOUNT
- --------
@V
SHORT-TERM INVESTMENTS -- 11.9%
REPURCHASE AGREEMENTS -- 3.1%
$ 9,245 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 9,245
12,748 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 12,748
138 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 138
7,980 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 7,980
2,725 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 2,725
7,980 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 7,980
----------
40,816
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
114,640 BNY Institutional Cash Reserve Fund............... $ 114,640
----------
Total short-term investments
(cost $155,456)................................. $ 155,456
----------
Total investments in securities
(cost $1,220,976) (C)........................... $1,408,139
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.97% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $80,225, which represents 6.16% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,224,698 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $199,387
Unrealized depreciation........................ (15,946)
--------
Net unrealized appreciation.................... $183,441
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
103
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 1.4%
FINANCE -- 0.3%
$ 24,319 CBA Commercial Small Balance Commercial Mortgage,
2.16%, 01/25/2039 (I)(L)(P)..................... $ 2,189
--------
TRANSPORTATION -- 1.1%
1,620 American Airlines, Inc.,
7.38%, 05/23/2019............................... 1,583
1,420 Continental Airlines, Inc.,
6.80%, 08/02/2018............................... 1,413
2,886 Continental Airlines, Inc.,
7.37%, 12/15/2015............................... 2,929
2,239 Continental Airlines, Inc.,
8.39%, 11/01/2020............................... 2,328
--------
8,253
--------
Total asset & commercial
mortgage backed securities
(cost $10,239).................................. $ 10,442
--------
CORPORATE BONDS: INVESTMENT GRADE -- 0.6%
SERVICES -- 0.6%
4,800 Harrah's Operating Co., Inc.,
5.63%, 06/01/2015............................... $ 4,117
--------
Total corporate bonds: investment grade
(cost $4,097)................................... $ 4,117
--------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 95.7%
BASIC MATERIALS -- 12.1%
2,750 AK Steel Corp.,
7.75%, 06/15/2012 #............................. $ 2,771
2,320 Aleris International, Inc.,
9.00%, 12/15/2014 (I)........................... 2,332
3,617 Boise Cascade LLC,
7.13%, 10/15/2014 (G)........................... 3,499
3,205 Bowater, Inc.,
8.36%, 03/15/2010 (L)(G)........................ 3,237
1,000 Bowater, Inc.,
9.50%, 10/15/2012 (G)........................... 1,035
2,875 Chaparral Steel Co.,
10.00%, 07/15/2013.............................. 3,209
3,165 Crown Americas, Inc.,
7.75%, 11/15/2015............................... 3,284
1,650 Crown Cork & Seal Co., Inc.,
8.00%, 04/15/2023............................... 1,609
3,880 Equistar Chemicals L.P.,
8.75%, 02/15/2009 (G)........................... 4,064
2,285 Georgia Gulf Corp.,
10.75%, 10/15/2016 (I)(G)....................... 2,194
4,325 Georgia-Pacific Corp.,
7.00%, 01/15/2015 (I)........................... 4,314
3,900 Goodyear Tire & Rubber Co.,
8.63%, 12/01/2011 (I)........................... 4,027
2,710 Graham Packaging Co., Inc.,
9.88%, 10/15/2014 (G)........................... 2,737
2,800 Huntsman International LLC,
7.88%, 11/15/2014 (I)........................... 2,821
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
BASIC MATERIALS -- (CONTINUED)
$ 2,923 Koppers, Inc.,
9.88%, 10/15/2013............................... $ 3,179
2,800 Lyondell Chemical Co.,
8.25%, 09/15/2016............................... 2,940
1,970 Mobile Services Group, Inc.,
9.75%, 08/01/2014 (I)........................... 2,059
5,440 Norske Skog Canada Ltd.,
8.63%, 06/15/2011 (G)........................... 5,508
2,650 Nova Chemicals Corp.,
8.50%, 11/15/2013 (L)........................... 2,650
2,415 Owens-Brockway Glass Container, Inc.,
8.88%, 02/15/2009............................... 2,469
2,560 Owens-Illinois, Inc.,
7.80%, 05/15/2018............................... 2,550
3,500 Peabody Energy Corp.,
6.88%, 03/15/2013............................... 3,588
3,450 PolyOne Corp.,
8.88%, 05/01/2012 (G)........................... 3,441
1,350 Potlatch Corp.,
13.00%, 12/01/2009 (L).......................... 1,557
2,835 Rockwood Specialties Group, Inc.,
7.50%, 11/15/2014............................... 2,856
1,052 Rockwood Specialties Group, Inc.,
10.63%, 05/15/2011.............................. 1,120
3,600 Smurfit Kappa Funding plc,
9.63%, 10/01/2012............................... 3,815
3,800 Smurfit-Stone Container Enterprises, Inc.,
8.38%, 07/01/2012............................... 3,724
2,080 Titan International, Inc.,
8.00%, 01/15/2012 (I)(G)........................ 2,080
4,105 Verso Paper Holdings LLC,
11.38%, 08/01/2016 (I)(G)....................... 4,310
--------
88,979
--------
CAPITAL GOODS -- 1.7%
2,845 Bombardier, Inc.,
6.30%, 05/01/2014 (I)........................... 2,673
2,000 Bombardier, Inc.,
6.75%, 05/01/2012 (I)(G)........................ 1,960
2,800 Case Corp.,
7.25%, 01/15/2016............................... 2,835
2,645 ESCO Corp.,
8.63%, 12/15/2013 (I)........................... 2,718
2,052 K2, Inc.,
7.38%, 07/01/2014 (G)........................... 2,073
412 L-3 Communications Corp.,
3.00%, 08/01/2035 (G)........................... 433
--------
12,692
--------
CONSUMER CYCLICAL -- 13.4%
5,600 Albertson's, Inc.,
7.25%, 05/01/2013 (G)........................... 5,696
2,155 Amerigas Partners L.P.,
7.25%, 05/20/2015............................... 2,182
5,680 ArvinMeritor, Inc.,
8.75%, 03/01/2012 (G)........................... 5,836
</Table>
The accompanying notes are an integral part of these financial statements.
104
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
$ 2,840 Beazer Homes USA, Inc.,
8.63%, 05/15/2011 (G)........................... $ 2,925
2,645 Buffalo Thunder,
9.38%, 12/15/2014 (I)........................... 2,685
2,100 Builders FirstSource, Inc.,
9.62%, 02/15/2012 (L)(G)........................ 2,066
4,000 Ford Capital B.V.,
9.50%, 06/01/2010 #............................. 3,980
6,450 General Motors Corp.,
6.38%, 05/01/2008 (G)........................... 6,418
5,640 General Motors Corp.,
7.13%, 07/15/2013 (G)........................... 5,316
2,295 GSC Holdings Corp.,
8.00%, 10/01/2012 (G)........................... 2,398
2,430 Hanesbrands, Inc.,
8.74%, 12/15/2014 (I)(L)........................ 2,473
1,750 Interline Brands, Inc.,
8.13%, 06/15/2014............................... 1,798
935 K. Hovnanian Enterprises, Inc.,
6.00%, 01/15/2010............................... 895
1,875 K. Hovnanian Enterprises, Inc.,
6.25%, 01/15/2015............................... 1,781
2,750 K. Hovnanian Enterprises, Inc.,
8.88%, 04/01/2012............................... 2,791
2,900 KB Home & Broad Home Corp.,
6.38%, 08/15/2011 (G)........................... 2,853
3,400 Lear Corp.,
5.75%, 08/01/2014............................... 2,856
2,300 Levi Strauss & Co.,
9.75%, 01/15/2015 (G)........................... 2,478
3,240 Michaels Stores, Inc.,
11.38%, 11/01/2016 (I)(G)....................... 3,378
2,485 Mosaic Co.,
7.38%, 12/01/2014 (I)........................... 2,550
1,150 Mosaic Co.,
7.63%, 12/01/2016 (I)........................... 1,192
4,065 Neiman Marcus Group, Inc.,
10.38%, 10/15/2015 (G).......................... 4,522
3,120 NPC International, Inc.,
9.50%, 05/01/2014 (G)........................... 3,198
2,160 Perry Ellis International, Inc.,
8.88%, 09/15/2013............................... 2,160
3,695 Phillips Van-Heusen Corp.,
7.75%, 11/15/2023............................... 3,861
2,145 Ply Gem Industries, Inc.,
9.00%, 02/15/2012 (G)........................... 1,823
3,640 SGS International, Inc.,
12.00%, 12/15/2013.............................. 3,786
2,435 Stater Brothers Holdings, Inc.,
8.13%, 06/15/2012 (G)........................... 2,472
3,175 Technical Olympic USA, Inc.,
9.00%, 07/01/2010 (G)........................... 3,127
1,740 Technical Olympic USA, Inc.,
10.38%, 07/01/2012 (G).......................... 1,566
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CONSUMER CYCLICAL -- (CONTINUED)
$ 4,490 Tenneco, Inc.,
8.63%, 11/15/2014 (G)........................... $ 4,580
2,795 United Auto Group, Inc.,
9.63%, 03/15/2012............................... 2,938
--------
98,580
--------
CONSUMER STAPLES -- 2.5%
2,545 Appleton Papers Inc.,
9.75%, 06/15/2014 (G)........................... 2,620
1,755 Constellation Brands, Inc.,
7.25%, 09/01/2016............................... 1,803
1,750 Dean Foods Co.,
7.00%, 06/01/2016............................... 1,768
2,100 Del Laboratories, Inc.,
10.37%, 11/01/2011 (L).......................... 2,179
4,505 Dole Food Co., Inc.,
8.63%, 05/01/2009............................... 4,477
3,520 Nutro Products, Inc.,
10.75%, 04/15/2014 (I).......................... 3,846
1,915 Pierre Foods, Inc.,
9.88%, 07/15/2012 (G)........................... 1,972
--------
18,665
--------
ENERGY -- 3.7%
1,339 Chesapeake Energy Corp.,
2.75%, 11/15/2035 +............................. 1,353
1,735 Chesapeake Energy Corp.,
7.63%, 07/15/2013............................... 1,828
2,720 Comstock Resources, Inc.,
6.88%, 03/01/2012............................... 2,638
3,570 Encore Acquisition Co.,
7.25%, 12/01/2017............................... 3,454
1,897 Ferrell Gas Partners L.P.,
8.75%, 06/15/2012............................... 1,944
2,600 Inergy L.P.,
8.25%, 03/01/2016............................... 2,730
1,537 Magnum Hunter Resources, Inc.,
9.60%, 03/15/2012............................... 1,616
2,675 OPTI Canada, Inc.,
8.25%, 12/15/2014 (I)........................... 2,749
2,825 Petrohawk Energy Corp.,
9.13%, 07/15/2013............................... 2,966
3,500 Pogo Producing Co.,
7.88%, 05/01/2013............................... 3,553
2,675 Range Resources Corp.,
7.50%, 05/15/2016............................... 2,742
--------
27,573
--------
FINANCE -- 13.1%
5,400 American Real Estate Partners L.P.,
7.13%, 02/15/2013 #............................. 5,426
3,430 Atlantic Broadband Finance LLC,
9.38%, 01/15/2014 #............................. 3,469
2,790 Avis Budget Car Rental,
7.87%, 05/15/2014 (I)(L)........................ 2,692
3,857 BCP Crystal Holdings Corp.,
9.63%, 06/15/2014............................... 4,262
</Table>
The accompanying notes are an integral part of these financial statements.
105
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ---------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 1,635 Crescent Real Estate Equities L.P.,
9.25%, 04/15/2009............................... $ 1,678
2,900 E*Trade Financial Corp,
8.00%, 06/15/2011............................... 3,031
3,440 El Paso Performance-Linked Trust,
7.75%, 07/15/2011 (I)........................... 3,638
1,000 Felcor Lodging L.P.,
8.50%, 06/01/2011............................... 1,065
4,175 Ford Motor Credit Co.,
5.80%, 01/12/2009............................... 4,099
3,680 Ford Motor Credit Co.,
6.75%, 08/15/2008............................... 3,641
9,480 Ford Motor Credit Co.,
6.94%, 01/15/2010 (L)........................... 9,271
4,600 Ford Motor Credit Co.,
7.38%, 02/01/2011............................... 4,554
3,900 General Motors Acceptance Corp.,
6.88%, 08/28/2012............................... 4,005
10,260 General Motors Acceptance Corp.,
6.88%, 09/15/2011#.............................. 10,524
3,300 General Motors Acceptance Corp.,
8.00%, 11/01/2031 (G)........................... 3,789
3,235 Hertz Corp.,
10.50%, 01/01/2016 (I)(G)....................... 3,559
2,800 Host Marriott L.P.,
6.75%, 06/01/2016............................... 2,804
2,020 LPL Holdings, Inc.,
10.75%, 12/15/2015 (I).......................... 2,111
3,125 Multiplan Corp.,
10.38%, 04/15/2016 (I).......................... 3,109
1,300 Nell Af Sarl,
8.38%, 08/15/2015 (I)(G)........................ 1,336
EUR 1,500 Nell Af Sarl,
8.38%, 08/15/2015 (I)........................... 2,124
3,500 Rainbow National Services LLC,
10.38%, 09/01/2014 (I).......................... 3,889
1,750 Rental Service Corp.,
9.50%, 12/01/2014 (I)........................... 1,807
3,465 United Rentals NA, Inc.,
6.50%, 02/15/2012#.............................. 3,422
3,290 Universal City Florida,
10.12%, 05/01/2010 (L).......................... 3,397
3,315 Universal Hospital Services,
10.13%, 11/01/2011.............................. 3,539
--------
96,241
--------
HEALTH CARE -- 5.6%
2,690 Accellent, Inc.,
10.50%, 12/01/2013#............................. 2,790
3,505 Biovail Corp.,
7.88%, 04/01/2010#.............................. 3,579
2,655 CDRV Investors, Inc.,
9.86%, 12/01/2011 (I)(L)........................ 2,589
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
HEALTH CARE -- (CONTINUED)
$ 2,900 Encore Medical Finance,
11.75%, 11/15/2014 (I).......................... $ 2,878
2,450 GNC Parent Corp.,
12.13%, 12/01/2011 (I)(L)....................... 2,450
5,695 HCA, Inc.,
7.88%, 02/01/2011............................... 5,709
6,997 HCA, Inc.,
9.25%, 11/15/2016 (I)........................... 7,496
3,420 Healthsouth Corp.,
11.35%, 06/15/2014 (I)(L)(G).................... 3,642
2,835 IASIS Healthcare Capital Corp.,
8.75%, 06/15/2014............................... 2,870
3,660 National Mentor Holdings, Inc.,
11.25%, 07/01/2014 (I).......................... 3,889
3,450 Tenet Healthcare Corp.,
6.50%, 06/01/2012............................... 3,122
--------
41,014
--------
SERVICES -- 18.3%
1,655 Allied Waste North America, Inc.,
5.75%, 02/15/2011 (G)........................... 1,600
1,100 Allied Waste North America, Inc.,
7.88%, 04/15/2013............................... 1,134
233 Allied Waste North America, Inc.,
9.25%, 09/01/2012............................... 248
2,500 AMC Entertainment, Inc.,
11.00%, 02/01/2016#............................. 2,806
3,395 Ameripath, Inc.,
10.50%, 04/01/2013#............................. 3,675
2,370 Cablevision Systems Corp.,
9.87%, 04/01/2009 (L)........................... 2,500
400 Century Communications Corp.,
8.88%, 01/15/2007............................... 417
3,570 Clarke American Corp.,
11.75%, 12/15/2013.............................. 3,820
3,055 Compucom Systems, Inc.,
12.00%, 11/01/2014 (I).......................... 3,147
7,090 Dex Media West LLC, Inc.,
8.00%, 11/15/2013............................... 7,303
5,277 Dex Media West LLC, Inc.,
9.88%, 08/15/2013............................... 5,752
3,650 DirecTV Holdings LLC,
6.38%, 06/15/2015............................... 3,499
34,000 Dow Jones CDX HY,
8.38%, 12/29/2011 (I)(G)........................ 34,741
1,700 Education Management LLC,
8.75%, 06/01/2014 (I)........................... 1,760
1,800 Education Management LLC,
10.25%, 06/01/2016 (I)(G)....................... 1,904
3,475 Knowledge Learning Center, Inc.,
7.75%, 02/01/2015 (I)........................... 3,327
2,900 Liberty Media Corp.,
8.25%, 02/01/2030............................... 2,843
3,465 Lodgenet Entertainment Corp.,
9.50%, 06/15/2013............................... 3,734
</Table>
The accompanying notes are an integral part of these financial statements.
106
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
SERVICES -- (CONTINUED)
$ 1,770 MGM Mirage, Inc.,
6.75%, 04/01/2013............................... $ 1,730
4,655 MGM Mirage, Inc.,
6.75%, 09/01/2012............................... 4,585
1,860 MTR Gaming Group, Inc.,
9.00%, 06/01/2012............................... 1,907
2,185 NCO Group, Inc.,
11.88%, 11/15/2014 (I).......................... 2,212
2,925 Penn National Gaming, Inc.,
6.75%, 03/01/2015 (G)........................... 2,867
1,700 Pokagon Gaming Authority,
10.38%, 06/15/2014 (I).......................... 1,862
3,000 Quebecor World Capital Corp.,
6.13%, 11/15/2013............................... 2,588
2,570 Quebecor World Capital Corp.,
8.75%, 03/15/2016 (I)(G)........................ 2,461
2,330 Quebecor World, Inc.,
9.75%, 01/15/2015 (I)........................... 2,345
3,755 Sheridan Group, Inc.,
10.25%, 08/15/2011.............................. 3,905
3,500 Sirius Satellite Radio, Inc.,
9.63%, 08/01/2013 (G)........................... 3,443
6,030 SunGard Data Systems, Inc.,
10.25%, 08/15/2015 (G).......................... 6,437
2,050 Town Sports International, Inc.,
9.63%, 04/15/2011 (G)........................... 2,165
1,910 Tropicana Entertainment,
9.63%, 12/15/2014 (I)........................... 1,891
3,500 Unisys Corp.,
7.88%, 04/01/2008 (G)........................... 3,491
3,050 West Corp.,
9.50%, 10/15/2014 (I)........................... 3,050
3,665 Wynn Las Vegas LLC,
6.63%, 12/01/2014............................... 3,642
--------
134,791
--------
TECHNOLOGY -- 19.0%
2,985 Advanced Micro Devices, Inc.,
7.75%, 11/01/2012 (G)........................... 3,096
1,710 Amkor Technologies, Inc.,
10.50%, 05/01/2009.............................. 1,667
3,445 Broadview Networks Holdings, Inc.,
11.38%, 09/01/2012 (I).......................... 3,591
7,200 Charter Communications Operating LLC,
8.00%, 04/30/2012 (I)........................... 7,479
8,645 Charter Communications Holdings LLC,
9.92%, 04/01/2011 (G)........................... 7,997
2,800 Cincinnati Bell, Inc.,
7.25%, 07/15/2013 (G)........................... 2,898
3,650 Citizens Communications Co.,
7.88%, 01/15/2027 (I)........................... 3,687
3,500 Dobson Cellular Systems,
8.38%, 11/01/2011 (I)........................... 3,688
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
TECHNOLOGY -- (CONTINUED)
$ 1,355 Dobson Communications Corp.,
9.62%, 10/15/2012 (L)........................... $ 1,382
2,800 Flextronics International Ltd.,
6.50%, 05/15/2013............................... 2,765
7,200 Freescale Semiconductor, Inc.,
10.13%, 12/15/2016 (I).......................... 7,209
2,570 Hawaiian Telcom Communications, Inc.,
10.89%, 05/01/2013 (L)(G)....................... 2,570
3,530 Idearc, Inc.,
8.00%, 11/15/2016 (I)........................... 3,583
2,805 Inmarsat Finance plc,
7.63%, 06/30/2012............................... 2,896
7,305 Intelsat Bermuda Ltd.,
11.25%, 06/15/2016 (I).......................... 8,017
3,615 Itron, Inc.,
7.75%, 05/15/2012............................... 3,696
3,500 Leap Wireless International, Inc.,
9.38%, 11/01/2014 (I)(G)........................ 3,693
1,825 Level 3 Communications,
11.50%, 03/01/2010 (G).......................... 1,935
6,430 Level 3 Financing, Inc.,
12.25%, 03/15/2013.............................. 7,282
2,594 Lucent Technologies, Inc.,
6.45%, 03/15/2029............................... 2,393
3,500 MagnaChip Semiconductor,
6.88%, 12/15/2011............................... 2,958
3,500 Mediacom LLC,
9.50%, 01/15/2013............................... 3,605
3,435 Metro Pcs Wireless, Inc.,
9.25%, 11/01/2014 (I)........................... 3,590
1,280 Momentive Performance,
9.75%, 12/01/2014 (I)........................... 1,280
800 Momentive Performance,
11.50%, 12/01/2016 (I).......................... 784
6,500 Nortel Networks Ltd.,
10.75%, 07/15/2016 (I).......................... 7,109
4,800 NXP B.V.,
8.12%, 10/15/2013 (I)(L)........................ 4,872
6,670 Qwest Communications International, Inc.,
7.50%, 02/15/2014 (G)........................... 6,870
3,500 Rural Cellular Corp.,
8.25%, 03/15/2012............................... 3,644
2,650 Sanmina-SCI Corp.,
8.13%, 03/01/2016 (G)........................... 2,564
3,015 Seagate Technology Holdings,
6.80%, 10/01/2016............................... 3,030
3,135 Solectron Global Finance Ltd.,
8.00%, 03/15/2016 (G)........................... 3,174
3,425 STATS ChipPAC Ltd.,
7.50%, 07/19/2010 (G)........................... 3,451
3,300 UGS Corp.,
10.00%, 06/01/2012.............................. 3,597
</Table>
The accompanying notes are an integral part of these financial statements.
107
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL Market
AMOUNT (B) Value (W)
- ---------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
EUR 1,600 Wind Acquisition,
9.75%, 12/01/2015 (I)........................... $ 2,429
$ 4,715 Windstream Corp.,
8.63%, 08/01/2016............................... 5,163
--------
139,644
--------
TRANSPORTATION -- 0.2%
1,625 PHI, Inc.,
7.13%, 04/15/2013............................... 1,572
--------
UTILITIES -- 6.1%
3,110 Atlas Pipeline Partners L.P.,
8.13%, 12/15/2015#.............................. 3,196
4,000 Chivor S.S. E.S.P.,
9.75%, 12/30/2014 (K)........................... 4,560
3,625 Colorado Interstate Gas Co.,
6.80%, 11/15/2015............................... 3,769
2,750 Copano Energy LLC,
8.13%, 03/01/2016............................... 2,846
3,515 Edison Mission Energy,
7.50%, 06/15/2013............................... 3,673
1,643 Elwood Energy LLC,
8.16%, 07/05/2026............................... 1,716
3,440 Markwest Energy Partners L.P.,
8.50%, 07/15/2016 (I)........................... 3,578
2,400 Mirant Americas Generation LLC,
8.30%, 05/01/2011............................... 2,460
2,545 NGC Corp.,
7.13%, 05/15/2018 (G)........................... 2,481
2,075 NRG Energy, Inc.,
7.25%, 02/01/2014............................... 2,091
3,620 NRG Energy, Inc.,
7.38%, 02/01/2016............................... 3,638
1,665 NRG Engery, Inc.,
7.38%, 01/15/2017............................... 1,669
1,700 PSEG Energy Holdings LLC,
8.50%, 06/15/2011............................... 1,828
2,325 Regency Energy Partners,
8.38%, 12/15/2013 (I)........................... 2,331
2,900 Reliant Energy, Inc.,
6.75%, 12/15/2014............................... 2,835
1,775 Williams Partners LP,
7.25%, 02/01/2017 (I)........................... 1,811
--------
44,482
--------
Total corporate bonds: non-investment grade
(cost $689,603)................................. $704,233
--------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE (V) -- 1.4%
CONSUMER CYCLICAL -- 0.5%
$ 3,500 Ford Motor Co.,
8.36%, 12/12/2013 (Q)(N)#....................... $ 3,506
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
FINANCE -- 0.4%
$ 2,900 Rental Service Corp.,
8.86%, 11/21/2013 (N)........................... $ 2,923
--------
TECHNOLOGY -- 0.5%
3,650 Wind Acquisitions Holdings Finance S.A.,
12.61%, 12/12/2011 (Q)(AA)...................... 3,698
--------
Total senior floating rate interests:
non-investment grade
(cost $10,055).................................. $ 10,127
--------
<Caption>
SHARES
- ---------
COMMON STOCK -- 0.0%
CONSUMER CYCLICAL -- 0.0%
-- Hosiery Corp. of America, Inc. Class A (D)(H)(A).. $ --
--------
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. (D)(H)(G)....................... --
--------
Total common stock
(cost $4)....................................... $ --
--------
WARRANTS -- 0.0%
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. ................................ $ --
--------
Total warrants
(cost $--)...................................... $ --
--------
PREFERRED STOCK -- 0.0%
TECHNOLOGY -- 0.0%
21 Adelphia Communications Corp. (D) +............... $ --
--------
Total preferred stock
(cost $513)..................................... $ --
--------
Total long-term investments
(cost $714,512)................................. $728,919
--------
SHORT-TERM INVESTMENTS -- 21.8%
INVESTMENT POOLS AND FUNDS -- 0.0%
-- State Street Bank Money Market Fund............... $ --
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
U.S. TREASURY SECURITIES -- 0.1%
$ 400 U.S. Treasury Bill,
4.83%, 03/15/2007 (S)........................... 396
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.7%
159,967 Navigator Prime Portfolio......................... $159,967
--------
Total short-term investments
(cost $160,363)................................. $160,363
--------
Total investments in securities
(cost $874,874) (C)............................. $889,282
========
</Table>
The accompanying notes are an integral part of these financial statements.
108
- --------------------------------------------------------------------------------
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 8.48% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value by,
or under the direction of, the Funds' Board of Directors rounds to zero.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
EUR -- EURO
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $875,457 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation............................ $17,634
Unrealized depreciation............................ (3,809)
-------
Net unrealized appreciation........................ $13,825
=======
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to cover
funding requirements on investment transactions settling in the future.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
October, 1994 -- Hosiery Corp. of America,
Inc. Class A-144A $ 4
May, 2006 -- XO Holdings, Inc. --
</Table>
The aggregate value of these securities at December 31, 2006
rounds to zero.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $227,190, which represents 30.87% of total net
assets.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $4,560 or 0.62% of net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(N) The interest rate disclosed for these securities represents the
average coupon as of December 31, 2006.
(P) The interest rate disclosed for interest only strips represents an
effective yield based upon estimated future cash flows at December 31,
2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $4,820.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006.
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S.
Treasury Note 600 long March 2007 $ (433)
======
</Table>
* The number of contracts does not omit 000's.
(V) Senior loans in which the Fund invests generally pay interest rates
which are periodically adjusted by reference to a base short-term, floating
lending rate plus a premium. These base lending rates are generally (i) the
lending rate offered by one or more major European banks, such as the
London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one
or more major United States Banks, or (iii) the bank's certificate of
deposit rate. Senior floating rate interests often require prepayments from
excess cash flows or permit the borrower to repay at its election. The rate
at which the borrower repays cannot be predicted with accuracy. As a
result, the actual remaining maturity may be substantially less than the
stated maturities shown. The average coupon indicated is the rate in effect
at December 31, 2006.
+ Convertible debt security.
(AA)The interest rate disclosed for these securities represents an
estimated average coupon as of December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
----------- ----------- ------ -------- -------- --------------
Euro Sell $4,568 $4,571 2/1/2007 $3
==
</Table>
The accompanying notes are an integral part of these financial statements.
109
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 3.1%
32 Air Products and Chemicals, Inc. ................. $ 2,264
127 Alcoa, Inc. (G)................................... 3,804
15 Allegheny Technologies, Inc. ..................... 1,333
8 Ashland, Inc. .................................... 581
15 Ball Corp. ....................................... 663
15 Bemis Co., Inc. .................................. 520
27 Consol Energy, Inc. .............................. 858
140 Dow Chemical Co. ................................. 5,577
134 E.I. DuPont de Nemours & Co. (G).................. 6,549
12 Eastman Chemical Co. (G).......................... 712
42 Eastman Kodak Co. ................................ 1,086
22 Fortune Brands, Inc. ............................. 1,891
29 Freeport-McMoRan Copper & Gold, Inc. Class B...... 1,605
26 Goodyear Tire & Rubber Co. (D).................... 544
17 Hercules, Inc. (D)(G)............................. 322
11 International Flavors & Fragrances, Inc. (G)...... 560
67 International Paper Co. .......................... 2,269
67 Kimberly-Clark Corp. ............................. 4,554
27 MeadWestvaco Corp. ............................... 800
66 Newmont Mining Corp. ............................. 2,972
44 Nucor Corp. ...................................... 2,415
11 OfficeMax, Inc. (G)............................... 541
19 Pactiv Corp. (D).................................. 692
39 Peabody Energy Corp. ............................. 1,560
30 Phelps Dodge Corp. ............................... 3,570
24 PPG Industries, Inc. ............................. 1,554
47 Praxair, Inc. .................................... 2,799
21 Rohm & Haas Co. .................................. 1,063
12 Sealed Air Corp. ................................. 766
9 Snap-On, Inc. .................................... 405
12 Stanley Works (G)................................. 598
16 Temple-Inland, Inc. .............................. 718
17 United States Steel Corp. ........................ 1,265
14 Vulcan Materials Co. ............................. 1,240
----------
58,650
----------
CAPITAL GOODS -- 4.4%
108 3M Co. ........................................... 8,386
25 American Standard Cos., Inc. ..................... 1,165
203 Applied Materials, Inc. .......................... 3,745
47 Baker Hughes, Inc. (G)............................ 3,499
10 Black & Decker Corp. ............................. 792
116 Boeing Co. ....................................... 10,269
95 Caterpillar, Inc. ................................ 5,829
8 Cummins, Inc. .................................... 910
34 Deere & Co. ...................................... 3,214
22 Eaton Corp. ...................................... 1,638
18 Goodrich Corp. ................................... 829
23 Hasbro, Inc. ..................................... 635
119 Honeywell International, Inc. .................... 5,401
61 Illinois Tool Works, Inc. ........................ 2,833
45 Ingersoll-Rand Co. Class A........................ 1,752
50 International Game Technology..................... 2,290
27 ITT Corp. ........................................ 1,534
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CAPITAL GOODS -- (CONTINUED)
29 KLA-Tencor Corp. ................................. $ 1,448
26 National Oilwell Varco, Inc. (D).................. 1,572
50 Northrop Grumman Corp. ........................... 3,417
18 Novellus Systems, Inc. (D)(G)..................... 623
18 Pall Corp. ....................................... 618
17 Parker-Hannifin Corp. ............................ 1,322
32 Pitney Bowes, Inc. ............................... 1,497
25 Rockwell Automation, Inc. ........................ 1,521
29 Smith International, Inc. ........................ 1,195
28 Teradyne, Inc. (D)(G)............................. 416
15 Terex Corp. (D)................................... 962
18 Textron, Inc. .................................... 1,716
147 United Technologies Corp. ........................ 9,172
141 Xerox Corp. (D)................................... 2,392
----------
82,592
----------
CONSUMER CYCLICAL -- 9.0%
306 Altria Group, Inc. ............................... 26,294
45 Amazon.com, Inc. (D).............................. 1,784
22 AutoNation, Inc. (D).............................. 467
7 AutoZone, Inc. (D)................................ 855
14 Avery Dennison Corp. ............................. 937
41 Bed Bath & Beyond, Inc. (D)....................... 1,574
59 Best Buy Co., Inc. ............................... 2,899
16 Big Lots, Inc. (D)................................ 369
12 Brown-Forman Corp. ............................... 762
14 Brunswick Corp. .................................. 431
17 Centex Corp. ..................................... 973
21 Circuit City Stores, Inc. (G)..................... 395
54 Coach, Inc. (D)................................... 2,309
67 Costco Wholesale Corp. ........................... 3,543
40 D.R. Horton, Inc. (G)............................. 1,068
22 Darden Restaurants, Inc. ......................... 864
9 Dillard's, Inc. .................................. 311
46 Dollar General Corp. ............................. 732
169 eBay, Inc. (D)#................................... 5,086
22 Family Dollar Stores, Inc. ....................... 651
77 Federated Department Stores, Inc. ................ 2,928
276 Ford Motor Co. ................................... 2,073
77 Gap, Inc. ........................................ 1,502
83 General Motors Corp. (G).......................... 2,540
25 Genuine Parts Co. ................................ 1,181
298 Home Depot, Inc. (G).............................. 11,980
33 J. C. Penney Co., Inc. (G)........................ 2,546
29 Johnson Controls, Inc. (G)........................ 2,459
16 Jones Apparel Group, Inc. ........................ 538
12 KB Home (G)....................................... 590
48 Kohl's Corp. (D).................................. 3,269
105 Kroger Co. ....................................... 2,418
26 Leggett & Platt, Inc. (G)......................... 629
20 Lennar Corp. (G).................................. 1,060
15 Liz Claiborne, Inc. .............................. 652
223 Lowe's Cos., Inc. ................................ 6,934
50 Ltd. Brands, Inc. ................................ 1,447
58 Masco Corp. (G)................................... 1,721
56 Mattel, Inc. ..................................... 1,264
</Table>
The accompanying notes are an integral part of these financial statements.
110
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
181 McDonald's Corp. ................................. $ 8,011
41 Newell Rubbermaid, Inc. .......................... 1,172
28 NIKE, Inc. Class B (G)............................ 2,726
33 Nordstrom, Inc. (G)............................... 1,648
41 Office Depot, Inc. (D)(G)......................... 1,554
36 PACCAR, Inc. ..................................... 2,353
20 Patterson Cos., Inc. (D).......................... 721
31 Pulte Homes, Inc. ................................ 1,027
20 RadioShack Corp. ................................. 336
65 Safeway, Inc. .................................... 2,240
12 Sears Holdings Corp. (D).......................... 2,043
16 Sherwin-Williams Co. (G).......................... 1,043
106 Staples, Inc. .................................... 2,820
111 Starbucks Corp. (D)............................... 3,914
30 Supervalu, Inc. .................................. 1,076
90 Sysco Corp. (G)................................... 3,322
126 Target Corp. ..................................... 7,164
20 Tiffany & Co. .................................... 777
67 TJX Cos., Inc. #.................................. 1,895
13 V.F. Corp. ....................................... 1,075
11 W.W. Grainger, Inc. .............................. 748
359 Wal-Mart Stores, Inc. ............................ 16,599
14 Wendy's International, Inc. ...................... 463
21 Whole Foods Market, Inc. (G)...................... 981
39 Yum! Brands, Inc. ................................ 2,281
----------
168,024
----------
CONSUMER STAPLES -- 5.5%
112 Anheuser-Busch Cos., Inc. #....................... 5,530
96 Archer Daniels Midland Co. ....................... 3,070
65 Avon Products, Inc. .............................. 2,148
32 Campbell Soup Co. (G)............................. 1,237
22 Clorox Co. ....................................... 1,424
298 Coca-Cola Co. .................................... 14,379
41 Coca-Cola Enterprises, Inc. ...................... 827
75 Colgate-Palmolive Co. ............................ 4,906
75 ConAgra Foods, Inc. .............................. 2,012
31 Constellation Brands, Inc. Class A (D)............ 894
20 Dean Foods Co. (D)................................ 824
19 Estee Lauder Cos., Inc. .......................... 759
50 General Mills, Inc. .............................. 2,889
48 H.J. Heinz Co. ................................... 2,168
25 Hershey Co. ...................................... 1,265
37 Kellogg Co. (G)................................... 1,837
19 McCormick & Co., Inc. ............................ 740
7 Molson Coors Brewing Co. ......................... 512
20 Pepsi Bottling Group, Inc. ....................... 621
240 PepsiCo, Inc. .................................... 15,016
463 Procter & Gamble Co. ............................. 29,767
25 Reynolds American, Inc. (G)....................... 1,643
109 Sara Lee Corp. ................................... 1,860
37 Tyson Foods, Inc. Class A......................... 605
24 UST, Inc. (G)..................................... 1,368
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CONSUMER STAPLES -- (CONTINUED)
35 Weyerhaeuser Co. ................................. $ 2,445
32 Wm. Wrigley Jr. Co. (G)........................... 1,660
----------
102,406
----------
ENERGY -- 9.3%
67 Anadarko Petroleum Corp. ......................... 2,925
48 Apache Corp. ..................................... 3,204
43 BJ Services Co. .................................. 1,255
61 Chesapeake Energy Corp. .......................... 1,765
319 Chevron Corp. .................................... 23,430
241 ConocoPhillips.................................... 17,308
65 Devon Energy Corp. ............................... 4,335
36 EOG Resources, Inc. (G)........................... 2,224
852 ExxonMobil Corp. ................................. 65,326
147 Halliburton Co. .................................. 4,564
40 Hess Corp. (G).................................... 1,963
26 KeySpan Corp. .................................... 1,054
51 Marathon Oil Corp. ............................... 4,751
27 Murphy Oil Corp. ................................. 1,388
44 Nabors Industries Ltd. (D)........................ 1,307
7 Nicor, Inc. ...................................... 304
20 Noble Corp. ...................................... 1,508
126 Occidental Petroleum Corp. ....................... 6,151
6 Peoples Energy Corp. ............................. 250
16 Rowan Companies, Inc. ............................ 535
172 Schlumberger Ltd. ................................ 10,879
38 Sempra Energy..................................... 2,144
18 Sunoco, Inc. ..................................... 1,122
43 Transocean, Inc. (D)(G)........................... 3,461
88 Valero Energy Corp. .............................. 4,521
50 Weatherford International Ltd. (D)................ 2,076
87 Williams Cos., Inc. .............................. 2,277
53 XTO Energy, Inc. #................................ 2,515
----------
174,542
----------
FINANCE -- 23.6%
49 ACE Ltd. ......................................... 2,966
76 Aetna, Inc. ...................................... 3,294
79 Aflac, Inc. ...................................... 3,652
94 Allstate Corp. ................................... 6,123
16 AMBAC Financial Group, Inc. ...................... 1,425
176 American Express Co. ............................. 10,686
391 American International Group, Inc. #.............. 28,037
35 Ameriprise Financial, Inc. ....................... 1,930
45 AON Corp. ........................................ 1,601
14 Apartment Investment & Management Co. ............ 790
32 Archstone-Smith Trust (G)......................... 1,858
656 Bank of America Corp. ............................ 35,042
112 Bank of New York Co., Inc. ....................... 4,398
79 BB&T Corp. ....................................... 3,474
17 Bear Stearns & Co., Inc. ......................... 2,792
17 Boston Properties, Inc. .......................... 1,908
60 Capital One Financial Corp. ...................... 4,581
27 CB Richard Ellis Group, Inc. Class A (D).......... 900
149 Charles Schwab Corp. ............................. 2,891
5 Chicago Mercantile Exchange Holdings, Inc. ....... 2,593
</Table>
The accompanying notes are an integral part of these financial statements.
111
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
FINANCE -- (CONTINUED)
62 Chubb Corp. ...................................... $ 3,277
15 CIGNA Corp. ...................................... 1,968
26 Cincinnati Financial Corp. ....................... 1,183
29 CIT Group, Inc. .................................. 1,617
718 Citigroup, Inc. .................................. 40,002
23 Comerica, Inc. (G)................................ 1,361
27 Commerce Bancorp, Inc. (G)........................ 966
19 Compass Bancshares, Inc. (G)...................... 1,133
30 Comverse Technology, Inc. (D)(G).................. 623
91 Countrywide Financial Corp. ...................... 3,853
62 E*Trade Financial Corp. (D)....................... 1,399
51 Equity Office Properties Trust (G)................ 2,474
43 Equity Residential Properties Trust............... 2,166
101 Federal Home Loan Mortgage Corp. ................. 6,880
143 Federal National Mortgage Association............. 8,464
13 Federated Investors, Inc. ........................ 446
82 Fifth Third Bancorp (G)........................... 3,339
18 First Horizon National Corp. ..................... 760
24 Franklin Resources, Inc. ......................... 2,681
71 Genworth Financial, Inc. ......................... 2,433
62 Goldman Sachs Group, Inc. ........................ 12,406
24 Humana, Inc. (D).................................. 1,344
35 Huntington Bancshares, Inc. ...................... 824
29 Janus Capital Group, Inc. ........................ 628
507 JP Morgan Chase & Co. ............................ 24,490
59 Keycorp........................................... 2,234
33 Kimco Realty Corp. ............................... 1,483
19 Legg Mason, Inc. (G).............................. 1,830
77 Lehman Brothers Holdings, Inc. ................... 6,054
46 Lincoln National Corp. ........................... 3,060
69 Loews Corp. ...................................... 2,854
11 M&T Bank Corp. ................................... 1,380
81 Marsh & McLennan Cos., Inc. ...................... 2,471
37 Marshall & Ilsley Corp. .......................... 1,795
20 MBIA, Inc. (G).................................... 1,483
43 Medco Health Solutions, Inc. (D).................. 2,292
60 Mellon Financial Corp. ........................... 2,539
129 Merrill Lynch & Co., Inc. ........................ 12,024
122 Metlife, Inc. .................................... 7,204
13 MGIC Investment Corp. (G)......................... 782
155 Morgan Stanley.................................... 12,596
92 National City Corp. (G)........................... 3,373
27 Northern Trust Corp. (G).......................... 1,663
26 Plum Creek Timber Co., Inc. (G)................... 1,032
43 PNC Financial Services Group, Inc. ............... 3,183
43 Principal Financial Group, Inc. .................. 2,541
115 Progressive Corp. ................................ 2,775
36 ProLogis.......................................... 2,200
77 Prudential Financial, Inc. ....................... 6,577
18 Public Storage, Inc. ............................. 1,745
31 Realogy Corp. (D)................................. 949
107 Regions Financial Corp. .......................... 3,985
9 Ryder System, Inc. ............................... 454
16 SAFECO Corp. ..................................... 988
32 Simon Property Group, Inc. ....................... 3,273
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
60 SLM Corp. ........................................ $ 2,914
53 Sovereign Bancorp, Inc. #......................... 1,333
104 St. Paul Travelers Cos., Inc. .................... 5,574
49 State Street Corp. ............................... 3,276
52 SunTrust Banks, Inc. ............................. 4,371
48 Synovus Financial Corp. .......................... 1,464
39 T. Rowe Price Group, Inc. ........................ 1,685
16 Torchmark Corp. .................................. 1,001
197 UnitedHealth Group, Inc. ......................... 10,578
55 UnumProvident Corp. .............................. 1,139
257 US Bancorp (G).................................... 9,298
19 Vornado Realty Trust.............................. 2,291
279 Wachovia Corp. ................................... 15,864
138 Washington Mutual, Inc. .......................... 6,283
91 Wellpoint, Inc. (D)............................... 7,134
493 Wells Fargo & Co. (G)............................. 17,548
112 Western Union Co.................................. 2,511
27 XL Capital Ltd. Class A........................... 1,961
16 Zions Bancorporation #............................ 1,286
----------
441,988
----------
HEALTH CARE -- 10.4%
224 Abbott Laboratories............................... 10,926
22 Allergan, Inc. (G)................................ 2,687
28 Amerisource Bergen Corp. ......................... 1,263
171 Amgen, Inc. (D)................................... 11,650
15 Bard (C.R.), Inc. ................................ 1,253
16 Barr Pharmaceuticals, Inc. (D).................... 777
8 Bausch & Lomb, Inc. .............................. 411
96 Baxter International, Inc. ....................... 4,437
36 Becton, Dickinson & Co. .......................... 2,526
49 Biogen Idec, Inc. (D)#............................ 2,423
36 Biomet, Inc. ..................................... 1,477
172 Boston Scientific Corp. (D)....................... 2,961
287 Bristol-Myers Squibb Co. ......................... 7,565
59 Cardinal Health, Inc. ............................ 3,817
62 Caremark Rx, Inc. ................................ 3,560
54 Celgene Corp. (D)................................. 3,133
23 Coventry Health Care, Inc. (D).................... 1,166
120 CVS Corp. ........................................ 3,721
144 Eli Lilly & Co. .................................. 7,498
46 Forest Laboratories, Inc. (D)..................... 2,342
38 Genzyme Corp. (D)................................. 2,365
67 Gilead Sciences, Inc. (D)......................... 4,365
35 Health Management Associates, Inc. Class A........ 743
23 Hospira, Inc. (D)................................. 766
424 Johnson & Johnson................................. 27,977
36 King Pharmaceuticals, Inc. (D).................... 565
18 Laboratory Corp. of America Holdings (D).......... 1,345
11 Manor Care, Inc. ................................. 507
43 McKesson Corp. ................................... 2,194
35 MedImmune, Inc. (D)(G)............................ 1,136
317 Merck & Co., Inc. #............................... 13,837
79 Monsanto Co. ..................................... 4,170
31 Mylan Laboratories, Inc. (G)...................... 621
1,054 Pfizer, Inc. ..................................... 27,295
</Table>
The accompanying notes are an integral part of these financial statements.
112
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
23 Quest Diagnostics, Inc. .......................... $ 1,240
217 Schering-Plough Corp. ............................ 5,123
10 Sigma-Aldrich Corp. .............................. 746
52 St. Jude Medical, Inc. (D)........................ 1,889
43 Stryker Corp. (G)................................. 2,396
69 Tenet Healthcare Corp. (D)........................ 480
147 Walgreen Co. ..................................... 6,732
15 Watson Pharmaceuticals, Inc. (D).................. 393
197 Wyeth............................................. 10,025
35 Zimmer Holdings, Inc. (D)......................... 2,736
----------
195,239
----------
SERVICES -- 6.9%
37 Allied Waste Industries, Inc. (D)................. 456
21 Apollo Group, Inc. Class A (D)(G)................. 799
34 Autodesk, Inc. (D)................................ 1,372
80 Automatic Data Processing, Inc. #................. 3,964
67 Avaya, Inc. (D)................................... 931
114 CBS Corp. Class B................................. 3,561
20 Cintas Corp. ..................................... 790
72 Clear Channel Communications, Inc. ............... 2,566
21 Cognizant Technology Solutions Corp. (D).......... 1,597
304 Comcast Corp. Class A (D)(G)...................... 12,876
25 Computer Sciences Corp. (D)....................... 1,340
20 Convergys Corp. (D)............................... 480
113 DirecTV Group, Inc. (D)........................... 2,811
10 Dow Jones & Co., Inc. ............................ 361
12 E.W. Scripps Co. ................................. 609
26 Ecolab, Inc. ..................................... 1,180
76 Electronic Data Systems Corp. .................... 2,083
18 Equifax, Inc. (D)................................. 743
20 Express Scripts, Inc. (D)(G)...................... 1,418
45 FedEx Corp. ...................................... 4,864
13 Fluor Corp. ...................................... 1,053
34 Gannett Co., Inc. ................................ 2,068
47 H & R Block, Inc. ................................ 1,085
27 Harrah's Entertainment, Inc. ..................... 2,252
57 Hilton Hotels Corp. .............................. 1,974
29 IMS Health, Inc. ................................. 800
65 Interpublic Group of Cos., Inc. (D)(G)............ 789
49 Marriott International, Inc. Class A.............. 2,346
52 McGraw-Hill Cos., Inc. ........................... 3,521
6 Meredith Corp. (G)................................ 321
19 Monster Worldwide, Inc. (D)....................... 877
34 Moody's Corp. .................................... 2,369
21 New York Times Co. Class A (G).................... 512
342 News Corp. Class A................................ 7,348
50 Novell, Inc. (D).................................. 311
25 Omnicom Group, Inc. .............................. 2,606
49 Paychex, Inc. .................................... 1,956
32 R.R. Donnelley & Sons Co. ........................ 1,127
25 Robert Half International, Inc. .................. 909
19 Sabre Holdings Corp. ............................. 615
31 Starwood Hotels & Resorts......................... 1,938
514 Sun Microsystems, Inc. (D)........................ 2,788
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SERVICES -- (CONTINUED)
584 Time Warner, Inc. ................................ $ 12,709
28 Tribune Co. (G)................................... 862
51 Unisys Corp. (D).................................. 398
157 United Parcel Service, Inc. Class B............... 11,763
37 Univision Communications, Inc. Class A (D)(G)..... 1,307
102 Viacom, Inc. Class B (D).......................... 4,194
302 Walt Disney Co. .................................. 10,359
78 Waste Management, Inc. ........................... 2,875
29 Wyndham Worldwide Corp. (D)....................... 929
----------
129,762
----------
TECHNOLOGY -- 22.2%
17 ADC Telecommunications, Inc. (D).................. 251
85 Adobe Systems, Inc. (D)#.......................... 3,507
80 Advanced Micro Devices, Inc. (D)(G)............... 1,632
17 Affiliated Computer Services, Inc. Class A (D)#... 845
60 Agilent Technologies, Inc. (D).................... 2,082
55 Alltel Corp. ..................................... 3,305
53 Altera Corp. (D).................................. 1,041
25 American Power Conversion Corp. .................. 759
50 Analog Devices, Inc. ............................. 1,644
124 Apple Computer, Inc. (D)(G)....................... 10,543
27 Applera Corp. -- Applied Biosystems Group......... 983
562 AT&T, Inc. #...................................... 20,080
267 BellSouth Corp. .................................. 12,559
30 BMC Software, Inc. (D)............................ 966
69 Broadcom Corp. Class A (D)........................ 2,214
60 CA, Inc. ......................................... 1,359
17 CenturyTel, Inc. ................................. 733
12 Ciena Corp. (D)................................... 341
888 Cisco Systems, Inc. (D)........................... 24,259
47 Citizens Communications Co. ...................... 675
27 Citrix Systems, Inc. (D).......................... 717
52 Compuware Corp. (D)............................... 431
13 Cooper Industries Ltd. ........................... 1,203
229 Corning, Inc. (D)................................. 4,279
35 Danaher Corp. (G)................................. 2,507
332 Dell, Inc. (D)#................................... 8,330
30 Dover Corp. ...................................... 1,461
45 Electronic Arts, Inc. (D)......................... 2,270
22 Embarq Corp. ..................................... 1,146
322 EMC Corp. (D)#.................................... 4,249
117 Emerson Electric Co. ............................. 5,167
24 Fidelity National Information Services, Inc. ..... 950
112 First Data Corp. ................................. 2,856
25 Fiserv, Inc. (D).................................. 1,326
1,507 General Electric Co. ............................. 56,064
31 Google, Inc. (D).................................. 14,421
10 Harman International Industries, Inc. ............ 949
400 Hewlett-Packard Co. .............................. 16,490
33 IAC/Interactive Corp. (D)(G)...................... 1,211
843 Intel Corp. ...................................... 17,066
220 International Business Machines Corp. #........... 21,393
51 Intuit, Inc. (D).................................. 1,559
27 Jabil Circuit, Inc. .............................. 665
</Table>
The accompanying notes are an integral part of these financial statements.
113
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
31 JDS Uniphase Corp. (D)............................ $ 515
83 Juniper Networks, Inc. (D)........................ 1,566
18 L-3 Communications Holdings, Inc. ................ 1,497
14 Lexmark International, Inc. ADR (D)............... 1,047
44 Linear Technology Corp. .......................... 1,325
52 Lockheed Martin Corp. ............................ 4,793
59 LSI Logic Corp. (D)............................... 527
47 Maxim Integrated Products, Inc. .................. 1,439
168 Medtronic, Inc. .................................. 9,003
110 Micron Technology, Inc. (D)(G).................... 1,540
1,264 Microsoft Corp. .................................. 37,756
8 Millipore Corp. (D)............................... 519
21 Molex, Inc. ...................................... 655
353 Motorola, Inc. ................................... 7,265
42 National Semiconductor Corp. (G).................. 960
26 NCR Corp. (D)..................................... 1,112
55 Network Appliance, Inc. (D)....................... 2,147
52 NVIDIA Corp. (D).................................. 1,923
585 Oracle Corp. (D).................................. 10,022
18 PerkinElmer, Inc. ................................ 400
31 PMC-Sierra, Inc. (D)(G)........................... 207
23 QLogic Corp. (D).................................. 506
242 Qualcomm, Inc. ................................... 9,128
235 Qwest Communications International, Inc. (D)(G)... 1,967
65 Raytheon Co. ..................................... 3,433
24 Rockwell Collins, Inc. ........................... 1,544
33 SanDisk Corp. (D)................................. 1,416
79 Sanmina-SCI Corp. (D)............................. 272
134 Solectron Corp. (D)............................... 431
423 Sprint Nextel Corp. .............................. 7,993
137 Symantec Corp. (D)(G)............................. 2,859
37 Symbol Technologies, Inc. ........................ 556
12 Tektronix, Inc. (G)............................... 353
65 Tellabs, Inc. (D)................................. 665
217 Texas Instruments, Inc. .......................... 6,247
60 Thermo Fisher Scientific Inc. (D)................. 2,701
291 Tyco International Ltd. .......................... 8,838
36 VeriSign, Inc. (D)................................ 861
427 Verizon Communications, Inc. ..................... 15,893
15 Waters Corp. (D)#................................. 725
12 Whirlpool Corp. (G)............................... 955
70 Windstream Corp. ................................. 991
49 Xilinx, Inc. ..................................... 1,169
179 Yahoo!, Inc. (D).................................. 4,570
----------
416,779
----------
TRANSPORTATION -- 1.3%
52 Burlington Northern Santa Fe Corp. ............... 3,872
65 Carnival Corp. ................................... 3,190
64 CSX Corp. (G)..................................... 2,191
59 General Dynamics Corp. ........................... 4,397
38 Harley-Davidson, Inc. (G)......................... 2,671
58 Norfolk Southern Corp. ........................... 2,919
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TRANSPORTATION -- (CONTINUED)
116 Southwest Airlines Co. ........................... $ 1,772
39 Union Pacific Corp. .............................. 3,625
----------
24,637
----------
UTILITIES -- 3.5%
97 AES Corp. (D)..................................... 2,139
24 Allegheny Energy, Inc. (D)........................ 1,111
30 Ameren Corp. (G).................................. 1,617
58 American Electric Power Co., Inc. ................ 2,463
46 CenterPoint Energy, Inc. (G)...................... 758
33 CMS Energy Corp. (D).............................. 543
38 Consolidated Edison, Inc. (G)..................... 1,803
26 Constellation Energy Group, Inc. ................. 1,811
52 Dominion Resources, Inc. ......................... 4,331
26 DTE Energy Co. (G)................................ 1,259
184 Duke Energy Corp. ................................ 6,094
55 Dynegy, Inc. (D).................................. 400
48 Edison International.............................. 2,164
103 El Paso Corp. .................................... 1,575
30 Entergy Corp. .................................... 2,790
98 Exelon Corp. ..................................... 6,068
47 FirstEnergy Corp. ................................ 2,810
59 FPL Group, Inc. .................................. 3,213
16 Kinder Morgan, Inc. .............................. 1,660
40 NiSource, Inc. ................................... 964
51 PG&E Corp. (G).................................... 2,412
15 Pinnacle West Capital Corp. ...................... 739
56 PPL Corp. ........................................ 1,998
37 Progress Energy, Inc. ............................ 1,826
37 Public Service Enterprise Group, Inc. ............ 2,450
13 Questar Corp. .................................... 1,046
109 Southern Co. ..................................... 4,003
31 TECO Energy, Inc. ................................ 527
67 TXU Corp. ........................................ 3,639
60 Xcel Energy, Inc. ................................ 1,372
----------
65,585
----------
Total common stock
(cost $1,484,804)............................... $1,860,204
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 7.6%
REPURCHASE AGREEMENTS -- 0.7%
$ 4,919 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 4,919
3,889 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 3,889
4,919 UBS Securities LLC Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 4,919
----------
13,727
----------
</Table>
The accompanying notes are an integral part of these financial statements.
114
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 6.9%
128,688 Mellon GSL DBTII Collateral Fund.................. $ 128,688
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT SECURITIES -- 0.1%
$ 2,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ $ 1,981
----------
Total short-term investments
(cost $144,396)................................. $ 144,396
----------
Total investments in securities
(cost $1,629,200) (C)........................... $2,004,600
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.75% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,650,067 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 508,279
Unrealized depreciation....................... (153,746)
---------
Net unrealized appreciation................... $ 354,533
=========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G)Security is partially on loan at December 31, 2006.
(M)The interest rate disclosed for these securities represents the effec-
tive yield on the date of acquisition.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Standard & Poor's 500 51 Long March 2007 $(66)
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
115
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 96.1%
AUSTRALIA -- 1.5%
360 Aristocrat Leisure Ltd. (A)....................... $ 4,499
427 Brambles Ltd. (D)(A).............................. 4,312
325 Toll Holdings Ltd. (A)............................ 4,685
--------
13,496
--------
AUSTRIA -- 1.3%
151 Erste Bank Der Oesterreichischen Sparkassen AG
(A)............................................. 11,530
--------
BELGIUM -- 1.3%
60 KBC Groep N.V. (A)................................ 7,317
64 UCB S.A. (A)...................................... 4,364
--------
11,681
--------
BRAZIL -- 1.1%
323 Companhia Vale do Rio Doce ADR.................... 9,618
--------
CANADA -- 7.1%
214 Cameco Corp. ..................................... 8,656
59 Potash Corp. of Saskatchewan...................... 8,422
211 Research In Motion Ltd. (D)....................... 27,000
374 Rogers Communications, Inc. Class B............... 11,135
264 SNC-Lavalin Group, Inc. .......................... 7,126
--------
62,339
--------
CHINA -- 0.4%
30 Baidu.com ADR (D)................................. 3,370
--------
DENMARK -- 0.5%
103 Vestas Wind Systems A/S (D)(A).................... 4,322
--------
FINLAND -- 1.0%
424 Nokia Corp. (G)................................... 8,620
--------
FRANCE -- 9.6%
94 Alstom RGPT (D)(A)................................ 12,702
39 Cie Generale d'Optique Essilor International S.A.
(A)............................................. 4,188
79 Iliad S.A. (A).................................... 6,827
1 Safran S.A. ...................................... 32
48 Unibail (A)(G).................................... 11,745
81 Vallourec (A)..................................... 23,516
331 Veolia Environnment S.A. (A)...................... 25,247
--------
84,257
--------
GERMANY -- 6.7%
55 Allianz SE-REG (A)................................ 11,236
112 Deutsche Boerse AG (A)(G)......................... 20,614
112 Salzgitter AG (A)................................. 14,618
153 Symrise AG (D).................................... 3,981
64 Wacker Chemie AG (D)(A)........................... 8,294
--------
58,743
--------
HONG KONG -- 1.4%
8,056 Shun Tak Holdings Ltd. (A)........................ 12,288
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
IRELAND -- 2.5%
597 Elan Corp. plc ADR (D)............................ $ 8,803
165 Ryanair Holdings plc ADR (D)(G)................... 13,480
--------
22,283
--------
JAPAN -- 19.4%
148 Daiichi Sankyo Co., Ltd. (A)...................... 4,626
246 Eisai Co., Ltd. (A)............................... 13,514
249 Elpida Memory, Inc. (D)(A)........................ 13,697
4 Japan Tobacco, Inc. (A)........................... 20,499
248 JFE Holdings, Inc. (A)............................ 12,772
215 Komatsu Ltd. (A).................................. 4,343
1 Mitsubishi UFJ Financial Group, Inc. (A).......... 8,622
88 Nintendo Co., Ltd. (A)............................ 22,756
603 Nomura Holdings, Inc. ............................ 11,375
30 ORIX Corp. (A) PFIC............................... 8,642
23 Rakuten, Inc. (D)(A).............................. 10,717
256 Sharp Corp. (A)................................... 4,402
-- Sumitomo Mitsui Financial Group, Inc. (A)......... 4,321
403 Sumitomo Realty & Development Co., Ltd. (A)....... 12,920
374 Suzuki Motor Corp. (A)............................ 10,539
100 Toyota Motor Corp. (A)............................ 6,659
--------
170,404
--------
MEXICO -- 3.0%
367 America Movil S.A. de C.V. ADR.................... 16,605
82 Fomento Economico Mexicano S.A. de C.V. ADR....... 9,515
--------
26,120
--------
NETHERLANDS -- 5.5%
503 ASML Holding N.V. (D)(A).......................... 12,424
582 Koninklijke Philips Electronics N.V. (A).......... 21,867
255 Royal Numico N.V. (A)............................. 13,681
--------
47,972
--------
NORWAY -- 0.7%
307 Telenor ASA (A)................................... 5,751
--------
RUSSIA -- 1.0%
196 RAO Gazprom Class S ADR (K)....................... 9,037
--------
SOUTH KOREA -- 1.0%
13 Samsung Electronics Co., Ltd. (A)................. 8,665
--------
SWEDEN -- 1.5%
694 Swedish Match AB (A).............................. 12,959
--------
SWITZERLAND -- 9.8%
780 ABB Ltd. (A)...................................... 13,965
870 Logitech International S.A. (D)(A)................ 25,038
33 Nestle S.A. (A)................................... 11,767
42 Nobel Biocare Holding AG (A)...................... 12,336
209 Swatch Group AG (A)............................... 9,332
24 Syngenta AG (A)................................... 4,444
144 UBS AG (A)........................................ 8,735
--------
85,617
--------
</Table>
The accompanying notes are an integral part of these financial statements.
116
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TAIWAN -- 1.8%
2,250 Hon Hai Precision Industry Co., Ltd. (A).......... $ 16,009
--------
UNITED KINGDOM -- 18.0%
134 Admiral Group plc (A)............................. 2,877
958 Alliance Boots plc (A)............................ 15,678
3,787 Arm Holdings plc (A).............................. 9,288
283 British Land Co. plc (A).......................... 9,463
2,135 Carphone Warehouse Group plc (A)(G)............... 13,084
2,119 Debenhams plc (A)................................. 7,850
2,899 EMI Group plc (A)................................. 15,029
2,011 Kesa Electricals plc (A).......................... 13,325
1,522 Man Group plc (A)................................. 15,536
303 Reckitt Benckiser plc (A)......................... 13,809
202 Rolls-Royce Group plc (A)......................... 1,765
109 Standard Chartered plc (A)........................ 3,172
3,322 Tesco plc (A)..................................... 26,254
232 Xstrata plc (A)................................... 11,563
--------
158,693
--------
Total common stock
(cost $695,697)................................. $843,774
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 7.0%
REPURCHASE AGREEMENTS -- 2.9%
$ 5,729 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 5,729
7,901 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 7,901
86 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 86
4,945 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 4,945
1,689 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,689
4,945 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 4,945
--------
25,295
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.1%
35,970 BNY Institutional Cash Reserve Fund............... $ 35,970
--------
Total short-term investments
(cost $61,265).................................. $ 61,265
--------
Total investments in securities
(cost $756,962) (C)............................. $905,039
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 95.67% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair
value by, or under the direction of, the Funds' Board of Directors at
December 31, 2006, was $686,999, which represents 78.29% of total net
assets.
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $762,088 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $145,051
Unrealized depreciation........................ (2,100)
--------
Net unrealized appreciation.................... $142,951
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(K)Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $9,037 or 1.03% of net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 11.6%
- ---------------------------------------------------------------
Capital Goods 2.6
- ---------------------------------------------------------------
Consumer Cyclical 12.5
- ---------------------------------------------------------------
Consumer Staples 9.9
- ---------------------------------------------------------------
Energy 1.0
- ---------------------------------------------------------------
Finance 18.3
- ---------------------------------------------------------------
Health Care 7.2
- ---------------------------------------------------------------
Services 3.0
- ---------------------------------------------------------------
Technology 25.0
- ---------------------------------------------------------------
Transportation 2.1
- ---------------------------------------------------------------
Utilities 2.9
- ---------------------------------------------------------------
Short-Term Investments 7.0
- ---------------------------------------------------------------
Other Assets & Liabilities (3.1)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
117
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Sell $ 976 $ 975 1/02/2007 $ (1)
British Pound Sell 1,283 1,287 1/03/2007 4
British Pound Sell 1,011 1,010 1/04/2007 (1)
Euro Sell 2,298 2,286 1/02/2007 (12)
Euro Sell 2,375 2,368 1/03/2007 (7)
Euro Buy 32 32 1/04/2007 --
Hong Kong Dollars Sell 333 333 1/02/2007 --
----
$(17)
====
</Table>
The accompanying notes are an integral part of these financial statements.
118
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BELGIUM -- 0.9%
270 UCB S.A. (A)...................................... $ 18,536
----------
BRAZIL -- 4.0%
2,056 All America Latina Logistica S.A.................. 21,335
1,926 Companhia Vale do Rio Doce ADR.................... 57,279
----------
78,614
----------
CANADA -- 6.5%
376 Alcan, Inc. ...................................... 18,307
581 Cameco Corp. ..................................... 23,489
621 EnCana Corp. ..................................... 28,575
143 Research in Motion, Ltd. (D)...................... 18,258
1,367 Talisman Energy, Inc. ............................ 23,210
226 Teck Cominco Ltd. Class B......................... 17,005
----------
128,844
----------
EGYPT -- 1.5%
452 Orascom Telecom Holding SAE GDR #................. 29,806
----------
FRANCE -- 11.1%
201 Accor S.A. (A)(G)................................. 15,528
464 Axa S.A. (A)(G)................................... 18,706
222 BNP Paribas (A)(G)................................ 24,175
234 Cie Generale d'Optique Essilor International S.A.
(A)(G).......................................... 25,074
177 CNP Assurances (A)................................ 19,746
182 Lafarge S.A. (A)(G)............................... 27,087
165 LVMH Moet Hennessy Louis Vuitton S.A. (A)(G)...... 17,383
418 Peugeot S.A. (A)(G)............................... 27,664
297 S.O.I. Tec, S.A. (D)(A)(G)........................ 10,483
382 Sanofi-Aventis S.A. (A)(G)........................ 35,251
----------
221,097
----------
GERMANY -- 7.3%
117 Deutsche Boerse AG (A)............................ 21,559
1,346 Deutsche Telekom AG (A)........................... 24,472
208 Henkel KGaA Vorzug................................ 30,700
184 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 31,592
230 RWE AG (A)........................................ 25,204
199 SAP AG ADR (A).................................... 10,573
----------
144,100
----------
HONG KONG -- 3.1%
8,247 Cathay Pacific Airways Ltd. (A)(G)................ 20,285
1,064 Dah Sing Financial Group (A)...................... 9,652
2,804 Hong Kong Exchanges & Clearing Ltd. (A)........... 30,690
----------
60,627
----------
INDIA -- 1.6%
325 Infosys Technologies Ltd. (A)..................... 16,418
1,448 Satyam Computer Services Ltd. (A)................. 15,802
----------
32,220
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
IRELAND -- 1.9%
513 Ryanair Holdings plc (D)(A)....................... $ 7,011
379 Ryanair Holdings plc ADR (D)(G)................... 30,864
----------
37,875
----------
ITALY -- 5.4%
987 Bulgari S.p.A. (A)................................ 13,976
4,361 Intesa Sanpaolo (A)............................... 33,583
287 Tod's S.p.A. (A)(G)............................... 23,115
4,236 UniCredito Italiano S.p.A. (A).................... 37,033
----------
107,707
----------
JAPAN -- 17.2%
516 Aisin Seiki Co., Ltd. (A)(G)(Q)................... 17,297
446 Astellas Pharma, Inc. (A)(G)...................... 20,195
503 Canon, Inc. (G)................................... 28,341
899 Daihatsu Motor Co., Ltd. (A)...................... 9,061
276 Denso Corp. (A)................................... 10,956
485 Eisai Co., Ltd. (A)(G)............................ 26,649
6 Japan Tobacco, Inc. (A)........................... 29,035
223 JFE Holdings, Inc. (A)(G)......................... 11,487
80 Keyence Corp. (A)(G).............................. 19,698
2 Mitsubishi UFJ Financial Group, Inc. (A).......... 28,682
1,712 Nippon Oil Corp. (A).............................. 11,449
2 Nippon Telegraph & Telephone Corp. (A)............ 9,261
30 Rakuten, Inc. (D)(A).............................. 14,096
492 Sega Sammy Holdings, Inc. (A)..................... 13,226
922 Sompo Japan Insurance, Inc. (A)................... 11,231
609 Sony Corp. (A).................................... 26,098
1,445 Sumitomo Chemical Co., Ltd. (A)................... 11,182
1 Sumitomo Mitsui Financial Group, Inc. (A)(G)...... 6,727
163 TDK Corp. (A)..................................... 12,986
714 Tokyo Electric Power Co., Inc. (A)(G)............. 23,054
----------
340,711
----------
KOREA (REPUBLIC OF) -- 0.8%
365 Korea Electric Power Corp......................... 16,641
----------
LUXEMBOURG -- 0.2%
149 Ternium S.A. ADR (D).............................. 4,409
----------
MEXICO -- 2.0%
2,808 Empresas ICA SAB de CV (D)........................ 10,605
366 Grupo Aeroportuario del Centro Norte, S.A.B. de CV
ADR (D)......................................... 8,145
246 Grupo Aeroportuario del Pacifico S.A. de CV
ADR #........................................... 9,649
2,627 Wal-Mart de Mexico................................ 11,559
----------
39,958
----------
NETHERLANDS -- 4.1%
884 Aercap Holdings N.V. (D).......................... 20,491
821 Koninklijke Philips Electronics N.V. (A).......... 30,873
536 Royal Numico N.V. (A)............................. 28,768
----------
80,132
----------
NORWAY -- 1.0%
742 Statoil ASA (A)(G)................................ 19,540
----------
</Table>
The accompanying notes are an integral part of these financial statements.
119
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
PANAMA -- 0.7%
307 Copa Holdings S.A. Class A........................ $ 14,299
----------
RUSSIA -- 3.3%
215 Lukoil ADR........................................ 18,968
521 RAO Gazprom Class S ADR (k)....................... 23,987
653 TMK OAO GDR (d)(I)#............................... 22,869
----------
65,824
----------
SINGAPORE -- 0.9%
1,592 Singapore Airlines Ltd. (A)....................... 18,128
----------
SOUTH AFRICA -- 1.2%
900 Impala Platinum Holdings Ltd. (A)................. 23,528
----------
SPAIN -- 0.9%
746 Banco Bilbao Vizcaya Argentaria S.A. (A)#......... 17,917
----------
SWEDEN -- 2.0%
932 Assa Abloy AB (A)................................. 20,217
4,642 Telefonaktiebolaget LM Ericsson (A)............... 18,668
----------
38,885
----------
SWITZERLAND -- 5.1%
505 Credit Suisse Group (A)........................... 35,185
119 Nestle S.A. (A)................................... 42,335
86 Zurich Financial Services AG (A).................. 23,161
----------
100,681
----------
TAIWAN -- 1.5%
2,204 Chunghwa Telecom Co., Ltd. (A).................... 4,095
1,283 Chunghwa Telecom Co., Ltd. ADR.................... 25,312
----------
29,407
----------
UNITED KINGDOM -- 12.0%
1,488 Alliance Boots plc (A)............................ 24,350
2,164 Amvescap plc (A).................................. 25,244
396 AstraZeneca plc (A)............................... 21,213
4,258 Debenhams plc (A)................................. 15,772
8,219 Old Mutual plc (A)................................ 27,974
790 Reckitt Benckiser plc (A)......................... 36,023
5,113 Tesco plc (A)..................................... 40,404
914 Xstrata plc (A)................................... 45,474
----------
236,454
----------
UNITED STATES -- 2.3%
124 Ctrip.Com International Ltd. (G).................. 7,760
289 Freeport-McMoRan Copper & Gold, Inc. Class B #.... 16,117
7,304 Hopson Development Holdings Ltd. (A).............. 20,648
----------
44,525
----------
Total common stock
(cost $1,651,664)............................... $1,950,465
----------
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE U
- --------- ----------
SHORT-TERM INVESTMENTS -- 10.0%
REPURCHASE AGREEMENTS -- 1.2%
$5,389 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 5,389
7,431 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 7,431
81 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 81
4,651 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 4,651
1,588 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,588
4,652 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 4,652
----------
23,792
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
173,189 Navigator Prime Portfolio......................... $ 173,189
----------
Total short-term investments
(cost $196,981)................................. $ 196,981
----------
Total investments in securities
(cost $1,848,645) (C)........................... $2,147,446
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 96.24% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $1,412,485, which represents 71.39% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,850,081 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $312,363
Unrealized depreciation........................ (14,998)
--------
Net unrealized appreciation.................... $297,365
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G)Security is partially on loan at December 31, 2006.
(k)Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At
The accompanying notes are an integral part of these financial statements.
120
- --------------------------------------------------------------------------------
December 31, 2006, the market value of these securities amounted to $23,987
or 1.21% of net assets.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $22,869, which represents 1.16% of total net assets.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $1,989.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 16.6%
- ---------------------------------------------------------------
Consumer Cyclical 11.2
- ---------------------------------------------------------------
Consumer Staples 6.9
- ---------------------------------------------------------------
Energy 7.6
- ---------------------------------------------------------------
Finance 21.3
- ---------------------------------------------------------------
Health Care 8.7
- ---------------------------------------------------------------
Services 1.3
- ---------------------------------------------------------------
Technology 15.8
- ---------------------------------------------------------------
Transportation 7.1
- ---------------------------------------------------------------
Utilities 2.0
- ---------------------------------------------------------------
Short-Term Investments 10.0
- ---------------------------------------------------------------
Other Assets & Liabilities (8.5)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Sell $10,022 $ 9,571 1/25/2007 $(451)
British Pound Buy 10,022 9,719 1/25/2007 303
Euro Buy 170 169 1/02/2007 1
Euro Buy 166 166 1/03/2007 --
Euro Buy 89 89 1/04/2007 --
Japanese Yen Buy 8,847 8,883 1/04/2007 (36)
Japanese Yen Buy 1,989 1,992 1/09/2007 (3)
Norwegian Krone Sell 11,551 11,459 1/02/2007 (92)
Swiss Francs Buy 1,964 1,954 1/03/2007 10
Swiss Francs Sell 9,661 9,390 1/25/2007 (271)
Swiss Francs Buy 9,661 9,424 1/25/2007 237
-----
$(302)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
121
HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.3%
AUSTRALIA -- 5.5%
1,080 Centennial Coal Co., Ltd. (A)(G).................. $ 2,401
585 Challenger Financial Services Group Limited
(A)(G).......................................... 1,896
1,095 Dyno Nobel Ltd. (D)(I)(A)......................... 2,054
169 Leighton Holdings Ltd. (A)(G)..................... 2,696
161 Programmed Maintenance Services, Ltd. (A)......... 633
1,795 Resource Pacific Holdings Limited (D)(A)(G)....... 1,895
693 Seek Ltd. (A)(G).................................. 3,211
1,158 Tower Australia Group Limited (D)(G).............. 2,788
611 Transurban Group (A)(G)........................... 3,669
96 Zinifex Ltd. (A).................................. 1,419
--------
22,662
--------
BELGIUM -- 1.6%
9 D'ieteren S.A. (A)................................ 3,160
20 Umicore (A)....................................... 3,435
--------
6,595
--------
BRAZIL -- 0.5%
164 Dufry South America LTDA (D) (I).................. 2,145
--------
CANADA -- 0.3%
31 Lundin Mining Corp. (D)(A)(G)..................... 1,147
--------
CHINA -- 1.2%
2,822 Beijing Capital International Airport Co., Ltd.
(A)(G).......................................... 2,206
4,225 China Oilfield Services Ltd. (A)(G)............... 2,928
--------
5,134
--------
DENMARK -- 4.2%
51 Carlsberg A/S Class B (A)......................... 5,075
36 Danisco A/S (A)................................... 3,068
41 Genmab A/S (D)(A)................................. 2,758
149 H. Lundbeck A/S (A)............................... 4,097
33 Trygvesta A/S (A)................................. 2,474
--------
17,472
--------
FINLAND -- 1.5%
128 Nokian Rendaat Oyj (A)(G)......................... 2,606
107 Tietoenator Oyj (A)(G)............................ 3,430
--------
6,036
--------
FRANCE -- 7.3%
60 Arkema (D)(A)(G).................................. 3,047
45 BioMerieux S.A. (A)............................... 3,089
27 Cegedim S.A. (A).................................. 2,339
85 Ipsen (A)......................................... 3,946
49 Korian (D)........................................ 2,412
190 S.O.I. Tec, S.A. (D)(A)(G)........................ 6,699
15 Seche Environment (A)............................. 2,655
88 Zodiac S.A. (A)(G)................................ 5,915
--------
30,102
--------
GERMANY -- 10.6%
58 AWD Holding AG (A)(G)............................. 2,436
25 Deutsche Euroshop AG (A).......................... 1,822
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
GERMANY -- (CONTINUED)
148 GEA Group AG (A).................................. $ 3,322
88 GFK AG (G)........................................ 3,821
40 Hochtief AG (A)................................... 2,900
30 Interhyp AG (D)(A)................................ 2,649
71 KarstadtQuelle AG (D)(A)(G)....................... 2,059
239 Kontron AG (A)(G)................................. 3,443
133 MTU Aero Engines Holdings AG (A).................. 6,189
66 Praktiker Bau-Und Heimwerkermaerkte Holding AG
(A)............................................. 2,352
40 Salzgitter AG (A)................................. 5,169
83 SGL Carbon AG (D)(A).............................. 2,047
135 Symrise AG (D).................................... 3,506
96 Thielert AG (D)(A)(G)............................. 2,244
--------
43,959
--------
GREECE -- 1.3%
483 Hellenic Technodomiki Tev S.A. (A)................ 5,376
--------
HONG KONG -- 3.8%
2,452 Chinese Estates Holdings Ltd. (A) PFIC............ 2,959
3,088 Far East Pharmaceutical Technology Co., Ltd.
(D)(H)(G)(A).................................... --
2,383 Shangri-La Asia Ltd. (A).......................... 6,131
2,070 Shun Tak Holdings Ltd. (A)(G)..................... 3,157
2,482 Techtronic Industries Co., Ltd. (A)(G)............ 3,209
--------
15,456
--------
IRELAND -- 0.6%
178 Elan Corp. plc (D)(A)............................. 2,571
--------
ITALY -- 5.8%
181 Antichi Pellettieri SpA (D)....................... 2,274
120 Banca Popolare di Milano S.c.r.l. (A)............. 2,070
86 Benetton Group S.p.A. (A)......................... 1,638
164 Brembo S.p.A. (A)................................. 2,005
656 Immobiliare Grande Distribuzione (A).............. 3,208
49 Pirelli & C. Real Estate S.p.A. (A)............... 3,332
520 Safilo Group S.p.A. (D)(A)........................ 3,086
1,486 Sorin S.p.A. (D)(A)(G)............................ 3,195
36 Tod's S.p.A. (A)(G)............................... 2,927
--------
23,735
--------
JAPAN -- 19.7%
470 77 Bank Ltd. (A).................................. 2,979
1 Bic Camera, Inc. (G).............................. 1,487
149 Daishi Bank LTD (A)............................... 587
61 Diamond City Co. LTD (A)(G)....................... 2,741
40 Disco Corp. (A)(G)................................ 2,806
87 FamilyMart Co., Ltd. (A).......................... 2,368
955 Fuji Fire & Marine Insurance Co., Ltd. (A)(G)..... 3,556
38 Hakuhodo DY Holdings, Inc. (A)(G)................. 2,495
50 Honeys Co., Ltd. (A)(G)........................... 1,868
38 Japan Petroleum Exploration Co., Ltd. (A)(G)
PFIC............................................ 2,274
6 Jupiter Telecommunications Co., Ltd. (D)(A)....... 4,930
80 Kobayashi Pharmaceutical Co., Ltd. (A)............ 2,983
122 MEC Co., Ltd. (A)(G).............................. 1,444
</Table>
The accompanying notes are an integral part of these financial statements.
122
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
JAPAN -- (CONTINUED)
64 Milbon Co., Ltd. (A).............................. $ 1,791
95 Nidec Copal Corp. (A)(G).......................... 1,118
56 OBIC Business Consultants Ltd. (A)(G)............. 3,867
22 OBIC Co., Ltd. (A)(G)............................. 4,659
50 Point, Inc. (A)(G)................................ 3,290
24 Ryohin Keikaku Co., Ltd. (A)(G)................... 1,837
287 Shionogi & Co., Ltd. (A)(G)....................... 5,633
1,987 Sumitomo Osaka Cement Co., Ltd. (A)(G)............ 6,495
58 Taiyo Ink Manufacturing Co., Ltd. (A)............. 3,199
52 Takamatsu Corp. (A)............................... 762
230 Tanabe Seiyaku Co., Ltd (A)(G).................... 3,008
383 The Keiyo Bank, Ltd. (A).......................... 2,103
41 Uni-Charm Corp. (A)(G)............................ 2,441
88 Union Tool Co. (A)(G)............................. 3,933
35 USS Co., Ltd. (A)................................. 2,294
201 Yamaguchi Financial Group, Inc. .................. 2,061
--------
81,009
--------
LIECHTENSTEIN -- 1.2%
19 Verwalt & Privat-Bank AG (A)...................... 4,965
--------
MALAYSIA -- 0.8%
782 Resorts World Berhad (A).......................... 3,239
--------
MEXICO -- 0.6%
620 Empresas ICA SAB de CV (D)........................ 2,342
--------
NETHERLANDS -- 4.6%
128 Koninklijke BAM Groep N.V. (G).................... 2,482
172 Ordina N.V. (A)(G)................................ 3,799
97 SBM Offshore N.V. (A)............................. 3,331
202 Spazio Investment NV (D).......................... 3,986
190 Wolters Kluwer N.V. (A)........................... 5,462
--------
19,060
--------
PORTUGAL -- 0.7%
410 Mota -- Engil S.A. (A)............................ 2,777
--------
SOUTH KOREA -- 1.9%
10 Cheil Communications, Inc. (D)(A)................. 2,393
38 GS Engineering & Construction Corp. (A)........... 3,350
25 Mirae Asset Securities Co. Ltd. (A)............... 2,041
--------
7,784
--------
SPAIN -- 1.6%
654 Iberia Lineas Aer De Espana (A)(G)................ 2,378
132 Prosegur Compania de Seguridad S.A. (A)#.......... 4,302
--------
6,680
--------
SWEDEN -- 3.8%
68 Alfa Laval AB (A)................................. 3,078
63 Boliden AB (A).................................... 1,594
46 Munters AB (A)(G)................................. 2,113
307 Swedish Match AB (A).............................. 5,740
130 Trelleborg AB (A)(G).............................. 3,095
--------
15,620
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SWITZERLAND -- 6.0%
36 Bachem Holding AG Class B......................... $ 2,747
29 Charles Voegele Holding AG (A).................... 2,267
53 Dufry Group (D)(A)................................ 4,421
128 EFG International (D)............................. 4,822
10 Ems-Chemie Holding AG (A)......................... 1,223
1 Geberit AG (A).................................... 2,205
166 Logitech International S.A. (D)(A)................ 4,774
2 Sulzer AG (A)..................................... 2,195
--------
24,654
--------
UNITED KINGDOM -- 10.3%
289 Cattles plc (A)................................... 2,477
172 Close Brothers Group plc (A)...................... 3,412
586 Fenner plc (A).................................... 2,479
183 FirstGroup plc (A)................................ 2,052
890 GCAP Media plc (A)(G)............................. 3,547
1,695 Guinness Peat Group plc (A)....................... 2,910
65 Homeserve plc (A)................................. 2,391
186 ICAP plc (A)...................................... 1,735
298 Mears Group plc (A)............................... 2,114
364 Morgan Crucible Co. plc (A)....................... 1,814
166 Speedy Hire plc (A)#.............................. 3,915
384 SSL International plc (A)......................... 2,776
365 Star Energy Group plc (D)(A)...................... 2,021
131 Ultra Electronics Holdings plc (A)................ 2,782
101 Vedanta Resources plc (A)......................... 2,411
632 Wolfson Microelectronics plc (D)(A)............... 3,441
--------
42,277
--------
UNITED STATES -- 3.9%
477 Benfield Group plc (A)#........................... 3,328
2,307 Goodpack Ltd. (A)(G).............................. 2,315
412 Lancashire Holdings Ltd. (D)(A)................... 2,705
39 Mapeley Ltd. (A).................................. 3,046
3,664 Midland Holdings Ltd. (A)(G)...................... 1,861
390 Petrofac Ltd. (A)................................. 3,063
--------
16,318
--------
Total common stock
(cost $356,540)................................. $409,115
--------
</Table>
<Table>
PRINCIPAL
AMOUNT
-------
<Caption>
SHORT-TERM INVESTMENTS -- 23.9%
REPURCHASE AGREEMENT -- 0.7%
$ 692 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 692
955 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 955
10 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 10
</Table>
The accompanying notes are an integral part of these financial statements.
123
HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
PRINCIPAL MARKET
AMOUNT VALUE (W)
------- --------
<Caption>
SHORT-TERM INVESTMENTS -- (CONTINUED)
REPURCHASE AGREEMENT -- (CONTINUED)
$ 598 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... $ 598
204 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 204
598 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 598
--------
3,057
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 23.2%
95,465 Navigator Prime Portfolio......................... 95,465
--------
Total short-term investments
(cost $98,522).................................. $ 98,522
--------
Total investments in securities
(cost $455,062) (C)............................. $507,637
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 95.36% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $372,242, which represents 90.37% of total net assets.
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $456,009 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $60,900
Unrealized depreciation......................... (9,272)
-------
Net unrealized appreciation..................... $51,628
=======
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G)Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES SECURITY COST BASIS
-------- ------ -------- ----------
03/2004-05/2004 3,088 Far East
Pharmaceutical
Technology Co., Ltd. $445
</Table>
The aggregate value of this security at December 31, 2006, rounds
to zero.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $4,199, which represents 1.02% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 11.6%
- ---------------------------------------------------------------
Capital Goods 7.4
- ---------------------------------------------------------------
Consumer Cyclical 16.6
- ---------------------------------------------------------------
Consumer Staples 3.4
- ---------------------------------------------------------------
Energy 3.1
- ---------------------------------------------------------------
Finance 21.3
- ---------------------------------------------------------------
Health Care 11.3
- ---------------------------------------------------------------
Services 10.0
- ---------------------------------------------------------------
Technology 10.2
- ---------------------------------------------------------------
Transportation 3.6
- ---------------------------------------------------------------
Utilities 0.8
- ---------------------------------------------------------------
Short-Term Investments 23.9
- ---------------------------------------------------------------
Other Assets & Liabilities (23.2)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
124
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Australian Dollar Buy $ 47 $ 46 1/02/2007 $ 1
Australian Dollar Buy 194 194 1/03/2007 --
Australian Dollar Buy 178 178 1/04/2007 --
British Pound Buy 89 89 1/02/2007 --
British Pound Buy 277 278 1/03/2007 (1)
Euro Sell 1,616 1,607 1/02/2007 (9)
Euro Buy 259 259 1/03/2007 --
Euro Buy 724 724 1/04/2007 --
Hong Kong Dollars Buy 206 206 1/03/2007 --
Japanese Yen Sell 34 34 1/04/2007 --
Japanese Yen Sell 152 153 1/05/2007 1
Japanese Yen Buy 75 75 1/09/2007 --
Swedish Krona Buy 406 405 1/03/2007 1
---
$(7)
===
</Table>
The accompanying notes are an integral part of these financial statements.
125
HARTFORD MIDCAP HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.9%
BASIC MATERIALS -- 5.6%
1,188 Cameco Corp. (G).................................. $ 48,034
480 Peabody Energy Corp. ............................. 19,397
147 Phelps Dodge Corp. ............................... 17,539
427 Precision Castparts Corp. ........................ 33,386
563 Teck Cominco Ltd. -- Class B...................... 42,415
----------
160,771
----------
CAPITAL GOODS -- 4.0%
1,067 American Standard Cos., Inc. ..................... 48,908
696 KLA-Tencor Corp. ................................. 34,606
446 Lam Research Corp. (D)............................ 22,561
302 Spirit Aerosystems Holdings, Inc. (D)............. 10,098
----------
116,173
----------
CONSUMER CYCLICAL -- 17.0%
637 Abercrombie & Fitch Co. Class A................... 44,319
308 American Eagle Outfitters, Inc. .................. 9,602
317 BorgWarner, Inc. ................................. 18,727
627 CarMax, Inc. (D).................................. 33,626
818 Cytyc Corp. (D)................................... 23,147
227 Fastenal Co. ..................................... 8,130
735 Foster Wheeler Ltd. (D)........................... 40,522
339 Gildan Activewear, Inc. (D)(G).................... 15,803
1,028 Newell Rubbermaid, Inc. .......................... 29,758
423 O'Reilly Automotive, Inc. (D)..................... 13,555
318 Oshkosh Truck Corp. .............................. 15,402
668 OSI Restaurant Partners, Inc. .................... 26,174
394 PACCAR, Inc. ..................................... 25,556
523 Patterson Cos., Inc. (D).......................... 18,558
1,219 PetSmart, Inc. (G)................................ 35,172
929 Saks, Inc. ....................................... 16,551
1,619 Supervalu, Inc. .................................. 57,876
986 Tiffany & Co. (G)................................. 38,671
783 TRW Automotive Holdings Corp. (D)................. 20,264
----------
491,413
----------
CONSUMER STAPLES -- 2.4%
497 Alberto-Culver Co. ............................... 10,661
575 Clorox Co. ....................................... 36,867
196 Sally Beauty Co., Inc. (D)........................ 1,529
1,198 Tyson Foods, Inc. Class A......................... 19,705
----------
68,762
----------
ENERGY -- 6.2%
835 GlobalSantaFe Corp. .............................. 49,064
407 Murphy Oil Corp. ................................. 20,716
519 Noble Corp. (G)................................... 39,529
444 Noble Energy, Inc. ............................... 21,772
370 Southwestern Energy Co. (D)(G).................... 12,983
1,234 Western Oil Sands, Inc. Class A (D)............... 34,624
----------
178,688
----------
FINANCE -- 13.9%
5,257 Aberdeen Asset Management PLC (A)................. 19,505
457 AMBAC Financial Group, Inc. ...................... 40,678
598 AmeriCredit Corp. (D)(G).......................... 15,062
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
575 Assurant, Inc. ................................... $ 31,791
115 Blackrock, Inc. .................................. 17,408
548 Dade Behring Holdings, Inc. ...................... 21,808
1,155 E*Trade Financial Corp. (D)....................... 25,902
179 Everest Re Group Ltd. ............................ 17,562
1,969 Hong Kong Exchanges & Clearing Ltd. (A)........... 21,549
1,043 Host Hotels & Resorts, Inc. (G)................... 25,603
601 State Street Corp. ............................... 40,545
893 T. Rowe Price Group, Inc. ........................ 39,087
1,330 UCBH Holdings, Inc. (G)........................... 23,357
1,296 UnumProvident Corp. .............................. 26,925
238 Ventas, Inc. ..................................... 10,059
470 Webster Financial Corp. .......................... 22,879
----------
399,720
----------
HEALTH CARE -- 9.5%
417 Amylin Pharmaceuticals, Inc. (D)(G)............... 15,023
654 Barr Pharmaceuticals, Inc. (D).................... 32,794
357 Cephalon, Inc. (D)(G)............................. 25,106
665 Charles River Laboratories International, Inc.
(D)............................................. 28,744
502 Eisai Co., Ltd. (A)............................... 27,594
773 Manor Care, Inc. (G).............................. 36,255
1,387 Millennium Pharmaceuticals, Inc. (D)(G)........... 15,123
953 Mylan Laboratories, Inc. ......................... 19,024
1,543 Shionogi & Co., Ltd. (A).......................... 30,303
479 Universal Health Services, Inc. Class B........... 26,529
427 Vertex Pharmaceuticals, Inc. (D).................. 15,982
----------
272,477
----------
SERVICES -- 20.0%
510 Alliance Data Systems Corp. (D)(G)................ 31,860
1,845 Allied Waste Industries, Inc. (D)................. 22,676
893 Autodesk, Inc. (D)................................ 36,147
1,512 BISYS Group, Inc. (D)............................. 19,521
525 C.H. Robinson Worldwide, Inc. (G)................. 21,459
1,228 Cablevision Systems Corp. (G)..................... 34,959
2,109 Cadence Design Systems, Inc. (D).................. 37,779
326 Cognizant Technology Solutions Corp. (D).......... 25,123
73 Corporate Executive Board Co. .................... 6,437
497 EchoStar Communications Corp. Class A (D)......... 18,909
1,361 Equifax, Inc. (D)................................. 55,257
434 Fluor Corp. ...................................... 35,461
248 Focus Media Holding Ltd. ADR (D)(G)............... 16,458
679 Manpower, Inc. ................................... 50,885
1,166 MoneyGram International, Inc. .................... 36,569
915 Monster Worldwide, Inc. (D)....................... 42,652
1,083 Republic Services, Inc. .......................... 44,037
624 Robert Half International, Inc. .................. 23,148
385 Weight Watchers International, Inc. .............. 20,198
----------
579,535
----------
TECHNOLOGY -- 12.6%
1,975 Activision, Inc. (D).............................. 34,049
2,222 Altera Corp. (D)(G)............................... 43,729
303 American Reprographics Co. (D).................... 10,106
1,085 American Tower Corp. Class A (D).................. 40,460
</Table>
The accompanying notes are an integral part of these financial statements.
126
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
641 Beckman Coulter, Inc. ............................ $ 38,302
493 DaVita, Inc. (D).................................. 28,048
1,023 Linear Technology Corp. .......................... 31,011
638 MEMC Electronic Materials, Inc. (D)............... 24,971
1,226 Network Appliance, Inc. (D)(G).................... 48,165
654 Rockwell Collins, Inc. ........................... 41,398
467 Roper Industries, Inc. ........................... 23,447
----------
363,686
----------
TRANSPORTATION -- 1.8%
269 Expeditors International of Washington, Inc. ..... 10,895
969 J.B. Hunt Transport Services, Inc. ............... 20,122
525 Landstar System, Inc. ............................ 20,025
----------
51,042
----------
UTILITIES -- 3.9%
1,481 Northeast Utilities............................... 41,697
650 NRG Energy, Inc. (D)(G)........................... 36,418
584 PNM Resources, Inc. .............................. 18,172
431 Suntech Power Holdings Co. Ltd. ADR (D)(G)........ 14,670
----------
110,957
----------
Total common stock
(cost $2,411,712)............................... $2,793,224
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 4.3%
REPURCHASE AGREEMENTS -- 2.9%
$18,891 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 18,891
26,050 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 26,050
283 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 283
16,306 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 16,306
5,568 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,568
16,306 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 16,306
----------
83,404
----------
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.4%
39,835 Navigator Prime Portfolio......................... $ 39,835
----------
Total short-term investments
(cost $123,239)................................. $ 123,239
----------
Total investments in securities
(cost $2,534,951) (C)........................... $2,916,463
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 9.40% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $98,951, which represents 3.43% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $2,535,950 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $430,292
Unrealized depreciation........................ (49,779)
--------
Net unrealized appreciation.................... $380,513
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
127
HARTFORD MIDCAP VALUE HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.0%
BASIC MATERIALS -- 14.7%
221 Arch Coal, Inc. .................................. $ 6,625
88 Ashland, Inc. .................................... 6,067
110 Carlisle Cos., Inc. .............................. 8,611
545 Celanese Corp. ................................... 14,097
199 Century Aluminum Co. (D).......................... 8,867
1,232 Chemtura Corp. ................................... 11,859
249 Cleveland-Cliffs, Inc. ........................... 12,042
350 Cytec Industries, Inc. ........................... 19,790
172 FMC Corp. ........................................ 13,197
106 Martin Marietta Materials, Inc. .................. 10,973
381 Mueller Water Products, Inc -- Class B (D)........ 5,679
660 Owens-Illinois, Inc. (D).......................... 12,181
329 Shaw Group, Inc. (D).............................. 11,018
233 Temple-Inland, Inc. .............................. 10,702
371 UAP Holding Corp. ................................ 9,344
----------
161,052
----------
CAPITAL GOODS -- 11.9%
263 AGCO Corp. (D).................................... 8,122
188 Alliant Techsystems, Inc. (D)..................... 14,700
285 American Standard Cos., Inc. ..................... 13,044
52 Black & Decker Corp. ............................. 4,190
609 Goodrich Corp. ................................... 27,717
248 Kennametal, Inc. ................................. 14,601
61 Lam Research Corp. (D)............................ 3,098
84 Parker-Hannifin Corp. ............................ 6,473
36 Terex Corp. (D)................................... 2,338
262 Toro Co. ......................................... 12,198
520 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 23,686
----------
130,167
----------
CONSUMER CYCLICAL -- 8.8%
483 American Axle & Manufacturing Holdings, Inc. ..... 9,172
509 Arris Group, Inc. (D)............................. 6,366
195 BorgWarner, Inc. ................................. 11,509
560 Circuit City Stores, Inc. ........................ 10,636
812 Foot Locker, Inc. ................................ 17,814
89 Newell Rubbermaid, Inc. .......................... 2,588
430 Ruby Tuesday, Inc. ............................... 11,791
221 TRW Automotive Holdings Corp. (D)................. 5,722
263 United Stationers, Inc. (D)....................... 12,256
26 V.F. Corp. ....................................... 2,118
231 Walter Industries (G)............................. 6,240
----------
96,212
----------
CONSUMER STAPLES -- 3.5%
303 Bunge Ltd. ....................................... 21,952
7,080 Pan Fish ASA (D)(A)............................... 6,438
182 Smithfield Foods, Inc. (D)........................ 4,670
288 Tyson Foods, Inc. Class A......................... 4,736
----------
37,796
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
ENERGY -- 4.3%
323 Brasil Ecodiesel ADR (G).......................... $ 1,786
758 Brasil Ecodiesel Industria (I).................... 4,189
312 Newfield Exploration Co. (D)...................... 14,355
323 Noble Energy, Inc. ............................... 15,830
390 UGI Corp. ........................................ 10,647
----------
46,807
----------
FINANCE -- 17.5%
128 Affiliated Managers Group, Inc. (D)............... 13,415
238 AMBAC Financial Group, Inc. ...................... 21,199
305 Apollo Investment Corp. .......................... 6,834
347 CIT Group, Inc. .................................. 19,341
51 City National Corp. .............................. 3,617
598 E*Trade Financial Corp. (D)....................... 13,414
149 Everest Re Group Ltd. ............................ 14,589
497 Genesis Lease Ltd. (D)............................ 11,684
547 Huntington Bancshares, Inc. (G)................... 12,989
690 KKR Financial Corp. .............................. 18,488
348 Platinum Underwriters Holdings Ltd. .............. 10,758
272 Reinsurance Group of America, Inc. ............... 15,150
85 UnionBanCal Corp. ................................ 5,182
535 UnumProvident Corp. .............................. 11,113
264 Webster Financial Corp. .......................... 12,872
----------
190,645
----------
HEALTH CARE -- 7.1%
387 Barr Pharmaceuticals, Inc. (D).................... 19,402
299 Cooper Companies, Inc. ........................... 13,310
550 Endo Pharmaceuticals Holdings, Inc. (D)........... 15,155
1,440 Impax Laboratories, Inc. (D)(H)(A)................ 12,703
562 Theravance, Inc. (D).............................. 17,366
----------
77,936
----------
SERVICES -- 10.8%
236 Avid Technology, Inc. (D)(G)...................... 8,790
306 Avis Budget Group, Inc. .......................... 6,635
842 BearingPoint, Inc. (D)............................ 6,624
489 Entercom Communications Corp. .................... 13,774
499 IMS Health, Inc. ................................. 13,707
514 R.H. Donnelley Corp. (G).......................... 32,268
418 R.R. Donnelley & Sons Co. ........................ 14,849
1,260 Unisys Corp. (D).................................. 9,875
275 URS Corp. (D)..................................... 11,771
----------
118,293
----------
TECHNOLOGY -- 12.8%
88 Acuity Brands, Inc. .............................. 4,574
801 Arrow Electronics, Inc. (D)....................... 25,259
1,216 Cinram International Income Fund.................. 23,921
143 Embarq Corp. ..................................... 7,500
795 Fairchild Semiconductor International, Inc. (D)... 13,356
1,213 Flextronics International Ltd. (D)................ 13,923
332 NCR Corp. (D)..................................... 14,179
965 Powerwave Technologies, Inc. (D).................. 6,222
500 QLogic Corp. (D).................................. 10,967
226 Syniverse Holdings, Inc. (D)...................... 3,391
</Table>
The accompanying notes are an integral part of these financial statements.
128
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
415 Tektronix, Inc. .................................. $ 12,111
338 Vishay Intertechnology, Inc. (D).................. 4,571
----------
139,974
----------
TRANSPORTATION -- 2.6%
272 Trinity Industries, Inc. ......................... 9,587
417 UAL Corp. (D)(G).................................. 18,344
----------
27,931
----------
UTILITIES -- 5.0%
475 Northeast Utilities............................... 13,387
631 PPL Corp. ........................................ 22,597
107 SBM Offshore N.V. (A)............................. 3,655
325 Wisconsin Energy Corp. ........................... 15,412
----------
55,051
----------
Total common stock
(cost $896,854)................................. $1,081,864
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 5.2%
REPURCHASE AGREEMENTS -- 1.0%
$ 2,469 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,469
3,405 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 3,405
37 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 37
2,131 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 2,131
728 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 728
2,131 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 2,131
----------
10,901
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.2%
45,824 BNY Institutional Cash Reserve Fund............... $ 45,824
----------
Total short-term investments
(cost $56,725).................................. $ 56,725
----------
Total investments in securities
(cost $953,579) (C)............................. $1,138,589
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 4.73% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $22,796, which represents 2.09% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $954,166 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $205,371
Unrealized depreciation........................ (20,948)
--------
Net unrealized appreciation.................... $184,423
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale or have a trade suspension in effect. A security may also be
considered illiquid if the security lacks a readily available market or if
its valuation has not changed for a certain period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
12/2004-11/2006 1,440 Impax Laboratories, Inc. $17,578
</Table>
The aggregate value of this security at December 31, 2006 was
$12,703, which represents 1.16% of total net assets.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $4,189, which represents 0.38% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
129
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- 1.3%
$25,345 Wal-Mart Stores, Inc. (L)......................... 5.26% 03/28/2007 $ 25,342
----------
CONSUMER STAPLES -- 3.7%
22,080 Alcoa, Inc. ...................................... 5.30% 01/24/2007 22,006
22,000 Alcoa, Inc. ...................................... 5.32% 02/15/2007 21,855
25,000 Stadshypotek...................................... 5.26% 01/22/2007 24,924
----------
68,785
----------
FINANCE -- 94.9%
25,000 Ab Spin Tab Swedmortgage.......................... 5.27% 01/29/2007 24,898
25,000 Ab Spin Tab Swedmortgage.......................... 5.28% 01/30/2007 24,894
25,000 Alliance & Leicester plc.......................... 5.29% 03/02/2007 24,785
21,000 Alliance & Leicester plc.......................... 5.36% 03/20/2007 20,761
25,000 American Express Credit Corp. (L)................. 5.35% 06/12/2007 25,002
24,500 American General Finance Corp. ................... 5.29% 01/10/2007 24,468
21,200 American General Finance Corp. (L)................ 5.40% 03/23/2007 21,203
22,900 American Honda Finance Corp. ..................... 5.27% 02/05/2007 22,783
26,500 American Honda Finance Corp. (I)(L)............... 5.35% 08/08/2007 26,500
30,920 Amsterdam Funding Corp. .......................... 5.27% 02/02/2007 30,776
27,210 Amsterdam Funding Corp. .......................... 5.28% 01/18/2007 27,142
21,700 Bank of America NA (L)............................ 5.32% 05/15/2007 21,851
26,500 Bank of America NA (L)............................ 5.36% 11/08/2007 26,500
32,750 Barton Capital Corp. ............................. 5.26% 01/12/2007 32,697
25,000 Barton Capital Corp. ............................. 5.27% 01/11/2007 24,963
8,600 Barton Capital Corp. ............................. 5.27% 01/17/2007 8,580
22,000 Bear Stearns & Co., Inc. (L)...................... 5.34% 01/14/2008 22,000
22,100 Bear Stearns & Co., Inc. (L)...................... 5.38% 06/29/2007 22,397
22,000 Bradford & Bingley plc............................ 5.30% 02/12/2007 21,865
21,900 Bradford & Bingley plc............................ 5.34% 02/20/2007 21,743
23,400 Britannia Building Society........................ 5.28% 01/31/2007 23,297
21,900 Britannia Building Society........................ 5.31% 02/27/2007 21,717
25,000 Cafco LLC......................................... 5.28% 01/25/2007 24,912
33,400 Cafco LLC......................................... 5.28% 01/30/2007 33,258
44,000 Caterpillar Financial Services Corp. (L).......... 5.39% 07/27/2007 44,006
25,620 Citibank NA (L)................................... 5.32% 02/14/2007 25,620
25,620 Citibank NA (L)................................... 5.32% 02/22/2007 25,620
19,200 Citigroup Funding, Inc. .......................... 5.27% 01/26/2007 19,130
21,120 Countrywide Financial Corp. ...................... 5.30% 01/16/2007 21,073
22,000 Countrywide Financial Corp. ...................... 5.31% 01/02/2007 21,997
20,000 General Electric Capital Corp. ................... 5.26% 01/26/2007 19,927
</Table>
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
FINANCE -- (CONTINUED)
$19,400 General Electric Capital Corp. (L)................ 5.31% 12/24/2007 $ 19,400
34,400 General Electric Capital Corp. (L)................ 5.45% 01/05/2007 34,400
49,580 Goldman Sachs Group, Inc. (L)..................... 5.46% 03/30/2007 49,599
24,300 HBOS Treasury Services plc........................ 5.28% 02/06/2007 24,172
26,440 HBOS Treasury Services plc (I)(L)................. 5.32% 01/09/2008 26,436
22,500 HSBC Finance Corp. (L)............................ 5.34% 01/04/2008 22,500
26,750 HSBC Finance Corp. ............................... 5.36% 03/16/2007 26,462
26,200 JP Morgan Chase & Co. (L)......................... 5.32% 01/02/2008 26,200
44,000 Lehman Brothers Holdings, Inc. (L)................ 5.40% 05/31/2007 44,015
22,000 Merrill Lynch & Co. (L)........................... 5.33% 12/24/2007 22,000
26,900 Merrill Lynch & Co. (L)........................... 5.36% 05/29/2007 26,899
25,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.43% 06/26/2007 25,011
23,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.48% 01/19/2007 23,001
25,000 Nationwide Building Society (I)................... 5.27% 01/25/2007 24,912
25,000 Nationwide Building Society (I)................... 5.28% 01/29/2007 24,898
21,700 Nordea Bank Ab (I)(L)............................. 5.33% 01/09/2008 21,700
25,000 Northern Rock plc................................. 5.28% 01/30/2007 24,894
25,000 Northern Rock plc................................. 5.30% 03/06/2007 24,766
32,500 Old Line Funding LLC.............................. 5.29% 02/08/2007 32,319
26,520 Old Line Funding LLC.............................. 5.33% 02/07/2007 26,376
33,500 Sheffield Receivables............................. 5.27% 01/18/2007 33,417
31,500 Sheffield Receivables............................. 5.30% 01/16/2007 31,431
22,030 Skandinaviska Enskilda Bank NY (I)(L)............. 5.31% 07/19/2007 22,029
21,600 Skandinaviska Enskilda Bank NY (I)(L)............. 5.34% 01/09/2008 21,600
21,700 SLM Corp. (I)(L).................................. 5.35% 01/11/2008 21,700
18,135 SLM Corp. (L)..................................... 5.50% 01/25/2007 18,137
24,600 Svenska Handelsbanken Ab.......................... 5.30% 03/19/2007 24,327
53,000 Toyota Motor Credit Corp. (L)..................... 5.21% 09/24/2007 53,000
22,000 Toyota Motor Credit Corp. ........................ 5.27% 02/07/2007 21,882
19,356 Triple A-1 Funding................................ 5.30% 01/09/2007 19,333
26,379 UBS Finance LLC................................... 5.27% 01/02/2007 26,375
23,700 UBS Finance LLC................................... 5.27% 01/05/2007 23,686
24,680 Washington Mutual Bank FA (L)..................... 5.35% 08/27/2007 24,680
21,135 Washington Mutual Bank FA (L)..................... 5.41% 02/28/2007 21,137
22,000 Wells Fargo & Co. (L)............................. 5.42% 03/23/2007 22,005
10,200 Westpac Banking Corp. ............................ 5.29% 02/06/2007 10,146
21,600 Westpac Banking Corp. (I)(L)...................... 5.32% 01/16/2008 21,600
20,700 Yorktown Capital.................................. 5.27% 01/09/2007 20,676
</Table>
The accompanying notes are an integral part of these financial statements.
130
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
FINANCE -- (CONTINUED)
$17,500 Yorktown Capital.................................. 5.31% 02/15/2007 $ 17,386
22,000 Yorktown Capital.................................. 5.33% 02/21/2007 21,836
----------
$1,782,708
----------
Total investments in securities
(cost $1,876,835) (C)........................... $1,876,835
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 6.04% of total net assets at December 31, 2006.
(C)Also represents cost for federal tax purposes.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $211,375, which represents 11.25% of total net
assets.
(L)Variable rate securities; the yield reported is the rate in effect at
December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
131
HARTFORD MORTGAGE SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 25.8%
FINANCE -- 25.8%
$ 2,802 Ameriquest Mortgage Securities, Inc.,
6.41%, 09/25/2032 (L)#.......................... $ 2,802
3,800 Ansonia CDO Ltd.,
5.62%, 07/28/2046 (I)(L)#....................... 3,800
5,000 Arbor Realty Mortgage Securities,
5.76%, 01/26/2042 (I)(L)........................ 5,000
15,000 Banc of America Commercial Mortgage, Inc.,
4.76%, 07/10/2045............................... 14,796
41,685 Banc of America Commercial Mortgage, Inc.,
4.83%, 07/11/2043 (I)(P)........................ 1,920
3,000 Banc of America Large Loan,
5.59%, 10/15/2019 (L)........................... 3,000
32,984 Bear Stearns Commercial Mortgage Securities, Inc.,
4.85%, 08/15/2038 (I)(P)........................ 2,137
2,500 Citigroup Commercial Mortgage Trust,
5.59%, 11/15/2036 (L)........................... 2,500
4,997 Commercial Mortgage Pass-Through Certificate,
5.64%, 12/15/2020 (I)(L)........................ 4,997
8,500 Countrywide Asset-Backed Certificates,
5.57%, 11/25/2035............................... 8,488
5,195 Countrywide Home Loan Mortgage Pass Through Trust,
5.00%, 01/25/2019............................... 5,081
2,000 Credit Suisse Mortgage Capital Certificates,
6.15%, 09/15/2021 (L)........................... 2,000
53,125 CS First Boston Mortgage Securities Corp.,
4.01%, 03/15/2035 (I)(P)........................ 1,838
4,000 Discover Card Master Trust I,
5.57%, 01/15/2008 (L)........................... 4,010
48 DLJ Mortgage Acceptance Corp. Class B1,
7.25%, 09/18/2011 (I)........................... 47
16 DLJ Mortgage Acceptance Corp. Class B2,
7.25%, 09/18/2011 (I)........................... 16
4,145 First Franklin Mortgage Loan Asset Backed
Certificates,
7.82%, 07/25/2033 (L)........................... 4,151
322 Green Tree Financial Corp.,
7.30%, 01/15/2026............................... 327
10,000 Greenwich Capital Commercial Funding Corp.,
4.53%, 01/05/2036............................... 9,741
6,000 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)........................... 5,979
4,000 Greenwich Capital Commercial Funding Corp.,
5.58%, 11/05/2021 (I)(L)........................ 4,000
3,940 Hasco NIM Trust,
6.17%, 08/26/2036 (I)........................... 3,922
47,160 LB-UBS Commercial Mortgage Trust,
4.25%, 12/15/2036 (I)(P)........................ 1,349
2,800 LNR CDO, Ltd.,
5.70%, 05/28/2043 (I)(L)........................ 2,800
35,603 Mach One Trust Commercial Mortgage-Backed,
6.09%, 05/28/2040 (I)(P)........................ 1,580
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
$ 2,619 Master Asset Backed Securities Trust,
6.10%, 05/25/2033 (L)........................... $ 2,626
2,000 Master Asset Backed Securities Trust,
7.15%, 05/25/2033 (L)........................... 2,015
4,323 Master Asset Securitization Trust,
5.00%, 12/25/2018............................... 4,229
4,800 MBNA Credit Card Master Note Trust,
5.49%, 02/16/2010 (L)........................... 4,806
4,250 Merrill Lynch Floating Trust,
5.55%, 06/15/2022 (I)(L)........................ 4,250
2,224 Merrill Lynch Mortgage Investors, Inc.,
7.00%, 05/25/2032 (L)........................... 2,227
5,000 Merrill Lynch Mortgage Trust,
5.24%, 11/12/2035............................... 4,978
4,628 Morgan Stanley ABS Capital I,
6.35%, 11/25/2032 (L)........................... 4,632
3,353 Residential Asset Mortgage Products, Inc.,
5.70%, 10/25/2031............................... 3,341
5,921 Spirit Master Funding LLC,
5.76%, 03/20/2024 (I)........................... 5,963
4,992 Structured Asset Securities Corp.,
6.35%, 02/25/2033 (L)........................... 5,051
--------
Total asset & commercial mortgage backed
securities
(cost $140,915)................................. $140,399
--------
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
1,500 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)........................ $ 1,290
--------
Total corporate bonds: investment grade
(cost $1,285)................................... $ 1,290
--------
U.S. GOVERNMENT SECURITIES -- 0.8%
U.S. TREASURY SECURITIES -- 0.8%
U.S. TREASURY NOTES
4,400 4.875% 2011....................................... $ 4,431
--------
Total U.S. government securities
(cost $4,423)................................... $ 4,431
--------
U.S. GOVERNMENT AGENCIES -- 86.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 36.5%
MORTGAGE BACKED SECURITIES:
1,729 4.50% 2018........................................ $ 1,671
3,076 4.94% 2035........................................ 3,043
92,406 5.50% 2022 -- 2034 (Q)#........................... 91,702
1,395 6.00% 2022 -- 2034................................ 1,411
2,214 6.50% 2014 -- 2017................................ 2,266
2,536 7.00% 2026 -- 2032................................ 2,609
42 7.50% 2024 -- 2025................................ 45
120 8.00% 2013 -- 2024................................ 126
50 8.50% 2009 -- 2024................................ 52
5 9.50% 2008........................................ 5
76 10.00% 2020....................................... 83
--------
103,013
--------
</Table>
The accompanying notes are an integral part of these financial statements.
132
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
U.S. GOVERNMENT AGENCIES -- (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION -- (CONTINUED)
REMIC -- IO & IO-ETTE:
$ 458 5.50% 2015 (P).................................... $ 8
REMIC -- PAC'S:
10,000 4.50% 2020........................................ 9,414
71,667 5.00% 2015 -- 2034#............................... 70,355
15,802 5.50% 2035........................................ 15,554
--------
95,323
--------
198,344
--------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 33.0%
MORTGAGE BACKED SECURITIES:
6,676 4.807% 2035 (L)................................... 6,622
8,826 4.924% 2035....................................... 8,777
60,317 5.00% 2018 -- 2037 (Q)............................ 58,849
28,574 5.50% 2019 -- 2037 (Q)............................ 28,310
24,801 6.00% 2023 -- 2035................................ 25,044
23,273 6.50% 2028 -- 2037 (Q)............................ 23,809
4,726 7.00% 2011 -- 2032................................ 4,858
320 8.00% 2029 -- 2031................................ 336
74 9.00% 2021........................................ 81
--------
156,686
--------
REMIC -- PAC'S:
11,000 4.50% 2018........................................ 10,478
10,371 5.50% 2035........................................ 10,192
2,121 6.50% 2031........................................ 2,173
--------
22,843
--------
ZERO COUPON STRIPS:
22 11.00% 2009....................................... 23
--------
179,552
--------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 9.6%
MORTGAGE BACKED SECURITIES:
41,661 6.00% 2033 -- 2037 (Q)............................ 42,245
5,771 6.50% 2028 -- 2032................................ 5,929
2,596 7.00% 2032........................................ 2,682
799 7.50% 2022 -- 2030................................ 830
153 8.50% 2017 -- 2030................................ 166
123 9.50% 2009........................................ 126
7 12.50% 2015....................................... 8
--------
51,986
--------
OTHER GOVERNMENT AGENCIES -- 7.1%
SMALL BUSINESS ADMINISTRATION PARTICIPATION
CERTIFICATES:
3,560 5.12% 2026........................................ 3,520
5,484 5.36% 2026........................................ 5,506
4,102 5.37% 2026........................................ 4,121
4,294 5.54% 2026........................................ 4,354
4,662 5.70% 2026........................................ 4,766
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
OTHER GOVERNMENT AGENCIES -- (CONTINUED)
$ 4,878 6.07% 2026........................................ $ 5,078
10,798 6.30% 2019........................................ 11,110
--------
38,455
--------
Total U.S. government agencies
(cost $470,549)................................. $468,337
--------
Total long-term investments
(cost $617,172)................................. $614,457
--------
SHORT-TERM INVESTMENTS -- 1.6%
REPURCHASE AGREEMENTS -- 1.6%
2,932 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 2,932
2,318 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 2,318
2,932 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 2,932
--------
8,182
--------
U.S. GOVERNMENT SECURITIES -- 0.0%
250 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 248
--------
Total short-term investments
(cost $8,430)................................... $ 8,430
--------
Total investments in securities
(cost $625,602) (C)............................. $622,887
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $625,969 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 2,497
Unrealized depreciation......................... (5,579)
-------
Net unrealized depreciation..................... $(3,082)
=======
</Table>
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $44,909, which represents 8.26% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M)The interest rate disclosed for these securities represents an effec-
tive yield on the date of acquisition.
The accompanying notes are an integral part of these financial statements.
133
HARTFORD MORTGAGE SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(P)The interest rate disclosed for interest only strips represents an
effective yield based on estimated future cash flows at December 31, 2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $81,705.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 273 Short March 2007 $261
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
134
HARTFORD SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 97.4%
BASIC MATERIALS -- 7.1%
486 Agrium, Inc. (G).................................. $ 15,320
134 Airgas, Inc. ..................................... 5,422
407 Arch Coal, Inc. .................................. 12,210
288 Brush Engineered Materials, Inc. (D).............. 9,713
3,887 Golden Hope Plantations BHD (A)................... 6,625
544 Jarden Corp. (D)(G)............................... 18,935
4,627 Kingboard Chemical Holdings Ltd. (A).............. 18,168
235 Kinross Gold Corp. (D)............................ 2,789
1,118 Terra Industries, Inc. (D)........................ 13,389
----------
102,571
----------
CAPITAL GOODS -- 3.9%
225 Bucyrus International, Inc. ...................... 11,634
117 Daktronics, Inc. ................................. 4,300
622 Goodman Global, Inc. (D).......................... 10,694
36 Hydril Co. (D).................................... 2,684
223 Marvel Entertainment, Inc. (D).................... 6,002
36 Scientific Games Corp. Class A (D)................ 1,097
378 TransDigm Group, Inc. (D)......................... 10,027
215 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 9,802
----------
56,240
----------
CONSUMER CYCLICAL -- 9.3%
60 Advance Auto Parts, Inc. ......................... 2,123
134 Be Aerospace, Inc. (D)............................ 3,436
57 Buffalo Wild Wings, Inc. (D)...................... 3,027
223 Children's Place Retail Stores, Inc. (D).......... 14,159
95 Conceptus, Inc. (D)............................... 2,031
136 Dick's Sporting Goods, Inc. (D)................... 6,663
172 DSW, Inc. (D)(G).................................. 6,633
154 Dufry Group (D)(A)................................ 12,854
6,079 Esun Holdings Ltd. (D)(A)......................... 6,333
56 Gildan Activewear, Inc. (D)....................... 2,593
134 GSI Commerce, Inc. (D)(G)......................... 2,509
973 LKQ Corp. (D)..................................... 22,371
19 Newell Rubbermaid, Inc. .......................... 556
120 Quanta Services, Inc. (D)......................... 2,362
393 Quicksilver, Inc. (D)............................. 6,187
187 Skechers U.S.A., Inc. Class A (D)................. 6,222
77 The Andersons, Inc. .............................. 3,256
273 Tween Brands, Inc. (D)............................ 10,898
152 Urban Outfitters, Inc. (D)........................ 3,494
517 VistaPrint Ltd. (D)............................... 17,125
----------
134,832
----------
CONSUMER STAPLES -- 0.6%
399 Jones Soda Co. (D)(G)............................. 4,909
45 Jones Soda Co. PIPE (D) ++........................ 553
97 Sanderson Farms, Inc. (G)......................... 2,950
----------
8,412
----------
ENERGY -- 4.7%
33 Aegean Marine Petroleum Network (D)............... 540
200 Cabot Oil & Gas Corp. ............................ 12,124
775 Complete Production Services, Inc. (D)............ 16,440
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
ENERGY -- (CONTINUED)
479 Denbury Resources, Inc. (D)....................... $ 13,314
72 ENSCO International, Inc. ........................ 3,604
65 Goodrich Petroleum Corp. (D)(G)................... 2,334
174 Oilsands Quest, Inc. (D).......................... 875
438 OPTI Canada, Inc. (D)............................. 7,429
95 Pride International, Inc. (D)..................... 2,841
311 Western Oil Sands, Inc. Class A (D)............... 8,721
----------
68,222
----------
FINANCE -- 9.0%
4,419 Aberdeen Asset Management PLC (A)................. 16,399
433 Admiral Group plc (A)............................. 9,295
450 Allied World Assurance Holdings Ltd. ............. 19,630
42 BOK Financial Corp. .............................. 2,298
73 CB Richard Ellis Group, Inc. Class A (D).......... 2,437
288 Covanta Holding Corp. (D)......................... 6,339
171 Dade Behring Holdings, Inc. ...................... 6,791
58 Delphi Financial Group Class A.................... 2,359
71 First Republic Bank............................... 2,790
141 Friedman Billings Ramsey Group, Inc. ............. 1,126
48 Investment Technology Group, Inc. (D)............. 2,058
252 Jamba, Inc. (D)(G)................................ 2,537
80 Jefferies Group, Inc. ............................ 2,154
257 Nuveen Investments, Inc. Class A.................. 13,316
351 ProAssurance Corp. (D)............................ 17,535
33 Signature Bank (D)................................ 1,029
79 Sterling Bancshares, Inc. ........................ 1,032
353 U-Store-It (G).................................... 7,252
451 Waddell and Reed Financial, Inc. Class A.......... 12,328
20 Wellcare Health Plans, Inc. (D)................... 1,371
----------
130,076
----------
HEALTH CARE -- 10.4%
58 Abaxis, Inc. (D).................................. 1,122
38 Adams Respiratory Therapeutics, Inc. (D).......... 1,539
48 Alexion Pharmaceuticals, Inc. (D)................. 1,939
494 Alkermes, Inc. (D)................................ 6,606
157 Amylin Pharmaceuticals, Inc. (D).................. 5,679
425 Arena Pharmaceuticals, Inc. (D)(G)................ 5,483
480 AtheroGenics, Inc. (D)(G)......................... 4,754
194 Charles River Laboratories International, Inc.
(D)............................................. 8,397
322 Digene Corp. (D).................................. 15,453
111 DJO, Inc. (D)..................................... 4,762
179 Genomic Health, Inc. (D).......................... 3,320
403 Herbalife Ltd. (D)................................ 16,175
656 Human Genome Sciences, Inc. (D)(G)................ 8,161
137 Inverness Medical Innovation (D).................. 5,286
165 Kyphon, Inc. (D).................................. 6,680
370 LifePoint Hospitals, Inc. (D)..................... 12,452
294 Medicines Co. (D)................................. 9,341
185 Mentor Corp. (G).................................. 9,059
84 Sunrise Senior Living, Inc. (D)................... 2,571
531 Symbion, Inc. (D)................................. 9,825
75 Ventana Medical Systems, Inc. (D)................. 3,219
</Table>
The accompanying notes are an integral part of these financial statements.
135
HARTFORD SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
159 Vertex Pharmaceuticals, Inc. (D).................. $ 5,934
193 Warner Chilcott Ltd. (D).......................... 2,666
----------
150,423
----------
SERVICES -- 15.9%
186 Allscripts Healthcare Solutions, Inc. (D)......... 5,020
44 Anixter International, Inc. (D)................... 2,384
114 Central European Media Enterprises Ltd. (D)....... 7,993
69 Corrections Corp. of America (D).................. 3,105
264 DreamWorks Animation SKG, Inc. (D)................ 7,793
262 Factset Research Systems, Inc. ................... 14,810
292 Focus Media Holding Ltd. ADR (D).................. 19,380
316 Foundry Networks, Inc. (D)........................ 4,740
273 GameTech International, Inc. (D).................. 3,268
302 Hythiam, Inc. (D)................................. 2,791
114 inVentiv Health, Inc. (D)......................... 4,026
299 Iron Mountain, Inc. (D)........................... 12,371
294 Jackson Hewitt Tax Service, Inc. ................. 10,003
34 Jacobs Engineering Group, Inc. (D)................ 2,740
67 Life Time Fitness, Inc. (D)....................... 3,260
388 Live Nation, Inc. (D)............................. 8,701
718 Mentor Graphics Corp. (D)......................... 12,943
717 MoneyGram International, Inc. .................... 22,493
107 Orient Express Hotels Ltd. Class A................ 5,068
336 Pinnacle Entertainment, Inc. (D).................. 11,148
377 Priceline.com, Inc. (D)(G)........................ 16,442
200 Stericycle, Inc. (D).............................. 15,134
5 Taleo Corp. Class A (D)........................... 66
513 TeleTech Holdings, Inc. (D)....................... 12,260
207 Washington Group International, Inc. ............. 12,360
214 WNS Holdings Ltd. ADR (D)......................... 6,642
200 World Wrestling Entertainment, Inc. .............. 3,257
----------
230,198
----------
TECHNOLOGY -- 30.5%
725 Activision, Inc. (D).............................. 12,500
467 American Reprographics Co. (D).................... 15,565
54 Amphenol Corp. Class A............................ 3,321
437 Ansys, Inc. (D)................................... 19,026
770 Art Technology Group, Inc. (D).................... 1,793
208 Aspen Technology, Inc. (D)........................ 2,292
121 Baidu.com ADR (D)(G).............................. 13,618
90 Belden CDT, Inc. ................................. 3,514
402 Brocade Communications Systems, Inc. (D).......... 3,303
137 China Techfaith Wireless Communication Techology
Ltd. ADR (D)(G)................................. 1,480
343 Cirrus Logic, Inc. (D)............................ 2,357
39 CoStar Group, Inc. (D)............................ 2,094
229 Ctrip.Com International Ltd. ..................... 14,330
196 EMCORE Corp. (D).................................. 1,081
141 Equinix, Inc. (D)(G).............................. 10,675
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TECHNOLOGY -- (CONTINUED)
31 FormFactor, Inc. (D).............................. $ 1,147
695 Fossil, Inc. (D).................................. 15,703
206 Global Payments, Inc. ............................ 9,529
526 Himax Techologies, Inc. ADR (D)................... 2,509
283 Hologic, Inc. (D)................................. 13,363
471 IHS, Inc. (D)..................................... 18,586
24 Interactive Data Corp. (D)........................ 565
314 Kenexa Corp. (D)(G)............................... 10,434
337 Leap Wireless International, Inc. (D)............. 20,040
312 Logitech International S.A. (D)................... 8,917
61 MEMC Electronic Materials, Inc. (D)............... 2,391
130 Microsemi Corp. (D)............................... 2,562
198 Ness Technologies, Inc. (D)....................... 2,819
399 Neustar, Inc. (D)................................. 12,952
380 Nuance Communications, Inc. (D)(G)................ 4,358
735 O2Micro International Ltd. ADR (D)................ 6,283
105 Power Integrations, Inc. (D)...................... 2,462
585 QLogic Corp. (D).................................. 12,830
69 Rackable Systems, Inc. (D)(G)..................... 2,146
753 Red Hat, Inc. (D)................................. 17,324
542 S.O.I. Tec, S.A. (D)(A)(G)........................ 19,141
190 SiRF Technology Holdings, Inc. (D)(G)............. 4,851
275 Sirona Dental Systems, Inc. (G)................... 10,596
91 Smith Micro Software, Inc. (D).................... 1,296
1,612 Sonus Networks, Inc. (D).......................... 10,625
304 Teledyne Technologies, Inc. (D)................... 12,196
4,418 Tencent Holdings Ltd. (A)......................... 15,688
285 THQ, Inc. (D)..................................... 9,264
313 Transaction Systems Architects, Inc. (D).......... 10,182
47 Trimble Navigation Ltd. (D)....................... 2,400
188 Triumph Group, Inc. .............................. 9,844
519 Trizetto Group, Inc. (D).......................... 9,543
564 VA Software Corp. (D)............................. 2,838
924 VeriFone Holdings, Inc. (D)....................... 32,699
404 Verint Systems, Inc. (D).......................... 13,847
----------
438,879
----------
TRANSPORTATION -- 6.0%
314 American Commercial Lines, Inc. (D)............... 20,583
97 American Rail Car Industries, Inc. ............... 3,315
385 Copa Holdings S.A. Class A........................ 17,930
173 Florida East Coast Industries, Inc. .............. 10,289
51 Genesee & Wyoming, Inc. Class A (D)............... 1,333
369 GOL Linhas Aereas Inteligentes S.A. ADR (G)....... 10,587
106 Kansas City Southern (D).......................... 3,083
439 Landstar System, Inc. ............................ 16,781
95 Wabtec............................................ 2,877
----------
86,778
----------
Total common stock
(cost $1,264,915)............................... $1,406,631
----------
</Table>
The accompanying notes are an integral part of these financial statements.
136
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- 9.8%
REPURCHASE AGREEMENTS -- 1.7%
$ 784 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 784
7,546 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 7,546
1,081 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 1,081
12 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 12
677 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 677
231 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 231
5,966 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 5,966
7,545 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 7,545
677 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 677
----------
24,519
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.1%
117,490 BNY Institutional Cash Reserve Fund............... $ 117,490
----------
Total short-term investments
(cost $142,009)................................. $ 142,009
----------
Total investments in securities
(cost $1,406,924) (C)........................... $1,548,640
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.38% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $104,503, which represents 7.24% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,410,143 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $161,705
Unrealized depreciation........................ (23,208)
--------
Net unrealized appreciation.................... $138,497
========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
++ Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $553, which
represents 0.04% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
137
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 100.0%
BASIC MATERIALS -- 7.7%
4 AEP Industries, Inc. (D).......................... $ 197
15 AK Steel Holding Corp. (D)........................ 253
9 Aventine Renewable Energy Holdings, Inc. (D)...... 205
6 Balchem Corp. .................................... 157
6 Cabot Microelectronics Corp. (D).................. 193
65 Carpenter Technology Corp. ....................... 6,623
63 Century Aluminum Co. (D)(G)....................... 2,831
81 Ceradyne, Inc. (D)................................ 4,560
18 Champion Enterprises, Inc. (D).................... 169
126 Chaparral Steel Co. .............................. 5,559
276 Cleveland-Cliffs, Inc. ........................... 13,365
4 Deltic Timber Corp. .............................. 208
141 Eagle Materials, Inc. ............................ 6,108
9 Georgia Gulf Corp. ............................... 179
22 Hercules, Inc. (D)................................ 421
174 Insteel Industries, Inc. ......................... 3,100
5 Kaydon Corp. ..................................... 186
107 Mueller Industries, Inc. ......................... 3,401
4 NCI Building Systems, Inc. (D).................... 214
5 Neenah Paper, Inc. ............................... 174
2 Newmarket Corp. .................................. 142
3 Oregon Steel Mills, Inc. (D)...................... 202
7 Pioneer Co. (D)................................... 186
10 Playtex Products, Inc. (D)........................ 144
190 PW Eagle, Inc. (G)................................ 6,562
7 Quanex Corp. ..................................... 229
533 Select Comfort Corp. (D)(G)....................... 9,273
161 Sun Hydraulics Corp. ............................. 3,294
249 Tempur-Pedic International, Inc. (D)(G)........... 5,101
157 Timken Co. ....................................... 4,575
18 Wausau Paper Corp. ............................... 274
21 Xerium Technologies, Inc. ........................ 201
----------
78,286
----------
CAPITAL GOODS -- 4.8%
53 Armor Holdings, Inc. (D).......................... 2,885
4 Clarcor, Inc. .................................... 145
8 Columbus McKinnon Corp. (D)....................... 164
4 Daktronics, Inc. ................................. 154
184 Graco, Inc. ...................................... 7,280
8 II VI, Inc. (D)................................... 223
101 Lennox International, Inc. ....................... 3,098
50 Lone Star Technologies, Inc. (D).................. 2,406
3 Lufkin Industries, Inc. .......................... 153
10 Marvel Entertainment, Inc. (D).................... 277
142 Nordson Corp. .................................... 7,051
6 Oil States International, Inc. (D)................ 202
14 Orbital Sciences Corp. (D)........................ 252
217 Steelcase, Inc. .................................. 3,932
203 Tennant Co. ...................................... 5,881
8 Tessera Technologies, Inc. (D).................... 322
103 Toro Co. ......................................... 4,789
210 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 9,549
----------
48,763
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- 13.2%
105 Aeropostale, Inc. (D)............................. $ 3,244
8 Albany International Corp. Class A................ 257
190 American Woodmark Corp. (G)....................... 7,968
1 AMREP Corp. (G)................................... 164
221 AnnTaylor Stores Corp. (D)........................ 7,254
137 Applied Industrial Technologies, Inc. ............ 3,593
-- Arden Group, Inc. ................................ 50
896 Arris Group, Inc. (D)............................. 11,211
7 Bebe Stores, Inc. ................................ 135
122 Bon-Ton Stores, Inc. (G).......................... 4,227
6 Charlotte Russe Holding, Inc. (D)................. 185
11 Charming Shoppes, Inc. (D)........................ 154
2 Children's Place Retail Stores, Inc. (D).......... 143
324 Christopher & Banks Corp. ........................ 6,050
5 Deckers Outdoor Corp. (D)......................... 326
102 Dress Barn, Inc (D)............................... 2,376
433 DSW, Inc. (D)(G).................................. 16,712
4 ESCO Technologies, Inc. (D)....................... 162
125 First Cash Financial Services, Inc. (D)........... 3,244
134 Genesco, Inc. (D)................................. 4,991
7 GenTek, Inc. (D).................................. 228
4 Granite Construction, Inc. ....................... 179
3 Guess?, Inc. (D).................................. 206
10 Gymboree Corp. (D)................................ 373
5 Herman Miller, Inc. .............................. 165
10 Iconix Brand Group, Inc. (D)...................... 200
151 J. Crew Group, Inc. (D)........................... 5,806
12 Kimball International, Inc. ...................... 302
5 K-Swiss, Inc. .................................... 144
17 Maidenform Brands, Inc. (D)....................... 300
68 McGrath RentCorp.................................. 2,092
6 Men's Wearhouse, Inc. ............................ 223
163 Noble International Ltd. ......................... 3,260
4 Pantry, Inc. (D).................................. 195
7 Payless ShoeSource, Inc. (D)...................... 215
130 Phillips-Van Heusen Corp. ........................ 6,524
290 PSS World Medical, Inc. (D)....................... 5,656
101 RARE Hospitality International, Inc. (D).......... 3,323
452 Skechers U.S.A., Inc. Class A (D)................. 15,053
5 Sotheby's......................................... 169
82 Stanley Furniture Co., Inc. ...................... 1,757
7 Steven Madden Ltd. ............................... 256
6 Synaptics, Inc. (D)............................... 168
331 Talbots, Inc. .................................... 7,972
4 The Buckle, Inc. ................................. 202
441 True Religion Apparel, Inc. (D)(G)................ 6,750
5 Tween Brands, Inc. (D)............................ 187
----------
134,351
----------
CONSUMER STAPLES -- 0.1%
6 Boston Beer Co., Inc. Class A (D)................. 228
5 Chattem, Inc. (D)................................. 235
5 Lancaster Colony Corp. ........................... 207
----------
670
----------
</Table>
The accompanying notes are an integral part of these financial statements.
138
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
ENERGY -- 4.6%
10 Alon USA Energy, Inc. ............................ $ 271
5 Berry Petroleum Co. .............................. 168
15 Bois d'Arc Energy, Inc. (D)....................... 217
201 Cabot Oil & Gas Corp. ............................ 12,163
14 Callon Petroleum Corp. (D)........................ 208
5 Clayton Williams Energy, Inc. (D)................. 169
10 Comstock Resources, Inc. (D)...................... 306
6 Crosstex Energy, Inc. ............................ 188
205 Delek US Holdings, Inc. .......................... 3,355
109 Encore Acquisition Co. (D)........................ 2,681
272 Frontier Oil Corp. ............................... 7,817
2 Giant Industries, Inc. (D)........................ 179
651 Grey Wolf, Inc. (D)............................... 4,464
9 Mariner Energy, Inc. (D).......................... 178
527 Meridian Resource Corp. (D)....................... 1,628
3 Penn Virginia Corp. .............................. 198
15 Petrohawk Energy Corp. (D)........................ 174
6 Petroleum Development Corp. (D)................... 243
197 Pioneer Drilling Co. (D).......................... 2,615
99 St. Mary Land & Exploration Co. .................. 3,643
66 Swift Energy Co. (D).............................. 2,940
64 Trico Marine Services, Inc. (D)................... 2,456
44 Vaalco Energy, Inc. (D)........................... 300
6 WD-40 Co. ........................................ 214
4 W-H Energy Services (D)........................... 194
----------
46,969
----------
FINANCE -- 11.2%
164 Advance America Cash Advance Centers, Inc. ....... 2,395
162 Advanta Corp. Class B............................. 7,081
1 Alexander's, Inc. ................................ 226
16 Amerigroup Corp. (D)#............................. 568
139 Arch Capital Group Ltd. (D)....................... 9,378
277 Aspen Insurance Holdings Ltd. .................... 7,302
5 Asta Funding, Inc. ............................... 164
10 Centene Corp. (D)................................. 237
37 City Holding Co. ................................. 1,492
142 CompuCredit Corp. (D)(G).......................... 5,641
144 Corus Bankshares, Inc. (G)........................ 3,324
89 Cousins Properties, Inc. ......................... 3,147
8 Credit Acceptance Corp. (D)....................... 251
129 Diamondrock Hospitality........................... 2,321
3 EastGroup Properties, Inc. ....................... 176
55 eHealth, Inc. (D)................................. 1,096
375 Encore Capital Group, Inc. (D).................... 4,725
23 Ezcorp, Inc. (D).................................. 382
104 First Community Bancorp, Inc. .................... 5,441
5 Getty Realty Corp. ............................... 167
4 Greenhill & Co., Inc. (G)......................... 272
301 Hersha Hospitality Trust.......................... 3,408
294 Highland Hospitality Corp. ....................... 4,182
712 Impac Mortgage Holdings, Inc. .................... 6,266
233 IndyMac Bancorp, Inc. ............................ 10,500
8 Inland Real Estate Corp. ......................... 149
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
4 International Securities Exchange Holdings,
Inc. ........................................... $ 173
9 KBW, Inc. (D)..................................... 270
136 Maguire Properties, Inc. ......................... 5,444
91 Molina Healthcare, Inc. (D)....................... 2,943
8 National Interstate Corp. ........................ 190
270 Net 1 UEPS Technologies, Inc. (D)................. 7,972
12 Omega Healthcare Investors........................ 209
8 optionsXpress Holdings, Inc. ..................... 181
3 PS Business Parks, Inc. .......................... 200
6 Saul Centers, Inc. ............................... 349
368 Strategic Hotels & Resorts, Inc. ................. 8,027
82 Sunstone Hotel Investors, Inc. ................... 2,200
5 Tower Group, Inc. ................................ 170
58 UTStarcom, Inc. (D)(G)............................ 510
71 Wellcare Health Plans, Inc. (D)................... 4,919
----------
114,048
----------
HEALTH CARE -- 15.7%
208 Acadia Pharmaceuticals, Inc. (D)(G)............... 1,827
643 Alkermes, Inc. (D)................................ 8,596
47 Alliance Imaging, Inc. (D)........................ 313
10 Alpharma, Inc. Class A............................ 237
7 AmSurg Corp. (D).................................. 152
132 Amylin Pharmaceuticals, Inc. (D).................. 4,758
504 Applera Corp. -- Celera Group (D)................. 7,044
14 Apria Healthcare Group, Inc. (D).................. 377
350 Ciphergen Biosystems, Inc. (D).................... 312
831 CV Therapeutics, Inc. (D)......................... 11,606
283 Cytokinetics, Inc. (D)............................ 2,120
4 Digene Corp. (D).................................. 171
814 Encysive Pharmaceuticals, Inc. (D)(G)............. 3,425
611 Exelixis, Inc. (D)................................ 5,503
6 Forrester Research, Inc. (D)...................... 168
7 Healthways, Inc. (D).............................. 326
267 Human Genome Sciences, Inc. (D)(G)................ 3,319
6 Illumina, Inc. (D)................................ 240
277 Immucor, Inc. (D)#................................ 8,093
301 Incyte Corp. (D).................................. 1,758
8 InterMune, Inc. (D)............................... 243
5 Kendle International, Inc. (D).................... 147
6 Kyphon, Inc. (D).................................. 237
10 Lifecell Corp. (D)................................ 248
479 LifePoint Hospitals, Inc. (D)..................... 16,129
69 Longs Drug Stores Corp. .......................... 2,912
209 Magellan Health Services, Inc. (D)................ 9,020
127 Mannatech, Inc. (G)............................... 1,870
6 MedCath Corp. (D)................................. 167
5 Medical Action Industries, Inc. (D)............... 155
8 Medicines Co. (D)................................. 243
9 Medicis Pharmaceutical Corp. Class A.............. 313
12 Mentor Corp.# .................................... 596
7 Meridian Bioscience, Inc. ........................ 163
8 MGI Pharma, Inc. (D).............................. 154
8 NBTY, Inc. (D).................................... 325
9 Nektar Therapeutics (D)........................... 140
</Table>
The accompanying notes are an integral part of these financial statements.
139
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
4 New River Pharmaceuticals, Inc. (D)(G)............ $ 194
1,392 NPS Pharmaceuticals, Inc. (D)..................... 6,305
367 Onyx Pharmaceuticals, Inc. (D).................... 3,884
118 OSI Pharmaceuticals, Inc. (D)..................... 4,119
8 PAREXEL International Corp. (D)................... 218
325 Perrigo Co. ...................................... 5,629
116 Pharmion Corp. (D)................................ 2,982
499 Regeneron Pharmaceuticals, Inc. (D)............... 10,015
518 Rigel Pharmaceuticals, Inc. (D)................... 6,149
155 Salix Pharmaceuticals Ltd. (D).................... 1,890
192 Sciele Pharma, Inc. (D)........................... 4,615
288 STERIS Corp. ..................................... 7,251
5 SurModics, Inc. (D)............................... 146
4 United Therapeutics Corp. (D)..................... 214
10 Valeant Pharmaceuticals International............. 166
16 ViroPharma, Inc. (D).............................. 238
6 West Pharmaceutical Services...................... 314
149 Wright Medical Group, Inc. (D).................... 3,464
86 Zoll Medical Corp. (D)............................ 5,016
231 Zymogenetics, Inc. (D)............................ 3,594
----------
159,810
----------
SERVICES -- 14.0%
104 Advisory Board Co. (D)............................ 5,557
107 Allscripts Healthcare Solutions, Inc. (D)......... 2,891
3 Anixter International, Inc. (D)................... 141
7 Atheros Communications, Inc. (D).................. 143
601 BISYS Group, Inc. (D)............................. 7,752
105 Central European Media Enterprises Ltd. (D)....... 7,350
119 Cerner Corp. (D).................................. 5,424
5 Coinstar, Inc. (D)................................ 153
4 Computer Programs and Systems, Inc. .............. 143
11 Corvel (D)........................................ 520
9 Digital River, Inc. (D)........................... 486
86 Factset Research Systems, Inc. ................... 4,846
17 First Consulting Group, Inc. (D).................. 233
19 Foundry Networks, Inc. (D)........................ 277
6 Geo Group, Inc. (D)............................... 221
263 Gevity HR, Inc. .................................. 6,221
510 Global Imaging Systems, Inc. (D).................. 11,203
151 Healthspring, Inc. (D)............................ 3,074
4 Heidrick & Struggles International, Inc. (D)...... 168
177 Hub Group, Inc. (D)............................... 4,865
243 Imergent, Inc. (D)(G)............................. 6,951
23 INVESTools, Inc. (D).............................. 312
226 ITT Educational Services, Inc. (D)................ 14,966
320 Jack Henry & Associates, Inc. .................... 6,852
43 John H. Harland Co. .............................. 2,174
9 Korn/Ferry International (D)...................... 207
163 Live Nation, Inc. (D)............................. 3,651
8 Lodgenet Entertainment Corp. (D).................. 193
14 Macrovision Corp. (D)............................. 398
10 Manhattan Associates, Inc. (D).................... 291
146 Martha Stewart Living Omnimedia, Inc. (G)......... 3,189
248 Mediacom Communications Corp. (D)................. 1,995
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SERVICES -- (CONTINUED)
4 Micros Systems (D)................................ $ 195
75 MoneyGram International, Inc. .................... 2,349
85 MTS Systems Corp. ................................ 3,267
181 Parametric Technology Corp. (D)................... 3,268
256 Perot Systems Corp. Class A (D)................... 4,189
130 Per-Se Technologies, Inc. (D)..................... 3,611
110 Plexus Corp. (D).................................. 2,617
174 Priceline.com, Inc. (D)(G)........................ 7,572
7 Quality Systems................................... 257
121 Resources Connection, Inc. (D).................... 3,865
5 Standard Parking Corp. (D)........................ 208
13 Time Warner Telecom, Inc. Class A (D)............. 253
5 Veritas DGC, Inc. (D)............................. 385
8 Waste Industries USA, Inc. ....................... 231
92 Watson Wyatt Worldwide, Inc. ..................... 4,158
100 Wright Express Corp. (D).......................... 3,129
----------
142,401
----------
TECHNOLOGY -- 24.4%
261 Acuity Brands, Inc. .............................. 13,583
174 Acxiom Corp. ..................................... 4,453
12 ADTRAN, Inc. ..................................... 261
605 Advanced Energy Industries, Inc. (D).............. 11,413
12 American Medical Systems Holdings (D)............. 219
3 American Science & Engineering, Inc. (D).......... 167
868 Amkor Technology, Inc. (D)........................ 8,106
17 Ansoft Corp. (D).................................. 484
99 Ansys, Inc. (D)................................... 4,307
178 Benchmark Electronics, Inc. (D)................... 4,341
5 Biosite Diagnostics, Inc. (D)..................... 221
214 Blackbaud, Inc. .................................. 5,552
904 Brocade Communications Systems, Inc. (D).......... 7,424
28 Bruker BioSciences Corp. (D)...................... 210
173 Candela Corp. (D)................................. 2,136
47 Carrier Access Corp. (D).......................... 306
27 C-COR.net Corp. (D)............................... 301
57 Chordiant Software, Inc. (D)...................... 188
614 Cirrus Logic, Inc. (D)............................ 4,227
6 Commonwealth Telephone Enterprise, Inc. .......... 248
332 CSG Systems International, Inc. (D)............... 8,863
184 Diodes, Inc. (D).................................. 6,532
3 Dionex Corp. (D).................................. 160
21 Dobson Communications Corp. (D)................... 182
343 Eagle Test Systems, Inc. (D)...................... 4,995
230 eFunds Corp. (D).................................. 6,325
19 Emulex Corp. (D).................................. 377
8 Exlservice Holdings, Inc. (D)..................... 177
10 FLIR Systems, Inc. (D)............................ 309
7 FormFactor, Inc. (D).............................. 244
2,135 Gemstar-TV Guide International, Inc. (D).......... 8,563
6 General Cable Corp. (D)........................... 254
13 General Communication, Inc. Class A (D)........... 202
223 Golden Telecom, Inc. ............................. 10,459
26 Harmonic, Inc. (D)................................ 191
8 Hittite Microwave Corp. (D)....................... 253
6 Hologic, Inc. (D)................................. 288
</Table>
The accompanying notes are an integral part of these financial statements.
140
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
9 Hyperion Solutions Corp. (D)...................... $ 313
5 IHS, Inc. (D)..................................... 213
12 Informatica Corp. (D)............................. 144
120 Interdigital Communications Corp. (D)............. 4,026
16 Internap Network Services Corp. (D)............... 317
12 Interwoven, Inc. (D).............................. 173
364 iPass, Inc. (D)(G)................................ 2,138
350 j2 Global Communications, Inc. (D)................ 9,531
218 Komag, Inc. (D)................................... 8,268
152 Lamson & Sessions Co. (D)(G)...................... 3,680
14 Lightbridge, Inc. (D)............................. 194
5 Littelfuse, Inc. (D).............................. 156
46 LTX Corp. (D)..................................... 256
21 Magma Design Automation, Inc. (D)................. 188
412 Micrel, Inc. (D).................................. 4,440
81 MicroStrategy, Inc. (D)#.......................... 9,276
98 Neustar, Inc. (D)................................. 3,166
213 Novatel, Inc. (D)................................. 8,487
226 OmniVision Technologies, Inc. (D)(G).............. 3,081
12 Packeteer, Inc. (D)............................... 158
196 Palomar Medical Technologies, Inc. (D)(G)......... 9,926
5 Park Electrochemical Corp. ....................... 118
14 Photon Dynamics, Inc. (D)......................... 165
8 Polycom, Inc. (D)................................. 242
49 RealNetworks, Inc. (D)#........................... 540
10 Redback Networks, Inc. (D)........................ 247
115 Regal-Beloit Corp. ............................... 6,028
23 RF Micro Devices, Inc. (D)........................ 158
15 Semtech Corp. (D)................................. 195
481 Silicon Image, Inc. (D)........................... 6,114
39 Silicon Storage Technology, Inc. (D).............. 175
5 SiRF Technology Holdings, Inc. (D)................ 138
820 Skyworks Solutions, Inc. (D)...................... 5,806
13 Smith Micro Software, Inc. (D).................... 177
23 Sonus Networks, Inc. (D).......................... 148
6 SRA International, Inc. (D)....................... 152
150 Sybase, Inc. (D).................................. 3,705
166 Syniverse Holdings, Inc. (D)...................... 2,483
41 Tibco Software, Inc. (D).......................... 388
101 Transaction Systems Architects, Inc. (D).......... 3,303
178 Travelzoo, Inc. (D)(G)............................ 5,337
135 Trident Microsystems, Inc. (D)#................... 2,462
523 Trizetto Group, Inc. (D).......................... 9,611
81 United Industrial Corp. .......................... 4,101
592 United Online, Inc. .............................. 7,868
4 Varian, Inc. (D).................................. 167
9 Vignette Corp. (D)................................ 150
282 Vishay Intertechnology, Inc. (D).................. 3,818
4 Vital Images, Inc. (D)............................ 146
14 Websense, Inc. (D)................................ 325
27 Wind River Systems, Inc. (D)...................... 276
29 Zoran Corp. (D)#.................................. 416
----------
249,611
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TRANSPORTATION -- 4.3%
179 American Commercial Lines, Inc. (D)............... $ 11,727
4 Atlas Air Worldwide Holdings, Inc. (D)............ 184
18 ExpressJet Holdings, Inc. (D)..................... 146
135 Freighter America, Inc. .......................... 7,502
144 General Maritime Corp. ........................... 5,055
10 Horizon Lines, Inc. Class A....................... 283
553 Knight Transportation, Inc. ...................... 9,422
166 Old Dominion Freight Line, Inc. (D)............... 3,986
14 Quality Distribution, Inc. (D).................... 186
46 Thor Industries, Inc. ............................ 2,032
209 Werner Enterprises, Inc. ......................... 3,652
6 Winnebago Industries, Inc. ....................... 192
----------
44,367
----------
Total common stock
(cost $930,491)................................. $1,019,276
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 8.5%
REPURCHASE AGREEMENTS -- 0.3%
$ 247 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 247
830 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 830
340 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 340
4 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 4
213 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 213
73 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 73
656 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 656
829 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 829
213 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 213
----------
3,405
----------
U.S. TREASURY BILL -- 0.0%
200 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 198
----------
</Table>
The accompanying notes are an integral part of these financial statements.
141
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.2%
83,802 BNY Institutional Cash Reserve Fund............... $ 83,802
----------
Total short-term investments
(cost $87,405).................................. $ 87,405
----------
Total investments in securities
(cost $1,017,896) (C)........................... $1,106,681
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.83% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,020,789 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $142,219
Unrealized depreciation........................ (56,327)
--------
Net unrealized appreciation.................... $ 85,892
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G)Security is partially on loan at December 31, 2006.
(M)The interest rate disclosed for these securities represents the effec-
tive yield on the date of acquisition.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Russell 2000 Mini 6 Long March 2007 $(3)
===
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
142
HARTFORD STOCK HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.8%
BASIC MATERIALS -- 5.1%
2,932 Alcoa, Inc. ...................................... $ 87,995
744 Cameco Corp. ..................................... 30,075
1,460 Companhia Vale do Rio Doce ADR (G)................ 43,412
940 Dow Chemical Co. ................................. 37,532
537 E.I. DuPont de Nemours & Co. ..................... 26,152
993 Mittal Steel Co. (G).............................. 41,876
----------
267,042
----------
CAPITAL GOODS -- 2.6%
982 American Standard Cos., Inc. ..................... 45,039
597 Boeing Co. ....................................... 53,011
425 Deere & Co. (G)................................... 40,376
----------
138,426
----------
CONSUMER CYCLICAL -- 8.9%
1,212 Altria Group, Inc. ............................... 104,048
2,837 Circuit City Stores, Inc. ........................ 53,848
2,006 D.R. Horton, Inc. ................................ 53,136
1,317 eBay, Inc. (D).................................... 39,593
1,415 Gap, Inc. ........................................ 27,601
1,228 Home Depot, Inc. ................................. 49,297
1,065 Lowe's Cos, Inc. ................................. 33,181
407 Toyota Motor Corp. (A)............................ 27,266
1,740 Wal-Mart Stores, Inc. ............................ 80,353
----------
468,323
----------
CONSUMER STAPLES -- 6.2%
399 Bunge Ltd. ....................................... 28,961
429 Clorox Co. ....................................... 27,514
6 Japan Tobacco, Inc. (A)........................... 28,068
1,329 PepsiCo, Inc. .................................... 83,104
1,334 Procter & Gamble Co. (G).......................... 85,730
1,224 Tyson Foods, Inc. Class A......................... 20,128
1,969 Unilever N.V. NY Shares........................... 53,663
----------
327,168
----------
ENERGY -- 6.2%
310 CNOOC Ltd. ADR.................................... 29,297
1,215 EnCana Corp. ..................................... 55,829
1,130 ExxonMobil Corp. ................................. 86,592
2,651 Halliburton Co. .................................. 82,310
905 Occidental Petroleum Corp. ....................... 44,201
66 Ultra Petroleum Corp (D).......................... 3,161
520 XTO Energy, Inc. (G).............................. 24,476
----------
325,866
----------
FINANCE -- 22.4%
2,815 Aegon N.V. (A).................................... 53,425
4,575 Akbank T.A.S (A).................................. 27,452
1,850 American International Group, Inc. ............... 132,578
2,317 Bank of America Corp. ............................ 123,679
1,147 Bank of New York Co., Inc. ....................... 45,142
638 Capital One Financial Corp. ...................... 49,011
2,777 Citigroup, Inc. .................................. 154,706
1,641 Countrywide Financial Corp. (G)................... 69,673
2,055 E*Trade Financial Corp. (D)....................... 46,065
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
613 Federal Home Loan Mortgage Corp. ................. $ 41,589
532 ING Groep N.V.-Sponsored ADR (G).................. 23,507
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 56,620
325 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 55,672
898 State Street Corp. ............................... 60,534
1,708 UBS AG............................................ 103,069
1,976 UnitedHealth Group, Inc. ......................... 106,154
1,377 Western Union Co.................................. 30,875
----------
1,179,751
----------
HEALTH CARE -- 10.2%
1,479 Abbott Laboratories............................... 72,037
3,709 Boston Scientific Corp. (D)....................... 63,724
2,808 Bristol-Myers Squibb Co. (G)...................... 73,909
355 Cardinal Health, Inc. (G)......................... 22,873
3,387 Elan Corp. plc ADR (D)(G)......................... 49,954
1,642 Eli Lilly & Co. (G)............................... 85,522
1,726 Sanofi-Aventis S.A. ADR (G)....................... 79,699
2,309 Schering-Plough Corp. ............................ 54,573
1,668 Shionogi & Co., Ltd. (A).......................... 32,758
----------
535,049
----------
SERVICES -- 8.9%
1,394 Accenture Ltd. Class A............................ 51,473
450 Fluor Corp. ...................................... 36,710
624 Monster Worldwide, Inc. (D)....................... 29,117
5,308 Sun Microsystems, Inc. (D)........................ 28,769
2,226 Time Warner, Inc. ................................ 48,474
1,616 United Parcel Service, Inc. Class B............... 121,190
1,493 Viacom, Inc. Class B (D)(G)....................... 61,270
1,116 Walt Disney Co. .................................. 38,239
3,671 XM Satellite Radio Holdings, Inc. Class A
(D)(G).......................................... 53,046
----------
468,288
----------
TECHNOLOGY -- 28.3%
1,138 Adobe Systems, Inc. (D)........................... 46,774
3,664 AT&T, Inc. (G).................................... 130,988
1,499 Broadcom Corp. Class A (D)........................ 48,430
4,865 Cisco Systems, Inc. (D)........................... 132,961
2,635 Corning, Inc. (D)................................. 49,307
7,551 EMC Corp. (D)..................................... 99,677
4,016 First Data Corp. ................................. 102,496
4,115 Flextronics International Ltd. (D)................ 47,240
6,823 General Electric Co. ............................. 253,880
177 Google, Inc. (D).................................. 81,505
2,358 Maxim Integrated Products, Inc. (G)............... 72,211
2,290 Medtronic, Inc. .................................. 122,527
2,713 Microsoft Corp. (G)............................... 81,022
1,016 Motorola, Inc. ................................... 20,893
1,027 Sharp Corp. (A)(G)................................ 17,658
4,207 Sprint Nextel Corp. .............................. 79,474
1,523 Texas Instruments, Inc. .......................... 43,868
2,153 Yahoo!, Inc. (D).................................. 54,998
----------
1,485,909
----------
</Table>
The accompanying notes are an integral part of these financial statements.
143
HARTFORD STOCK HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 1.0%
2,374 British Energy Group PLC (D)(A)................... $ 25,163
195 E.On AG (A)....................................... 26,281
----------
51,444
----------
Total common stock
(cost $4,839,704)............................... $5,247,266
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 0.5%
REPURCHASE AGREEMENTS -- 0.2%
$ 2,020 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,020
2,785 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,785
30 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 30
1,743 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,743
595 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 595
1,744 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,744
----------
8,917
----------
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 0.3%
17,647 Navigator Prime Portfolio......................... $ 17,647
----------
Total short-term investments
(cost $26,564).................................. $ 26,564
----------
Total investments in securities
(cost $4,866,268) (C)........................... $5,273,830
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 16.43% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $350,363, which represents 6.66% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $4,908,556 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 509,490
Unrealized depreciation....................... (144,216)
---------
Net unrealized appreciation................... $ 365,274
=========
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
144
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 7,325 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 6,651
----------
HOUSING (HFA'S, ETC.) -- 0.0%
275 Industry Urban DA,
6.10%, 05/01/2024............................... 282
----------
Total municipal bonds
(cost $7,606)................................... $ 6,933
----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 17.6%
FINANCE -- 17.3%
9,450 ACT Depositor Corp.,
5.47%, 09/22/2041 (I)(L)........................ $ 9,114
8,763 AmeriCredit Automobile Receivables Trust,
5.20%, 03/06/2011............................... 8,750
256,064 Banc of America Commercial Mortgage, Inc.,
4.08%, 12/10/2042 (P)#.......................... 4,946
2,695 Banc of America Commercial Mortgage, Inc.,
4.43%, 11/10/2039............................... 2,603
101,748 Banc of America Commercial Mortgage, Inc.,
4.52%, 09/11/2036 (I)(P)........................ 3,457
20,180 Banc of America Commercial Mortgage, Inc.,
5.31%, 10/10/2045............................... 20,226
15,160 Banc of America Commercial Mortgage, Inc.,
5.32%, 09/10/2047............................... 15,200
15,300 Banc of America Commercial Mortgage, Inc.,
5.52%, 07/10/2046 (L)........................... 15,467
19,220 Banc of America Commercial Mortgage, Inc.,
6.01%, 07/10/2044 (L)........................... 20,000
5,880 Banc of America Securities Auto Trust,
4.49%, 02/18/2013............................... 5,793
4,200 Bank One Issuance Trust,
4.77%, 02/16/2016............................... 4,038
1,243 Bear Stearns Commercial Mortgage Securities, Inc.,
2.96%, 08/13/2039............................... 1,212
75,139 Bear Stearns Commercial Mortgage Securities, Inc.,
4.07%, 07/11/2042 (P)#.......................... 2,493
58,968 Bear Stearns Commercial Mortgage Securities, Inc.,
4.12%, 11/11/2041 (P)#.......................... 1,663
132,676 Bear Stearns Commercial Mortgage Securities, Inc.,
5.50%, 02/11/2041 (I)(P)........................ 2,222
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 15,790 Bear Stearns Commercial Mortgage Securities, Inc.,
5.58%, 09/11/2041............................... $ 16,026
2,950 Capital Auto Receivables Asset Trust,
5.77%, 05/20/2010 (I)........................... 2,957
3,850 Capital Auto Receivables Asset Trust,
6.15%, 04/20/2011 (I)........................... 3,858
5,860 Capital One Auto Finance Trust,
4.32%, 05/15/2010#.............................. 5,799
66,452 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 07/25/2035 (I)(P)#....................... 3,260
49,297 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 06/25/2038 (I)(P)........................ 3,240
12,560 Citibank Credit Card Issuance Trust,
5.70%, 05/15/2013............................... 12,637
8,050 Citigroup Commercial Mortgage Trust,
5.25%, 04/15/2040............................... 8,048
19,950 Citigroup Commercial Mortgage Trust,
5.43%, 10/15/2049............................... 20,046
18,500 Citigroup Commercial Mortgage Trust,
5.91%, 03/15/2049 (L)........................... 19,076
3,350 Connecticut RRB Special Purpose Trust CL&P,
6.21%, 12/30/2011............................... 3,454
631 Conseco Finance Securitizations Corp.,
5.79%, 05/01/2033............................... 631
1,753 Countrywide Asset-Backed Certificates,
5.46%, 07/25/2035............................... 1,735
7,816 Credit Suisse Mortgage Capital Certificates,
6.02%, 06/15/2038 (L)........................... 8,120
1,934 CS First Boston Mortgage Securities Corp.,
2.08%, 05/15/2038............................... 1,885
240,946 CS First Boston Mortgage Securities Corp.,
4.39%, 07/15/2037 (I)(P)........................ 6,350
1,835 CS First Boston Mortgage Securities Corp.,
4.51%, 07/15/2037............................... 1,794
15,300 CS First Boston Mortgage Securities Corp.,
4.69%, 04/15/2037#.............................. 14,917
12,470 DB Master Finance LLC,
5.78%, 06/20/2031 (I)........................... 12,625
4,940 Ford Credit Auto Owner Trust,
5.30%, 06/15/2012............................... 4,940
344,101 GE Business Loan Trust,
6.14%, 05/15/2034 (I)(P)........................ 3,782
9,745 GE Business Loan Trust,
6.35%, 05/15/2034 (I)(L)........................ 9,745
67,318 GMAC Commercial Mortgage Securities, Inc.,
4.10%, 12/10/2041 (P)........................... 1,513
11,660 GMAC Commercial Mortgage Securities, Inc.,
5.24%, 11/10/2045 (L)........................... 11,577
12,580 GMAC Mortgage Corp. Loan Trust,
5.75%, 10/25/2036............................... 12,576
</Table>
The accompanying notes are an integral part of these financial statements.
145
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 172,686 Goldman Sachs Mortgage Securities Corp. II,
4.38%, 08/10/2038 (I)(P)........................ $ 1,795
1,718 Green Tree Financial Corp.,
7.24%, 06/15/2028............................... 1,798
19,075 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)........................... 19,007
9,725 Greenwich Capital Commercial Funding Corp.,
6.11%, 07/10/2038 (L)........................... 10,179
2,519 Home Equity Asset Trust,
4.75%, 06/27/2035 (I)........................... 2,453
11,405 Hyundai Auto Receivables Trust,
5.19%, 05/15/2013............................... 11,404
3,180 Hyundai Auto Receivables Trust,
5.29%, 11/15/2012............................... 3,182
95,977 JP Morgan Chase Commercial Mortgage Securities
Corp.,
3.68%, 01/15/2038 (I)(P)........................ 2,837
281,619 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.07%, 01/15/2042 (P)........................... 4,510
677,917 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.82%, 08/12/2037 (P)........................... 2,725
10,420 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.87%, 03/15/2046............................... 10,228
475,922 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.42%, 05/12/2045 (P)........................... 12,152
4,140 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 12/12/2044............................... 4,167
14,725 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 05/15/2045 (L)........................... 14,773
20,090 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.54%, 12/12/2043 (L)........................... 20,183
5,738 LB-UBS Commercial Mortgage Trust,
2.72%, 03/15/2027............................... 5,610
18,200 LB-UBS Commercial Mortgage Trust,
5.22%, 02/15/2031 (L)........................... 18,010
14,725 LB-UBS Commercial Mortgage Trust,
5.41%, 09/15/2039 (L)........................... 14,760
4,750 LB-UBS Commercial Mortgage Trust,
5.45%, 11/15/2038 (L)........................... 4,746
11,890 LB-UBS Commercial Mortgage Trust,
5.48%, 11/15/2038 (L)........................... 11,898
6,553 Lehman Brothers Small Balance Commercial,
5.52%, 09/25/2030............................... 6,531
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 5,180 Lehman Brothers Small Balance Commercial,
5.62%, 09/25/2036 (I)........................... $ 5,204
13,390 Marlin Leasing Receivables LLC,
5.33%, 09/16/2013............................... 13,402
8,110 MBNA Credit Card Master Note Trust,
4.10%, 10/15/2012............................... 7,882
5,250 MBNA Credit Card Master Note Trust,
4.30%, 02/15/2011............................... 5,181
13,950 MBNA Credit Card Master Note Trust,
4.50%, 01/15/2013 (G)........................... 13,712
66,175 Merrill Lynch Mortgage Trust,
3.96%, 09/12/2041 (I)(P)........................ 2,067
1,834 Merrill Lynch Mortgage Trust,
4.56%, 06/12/2043............................... 1,795
247,621 Merrill Lynch Mortgage Trust,
4.57%, 06/12/2043 (P)........................... 6,574
14,725 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
5.46%, 07/12/2046 (L)........................... 14,775
9,920 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
6.10%, 06/12/2046 (L)........................... 10,367
2,280 Morgan Stanley Auto Loan Trust,
5.00%, 03/15/2012 (I)........................... 2,274
2,751 Morgan Stanley Capital I,
7.49%, 04/30/2039 (I)(L)........................ 2,752
73,119 Morgan Stanley Dean Witter Capital I,
0.0001%, 08/25/2032 (D)(H)(A)................... --
31,501 Morgan Stanley Dean Witter Capital I,
8.05%, 08/25/2032 (H)(P)........................ 274
7,100 Navistar Financial Corp. Owner Trust,
3.53%, 10/15/2012............................... 6,895
3,775 Popular ABS Mortgage Pass-Through Trust,
4.75%, 12/25/2034............................... 3,629
3,180 Popular ABS Mortgage Pass-Through Trust,
5.42%, 04/25/2035............................... 3,121
6,625 Providian Gateway Master Trust,
3.35%, 09/15/2011 (I)........................... 6,530
7,360 Providian Gateway Master Trust,
5.90%, 03/15/2015 (L)........................... 7,360
4,670 Renaissance Home Equity Loan Trust,
5.36%, 05/25/2035............................... 4,594
6,480 Renaissance Home Equity Loan Trust,
5.75%, 05/25/2036 (L)........................... 6,549
3,250 Residential Asset Mortgage Products, Inc.,
4.98%, 08/25/2034............................... 3,202
9,700 Wachovia Auto Loan Owner Trust,
5.15%, 07/20/2012 (I)........................... 9,690
9,970 Wachovia Auto Loan Owner Trust,
5.29%, 06/20/2012 (I)........................... 10,003
59,751 Wachovia Bank Commercial Mortgage Trust,
3.65%, 02/15/2041 (I)(P)........................ 1,691
</Table>
The accompanying notes are an integral part of these financial statements.
146
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 247,163 Wachovia Bank Commercial Mortgage Trust,
4.48%, 05/15/2044 (I)(P)........................ $ 6,357
1,835 Wachovia Bank Commercial Mortgage Trust,
4.52%, 05/15/2044............................... 1,793
8,050 Wachovia Bank Commercial Mortgage Trust,
4.72%, 01/15/2041............................... 7,897
15,000 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045 (L)........................... 15,069
19,430 Wachovia Bank Commercial Mortgage Trust,
5.77%, 07/15/2045 (L)........................... 19,999
14,725 Wachovia Bank Commercial Mortgage Trust,
5.96%, 05/15/2043 (L)........................... 15,221
----------
706,582
----------
TRANSPORTATION -- 0.3%
4,915 Continental Airlines, Inc.,
6.70%, 06/15/2021 #............................. 5,063
4,750 Continental Airlines, Inc.,
8.05%, 11/01/2020 #............................. 5,284
----------
10,347
----------
Total asset & commercial
mortgage backed securities
(cost $719,434)................................. $ 716,929
----------
CORPORATE BONDS: INVESTMENT GRADE -- 23.6%
BASIC MATERIALS -- 1.0%
2,425 Fortune Brands, Inc.,
5.13%, 01/15/2011 (G)........................... $ 2,380
7,995 Teck Cominco Ltd.,
5.38%, 10/01/2015 #............................. 7,744
6,180 Teck Cominco Ltd.,
6.13%, 10/01/2035 #............................. 5,938
5,855 Vale Overseas Limited,
6.88%, 11/21/2036............................... 6,005
4,975 Westvaco Corp.,
7.95%, 02/15/2031 #............................. 5,447
11,394 Xstrata Finance Canada,
5.80%, 11/15/2016 (I)........................... 11,361
----------
38,875
----------
CAPITAL GOODS -- 0.3%
9,771 Xerox Corp.,
6.75%, 02/01/2017 #............................. 10,211
----------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- 1.0%
$ 11,371 D.R. Horton Inc.,
6.50%, 04/15/2016 (G)........................... $ 11,440
5,890 Energy Transfer Partners L.P.,
6.13%, 02/15/2017............................... 5,972
4,150 Foster's Finance Corp.,
4.88%, 10/01/2014 (I)#.......................... 3,891
19,060 Home Depot, Inc.,
5.25%, 12/16/2013............................... 18,918
----------
40,221
----------
CONSUMER STAPLES -- 0.5%
11,414 Diageo Finance B.V.,
5.50%, 04/01/2013 (G)........................... 11,392
9,025 SABMiller plc,
6.20%, 07/01/2011 (I)#.......................... 9,237
----------
20,629
----------
ENERGY -- 2.1%
9,085 Amerada Hess Corp.,
7.13%, 03/15/2033 #............................. 9,940
10,515 Anadarko Petroleum Corp.,
5.95%, 09/15/2016............................... 10,537
4,000 Consumers Energy Co.,
5.15%, 02/15/2017 #............................. 3,801
5,190 Consumers Energy Co.,
5.38%, 04/15/2013 #............................. 5,140
6,935 Enterprise Products Operating L.P.,
4.63%, 10/15/2009 #............................. 6,790
5,935 Gazprom Capital SA,
6.21%, 11/22/2016 (I)........................... 5,977
220 Husky Oil Co.,
8.90%, 08/15/2028 #............................. 230
5,795 Nexen, Inc.,
7.88%, 03/15/2032 #............................. 6,894
7,960 Petro-Canada,
5.95%, 05/15/2035 #............................. 7,548
2,725 Ras Laffan Liquefied Natural Gas Co., Ltd.,
3.44%, 09/15/2009 (I)#.......................... 2,655
16,410 Ras Laffan Liquefied Natural Gas Co., Ltd.,
5.30%, 09/30/2020 (I)#.......................... 15,722
3,435 Smepra Energy,
6.00%, 02/01/2013 #............................. 3,503
7,195 TNK-BP Finance S.A.,
7.50%, 07/18/2016 (I)#.......................... 7,654
----------
86,391
----------
FINANCE -- 11.7%
5,983 ABX Financing Co.,
6.35%, 10/15/2036 (I)#.......................... 5,954
6,930 Aegon Funding Corp.,
5.75%, 12/15/2020 #............................. 7,004
7,300 AES El Salvador Trust,
6.75%, 02/01/2016 (I)#.......................... 7,261
13,161 Aetna, Inc.,
5.75%, 06/15/2011 (G)........................... 13,361
</Table>
The accompanying notes are an integral part of these financial statements.
147
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 8,785 Aetna, Inc.,
6.63%, 06/15/2036 #............................. $ 9,394
28,464 American Express Credit Corp.,
6.80%, 09/01/2066 (G)........................... 30,352
75 Americo Life, Inc.,
7.88%, 05/01/2013 (I)#.......................... 75
18,030 Amvescap plc,
4.50%, 12/15/2009 #............................. 17,577
3,544 Amvescap plc,
5.38%, 02/27/2013 #............................. 3,507
5,370 Army Hawaii Family Housing Trust Certificates,
5.52%, 06/15/2050 (I)#.......................... 5,247
18,341 AXA S.A.,
6.46%, 12/14/2049 (I)(L)........................ 18,109
9,550 BAC Capital Trust XI,
6.63%, 05/23/2036 #............................. 10,306
9,535 BAE Systems Holdings, Inc.,
5.20%, 08/15/2015 (I)#.......................... 9,082
200 Bank of New York Institutional Capital Trust,
7.78%, 12/01/2026 (I)#.......................... 208
250 Centura Capital Trust I,
8.85%, 06/01/2027 (H)#.......................... 264
6,300 Credit Suisse First Boston USA, Inc.,
6.50%, 01/15/2012 #............................. 6,621
15,675 Duke Reality L.P.,
5.95%, 02/15/2017............................... 15,902
7,300 ERAC USA Finance Co.,
5.60%, 05/01/2015 (I)#.......................... 7,246
8,170 ERP Operating L.P.,
6.58%, 04/13/2015 #............................. 8,719
16,049 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 16,026
17,925 Goldman Sachs Group, Inc.,
5.95%, 01/15/2027............................... 17,712
9,530 HSBC Holding plc,
6.50%, 05/02/2036 #............................. 10,252
11,875 iStar Financial, Inc.,
5.95%, 10/15/2013 (I)........................... 11,935
16,135 JP Morgan Chase Capital XX,
6.55%, 09/29/2036 #............................. 16,661
3,785 Kazkommerts International B.V.,
8.00%, 11/03/2015 (I)(G)........................ 3,936
8,597 Lehman Brothers Holdings, Inc.,
5.50%, 04/04/2016 (G)........................... 8,596
9,160 Liberty Mutual Group,
7.50%, 08/15/2036 #............................. 10,022
12,600 Merrill Lynch & Co., Inc.,
6.05%, 05/16/2016 (G)........................... 13,042
6,575 Merrill Lynch & Co., Inc.,
6.22%, 09/15/2026............................... 6,775
28,674 Metlife, Inc.,
6.40%, 12/15/2036............................... 28,806
</Table>
<Table>
<Caption>
PRINCIPAL Market
AMOUNT (B) Value (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 10,500 MUFG Capital Finance I Ltd.,
6.35%, 07/25/2049 (L)#.......................... $ 10,656
3,900 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)........................ 3,354
8,700 PNC Preferred Funding Trust,
6.52%, 12/29/2049 (I)(G)........................ 8,851
6,988 Principal Financial Group,
6.05%, 10/15/2036............................... 7,153
200 Prudential Holdings LLC,
7.25%, 12/18/2023 (I)#.......................... 231
96 Regional Diversified Funding,
9.25%, 03/15/2030 (I)#.......................... 110
10,700 Simon Property Group, Inc.,
7.88%, 03/15/2016 (I)#.......................... 12,438
16,392 SMFG Preferred Capital,
6.08%, 12/01/2049 (I)(L)........................ 16,217
6,800 St. Paul Travelers Cos., Inc.,
8.13%, 04/15/2010 #............................. 7,376
15,422 Standard Chartered plc,
6.41%, 01/30/2049 (I)(L)........................ 15,300
16,713 Suntrust Capital VIII,
6.10%, 12/01/2066............................... 16,257
3,740 Suntrust Preferred Capital,
5.85%, 12/29/2049 (L)........................... 3,769
2,882 Travelers Property Casualty Corp.,
5.00%, 03/15/2013 #............................. 2,813
6,260 TuranAlem Finance B.V.,
8.50%, 02/10/2015............................... 6,442
13,200 US Bank Realty Corp.,
6.09%, 12/22/2049 (I)(L)........................ 13,707
6,930 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045............................... 6,965
5,862 WellPoint, Inc.,
5.85%, 01/15/2036 (G)........................... 5,695
4,700 WellPoint, Inc.,
6.80%, 08/01/2012 #............................. 4,985
7,913 Wells Fargo Capital X,
5.95%, 12/15/2036............................... 7,755
9,076 Westfield Group,
5.70%, 10/01/2016 (I)........................... 9,110
----------
479,136
----------
FOREIGN GOVERNMENTS -- 0.2%
CAD 200 Canadian Government,
7.25%, 06/01/2007............................... 174
CAD 200 Canadian Government,
9.00%, 03/01/2011............................... 204
3,370 El Salvador (Republic of),
8.25%, 04/10/2032 (I)#.......................... 4,052
AUD 300 Italy,
5.88%, 08/14/2008............................... 234
3,614 United Mexican States,
5.63%, 01/15/2017 #............................. 3,618
----------
8,282
----------
</Table>
The accompanying notes are an integral part of these financial statements.
148
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
HEALTH CARE -- 0.8%
$ 4,120 Baxter International, Inc.,
5.90%, 09/01/2016 #............................. $ 4,232
9,475 Cardinal Health, Inc.,
5.85%, 12/15/2017 #............................. 9,422
8,124 CVS Lease Pass Through,
6.04%, 12/10/2028 (I)........................... 8,090
12,365 Teva Pharmaceuticals Finance LLC,
6.15%, 02/01/2036............................... 12,014
----------
33,758
----------
SERVICES -- 2.0%
100 Comcast Corp.,
10.63%, 07/15/2012.............................. 121
10,240 Cox Communications, Inc.,
5.45%, 12/15/2014 (G)........................... 9,976
7,758 Cox Communications, Inc.,
5.88%, 12/01/2016 (I)........................... 7,703
4,970 Cox Communications, Inc.,
6.45%, 12/01/2036 (I)(G)........................ 4,892
2,350 Electronic Data Systems Corp.,
3.88%, 07/15/2023 #............................. 2,494
3,800 FedEx Corp.,
3.50%, 04/01/2009 #............................. 3,650
9,625 Marriott International, Inc.,
6.20%, 06/15/2016 #............................. 9,707
4,709 Mashantucket Western Pequot Revenue Bond,
5.91%, 09/01/2021 (I)#.......................... 4,503
15,075 Time Warner Entertainment Co. L.P.,
8.38%, 07/15/2033 (G)........................... 18,219
5,120 Time Warner, Inc.,
6.50%, 11/15/2036............................... 5,096
15,640 Viacom, Inc.,
6.88%, 04/30/2036............................... 15,463
----------
81,824
----------
TECHNOLOGY -- 2.0%
7,672 AT&T Corp.,
8.00%, 11/15/2031 #............................. 9,518
12,600 Cingular Wireless Services, Inc.,
8.75%, 03/01/2031 #............................. 16,375
500 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027 #............................. 614
165 GTE Corp.,
8.75%, 11/01/2021 (G)........................... 201
10,222 Siemens Finance,
6.13%, 08/17/2026 (I)........................... 10,445
11,130 Sprint Capital Corp.,
8.75%, 03/15/2032............................... 13,396
4,025 TCI Communications, Inc.,
8.75%, 08/01/2015 #............................. 4,761
7,975 Tele-Communications, Inc.,
7.88%, 08/01/2013 #............................. 8,868
14,925 Telefonica Emisiones SAU,
6.42%, 06/20/2016 #............................. 15,397
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
TECHNOLOGY -- (CONTINUED)
$ 1,500 Verizon Maryland, Inc.,
8.30%, 08/01/2031 #............................. $ 1,758
125 Verizon Virginia, Inc.,
4.63%, 03/15/2013 (G)........................... 117
----------
81,450
----------
TRANSPORTATION -- 0.5%
5,696 American Airlines, Inc.,
7.86%, 10/01/2011 #............................. 6,223
10,875 CSX Corp.,
6.75%, 03/15/2011 #............................. 11,419
325 Roadway Corp.,
8.25%, 12/01/2008 #............................. 336
4,025 Royal Caribbean Cruises Ltd.,
7.50%, 10/15/2027 (G)........................... 3,944
----------
21,922
----------
UTILITIES -- 1.5%
6,550 Carolina Power & Light Co.,
5.25%, 12/15/2015 #............................. 6,441
7,475 Centerpoint Energy, Inc.,
6.85%, 06/01/2015 (G)........................... 7,910
3,875 Detroit Edison Co.,
6.13%, 10/01/2010 #............................. 3,961
9,251 Kinder Morgan Finance Co.,
5.70%, 01/05/2016 #............................. 8,488
5,735 Northern States Power Co.,
6.25%, 06/01/2036 #............................. 6,109
10,938 Oneok Partners L.P.,
6.65%, 10/01/2036............................... 11,188
6,130 Peco Energy Corp.,
5.95%, 10/01/2036............................... 6,228
3,190 Puget Sound Energy, Inc.,
7.96%, 02/22/2010 #............................. 3,416
4,150 Texas-New Mexico Power Co.,
6.13%, 06/01/2008 #............................. 4,162
1,400 Westar Energy, Inc.,
5.15%, 01/01/2017 #............................. 1,330
----------
59,233
----------
Total corporate bonds: investment grade
(cost $956,513)................................. $ 961,932
----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 10.4%
BASIC MATERIALS -- 1.5%
8,590 Boise Cascade LLC,
7.13%, 10/15/2014 #............................. $ 8,311
9,503 Equistar Chemicals L.P.,
8.75%, 02/15/2009 (G)........................... 9,954
3,770 Evraz Group S.A.,
8.25%, 11/10/2015 (I)........................... 3,878
3,865 Goodyear Tire & Rubber Co.,
9.14%, 12/01/2009 (I)(L)(G)..................... 3,879
8,275 Goodyear Tire & Rubber Co.,
11.25%, 03/01/2011 #............................ 9,144
12,100 Potlatch Corp.,
13.00%, 12/01/2009 (L)#......................... 13,952
</Table>
The accompanying notes are an integral part of these financial statements.
149
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
BASIC MATERIALS -- (CONTINUED)
$ 4,856 Vedanta Resources plc,
6.63%, 02/22/2010 (I)#.......................... $ 4,795
5,765 Verso Paper Holdings LLC,
11.38%, 08/01/2016 (I)#......................... 6,053
----------
59,966
----------
CAPITAL GOODS -- 0.6%
8,650 Bombardier, Inc.,
6.30%, 05/01/2014 (I)........................... 8,131
7,870 Case Corp.,
7.25%, 01/15/2016............................... 7,968
6,102 L-3 Communications Corp.,
3.00%, 08/01/2035 (G)........................... 6,407
----------
22,506
----------
CONSUMER CYCLICAL -- 1.7%
9,650 ArvinMeritor, Inc.,
8.75%, 03/01/2012 (G)........................... 9,915
10,345 General Motors Corp.,
6.38%, 05/01/2008 (G)........................... 10,293
5,765 K. Hovnanian Enterprises,
6.00%, 01/15/2010 #............................. 5,520
10,110 Mosaic Co.,
7.38%, 12/01/2014 (I)(G)........................ 10,375
4,891 Neiman Marcus Group, Inc.,
10.38%, 10/15/2015 (G).......................... 5,441
6,985 Supervalu, Inc.,
7.50%, 11/15/2014............................... 7,283
11,500 Technical Olympic USA, Inc.,
8.25%, 04/01/2011 (I)(G)........................ 11,213
9,695 Tenneco, Inc.,
8.63%, 11/15/2014 (G)........................... 9,889
----------
69,929
----------
CONSUMER STAPLES -- 0.2%
4,585 Dole Food Co., Inc.,
8.63%, 05/01/2009 #............................. 4,556
4,235 OJSC Myronivsky Hliboproduct,
10.25%, 11/30/2011 (I)(G)....................... 4,325
----------
8,881
----------
ENERGY -- 0.1%
3,876 Chesapeake Energy Corp.,
2.75%, 11/15/2035............................... 3,920
----------
FINANCE -- 1.6%
4,395 American Real Estate Partners L.P.,
7.13%, 02/15/2013 #............................. 4,417
8,070 Avis Budget Car Rental,
7.87%, 05/15/2014 (I)(L)........................ 7,788
2,680 Drummond Co., Inc.,
7.38%, 02/15/2016 (I)(G)........................ 2,626
12,040 Ford Motor Credit Co.,
7.38%, 02/01/2011 (G)........................... 11,919
</Table>
<Table>
<Caption>
PRINCIPAL Market
AMOUNT (B) Value (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 12,715 Ford Motor Credit Co.,
9.82%, 04/15/2012 (L)#.......................... $ 13,475
23,935 General Motors Acceptance Corp.,
6.88%, 09/15/2011 #............................. 24,550
----------
64,775
----------
FOREIGN GOVERNMENTS -- 0.3%
4,235 Argentina (Republic of),
7.00%, 09/12/2013............................... 4,069
BRL 8,820 Brazil (Republic of),
12.50%, 01/05/2022.............................. 4,717
3,970 Turkey (Republic of),
7.00%, 09/26/2016............................... 4,035
----------
12,821
----------
HEALTH CARE -- 0.5%
2,825 Biovail Corp.,
7.88%, 04/01/2010............................... 2,885
10,210 HCA , Inc.,
7.88%, 02/01/2011............................... 10,236
5,565 HCA, Inc.,
9.25%, 11/15/2016 (I)........................... 5,962
----------
19,083
----------
SERVICES -- 0.9%
2,220 CSC Holdings, Inc.,
8.13%, 08/15/2009............................... 2,300
18,300 Dex Media West LLC,
9.88%, 08/15/2013 #............................. 19,947
7,910 Echostar DBS Corp.,
6.38%, 10/01/2011............................... 7,861
8,170 SunGard Data Systems, Inc.,
9.13%, 08/15/2013............................... 8,579
----------
38,687
----------
TECHNOLOGY -- 2.8%
6,480 Advanced Micro Devices, Inc.,
7.75%, 11/01/2012 #............................. 6,723
9,170 Citizens Communications Co.,
9.00%, 08/15/2031 #............................. 9,949
6,835 CSC Holdings, Inc.,
8.13%, 07/15/2009............................... 7,083
5,325 Dobson Cellular Systems,
8.38%, 11/01/2011 (I)#.......................... 5,611
8,325 Freescale Semiconductor, Inc.,
10.13%, 12/15/2016 (I)(G)....................... 8,335
8,670 Intelsat Bermuda Ltd.,
9.25%, 06/15/2016 (I)#.......................... 9,320
4,335 Level 3 Financing, Inc.,
9.25%, 11/01/2014 (I)........................... 4,422
9,695 Nortel Networks Ltd.,
9.62%, 07/15/2011 (I)(L)#....................... 10,216
5,150 NXP B.V.,
8.12%, 10/15/2013 (I)(L)........................ 5,227
10,305 Panamsat Corp.,
9.00%, 06/15/2016 (I)#.......................... 10,910
</Table>
The accompanying notes are an integral part of these financial statements.
150
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 9,440 Qwest Communications International, Inc.,
7.50%, 02/15/2014 #............................. $ 9,723
2,980 Qwest Corp.,
7.88%, 09/01/2011 #............................. 3,174
7,450 Seagate Technology Holdings,
6.80%, 10/01/2016............................... 7,487
3,815 Vimpel Communications,
8.25%, 05/23/2016 (I)........................... 4,006
9,220 Windstream Corp.,
8.63%, 08/01/2016 (I)#.......................... 10,096
----------
112,282
----------
UTILITIES -- 0.2%
9,645 NRG Energy, Inc.,
7.38%, 02/01/2016 #............................. 9,693
----------
Total corporate bonds: non-investment grade
(cost $410,740)................................. $ 422,543
----------
U.S. GOVERNMENT SECURITIES -- 5.6%
OTHER DIRECT FEDERAL OBLIGATIONS -- 0.3%
2,350 Federal Home Loan Bank,
6.05%, 02/20/2007 (L)........................... $ 2,345
46,200 Tennessee Valley Authority,
4.75%, 11/01/2025 (N)........................... 11,891
----------
14,236
----------
U.S. TREASURY SECURITIES -- 5.3%
104,841 4.50% 2011 -- 2036 (G)............................ 103,559
53,477 4.625% 2016 (G)................................... 53,126
5,935 4.875% 2009 (G)................................... 5,953
53,060 5.00% 2008 (G).................................... 53,147
----------
215,785
----------
Total U.S. government securities
(cost $232,195)................................. $ 230,021
----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- 5.2%
BASIC MATERIALS -- 0.6%
6,085 Compass Minerals Group, Inc.,
6.88%, 12/22/2012 #............................. $ 6,088
12,238 Georgia-Pacific Corp.,
7.35%, 02/14/2013 #............................. 12,290
7,082 Huntsman International, Inc.,
7.10%, 08/16/2012 #............................. 7,084
----------
25,462
----------
CONSUMER CYCLICAL -- 0.7%
19,965 Ford Motor Co.,
8.36%, 12/12/2013 (Q)#.......................... 19,999
3,282 Invista B.V.,
6.88%, 04/30/2010 #............................. 3,276
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
$ 4,923 Supervalu, Inc.,
7.10%, 05/30/2013 #............................. $ 4,933
2,167 William Carter Co.,
6.87%, 07/14/2012 #............................. 2,163
----------
30,371
----------
FINANCE -- 0.9%
11,607 Ameritrade Holding Corp.,
6.85%, 12/31/2011 #............................. 11,599
11,871 General Growth Properties,
6.60%, 02/24/2010............................... 11,802
11,413 Nasdaq Stock Market, Inc.,
7.10%, 05/22/2012 #............................. 11,408
----------
34,809
----------
HEALTH CARE -- 0.7%
7,281 Community Health Systems,
7.07%, 08/19/2011 #............................. 7,273
2,300 DJ Orthopedics LLC,
6.88%, 04/07/2013 (Q)#.......................... 2,294
11,878 Fresenius Medical Care AG,
6.74%, 03/23/2012 #............................. 11,797
8,742 Lifepoint Hospitals, Inc.,
6.98%, 04/15/2012 #............................. 8,709
----------
30,073
----------
SERVICES -- 1.4%
4,567 Allied Waste,
7.08%, 01/15/2012 #............................. 4,576
10,298 Allied Waste,
7.16%, 01/15/2012 #............................. 10,315
3,189 Gray Television, Inc.,
6.87%, 11/22/2012 #............................. 3,181
2,473 Gray Television, Inc.,
6.88%, 05/22/2013 #............................. 2,469
13,573 MGM Mirage, Inc.,
6.53%, 10/03/2011 #............................. 13,360
12,720 Regal Cinemas, Inc.,
7.12%, 11/10/2010 #............................. 12,684
4,319 UPC Financing Partnership,
7.64%, 03/31/2013 #............................. 4,323
4,319 UPC Financing Partnership,
7.64%, 12/31/2013 #............................. 4,322
----------
55,230
----------
TECHNOLOGY -- 0.7%
3,282 Cincinnati Bell, Inc.,
6.93%, 08/31/2012 #............................. 3,275
9,872 Idearc, Inc.,
7.35%, 11/17/2014 #............................. 9,923
3,496 Mediacom Broadband,
7.17%, 01/31/2015 #............................. 3,477
</Table>
The accompanying notes are an integral part of these financial statements.
151
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 10,237 Mediacom Broadband,
7.37%, 01/31/2015............................... $ 10,173
2,057 Mediacom LLC,
7.17%, 01/31/2015 #............................. 2,051
----------
28,899
----------
UTILITIES -- 0.2%
4,496 Mirant North America LLC,
7.10%, 01/03/2013 #............................. 4,486
2,912 NRG Energy, Inc.,
7.36%, 01/27/2013 #............................. 2,928
1,621 Pike Electric, Inc.,
6.88%, 07/01/2012 #............................. 1,618
----------
9,032
----------
Total senior floating rate interests:
non-investment grade
(cost $214,000)................................. $ 213,876
----------
U.S. GOVERNMENT AGENCIES -- 31.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 9.6%
21,000 4.10% 2014 #...................................... $ 20,462
69,128 4.50% 2018........................................ 66,785
47,165 5.00% 2034........................................ 44,921
16,826 5.04% 2035 (L)#................................... 16,671
9,057 5.33% 2036 #...................................... 9,041
4,704 5.45% 2036 (L)#................................... 4,706
72,230 5.49% 2036 (L)#................................... 71,813
19,583 5.50% 2018 -- 2034................................ 19,389
133,425 6.00% 2017 -- 2037 (Q)#........................... 134,501
7 6.50% 2031 -- 2032................................ 7
11 7.50% 2029 -- 2031................................ 11
----------
388,307
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 16.0%
250 3.20% 2009 (L).................................... 244
4,169 4.69% 2034 (L).................................... 4,097
10,245 4.72% 2035 (L).................................... 10,058
4,934 4.73% 2035 (L).................................... 4,855
12,842 4.79% 2035 (L).................................... 12,624
28,554 4.82% 2036 (L).................................... 28,375
30,400 4.875% 2008 (G)................................... 30,297
6,184 4.88% 2035 (L).................................... 6,121
4,420 4.91% 2035 (L).................................... 4,347
11,083 4.93% 2035 (L).................................... 10,909
206,694 5.00% 2018 -- 2037 (Q)............................ 201,893
7,179 5.09% 2035 (L).................................... 7,121
30,525 5.21% 2009........................................ 30,489
112,111 5.50% 2013 -- 2034 (Q)#........................... 111,320
11,546 5.51% 2036 (L).................................... 11,560
164,173 6.00% 2012 -- 2037 (Q)............................ 165,371
11,164 6.50% 2014 -- 2037 (Q)............................ 11,391
43 7.00% 2016 -- 2032................................ 43
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
$ 1,378 7.50% 2015 -- 2032................................ $ 1,435
2 8.00% 2032........................................ 2
----------
652,552
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 3.7%
30,870 5.50% 2033 -- 2034................................ 30,704
96,173 6.00% 2031 -- 2037 (Q)............................ 97,458
23,838 6.50% 2028 -- 2032................................ 24,498
81 7.00% 2030 -- 2031................................ 83
15 8.50% 2024........................................ 16
----------
152,759
----------
SMALL BUSINESS ADMINISTRATION -- 2.5%
6,197 5.12% 2026........................................ 6,128
12,839 5.36% 2026........................................ 12,890
9,604 5.37% 2026........................................ 9,649
8,948 5.54% 2026........................................ 9,073
9,938 5.57% 2026........................................ 10,094
9,782 5.64% 2026........................................ 9,993
10,627 5.70% 2026........................................ 10,865
8,532 5.82% 2026........................................ 8,776
8,670 5.87% 2026........................................ 8,938
7,722 6.07% 2026........................................ 8,039
8,861 6.14% 2022........................................ 9,139
----------
103,584
----------
Total U.S. government agencies
(cost $1,308,692)............................... $1,297,202
----------
<Caption>
SHARES
- ---------
COMMON STOCK -- 0.0%
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. (D)(H).......................... $ --
----------
Total common stock
(cost $--)...................................... $ --
----------
WARRANTS -- 0.0%
TECHNOLOGY -- 0.0%
-- Ntelos, Inc. (D)(H)(A)............................ $ --
----------
Total warrants
(cost $1)....................................... $ --
----------
Total long-term investments
(cost $3,849,180)............................... $3,849,436
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 20.8%
BASIC MATERIALS -- 0.4%
$ 15,000 Valspar Corp.,
5.38%, 01/16/2007............................... $ 14,964
----------
CONSUMER STAPLES -- 1.0%
40,000 Cargill, Inc.,
5.28%, 01/12/2007............................... 39,930
----------
</Table>
The accompanying notes are an integral part of these financial statements.
152
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
ENERGY -- 0.2%
$ 10,000 Weatherford International Ltd.,
5.33%, 01/11/2007............................... $ 9,984
----------
FINANCE -- 2.4%
20,000 Countrywide Financial Corp.,
5.43%, 01/02/2007............................... 19,994
40,000 Skandinav Enskilda Bank,
5.28%, 01/10/2007............................... 39,941
40,000 UBS Finance LLC,
5.27%, 01/11/2007............................... 39,935
----------
99,870
----------
HEALTH CARE -- 0.7%
30,000 Abbot Laboratories,
5.27%, 01/09/2007............................... 29,962
----------
INVESTMENT POOLS AND FUNDS -- 0.1%
3,035 State Street Bank Money Market Fund............... 3,035
----------
REPURCHASE AGREEMENTS -- 7.6%
111,004 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
87,766 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 87,766
111,004 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
----------
309,774
----------
TECHNOLOGY -- 0.5%
20,000 Verizon Communications,
5.29%, 01/11/2007............................... 19,968
----------
U.S. TREASURY SECURITIES -- 0.1%
4,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 3,962
----------
UTILITIES -- 0.4%
15,000 Dominion Resources, Inc.,
5.36%, 01/12/2007............................... 14,973
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 7.4%
302,916 Navigator Prime Portfolio......................... $ 302,916
----------
Total short-term investments
(cost $849,337)................................. $ 849,338
----------
Total investments in securities
(cost $4,698,517) (C)........................... $4,698,774
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 7.51% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006 rounds to zero.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
AUD -- Australian Dollar
BRL -- Brazilian Real
CAD -- Canadian Dollar
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $4,699,199 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 32,358
Unrealized depreciation........................ (32,783)
--------
Net unrealized depreciation.................... $ (425)
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G)Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
5/2003 250 Centura Capital Trust I,
due 2027 -- 144A $ 272
4/2005 73,119 Morgan Stanley Dean
Witter Capital I, due
2032 --
10/2005 31,501 Morgan Stanley Dean
Witter Capital I, due
2032 329
7/2000 -- Ntelos, Inc. warrants 1
5/2006 -- XO Holdings, Inc. --
</Table>
The aggregate value of these securities at December 31, 2006 was
$538, which represents 0.01% of total net assets.
(I)Securities issued within terms of a private placement memoran-
dum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $495,984, which represents 12.15% of total net
assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M)The interest rate disclosed for these securities represents the effec-
tive yield on the date of acquisition.
(N)The interest rate disclosed for these securities represents the effec-
tive yield as of December 31, 2006.
The accompanying notes are an integral part of these financial statements.
153
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(P)The interest rate disclosed for interest only strips represents an
effective yield based upon estimated future cash flows at December 31,
2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $370,173.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 3,767 Long March 2007 $(1,058)
CBT 2 Year U.S. Treasury
Note 879 Long March 2007 (497)
CBT U.S. Treasury Long
Bond 1,061 Short March 2007 2,302
-------
$ 747
=======
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Euro Buy $41,003 $41,050 1/04/2007 $ (47)
Euro Sell 41,003 40,705 1/04/2007 (298)
Japanese Yen Buy 19,874 20,618 1/23/2007 (744)
Japanese Yen Sell 19,873 20,421 1/23/2007 548
-----
$(541)
=====
</Table>
CREDIT DEFAULT SWAP AGREEMENTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
PAY/ UNREALIZED
REFERENCE BUY/SELL RECEIVE EXPIRATION NOTIONAL APPRECIATION
COUNTERPARTY ENTITY PROTECTION FIXED RATE DATE AMOUNT (DEPRECIATION)
- ------------ --------- ---------- ---------- ---------- -------- --------------
Lehman Brothers Special Financing, Inc. GMAC LLC Sell 0.55% 3/20/2007 $16,500 $ --
Lehman Brothers Special Financing, Inc. HCA, Inc. Buy 2.70% 12/20/2010 10,400 95
Lehman Brothers Special Financing, Inc. HCA, Inc. Sell 3.50% 12/20/2011 10,400 (138)
-----
$ (43)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
154
HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 14.7%
FINANCE -- 14.7%
$ 1,500 American Express Credit Account Master Trust,
5.35%, 03/15/2011 (L)#............................ $ 1,497
6,000 Ansonia CDO Ltd.,
5.62%, 07/28/2046 (I)(L)#......................... 6,000
8,000 Arbor Realty Mortgage Securities,
5.76%, 01/26/2042 (I)(L)#......................... 8,000
9,000 Banc of America Commercial Mortgage, Inc.,
4.50%, 07/10/2043................................. 8,790
9,433 Banc of America Commercial Mortgage, Inc.,
5.00%, 10/10/2045................................. 9,357
230,526 Bear Stearns Commercial Mortgage Securities, Inc.,
4.65%, 02/11/2041 (P)............................. 2,574
2,500 Citigroup Commercial Mortgage Trust,
5.59%, 11/15/2036 (L)............................. 2,500
9,000 Commercial Mortgage Pass-Through Certificate,
5.00%, 06/10/2044................................. 8,945
4,997 Commercial Mortgage Pass-Through Certificate,
5.64%, 12/15/2020 (I)(L).......................... 4,997
2,299 Countrywide Alternative Loan Trust,
5.50%, 10/25/2035 (L)............................. 2,292
9,000 Countrywide Asset-Backed Certificates,
5.76%, 06/25/2035................................. 9,015
9,000 Countrywide Asset-Backed Certificates,
5.80%, 07/25/2034................................. 8,951
11,000 Credit Suisse Mortgage Capital Certificates,
6.15%, 09/15/2021 (L)#............................ 11,000
9,000 CS First Boston Mortgage Securities Corp.,
4.51%, 07/15/2037................................. 8,797
5,000 Discover Card Master Trust I,
5.57%, 01/15/2008 (L)............................. 5,013
9,000 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)............................. 8,968
8,000 Greenwich Capital Commercial Funding Corp.,
5.58%, 11/05/2021 (I)(L).......................... 8,000
4,400 LNR CDO, Ltd.,
5.70%, 05/28/2043 (I)(L).......................... 4,400
2,400 MBNA Credit Card Master Note Trust,
5.49%, 02/16/2010 (L)............................. 2,403
6,750 Merrill Lynch Floating Trust,
5.55%, 06/15/2022 (I)(L)#......................... 6,750
141,111 Merrill Lynch Mortgage Trust,
4.57%, 06/12/2043 (P)#............................ 3,746
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 6,907 Spirit Master Funding LLC,
5.76%, 03/20/2024 (I)#............................ $ 6,957
9,000 Wachovia Bank Commercial Mortgage Trust,
4.52%, 05/15/2044 #............................... 8,795
----------
Total asset & commercial mortgage backed
securities
(cost $148,897)................................. $ 147,747
----------
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
2,750 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)#......................... $ 2,365
----------
Total corporate bonds: investment grade
(cost $2,355)................................... $ 2,365
----------
U.S. GOVERNMENT SECURITIES -- 15.8%
OTHER DIRECT FEDERAL OBLIGATIONS -- 9.7%
FEDERAL HOME LOAN BANK
29,800 3.375% 2008 #..................................... $ 29,049
22,000 4.43% 2008 #...................................... 21,806
19,000 4.875% 2011 #..................................... 18,924
15,000 5.50% 2009........................................ 15,009
----------
84,788
----------
TENNESSEE VALLEY AUTHORITY
11,750 5.375% 2008....................................... 11,824
----------
96,612
----------
U.S. TREASURY SECURITIES -- 6.1%
U.S. TREASURY NOTES
10,000 2.00% 2016 (O).................................... 9,817
12,000 4.00% 2010 (G)#................................... 11,742
11,000 4.625% 2009 (G)#.................................. 10,966
14,780 4.875% 2009 -- 2011 (G)#.......................... 14,863
13,680 5.125% 2016....................................... 14,091
----------
61,479
----------
Total U.S. government securities
(cost $158,875)................................. $ 158,091
----------
U.S. GOVERNMENT AGENCIES -- 74.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 16.6%
MORTGAGE BACKED SECURITIES:
7,578 5.45% 2036 (L)#................................... $ 7,581
11,627 5.49% 2036 (L)#................................... 11,694
22,818 5.60% 2036 (L)#................................... 22,885
58,971 6.00% 2021 -- 2037 (Q)#........................... 59,411
4,380 6.50% 2028 -- 2032................................ 4,479
26 7.00% 2029 -- 2031 #.............................. 27
----------
106,077
----------
NOTES:
23,000 4.625% 2008....................................... 22,843
16,000 4.75% 2009 #...................................... 15,913
----------
38,756
----------
</Table>
The accompanying notes are an integral part of these financial statements.
155
HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
U.S. GOVERNMENT AGENCIES -- (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION -- (CONTINUED)
REMIC -- PAC'S:
$ 11,234 5.50% 2016........................................ $ 11,249
6,783 6.00% 2031........................................ 6,808
3,511 6.50% 2028........................................ 3,582
----------
21,639
----------
166,472
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 43.2%
MORTGAGE BACKED SECURITIES:
2,059 4.79% 2035 (L)#................................... 2,024
14,833 4.81% 2035 (L)#................................... 14,715
10,684 4.84% 2034 (L).................................... 10,632
1,353 4.88% 2035 (L).................................... 1,339
18,118 4.92% 2035........................................ 18,019
2,424 4.93% 2035 (L)#................................... 2,385
7,880 5.02% 2035 (L).................................... 7,844
10,573 5.10% 2035 (L)#................................... 10,516
8,359 5.14% 2035 (L)#................................... 8,325
8,812 5.22% 2035 (L).................................... 8,783
13,025 5.47% 2036 (L).................................... 13,043
111,292 5.50% 2015 -- 2037 (Q)............................ 110,482
59,746 6.00% 2013 -- 2037 (Q)#........................... 60,165
894 6.01% 2009........................................ 900
3,268 6.50% 2013 -- 2032 #.............................. 3,342
2,287 6.52% 2008........................................ 2,291
97 7.50% 2023........................................ 101
11 8.50% 2017........................................ 12
7 9.00% 2020 -- 2021................................ 8
9 9.75% 2020........................................ 10
----------
274,936
----------
NOTES:
75,000 5.55% 2009........................................ 75,051
45,000 6.00% 2016........................................ 45,569
----------
120,620
----------
REMIC -- PAC'S:
4,397 4.50% 2016........................................ 4,338
28,709 5.50% 2014 -- 2035................................ 28,484
4,155 6.50% 2029........................................ 4,280
----------
37,102
----------
432,658
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.0%
MORTGAGE BACKED SECURITIES:
9,738 5.00% 2034........................................ 9,438
6,029 6.00% 2033 -- 2034................................ 6,103
3,250 6.50% 2031........................................ 3,350
1,762 7.00% 2030 -- 2032................................ 1,820
170 7.50% 2027........................................ 178
3 9.50% 2020........................................ 4
----------
20,893
----------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
OTHER GOVERNMENT AGENCIES -- 12.3%
SMALL BUSINESS ADMINISTRATION PARTICIPATION
CERTIFICATES:
$ 4,428 4.95% 2025........................................ $ 4,333
6,382 5.12% 2026........................................ 6,311
9,140 5.31% 2022........................................ 9,188
9,577 5.35% 2026........................................ 9,621
9,676 5.36% 2026........................................ 9,714
7,238 5.37% 2026........................................ 7,272
4,272 5.52% 2024........................................ 4,328
7,309 5.54% 2026........................................ 7,411
8,856 5.57% 2026........................................ 8,995
8,717 5.64% 2026........................................ 8,904
8,227 5.70% 2026........................................ 8,411
4,499 5.76% 2021........................................ 4,587
4,964 5.78% 2021........................................ 5,064
8,981 5.82% 2026........................................ 9,238
10,670 5.87% 2026........................................ 11,000
8,130 6.07% 2026........................................ 8,464
----------
122,841
----------
Total U.S. government agencies
(cost $743,905)................................. $ 742,864
----------
Total long-term investments
(cost $1,054,032)............................... $1,051,067
----------
SHORT-TERM INVESTMENTS -- 14.5%
REPURCHASE AGREEMENTS -- 10.6%
38,206 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007................................. $ 38,206
30,208 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007................................. 30,208
38,207 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007................................. 38,207
----------
106,621
----------
U.S. GOVERNMENT SECURITIES -- 0.0%
400 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)#......................... 396
----------
107,017
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 3.9%
38,767 Navigator Prime Portfolio......................... $ 38,767
----------
Total short-term investments
(cost $145,784)................................. $ 145,784
----------
Total investments in securities
(cost $1,199,816) (C)........................... $1,196,851
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
The accompanying notes are an integral part of these financial statements.
156
- --------------------------------------------------------------------------------
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,200,044 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 3,438
Unrealized depreciation......................... (6,631)
-------
Net unrealized depreciation..................... $(3,193)
=======
</Table>
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $47,469, which represents 4.73% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(O)U.S. Treasury inflation-protection securities (TIPS) are securities
in which the principal amount is adjusted for inflation and the semiannual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
(P) The interest rate disclosed for interest only strips represents an
effective yield based upon estimated future cash flows at December 31,
2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $163,522.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note futures contracts 749 Long March 2007 $(728)
=====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
157
HARTFORD VALUE HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 97.1%
BASIC MATERIALS -- 4.6%
85 Alcoa, Inc. ...................................... $ 2,536
117 Cameco Corp. ..................................... 4,737
91 Dow Chemical Co. ................................. 3,627
111 E.I. DuPont de Nemours & Co. ..................... 5,397
50 Kimberly-Clark Corp. ............................. 3,364
--------
19,661
--------
CAPITAL GOODS -- 6.7%
96 American Standard Cos., Inc. ..................... 4,392
159 Applied Materials, Inc. .......................... 2,935
54 Deere & Co. ...................................... 5,124
94 Goodrich Corp. ................................... 4,277
68 National Oilwell Varco, Inc. (D).................. 4,148
82 Pitney Bowes, Inc. ............................... 3,774
44 Textron, Inc. .................................... 4,107
--------
28,757
--------
CONSUMER CYCLICAL -- 6.1%
78 Altria Group, Inc. ............................... 6,703
52 D.R. Horton, Inc. ................................ 1,364
85 Federated Department Stores, Inc. ................ 3,226
205 Gap, Inc. ........................................ 3,988
98 McDonald's Corp. ................................. 4,362
169 Safeway, Inc. (G)................................. 5,827
15 Supervalu, Inc. .................................. 526
--------
25,996
--------
CONSUMER STAPLES -- 5.7%
94 Campbell Soup Co. (G)............................. 3,640
112 Kellogg Co. ...................................... 5,612
153 PepsiCo, Inc. .................................... 9,545
332 Tyson Foods, Inc. Class A......................... 5,461
--------
24,258
--------
ENERGY -- 9.6%
60 Chevron Corp. .................................... 4,441
247 ExxonMobil Corp. ................................. 18,905
72 GlobalSantaFe Corp. (G)........................... 4,220
130 Halliburton Co. .................................. 4,033
189 Occidental Petroleum Corp. ....................... 9,234
--------
40,833
--------
FINANCE -- 30.4%
65 ACE Ltd. ......................................... 3,937
90 Aetna, Inc. ...................................... 3,886
117 Allstate Corp. ................................... 7,605
90 American International Group, Inc. ............... 6,421
314 Bank of America Corp. ............................ 16,786
117 Bank of New York Co., Inc. ....................... 4,591
116 Chubb Corp. ...................................... 6,116
316 Citigroup, Inc. .................................. 17,584
48 Goldman Sachs Group, Inc. ........................ 9,649
302 Host Hotels & Resorts, Inc. ...................... 7,421
116 JP Morgan Chase & Co. ............................ 5,581
23 Merrill Lynch & Co., Inc. ........................ 2,104
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
52 PNC Financial Services Group, Inc. (G)............ $ 3,865
126 State Street Corp. ............................... 8,511
42 SunTrust Banks, Inc. ............................. 3,564
78 UBS AG............................................ 4,718
119 US Bancorp........................................ 4,317
89 Wachovia Corp. ................................... 5,040
48 Wellpoint, Inc. (D)............................... 3,746
118 Wells Fargo & Co. ................................ 4,203
--------
129,645
--------
HEALTH CARE -- 7.4%
81 Abbott Laboratories............................... 3,941
126 Baxter International, Inc. ....................... 5,850
204 Boston Scientific Corp. (D)....................... 3,499
66 Bristol-Myers Squibb Co. ......................... 1,729
279 CVS Corp. ........................................ 8,624
152 Wyeth............................................. 7,735
--------
31,378
--------
SERVICES -- 2.7%
69 Comcast Corp. Class A (D)......................... 2,929
766 Sun Microsystems, Inc. (D)........................ 4,154
212 Time Warner, Inc. ................................ 4,622
--------
11,705
--------
TECHNOLOGY -- 16.0%
221 AT&T, Inc. (G).................................... 7,901
60 Beckman Coulter, Inc. ............................ 3,576
198 BellSouth Corp. .................................. 9,309
168 Cisco Systems, Inc. (D)........................... 4,602
212 Corning, Inc. (D)................................. 3,972
446 EMC Corp. (D)..................................... 5,887
312 General Electric Co. ............................. 11,595
110 Hewlett-Packard Co. .............................. 4,531
191 Motorola, Inc. ................................... 3,933
145 Sprint Nextel Corp. .............................. 2,737
278 Verizon Communications, Inc. ..................... 10,345
--------
68,388
--------
TRANSPORTATION -- 3.1%
129 General Dynamics Corp. ........................... 9,561
227 Southwest Airlines Co. ........................... 3,472
--------
13,033
--------
UTILITIES -- 4.8%
65 Dominion Resources, Inc. ......................... 5,408
22 Entergy Corp. .................................... 1,985
90 Exelon Corp. ..................................... 5,595
72 FPL Group, Inc. .................................. 3,896
77 SCANA Corp. ...................................... 3,115
--------
19,999
--------
Total common stock
(cost $332,169)................................. $413,653
--------
</Table>
The accompanying notes are an integral part of these financial statements.
158
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE W
- --------- ---------
SHORT-TERM INVESTMENTS -- 6.6%
REPURCHASE AGREEMENTS -- 2.6%
$ 2,589 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,589
3,569 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 3,569
39 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 39
2,234 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 2,234
763 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 763
2,234 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 2,234
--------
11,428
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.0%
16,869 BNY Institutional Cash Reserve Fund............... $ 16,869
--------
Total short-term investments
(cost $28,297).................................. $ 28,297
--------
Total investments in securities
(cost $360,466) (C)............................. $441,950
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 2.22% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $361,217 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $82,740
Unrealized depreciation......................... (2,007)
-------
Net unrealized appreciation..................... $80,733
=======
</Table>
(D)Currently non-income producing.
(G)Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
159
HARTFORD VALUE OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 9.0%
459 Alcoa, Inc. ...................................... $ 13,769
183 Arch Coal, Inc. (G)............................... 5,489
169 Celanese Corp. ................................... 4,361
45 Century Aluminum Co. (D)(G)....................... 2,016
427 Chemtura Corp. ................................... 4,109
104 Cytec Industries, Inc. (G)........................ 5,894
53 E.I. DuPont de Nemours & Co. ..................... 2,572
23 FMC Corp. ........................................ 1,784
55 Martin Marietta Materials, Inc. .................. 5,663
95 Mueller Water Products, Inc. Class B (D).......... 1,409
310 Owens-Illinois, Inc. (D).......................... 5,714
312 Smurfit-Stone Container Corp. (D)................. 3,290
104 Temple-Inland, Inc. .............................. 4,782
--------
60,852
--------
CAPITAL GOODS -- 5.3%
54 Alliant Techsystems, Inc. (D)..................... 4,214
72 Deere & Co. ...................................... 6,845
363 Goodrich Corp. ................................... 16,544
63 Kennametal, Inc. ................................. 3,708
88 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 4,019
--------
35,330
--------
CONSUMER CYCLICAL -- 8.3%
324 American Axle & Manufacturing Holdings, Inc. ..... 6,155
166 Circuit City Stores, Inc. ........................ 3,147
673 Foot Locker, Inc. ................................ 14,750
193 Home Depot, Inc. ................................. 7,767
155 Lear Corp. (G).................................... 4,577
415 Ruby Tuesday, Inc. (G)............................ 11,393
259 TRW Automotive Holdings Corp. (D)................. 6,687
57 Walter Industries................................. 1,545
--------
56,021
--------
CONSUMER STAPLES -- 2.1%
107 Avon Products, Inc. .............................. 3,525
4,218 Pan Fish ASA (D)(A)#.............................. 3,836
258 Unilever N.V. NY Shares (G)....................... 7,022
--------
14,383
--------
ENERGY -- 9.2%
641 Brasil EcoDiesel Industria........................ 3,542
139 ExxonMobil Corp. ................................. 10,667
74 GlobalSantaFe Corp. .............................. 4,326
84 Noble Corp. ...................................... 6,397
135 Noble Energy, Inc. ............................... 6,639
88 Petro-Canada...................................... 3,607
417 Talisman Energy, Inc. ............................ 7,087
213 Total S.A. ADR.................................... 15,290
170 UGI Corp. ........................................ 4,649
--------
62,204
--------
FINANCE -- 29.0%
337 ACE Ltd. ......................................... 20,436
149 Aetna, Inc. ...................................... 6,434
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
77 Allstate Corp. ................................... $ 5,033
66 AMBAC Financial Group, Inc. ...................... 5,879
117 American International Group, Inc. ............... 8,391
620 Apollo Investment Corp. .......................... 13,888
622 Bank of America Corp. ............................ 33,183
262 Capital One Financial Corp. ...................... 20,135
73 CIT Group, Inc. .................................. 4,077
439 E*Trade Financial Corp. (D)....................... 9,831
88 Everest Re Group Ltd. ............................ 8,585
360 Genesis Lease Ltd. (D)(G)......................... 8,460
280 KKR Financial Corp. .............................. 7,509
215 Platinum Underwriters Holdings Ltd. .............. 6,664
490 Royal Bank of Scotland Group plc (A).............. 19,066
191 UBS AG............................................ 11,493
276 UnumProvident Corp. .............................. 5,744
--------
194,808
--------
HEALTH CARE -- 7.2%
62 Astellas Pharma, Inc. (A)......................... 2,815
164 Bristol-Myers Squibb Co. ......................... 4,322
138 Cooper Companies, Inc. ........................... 6,123
698 Impax Laboratories, Inc. (A)(D)(H)................ 6,153
50 Sanofi-Aventis S.A. (A)........................... 4,598
276 Sanofi-Aventis S.A. ADR........................... 12,748
226 Wyeth............................................. 11,528
--------
48,287
--------
SERVICES -- 7.3%
59 Apollo Group, Inc. Class A (D).................... 2,284
93 Avid Technology, Inc. (D)(G)...................... 3,461
168 Avis Budget Group, Inc. .......................... 3,635
30 Comcast Corp. Class A (D)......................... 1,253
294 Comcast Corp. Special Class A (D)................. 12,296
184 Entercom Communications Corp. .................... 5,194
87 Liberty Global, Inc. (D).......................... 2,545
89 Liberty Global, Inc. Class C (D).................. 2,478
132 R.H. Donnelley Corp. (G).......................... 8,268
761 Unisys Corp. (D).................................. 5,969
40 Viacom, Inc. Class B (D).......................... 1,621
--------
49,004
--------
TECHNOLOGY -- 17.4%
226 Arrow Electronics, Inc. (D)....................... 7,124
815 Cinram International Income Fund.................. 16,029
832 Cisco Systems, Inc. (D)........................... 22,728
26 Embarq Corp. ..................................... 1,348
140 Fairchild Semiconductor International, Inc. (D)... 2,348
550 Flextronics International Ltd. (D)................ 6,312
358 Microsoft Corp. .................................. 10,693
167 NCR Corp. (D)..................................... 7,145
587 Powerwave Technologies, Inc. (D)(G)............... 3,787
128 QLogic Corp. (D).................................. 2,808
112 Seagate Technology................................ 2,968
343 Sprint Nextel Corp. (G)........................... 6,476
309 Symantec Corp. (D)................................ 6,443
135 Tektronix, Inc. .................................. 3,944
</Table>
The accompanying notes are an integral part of these financial statements.
160
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
263 Telefonaktiebolaget LM Ericsson ADR (G)........... $ 10,589
164 Verizon Communications, Inc. (G).................. 6,104
--------
116,846
--------
TRANSPORTATION -- 4.4%
405 UAL Corp. (D)(G).................................. 17,829
219 US Airways Group, Inc. (D)(J).................... 11,786
--------
29,615
--------
Total common stock
(cost $568,130)................................. $667,350
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 10.0%
REPURCHASE AGREEMENTS -- 1.3%
$ 1,933 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,933
2,666 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,666
29 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 29
1,669 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,669
570 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%,01/02/2007................................ 570
1,669 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,669
--------
8,536
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.7%
58,689 BNY Institutional Cash Reserve Fund............... $ 58,689
--------
Total short-term investments
(cost $67,225).................................. $ 67,225
--------
Total investments in securities
(cost $635,355) (C)............................. $734,575
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 18.75% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value by, or
under the direction of, the Funds' Board of Directors at December 31, 2006,
was $36,468, which represents 5.42% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $635,940 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $106,302
Unrealized depreciation........................ (7,667)
--------
Net unrealized appreciation.................... $ 98,635
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to cover
funding requirements on investment transactions settling in the future.
(G)Security is partially on loan at December 31, 2006.
(H)The following security is considered illiquid. illiquid securities are
often purchased in private placement transactions, are not registered under
the Securities Act of 1933 and may have contractual restrictions on resale.
A security may also be considered illiquid if the security lacks a readily
available market or if its valuation has not changed for a certain period
of time.
<Table>
<Caption>
PERIOD ACQUIRED SHARES/PAR SECURITY COST BASIS
--------------- ---------- -------- ----------
12/2005-12/2006 698 Impax Laboratories, Inc. $5,885
</Table>
The aggregate value of this security at December 31, 2006 was $6,153, which
represents 0.91% of total net assets.
(J)Securities exempt from registration under Regulation D of the Securities
Act of 1933. These securities are determined to be liquid. At December 31,
2006, the market value of these securities was $11,786, which represents
1.75% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements regarding
valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Buy $ 343 $ 342 1/02/2007 $ 1
Canadian Dollar Buy 1,111 1,116 1/02/2007 (5)
Euro Buy 88 88 1/02/2007 --
Japanese Yen Buy 54 54 1/04/2007 --
Norwegian Krone Buy 87 86 1/02/2007 1
---
$(3)
===
</Table>
The accompanying notes are an integral part of these financial statements.
161
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD CAPITAL
ADVISERS APPRECIATION
HLS FUND HLS FUND
----------------- ----------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $10,166,864 $15,188,945
Cash...................................................... 375 2,806
Foreign currency on deposit with custodian#............... -- 47,898
Unrealized appreciation on forward foreign currency
contracts............................................... 1 47
Unrealized appreciation on forward bond contracts......... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. 54,997 46,827
Fund shares sold........................................ 231 2,782
Dividends and interest.................................. 34,763 21,958
Variation margin........................................ -- --
Other assets.............................................. 42 61
----------- -----------
Total assets................................................ 10,257,273 15,311,324
----------- -----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- 6,341
Unrealized depreciation on forward bond contracts......... -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Bank overdraft -- foreign cash............................ -- --
Payable upon return of securities loaned.................. 1,781,676 596,978
Payables:
Investment securities purchased......................... 5,583 131,870
Fund shares redeemed.................................... 8,213 15,972
Variation margin........................................ -- --
Investment management and advisory fees................. 467 861
Administrative services fee............................. 232 400
Distribution fees....................................... 43 96
Accrued expenses.......................................... 840 1,388
Written options........................................... -- --
----------- -----------
Total liabilities........................................... 1,797,054 753,906
----------- -----------
Net assets.................................................. $ 8,460,219 $14,557,418
=========== ===========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 7,905,005 $11,580,524
Accumulated undistributed (distribution in excess of) net
investment income......................................... 7,195 (2,872)
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 90,854 498,316
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 457,165 2,481,450
----------- -----------
Net assets.................................................. $ 8,460,219 $14,557,418
=========== ===========
Shares authorized........................................... 9,500,000 5,000,000
----------- -----------
Par value................................................... $ 0.001 $ 0.001
----------- -----------
CLASS IA: Net asset value per share......................... $ 22.60 $ 53.49
----------- -----------
Shares outstanding................................. 318,941 219,618
----------- -----------
Net assets......................................... $ 7,207,926 $11,746,831
----------- -----------
CLASS IB: Net asset value per share......................... $ 22.78 $ 53.21
----------- -----------
Shares outstanding................................. 54,968 52,824
----------- -----------
Net assets......................................... $ 1,252,293 $ 2,810,587
----------- -----------
@ Cost of securities........................................ $ 9,709,700 $12,700,827
----------- -----------
@ Market value of securities on loan........................ $ 1,729,538 $ 580,043
----------- -----------
# Cost of foreign currency on deposit with custodian........ $ -- $ 48,222
----------- -----------
* Cash of $2,498 was pledged as initial margin deposit for
open futures contracts.
</Table>
The accompanying notes are an integral part of these financial statements.
162
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD GLOBAL GLOBAL
DISCIPLINED EQUITY DIVIDEND AND GROWTH EQUITY INCOME FOCUS GLOBAL ADVISERS COMMUNICATIONS FINANCIAL SERVICES
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
------------------ ------------------- ------------- -------- --------------- --------------- ------------------
$1,780,476 $8,440,281 $474,185 $82,896 $ 373,770 $ 34,682 $ 38,183
2,498* -- -- -- 13 -- 1
-- -- -- -- 91 -- --
-- -- -- -- 1,409 -- --
-- -- -- -- 554 -- --
-- -- -- -- -- -- --
425 11,993 930 -- 31,994 167 --
2,416 2,847 543 29 50 14 --
2,465 7,783 1,078 78 1,247 130 25
-- -- -- -- 66 -- --
13 26 10 -- 8 3 --
---------- ---------- -------- -------- ---------- -------- --------
1,788,293 8,462,930 476,746 83,003 409,202 34,996 38,209
---------- ---------- -------- -------- ---------- -------- --------
-- -- -- -- 1,148 -- --
-- -- -- -- 545 -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- -- -- -- -- -- --
30,653 1,155,920 7,211 -- 2,991 6,626 --
-- 20,164 2,348 -- 33,208 -- --
881 10,083 146 79 631 93 21
162 -- -- -- 15 -- --
114 437 39 7 28 3 3
48 200 13 2 10 1 1
12 55 4 1 2 -- 1
134 567 42 21 50 18 18
111 -- -- -- -- -- --
---------- ---------- -------- -------- ---------- -------- --------
32,115 1,187,426 9,803 110 38,628 6,741 44
---------- ---------- -------- -------- ---------- -------- --------
$1,756,178 $7,275,504 $466,943 $82,893 $ 370,574 $ 28,255 $ 38,165
========== ========== ======== ======== ========== ======== ========
$1,545,062 $5,669,632 $387,876 $71,908 $ 329,743 $ 17,338 $ 23,901
1,000 3,359 605 43 (812) 65 17
(19,894) 80,456 17,110 6,674 6,022 5,350 7,333
230,010 1,522,057 61,352 4,268 35,621 5,502 6,914
---------- ---------- -------- -------- ---------- -------- --------
$1,756,178 $7,275,504 $466,943 $82,893 $ 370,574 $ 28,255 $ 38,165
========== ========== ======== ======== ========== ======== ========
3,500,000 4,000,000 800,000 800,000 1,000,000 800,000 800,000
---------- ---------- -------- -------- ---------- -------- --------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
---------- ---------- -------- -------- ---------- -------- --------
$ 14.08 $ 22.79 $ 14.20 $ 10.56 $ 12.71 $ 9.79 $ 13.16
---------- ---------- -------- -------- ---------- -------- --------
99,523 248,854 25,362 4,625 24,108 1,506 1,589
---------- ---------- -------- -------- ---------- -------- --------
$1,401,619 $5,671,552 $360,210 $48,852 $ 306,498 $ 14,745 $ 20,921
---------- ---------- -------- -------- ---------- -------- --------
$ 14.01 $ 22.72 $ 14.19 $ 10.54 $ 12.67 $ 9.75 $ 13.15
---------- ---------- -------- -------- ---------- -------- --------
25,315 70,589 7,521 3,231 5,058 1,385 1,311
---------- ---------- -------- -------- ---------- -------- --------
$ 354,559 $1,603,952 $106,733 $34,041 $ 64,076 $ 13,510 $ 17,244
---------- ---------- -------- -------- ---------- -------- --------
$1,551,182 $6,918,224 $412,833 $78,628 $ 337,977 $ 29,182 $ 31,269
---------- ---------- -------- -------- ---------- -------- --------
$ 29,724 $1,107,089 $ 7,037 $ -- $ 2,908 $ 6,379 $ --
---------- ---------- -------- -------- ---------- -------- --------
$ -- $ -- $ -- $ -- $ 91 $ -- $ --
---------- ---------- -------- -------- ---------- -------- --------
<Caption>
HARTFORD
GLOBAL HEALTH
HLS FUND
-------------
$442,665
--
2,295
--
--
--
186
324
211
--
4
--------
445,685
--------
--
--
--
--
--
5,221
374
1,091
--
38
12
4
49
--
--------
6,789
--------
$438,896
========
$358,615
24
10,237
70,020
--------
$438,896
========
800,000
--------
$ 0.001
--------
$ 16.84
--------
18,997
--------
$319,896
--------
$ 16.59
--------
7,172
--------
$119,000
--------
$372,656
--------
$ 4,980
--------
$ 2,284
--------
</Table>
163
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
GLOBAL LEADERS GLOBAL TECHNOLOGY
HLS FUND HLS FUND
-------------- -----------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $1,323,202 $148,416
Cash...................................................... -- 1
Foreign currency on deposit with custodian#............... 444 141
Unrealized appreciation on forward foreign currency
contracts............................................... 11 --
Unrealized appreciation on forward bond contracts......... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. 19,459 2,168
Fund shares sold........................................ 414 149
Dividends and interest.................................. 273 45
Variation margin........................................ -- --
Other assets.............................................. 8 4
---------- --------
Total assets................................................ 1,343,811 150,924
---------- --------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... 27 --
Unrealized depreciation on forward bond contracts......... -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Bank overdraft -- foreign cash............................ -- --
Payable upon return of securities loaned.................. 110,395 --
Payables:
Investment securities purchased......................... 9,743 1,978
Fund shares redeemed.................................... 826 335
Variation margin........................................ -- --
Investment management and advisory fees................. 83 13
Administrative services fee............................. 34 4
Distribution fees....................................... 10 2
Accrued expenses.......................................... 152 32
Written options........................................... -- --
---------- --------
Total liabilities........................................... 121,270 2,364
---------- --------
Net assets.................................................. $1,222,541 $148,560
========== ========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 999,811 $178,092
Accumulated undistributed (distribution in excess of) net
investment income......................................... (2,425) --
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 23,256 (50,445)
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 201,899 20,913
---------- --------
Net assets.................................................. $1,222,541 $148,560
========== ========
Shares authorized........................................... 3,400,000 800,000
---------- --------
Par value................................................... $ 0.001 $ 0.001
---------- --------
CLASS IA: Net asset value per share......................... $ 20.09 $ 6.05
---------- --------
Shares outstanding................................. 46,902 17,227
---------- --------
Net assets......................................... $ 942,258 $104,147
---------- --------
CLASS IB: Net asset value per share......................... $ 20.02 $ 5.97
---------- --------
Shares outstanding................................. 14,003 7,436
---------- --------
Net assets......................................... $ 280,283 $ 44,413
---------- --------
@ Cost of securities........................................ $1,121,313 $127,505
---------- --------
@ Market value of securities on loan........................ $ 106,045 $ --
---------- --------
# Cost of foreign currency on deposit with custodian........ $ 448 $ 140
---------- --------
</Table>
The accompanying notes are an integral part of these financial statements.
164
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
HARTFORD GROWTH HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL INTERNATIONAL
GROWTH OPPORTUNITIES HIGH YIELD INDEX CAPITAL APPRECIATION OPPORTUNITIES SMALL COMPANY
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
-------- --------------- ---------- ---------- ---------------------- ---------------------- ----------------------
$593,221 $1,408,139 $ 889,282 $2,004,600 $905,039 $2,147,446 $507,637
1 -- -- -- -- 9,429 1,268
-- -- 434 -- 293 128 --
-- -- 3 -- 4 551 3
-- -- -- -- -- -- --
-- -- -- -- -- -- --
10,238 13,009 990 345 8,276 18,920 2,499
1,625 308 639 415 396 1,422 294
553 971 13,185 2,557 275 742 385
-- -- -- -- -- -- --
9 6 16 7 7 9 6
-------- ---------- ---------- ---------- -------- ---------- --------
605,647 1,422,433 904,549 2,007,924 914,290 2,178,647 512,092
-------- ---------- ---------- ---------- -------- ---------- --------
-- -- -- -- 21 853 10
-- -- -- -- -- -- --
-- -- -- -- -- -- --
-- 605 162 28 -- -- --
-- -- -- -- -- -- --
25,747 114,640 159,967 128,688 35,970 173,189 95,465
9,755 4,086 7,686 -- 32 24,297 4,421
344 1,433 694 3,843 529 1,434 173
-- -- 38 69 -- -- --
46 109 53 26 71 127 36
16 -- 20 52 24 54 11
6 7 9 10 10 13 4
69 166 68 182 98 254 61
-- -- -- -- -- -- --
-------- ---------- ---------- ---------- -------- ---------- --------
35,983 121,046 168,697 132,898 36,755 200,221 100,181
-------- ---------- ---------- ---------- -------- ---------- --------
$569,664 $1,301,387 $ 735,852 $1,875,026 $877,535 $1,978,426 $411,911
======== ========== ========== ========== ======== ========== ========
$513,021 $1,088,607 $ 754,087 $1,512,515 $705,211 $1,612,587 $347,111
75 389 990 647 (285) 476 (166)
11,844 25,228 (33,202) (13,470) 24,521 66,754 12,382
44,724 187,163 13,977 375,334 148,088 298,609 52,584
-------- ---------- ---------- ---------- -------- ---------- --------
$569,664 $1,301,387 $ 735,852 $1,875,026 $877,535 $1,978,426 $411,911
======== ========== ========== ========== ======== ========== ========
800,000 700,000 2,800,000 4,000,000 800,000 2,625,000 800,000
-------- ---------- ---------- ---------- -------- ---------- --------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
-------- ---------- ---------- ---------- -------- ---------- --------
$ 12.32 $ 30.13 $ 9.35 $ 32.36 $ 14.18 $ 15.23 $ 16.77
-------- ---------- ---------- ---------- -------- ---------- --------
30,815 36,628 50,402 49,382 40,525 104,794 17,568
-------- ---------- ---------- ---------- -------- ---------- --------
$379,601 $1,103,590 $ 471,327 $1,598,176 $574,806 $1,596,055 $294,660
-------- ---------- ---------- ---------- -------- ---------- --------
$ 12.17 $ 29.90 $ 9.27 $ 32.22 $ 14.10 $ 15.36 $ 16.64
-------- ---------- ---------- ---------- -------- ---------- --------
15,620 6,616 28,534 8,592 21,467 24,899 7,046
-------- ---------- ---------- ---------- -------- ---------- --------
$190,063 $ 197,797 $ 264,525 $ 276,850 $302,729 $ 382,371 $117,251
-------- ---------- ---------- ---------- -------- ---------- --------
$548,497 $1,220,976 $ 874,875 $1,629,200 $756,962 $1,848,645 $455,062
-------- ---------- ---------- ---------- -------- ---------- --------
$25,093 $ 111,630 $ 156,721 $ 124,678 $ 34,492 $ 165,689 $ 90,427
-------- ---------- ---------- ---------- -------- ---------- --------
$ -- $ -- $ 435 $ -- $ 295 $ 125 $ --
-------- ---------- ---------- ---------- -------- ---------- --------
<Caption>
HARTFORD
MIDCAP
HLS FUND
----------
$2,916,463
1
--
--
--
--
5,820
2,721
3,124
--
45
----------
2,928,174
----------
--
--
--
--
--
39,835
4,144
2,914
--
180
79
9
43
--
----------
47,204
----------
$2,880,970
==========
$2,429,790
722
68,951
381,507
----------
$2,880,970
==========
2,400,000
----------
$ 0.001
----------
$ 26.99
----------
96,563
----------
$2,606,275
----------
$ 26.76
----------
10,265
----------
$ 274,695
----------
$2,534,951
----------
$ 38,961
----------
$ --
----------
</Table>
165
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
MIDCAP VALUE MONEY MARKET
HLS FUND HLS FUND
------------ ------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $1,138,589 $1,876,835
Cash...................................................... 77 114
Foreign currency on deposit with custodian#............... -- --
Unrealized appreciation on forward foreign currency
contracts............................................... -- --
Unrealized appreciation on forward bond contracts......... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. -- --
Fund shares sold........................................ 21 11,129
Dividends and interest.................................. 889 3,499
Variation margin........................................ -- --
Other assets.............................................. 5 8
---------- ----------
Total assets................................................ 1,139,581 1,891,585
---------- ----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- --
Unrealized depreciation on forward bond contracts......... -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Bank overdraft -- foreign cash............................ -- --
Payable upon return of securities loaned.................. 45,824 --
Payables:
Investment securities purchased......................... 936 --
Fund shares redeemed.................................... 429 12,922
Variation margin........................................ -- --
Investment management and advisory fees................. 83 64
Administrative services fee............................. 30 51
Distribution fees....................................... 13 11
Accrued expenses.......................................... 26 178
Written options........................................... -- --
---------- ----------
Total liabilities........................................... 47,341 13,226
---------- ----------
Net assets.................................................. $1,092,240 $1,878,359
========== ==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 742,989 $1,878,359
Accumulated undistributed (distribution in excess of) net
investment income......................................... 147 --
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 164,095 --
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 185,009 --
---------- ----------
Net assets.................................................. $1,092,240 $1,878,359
========== ==========
Shares authorized........................................... 1,200,000 7,000,000
---------- ----------
Par value................................................... $ 0.001 $ 0.001
---------- ----------
CLASS IA: Net asset value per share......................... $ 14.18 $ 1.00
---------- ----------
Shares outstanding 50,887 1,558,433
---------- ----------
Net assets $ 721,469 $1,558,433
---------- ----------
CLASS IB: Net asset value per share......................... $ 14.13 $ 1.00
---------- ----------
Shares outstanding................................. 26,237 319,926
---------- ----------
Net assets......................................... $ 370,771 $ 319,926
---------- ----------
@ Cost of securities........................................ $ 953,579 $1,876,835
---------- ----------
@ Market value of securities on loan........................ $ 44,778 $ --
---------- ----------
# Cost of foreign currency on deposit with custodian........ $ -- $ --
---------- ----------
* Investments in repurchase agreements were $106,621.
</Table>
The accompanying notes are an integral part of these financial statements.
166
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD U.S. GOVERNMENT HARTFORD
MORTGAGE SECURITIES SMALL COMPANY SMALLCAP GROWTH STOCK HLS TOTAL RETURN BOND SECURITIES VALUE
HLS FUND HLS FUND HLS FUND FUND HLS FUND HLS FUND HLS FUND
------------------- ------------- --------------- ---------- ----------------- ------------------- --------
$ 622,887 $1,548,640 $1,106,681 $5,273,830 $4,698,774 $1,196,851* $441,950
3,637 -- 457 19 260 8,013 1
-- -- -- -- 3,581 9 --
-- -- -- -- 548 -- --
-- -- -- -- -- -- --
-- -- -- -- 95 -- --
413 38,521 1,589 3,458 18,512 440 2,919
129 895 754 191 3,659 1,564 357
2,892 459 621 6,211 36,500 6,963 807
17 -- -- -- 99 -- --
2 23 -- 20 16 -- 1
---------- ---------- ---------- ---------- ---------- ---------- --------
629,977 1,588,538 1,110,102 5,283,729 4,762,044 1,213,840 446,035
---------- ---------- ---------- ---------- ---------- ---------- --------
-- -- -- -- 1,089 -- --
-- -- -- -- -- -- --
-- -- -- -- 138 -- --
-- 2,761 -- -- -- -- --
-- 1 -- -- -- -- --
-- 117,490 83,802 17,647 302,916 38,767 16,869
85,705 23,460 3,382 5,076 370,173 171,522 2,155
665 946 2,727 3,363 5,291 764 801
-- -- 3 -- 83 47 --
19 95 86 186 146 62 35
15 40 -- 144 112 -- 12
5 10 9 26 36 10 5
60 148 91 484 331 66 41
-- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- --------
86,469 144,951 90,100 26,926 680,315 211,238 19,918
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 543,508 $1,443,587 $1,020,002 $5,256,803 $4,081,729 $1,002,602 $426,117
========== ========== ========== ========== ========== ========== ========
$ 565,647 $1,245,167 $ 931,692 $4,781,215 $4,118,692 $ 995,231 $308,386
879 -- -- 4,252 4,639 42,556 332
(20,564) 56,705 (472) 63,774 (42,015) (31,492) 35,915
(2,454) 141,715 88,782 407,562 413 (3,693) 81,484
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 543,508 $1,443,587 $1,020,002 $5,256,803 $4,081,729 $1,002,602 $426,117
========== ========== ========== ========== ========== ========== ========
1,200,000 1,500,000 700,000 4,000,000 5,000,000 700,000 800,000
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 10.82 $ 19.07 $ 20.79 $ 52.57 $ 11.24 $ 11.13 $ 13.06
---------- ---------- ---------- ---------- ---------- ---------- --------
37,618 59,730 35,894 85,559 270,560 63,943 21,288
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 406,971 $1,138,830 $ 746,266 $4,498,001 $3,041,321 $ 711,639 $277,982
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 10.75 $ 18.71 $ 20.74 $ 52.45 $ 11.19 $ 11.07 $ 13.03
---------- ---------- ---------- ---------- ---------- ---------- --------
12,703 16,291 13,200 14,468 92,981 26,274 11,366
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 136,537 $ 304,757 $ 273,736 $ 758,802 $1,040,408 $ 290,963 $148,135
---------- ---------- ---------- ---------- ---------- ---------- --------
$ 625,602 $1,406,924 $1,017,896 $4,866,268 $4,698,517 $1,199,816 $360,466
---------- ---------- ---------- ---------- ---------- ---------- --------
$ -- $ 113,301 $ 80,550 $ 16,788 $ 296,791 $ 37,994 $16,402
---------- ---------- ---------- ---------- ---------- ---------- --------
$ -- $ -- $ -- $ -- $ 3,590 $ 9 $ --
---------- ---------- ---------- ---------- ---------- ---------- --------
<Caption>
HARTFORD
VALUE
OPPORTUNITIES
HLS FUND
--------------
$734,575
120
26
2
--
--
7,797
1,546
454
--
2
--------
744,522
--------
5
--
--
--
--
58,689
12,710
185
--
57
--
6
71
--
--------
71,723
--------
$672,799
========
$561,704
345
11,531
99,219
--------
$672,799
========
700,000
--------
$ 0.001
--------
$ 19.74
--------
25,772
--------
$508,648
--------
$ 19.64
--------
8,359
--------
$164,151
--------
$635,355
--------
$ 57,046
--------
$ 26
--------
</Table>
167
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD CAPITAL
ADVISERS APPRECIATION
HLS FUND HLS FUND
----------------- ----------------
INVESTMENT INCOME:
Dividends................................................. $101,204 $ 204,568
Interest.................................................. 149,436 11,133
Securities lending........................................ 4,977 1,978
Less: foreign tax withheld................................ (2,981) (6,354)
-------- ----------
Total investment income, net............................ 252,636 211,325
-------- ----------
EXPENSES:
Investment management and advisory fees................... 35,509 61,249
Administrative services fees.............................. 17,669 28,411
Distribution fees -- Class IB............................. 3,212 6,937
Custodian fees............................................ 290 1,800
Accounting services....................................... 1,325 2,131
Board of Directors' fees.................................. 148 230
Other expenses............................................ 1,255 1,950
-------- ----------
Total expenses (before waivers and fees paid
indirectly)............................................ 59,408 102,708
Expense waivers........................................... -- --
Commission recapture...................................... (1,015) (1,360)
Custodian fee offset...................................... (77) (52)
-------- ----------
Total waivers and fees paid indirectly.................. (1,092) (1,412)
-------- ----------
Total expenses, net..................................... 58,316 101,296
-------- ----------
Net investment income (loss).............................. 194,320 110,029
-------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 731,054 1,783,272
Net realized gain (loss) on futures, options and swap
contracts............................................... 3,532 (12,413)*
Net realized gain (loss) on foreign currency
transactions............................................ 109 (282)
-------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS...... 734,695 1,770,577
-------- ----------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. (63,623) 293,335
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. (457) --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... 47 (6,972)
-------- ----------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS............................. (64,033) 286,363
-------- ----------
NET GAIN(LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS............... 670,662 2,056,940
-------- ----------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ 6,804 11,567
-------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $871,786 $2,178,536
======== ==========
</Table>
* Realized losses on written options were $12,413 for the Hartford Capital
Appreciation HLS Fund.
** Realized gains on written options were $186 for the Hartford Disciplined
Equity HLS Fund.
*** Realized losses on written options were $61 for the Hartford Global Advisers
HLS Fund.
The accompanying notes are an integral part of these financial statements.
168
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD GLOBAL HARTFORD
DISCIPLINED EQUITY DIVIDEND AND EQUITY INCOME FOCUS GLOBAL ADVISERS COMMUNICATIONS GLOBAL FINANCIAL
HLS FUND GROWTH HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND SERVICES HLS FUND
------------------ --------------- --------------- -------- --------------- -------------- -----------------
$ 26,939 $ 161,694 $10,986 $1,407 $ 2,813 $ 669 $ 856
2,239 3,745 393 38 6,670 11 26
159 1,143 -- -- 83 40 16
(5) (2,177) (18) (54) (238) (53) (60)
-------- ---------- ------- ------ ------- ------ ------
29,332 164,405 11,361 1,391 9,328 667 838
-------- ---------- ------- ------ ------- ------ ------
7,447 29,539 2,257 555 2,149 178 248
3,093 13,489 742 171 771 55 76
865 3,828 227 90 166 31 44
15 17 9 19 89 23 17
232 1,012 56 13 58 4 6
23 107 6 2 7 1 1
249 963 70 40 87 28 31
-------- ---------- ------- ------ ------- ------ ------
11,924 48,955 3,367 890 3,327 320 423
-- -- (371) (71) -- (103) (143)
(63) (340) (18) (15) (58) (8) (4)
(5) (4) -- (2) (10) (3) --
-------- ---------- ------- ------ ------- ------ ------
(68) (344) (389) (88) (68) (114) (147)
-------- ---------- ------- ------ ------- ------ ------
11,856 48,611 2,978 802 3,259 206 276
-------- ---------- ------- ------ ------- ------ ------
17,476 115,794 8,383 589 6,069 461 562
-------- ---------- ------- ------ ------- ------ ------
44,174 538,273 17,190 6,730 20,523 5,343 7,518
2,199** -- -- -- (2,197)*** -- --
-- -- -- (9) (651) 6 7
-------- ---------- ------- ------ ------- ------ ------
46,373 538,273 17,190 6,721 17,675 5,349 7,525
-------- ---------- ------- ------ ------- ------ ------
119,931 599,277 46,269 25 7,851 (735) (963)
1,202 -- -- -- (285) -- --
-- -- -- -- 339 1 --
-------- ---------- ------- ------ ------- ------ ------
121,133 599,277 46,269 25 7,905 (734) (963)
-------- ---------- ------- ------ ------- ------ ------
167,506 1,137,550 63,459 6,746 25,580 4,615 6,562
-------- ---------- ------- ------ ------- ------ ------
605 4,254 -- 110 572 11 6
-------- ---------- ------- ------ ------- ------ ------
$185,587 $1,257,598 $71,842 $7,445 $32,221 $5,087 $7,130
======== ========== ======= ====== ======= ====== ======
<Caption>
HARTFORD
GLOBAL HEALTH
HLS FUND
-------------
$ 4,099
130
154
(152)
-------
4,231
-------
2,705
860
302
29
65
7
113
-------
4,081
--
(28)
(2)
-------
(30)
-------
4,051
-------
180
-------
37,160
--
19
-------
37,179
-------
7,657
--
12
-------
7,669
-------
44,848
-------
116
-------
$45,144
=======
</Table>
169
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
GLOBAL LEADERS GLOBAL TECHNOLOGY
HLS FUND HLS FUND
-------------- -----------------
INVESTMENT INCOME:
Dividends................................................. $ 14,656 $ 851
Interest.................................................. 1,001 52
Securities lending........................................ 440 36
Less: foreign tax withheld................................ (1,287) (57)
-------- -------
Total investment income, net............................ 14,810 882
-------- -------
EXPENSES:
Investment management and advisory fees................... 6,040 963
Administrative services fees.............................. 2,431 296
Distribution fees -- Class IB............................. 697 111
Custodian fees............................................ 342 55
Accounting services....................................... 182 22
Board of Directors' fees.................................. 21 3
Other expenses............................................ 216 78
-------- -------
Total expenses (before waivers and fees paid
indirectly)............................................ 9,929 1,528
Expense waivers........................................... -- --
Commission recapture...................................... (260) (37)
Custodian fee offset...................................... (3) (1)
-------- -------
Total waivers and fees paid indirectly.................. (263) (38)
-------- -------
Total expenses, net..................................... 9,666 1,490
-------- -------
Net investment income (loss).............................. 5,144 (608)
-------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 80,825 13,974
Net realized gain (loss) on futures, options and swap
contracts............................................... -- --
Net realized gain (loss) on foreign currency
transactions............................................ (661) 6
-------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS...... 80,164 13,980
-------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. 70,983 438
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. -- --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... 6 (1)
-------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS............................. 70,989 437
-------- -------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS............... 151,153 14,417
-------- -------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ 3,344 88
-------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $159,641 $13,897
======== =======
</Table>
The accompanying notes are an integral part of these financial statements.
170
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
HARTFORD GROWTH HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL INTERNATIONAL HARTFORD
GROWTH OPPORTUNITIES HIGH YIELD INDEX CAPITAL APPRECIATION OPPORTUNITIES SMALL COMPANY MIDCAP
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
--------- ------------------- ---------- -------- -------------------- ------------- ------------- ----------
$ 4,896 $ 14,732 $ -- $35,810 $ 11,020 $ 39,111 $ 6,976 $ 43,283
483 1,017 57,262 535 1,181 2,607 333 5,868
3 1,416 495 198 503 1,761 423 421
(153) (380) -- -- (1,260) (4,771) (852) (128)
-------- -------- ------- -------- -------- -------- ------- --------
5,229 16,785 57,757 36,543 11,444 38,708 6,880 49,444
-------- -------- ------- -------- -------- -------- ------- --------
3,349 7,629 3,757 3,456 4,408 8,327 2,216 13,102
1,133 -- 1,424 3,770 1,467 3,507 697 5,754
492 474 659 661 676 864 260 672
13 236 24 80 300 822 200 65
85 -- 107 283 110 263 52 432
9 18 11 31 11 27 5 48
143 291 193 266 129 282 86 199
-------- -------- ------- -------- -------- -------- ------- --------
5,224 8,648 6,175 8,547 7,101 14,092 3,516 20,272
-- -- (356) (1,572) -- -- -- --
(92) (271) -- -- (196) (385) (60) (661)
(1) (11) (34) (5) (1) (3) -- (23)
-------- -------- ------- -------- -------- -------- ------- --------
(93) (282) (390) (1,577) (197) (388) (60) (684)
-------- -------- ------- -------- -------- -------- ------- --------
5,131 8,366 5,785 6,970 6,904 13,704 3,456 19,588
-------- -------- ------- -------- -------- -------- ------- --------
98 8,419 51,972 29,573 4,540 25,004 3,424 29,856
-------- -------- ------- -------- -------- -------- ------- --------
44,228 124,772 (250) 86,852 81,570 240,667 54,594 430,709
-- -- 153 2,005 -- -- -- --
(7) 22 (118) -- (42) (1,828) 600 (30)
-------- -------- ------- -------- -------- -------- ------- --------
44,221 124,794 (215) 88,857 81,528 238,839 55,194 430,679
-------- -------- ------- -------- -------- -------- ------- --------
(19,797) 3,809 23,383 149,275 73,299 122,554 29,577 (152,469)
-- -- (433) 94 -- -- -- --
-- (4) 388 -- 14 (180) (680) 17
-------- -------- ------- -------- -------- -------- ------- --------
(19,797) 3,805 23,338 149,369 73,313 122,374 28,897 (152,452)
-------- -------- ------- -------- -------- -------- ------- --------
24,424 128,599 23,123 238,226 154,841 361,213 84,091 278,227
-------- -------- ------- -------- -------- -------- ------- --------
286 1,098 129 90 11 314 11 3,817
-------- -------- ------- -------- -------- -------- ------- --------
$ 24,808 $138,116 $75,224 $267,889 $159,392 $386,531 $87,526 $311,900
======== ======== ======= ======== ======== ======== ======= ========
</Table>
171
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
MIDCAP VALUE MONEY MARKET
HLS FUND HLS FUND
------------ ------------
INVESTMENT INCOME:
Dividends................................................. $ 16,419 $ --
Interest.................................................. 472 90,349
Securities lending........................................ 176 --
Less: foreign tax withheld................................ (395) --
-------- -------
Total investment income, net............................ 16,672 90,349
-------- -------
EXPENSES:
Investment management and advisory fees................... 6,105 4,419
Administrative services fees.............................. 2,202 3,535
Distribution fees -- Class IB............................. 952 747
Custodian fees............................................ 24 10
Accounting services....................................... 165 265
Board of Directors' fees.................................. 19 27
Other expenses............................................ 116 313
-------- -------
Total expenses (before waivers and fees paid
indirectly)............................................ 9,583 9,316
Expense waivers........................................... -- --
Commission recapture...................................... (105) --
Custodian fee offset...................................... (8) (5)
-------- -------
Total waivers and fees paid indirectly.................. (113) (5)
-------- -------
Total expenses, net..................................... 9,470 9,311
-------- -------
Net investment income (loss).............................. 7,202 81,038
-------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 164,741 1
Net realized gain (loss) on futures, options and swap
contracts............................................... -- --
Net realized gain (loss) on foreign currency
transactions............................................ (6) --
-------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS...... 164,735 1
-------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. 6,622 --
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. -- --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... (1) --
-------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS............................. 6,621 --
-------- -------
NET GAIN(LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS............... 171,356 1
-------- -------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ 980 --
-------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $179,538 $81,039
======== =======
</Table>
The accompanying notes are an integral part of these financial statements.
172
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD HARTFORD HARTFORD HARTFORD U.S.
MORTGAGE SMALL SMALLCAP HARTFORD TOTAL GOVERNMENT HARTFORD
SECURITIES COMPANY GROWTH STOCK RETURN BOND SECURITIES VALUE
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
---------- -------------- -------- -------- -------------- ------------- --------------
$ -- $ 9,402 $ 8,056 $92,268 $ 367 $ -- $ 7,667
30,210 1,568 637 1,216 206,125 46,607 287
-- 1,492 1,645 1,695 1,117 282 4
-- (205) (4) (2,658) -- -- (2)
------- --------- -------- -------- -------- ------- -------
30,210 12,257 10,334 92,521 207,609 46,889 7,956
------- --------- -------- -------- -------- ------- -------
1,441 6,563 6,041 13,697 10,202 4,286 2,199
1,153 2,699 -- 10,608 7,811 -- 721
369 642 658 1,871 2,622 767 340
15 137 27 190 116 61 10
86 202 -- 796 586 -- 54
10 21 16 95 62 15 5
102 241 235 731 580 152 75
------- --------- -------- -------- -------- ------- -------
3,176 10,505 6,977 27,988 21,979 5,281 3,404
-- -- -- -- -- -- --
-- (440) (140) (987) -- -- (27)
(9) (32) (10) (17) (80) (7) (1)
------- --------- -------- -------- -------- ------- -------
(9) (472) (150) (1,004) (80) (7) (28)
------- --------- -------- -------- -------- ------- -------
3,167 10,033 6,827 26,984 21,899 5,274 3,376
------- --------- -------- -------- -------- ------- -------
27,043 2,224 3,507 65,537 185,710 41,615 4,580
------- --------- -------- -------- -------- ------- -------
(2,435) 280,268 69,117 646,164 (19,320) (8,974) 36,922
(288) -- 247 (200) (1,138) (201) --
-- (60) -- 106 (3,287) 179 --
------- --------- -------- -------- -------- ------- -------
(2,723) 280,208 69,364 646,070 (23,745) (8,996) 36,922
------- --------- -------- -------- -------- ------- -------
789 (107,792) (13,939) (4,482) 21,620 5,654 30,229
261 -- (3) -- 705 (728) --
-- 3 -- 41 (317) -- --
------- --------- -------- -------- -------- ------- -------
1,050 (107,789) (13,942) (4,441) 22,008 4,926 30,229
------- --------- -------- -------- -------- ------- -------
(1,673) 172,419 55,422 641,629 (1,737) (4,070) 67,151
------- --------- -------- -------- -------- ------- -------
-- 1,839 (229) 5,820 107 -- 33
------- --------- -------- -------- -------- ------- -------
$25,370 $ 176,482 $58,700 $712,986 $184,080 $37,545 $71,764
======= ========= ======== ======== ======== ======= =======
<Caption>
HARTFORD
VALUE
OPPORTUNITIES
HLS FUND
--------------
$ 11,415
250
219
(483)
--------
11,401
--------
3,620
--
391
28
--
9
125
--------
4,173
--
(43)
(4)
--------
(47)
--------
4,126
--------
7,275
--------
46,712
--
(13)
--------
46,699
--------
47,434
--
--
--------
47,434
--------
94,133
--------
280
--------
$101,688
========
</Table>
173
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
ADVISERS HLS FUND CAPITAL APPRECIATION HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss)............................. $ 194,320 $ 196,156 $ 110,029 $ 96,479
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions... 734,695 906,755 1,770,577 2,125,947
Net unrealized appreciation (depreciation) of
investments, futures, options and swap contracts and
foreign currency transactions.......................... (64,033) (420,729) 286,363 (294,622)
Payments from (to) affiliate............................. 6,804 -- 11,567 --
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations..... 871,786 682,182 2,178,536 1,927,804
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA............................................... (166,222) (272,290) (151,317) (99,634)
Class IB............................................... (25,557) (39,286) (29,396) (15,790)
From net realized gain on investments
Class IA............................................... (516,571) (351,514) (1,436,633) (1,510,221)
Class IB............................................... (89,064) (58,538) (347,480) (373,818)
From tax-return of capital
Class IA............................................... -- (118,875) -- --
Class IB............................................... -- (19,797) -- --
----------- ----------- ----------- -----------
Total distributions.................................... (797,414) (860,300) (1,964,826) (1,999,463)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold................................................. 173,052 187,216 793,724 980,291
Issued on reinvestment of distributions.............. 682,793 742,679 1,587,950 1,609,855
Redeemed............................................. (1,869,501) (2,318,933) (2,124,483) (1,962,162)
----------- ----------- ----------- -----------
Total capital share transactions....................... (1,013,656) (1,389,038) 257,191 627,984
----------- ----------- ----------- -----------
Class IB
Sold................................................. 24,003 63,508 106,901 325,619
Issued on reinvestment of distributions.............. 114,621 117,621 376,876 389,608
Redeemed............................................. (262,691) (252,096) (508,433) (418,122)
----------- ----------- ----------- -----------
Total capital share transactions....................... (124,067) (70,967) (24,656) 297,105
----------- ----------- ----------- -----------
Net increase (decrease) from capital share
transactions.................................... (1,137,723) (1,460,005) 232,535 925,089
----------- ----------- ----------- -----------
Net increase (decrease) in net assets............. (1,063,351) (1,638,123) 446,245 853,430
NET ASSETS:
Beginning of period...................................... 9,523,570 11,161,693 14,111,173 13,257,743
----------- ----------- ----------- -----------
End of period............................................ $ 8,460,219 $ 9,523,570 $14,557,418 $14,111,173
=========== =========== =========== ===========
Accumulated undistributed (distribution in excess of) net
investment income........................................ $ 7,195 $ -- $ (2,872) $ 2,079
=========== =========== =========== ===========
SHARE ACTIVITY:
Class IA
Sold................................................. 7,509 8,100 14,540 17,986
Issued on reinvestment of distributions.............. 30,245 32,735 30,179 30,675
Redeemed............................................. (80,891) (99,678) (38,693) (36,297)
----------- ----------- ----------- -----------
Total share activity................................... (43,137) (58,843) 6,026 12,364
----------- ----------- ----------- -----------
Class IB
Sold................................................. 1,030 2,719 1,959 6,092
Issued on reinvestment of distributions.............. 5,036 5,150 7,203 7,457
Redeemed............................................. (11,296) (10,778) (9,300) (7,702)
----------- ----------- ----------- -----------
Total share activity................................... (5,230) (2,909) (138) 5,847
----------- ----------- ----------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
174
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
DISCIPLINED EQUITY HLS FUND DIVIDEND AND GROWTH HLS FUND EQUITY INCOME HLS FUND
------------------------------ ------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
$ 17,476 $ 11,779 $ 115,794 $ 103,335 $ 8,383 $ 5,128
46,373 78,302 538,273 247,944 17,190 915
121,133 (12,263) 599,277 18,268 46,269 6,664
605 -- 4,254 -- -- --
---------- ---------- ---------- ---------- -------- --------
185,587 77,818 1,257,598 369,547 71,842 12,707
---------- ---------- ---------- ---------- -------- --------
(14,696) (11,182) (93,362) (91,433) (6,424) (3,760)
(2,529) (2,973) (22,067) (23,657) (1,572) (1,110)
-- -- (395,906) (211,926) (587) --
-- -- (113,682) (64,731) (200) --
-- -- -- -- -- --
-- -- -- -- -- --
---------- ---------- ---------- ---------- -------- --------
(17,225) (14,155) (625,017) (391,747) (8,783) (4,870)
---------- ---------- ---------- ---------- -------- --------
375,407 347,973 575,385 702,681 115,567 161,388
14,697 11,182 489,268 303,359 7,011 3,761
(139,427) (156,297) (859,340) (729,202) (40,987) (29,739)
---------- ---------- ---------- ---------- -------- --------
250,677 202,858 205,313 276,838 81,591 135,410
---------- ---------- ---------- ---------- -------- --------
25,457 80,477 76,057 183,594 29,567 59,757
2,528 2,973 135,749 88,388 1,772 1,110
(50,657) (31,269) (259,525) (154,365) (19,614) (8,618)
---------- ---------- ---------- ---------- -------- --------
(22,672) 52,181 (47,719) 117,617 11,725 52,249
---------- ---------- ---------- ---------- -------- --------
228,005 255,039 157,594 394,455 93,316 187,659
---------- ---------- ---------- ---------- -------- --------
396,367 318,702 790,175 372,255 156,375 195,496
1,359,811 1,041,109 6,485,329 6,113,074 310,568 115,072
---------- ---------- ---------- ---------- -------- --------
$1,756,178 $1,359,811 $7,275,504 $6,485,329 $466,943 $310,568
========== ========== ========== ========== ======== ========
$ 1,000 $ 571 $ 3,359 $ 1,884 $ 605 $ 239
========== ========== ========== ========== ======== ========
28,473 28,356 26,036 33,702 8,780 13,691
1,053 886 21,722 14,549 505 310
(10,549) (12,853) (38,955) (34,828) (3,177) (2,494)
---------- ---------- ---------- ---------- -------- --------
18,977 16,389 8,803 13,423 6,108 11,507
---------- ---------- ---------- ---------- -------- --------
1,951 6,744 3,433 8,897 2,249 5,122
181 237 6,046 4,254 128 92
(3,860) (2,575) (11,758) (7,409) (1,483) (727)
---------- ---------- ---------- ---------- -------- --------
(1,728) 4,406 (2,279) 5,742 894 4,487
---------- ---------- ---------- ---------- -------- --------
<Caption>
HARTFORD
FOCUS HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ 589 $ 562
6,721 7,485
25 (247)
110 --
-------- --------
7,445 7,800
-------- --------
(398) (860)
(168) (501)
(3,809) (1,785)
(2,777) (1,463)
-- --
-- --
-------- --------
(7,152) (4,609)
-------- --------
8,031 12,484
4,207 2,645
(16,262) (13,662)
-------- --------
(4,024) 1,467
-------- --------
3,065 6,808
2,945 1,964
(14,037) (9,886)
-------- --------
(8,027) (1,114)
-------- --------
(12,051) 353
-------- --------
(11,758) 3,544
94,651 91,107
-------- --------
$ 82,893 $ 94,651
======== ========
$ 43 $ 13
======== ========
777 1,217
446 267
(1,585) (1,360)
-------- --------
(362) 124
-------- --------
301 666
315 200
(1,369) (987)
-------- --------
(753) (121)
-------- --------
</Table>
175
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
GLOBAL ADVISERS HLS FUND GLOBAL COMMUNICATIONS HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 6,069 $ 6,504 $ 461 $ 671
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 17,675 20,248 5,349 4,678
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ 7,905 (14,739) (734) (742)
Payments from (to) affiliate.............................. 572 -- 11 --
-------- -------- ------- -------
Net increase in net assets resulting from operations...... 32,221 12,013 5,087 4,607
-------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (9,020) (12,430) (270) (622)
Class IB................................................ (1,561) (2,383) (203) (409)
From net realized gain on investments
Class IA................................................ (11,075) -- (2,568) (39)
Class IB................................................ (2,317) -- (2,122) (29)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
-------- -------- ------- -------
Total distributions..................................... (23,973) (14,813) (5,163) (1,099)
-------- -------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 17,818 30,360 434 465
Issued on reinvestment of distributions............... 20,095 12,430 2,838 661
Redeemed.............................................. (70,279) (71,319) (4,898) (4,083)
-------- -------- ------- -------
Total capital share transactions........................ (32,366) (28,529) (1,626) (2,957)
-------- -------- ------- -------
Class IB
Sold.................................................. 7,235 15,851 2,285 826
Issued on reinvestment of distributions............... 3,878 2,383 2,325 438
Redeemed.............................................. (19,936) (33,084) (3,607) (2,517)
-------- -------- ------- -------
Total capital share transactions........................ (8,823) (14,850) 1,003 (1,253)
-------- -------- ------- -------
Net increase (decrease) from capital share transactions... (41,189) (43,379) (623) (4,210)
-------- -------- ------- -------
Net increase (decrease) in net assets..................... (32,941) (46,179) (699) (702)
NET ASSETS:
Beginning of period....................................... 403,515 449,694 28,954 29,656
-------- -------- ------- -------
End of period............................................. $370,574 $403,515 $28,255 $28,954
======== ======== ======= =======
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ (812) $ 3,579 $ 65 $ 76
======== ======== ======= =======
SHARE ACTIVITY:
Class IA
Sold.................................................. 1,386 2,493 45 51
Issued on reinvestment of distributions............... 1,590 1,014 370 71
Redeemed.............................................. (5,482) (5,848) (555) (460)
-------- -------- ------- -------
Total share activity.................................... (2,506) (2,341) (140) (338)
-------- -------- ------- -------
Class IB
Sold.................................................. 564 1,312 240 89
Issued on reinvestment of distributions............... 308 196 304 47
Redeemed.............................................. (1,564) (2,749) (398) (276)
-------- -------- ------- -------
Total share activity.................................... (692) (1,241) 146 (140)
-------- -------- ------- -------
</Table>
The accompanying notes are an integral part of these financial statements.
176
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
GLOBAL FINANCIAL SERVICES HLS FUND GLOBAL HEALTH HLS FUND GLOBAL LEADERS HLS FUND
---------------------------------- ------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
-------------- -------------- ------------ ------------ ------------ ------------
$ 562 $ 547 $ 180 $ 88 $ 5,144 $ 8,291
7,525 1,549 37,179 35,610 80,164 77,137
(963) 1,493 7,669 11,942 70,989 (57,471)
6 -- 116 -- 3,344 --
------- ------- -------- -------- ---------- ----------
7,130 3,589 45,144 47,640 159,641 27,957
------- ------- -------- -------- ---------- ----------
(359) (658) (179) (207) (7,210) (7,384)
(228) (505) -- -- (1,211) (1,309)
(815) (19) (44,335) (20,387) (50,448) --
(704) (17) (17,323) (8,453) (15,059) --
-- -- -- -- -- --
-- -- -- -- -- --
------- ------- -------- -------- ---------- ----------
(2,106) (1,199) (61,837) (29,047) (73,928) (8,693)
------- ------- -------- -------- ---------- ----------
263 260 70,132 29,063 75,692 75,573
1,173 677 44,514 20,594 57,658 7,384
(3,652) (3,750) (92,232) (63,504) (192,502) (165,723)
------- ------- -------- -------- ---------- ----------
(2,216) (2,813) 22,414 (13,847) (59,152) (82,766)
------- ------- -------- -------- ---------- ----------
57 216 11,475 6,483 21,219 47,667
933 522 17,323 8,453 16,270 1,309
(4,197) (3,534) (28,451) (22,087) (57,098) (47,937)
------- ------- -------- -------- ---------- ----------
(3,207) (2,796) 347 (7,151) (19,609) 1,039
------- ------- -------- -------- ---------- ----------
(5,423) (5,609) 22,761 (20,998) (78,761) (81,727)
------- ------- -------- -------- ---------- ----------
(399) (3,219) 6,068 (2,405) 6,952 (62,463)
38,564 41,783 432,828 435,233 1,215,589 1,278,052
------- ------- -------- -------- ---------- ----------
$38,165 $38,564 $438,896 $432,828 $1,222,541 $1,215,589
======= ======= ======== ======== ========== ==========
$ 17 $ 36 $ 24 $ -- $ (2,425) $ 845
======= ======= ======== ======== ========== ==========
21 25 3,991 1,750 3,866 4,330
99 62 2,744 1,309 2,895 404
(296) (351) (5,251) (3,847) (9,779) (9,391)
------- ------- -------- -------- ---------- ----------
(176) (264) 1,484 (788) (3,018) (4,657)
------- ------- -------- -------- ---------- ----------
5 20 661 395 1,077 2,759
79 48 1,084 543 819 72
(343) (330) (1,648) (1,347) (2,902) (2,736)
------- ------- -------- -------- ---------- ----------
(259) (262) 97 (409) (1,006) 95
------- ------- -------- -------- ---------- ----------
<Caption>
HARTFORD
GLOBAL TECHNOLOGY HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ (608) $ (683)
13,980 11,518
437 2,824
88 --
-------- --------
13,897 13,659
-------- --------
-- (275)
-- (11)
-- --
-- --
-- --
-- --
-------- --------
-- (286)
-------- --------
44,605 21,905
-- 275
(54,039) (39,385)
-------- --------
(9,434) (17,205)
-------- --------
7,797 9,251
-- 11
(12,062) (15,056)
-------- --------
(4,265) (5,794)
-------- --------
(13,699) (22,999)
-------- --------
198 (9,626)
148,362 157,988
-------- --------
$148,560 $148,362
======== ========
$ -- $ --
======== ========
7,779 4,379
-- 56
(9,500) (8,121)
-------- --------
(1,721) (3,686)
-------- --------
1,378 1,834
-- 2
(2,153) (3,045)
-------- --------
(775) (1,209)
-------- --------
</Table>
177
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD GROWTH OPPORTUNITIES
GROWTH HLS FUND HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss)............................. $ 98 $ (364) $ 8,419 $ 2,979
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions... 44,221 6,503 124,794 131,569
Net unrealized appreciation (depreciation) of
investments, futures, options and swap contracts and
foreign currency transactions.......................... (19,797) 21,713 3,805 28,121
Payments from (to) affiliate............................. 286 440 1,098 1,140
-------- -------- ---------- ----------
Net increase in net assets resulting from operations..... 24,808 28,292 138,116 163,809
-------- -------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA............................................... (186) -- (8,100) (1,991)
Class IB............................................... -- -- (884) --
From net realized gain on investments
Class IA............................................... (23,496) (12,015) (108,948) (62,345)
Class IB............................................... (11,791) (7,929) (19,575) (11,118)
From tax-return of capital
Class IA............................................... -- -- -- --
Class IB............................................... -- -- -- --
-------- -------- ---------- ----------
Total distributions.................................... (35,473) (19,944) (137,507) (75,454)
-------- -------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold................................................. 104,413 212,798 188,777 320,008
Issued on reinvestment of distributions.............. 23,682 12,015 117,049 64,336
Redeemed............................................. (87,022) (134,784) (216,061) (295,764)
-------- -------- ---------- ----------
Total capital share transactions....................... 41,073 90,029 89,765 88,580
-------- -------- ---------- ----------
Class IB
Sold................................................. 24,147 52,952 49,911 67,825
Issued on reinvestment of distributions.............. 11,791 7,929 20,458 11,118
Redeemed............................................. (48,345) (27,963) (51,438) (25,366)
-------- -------- ---------- ----------
Total capital share transactions....................... (12,407) 32,918 18,931 53,577
-------- -------- ---------- ----------
Net increase (decrease) from capital share
transactions........................................... 28,666 122,947 108,696 142,157
-------- -------- ---------- ----------
Net increase (decrease) in net assets.................... 18,001 131,295 109,305 230,512
NET ASSETS:
Beginning of period...................................... 551,663 420,368 1,192,082 961,570
-------- -------- ---------- ----------
End of period............................................ $569,664 $551,663 $1,301,387 $1,192,082
======== ======== ========== ==========
Accumulated undistributed (distribution in excess of) net
investment income........................................ $ 75 $ -- $ 389 $ 717
======== ======== ========== ==========
SHARE ACTIVITY:
Class IA
Sold................................................. 8,271 17,662 6,073 11,178
Issued on reinvestment of distributions.............. 1,924 992 3,934 2,155
Redeemed............................................. (6,928) (11,119) (7,054) (10,378)
-------- -------- ---------- ----------
Total share activity................................... 3,267 7,535 2,953 2,955
-------- -------- ---------- ----------
Class IB
Sold................................................. 1,970 4,471 1,621 2,434
Issued on reinvestment of distributions.............. 969 661 693 375
Redeemed............................................. (3,908) (2,346) (1,706) (915)
-------- -------- ---------- ----------
Total share activity................................... (969) 2,786 608 1,894
-------- -------- ---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
178
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD HARTFORD INTERNATIONAL CAPITAL
HIGH YIELD HLS FUND INDEX HLS FUND APPRECIATION HLS FUND
------------------------------ ------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
$ 51,972 $ 48,916 $ 29,573 $ 29,486 $ 4,540 $ 4,629
(215) 2,598 88,857 112,925 81,528 14,958
23,338 (40,161) 149,369 (55,752) 73,313 27,783
129 4,027 90 -- 11 --
--------- ---------- ---------- ---------- -------- --------
75,224 15,380 267,889 86,659 159,392 47,370
--------- ---------- ---------- ---------- -------- --------
(66,340) (30,128) (26,105) (32,716) (4,215) (2,955)
(37,565) (18,501) (3,766) (4,176) (1,218) (1,223)
-- -- (174,313) (56,659) (41,640) (15,233)
-- -- (29,239) (8,074) (22,639) (10,934)
-- -- -- -- -- --
-- -- -- -- -- --
--------- ---------- ---------- ---------- -------- --------
(103,905) (48,629) (233,423) (101,625) (69,712) (30,345)
--------- ---------- ---------- ---------- -------- --------
129,199 1,060,510 109,735 207,714 153,015 188,636
66,340 30,128 200,417 89,375 45,855 18,188
(149,734) (1,146,072) (443,564) (555,228) (50,226) (54,517)
--------- ---------- ---------- ---------- -------- --------
45,805 (55,434) (133,412) (258,139) 148,644 152,307
--------- ---------- ---------- ---------- -------- --------
42,493 59,094 52,154 57,766 55,914 114,389
37,565 18,501 33,006 12,250 23,857 12,157
(77,727) (101,068) (76,191) (58,337) (55,687) (26,637)
--------- ---------- ---------- ---------- -------- --------
2,331 (23,473) 8,969 11,679 24,084 99,909
--------- ---------- ---------- ---------- -------- --------
48,136 (78,907) (124,443) (246,460) 172,728 252,216
--------- ---------- ---------- ---------- -------- --------
19,455 (112,156) (89,977) (261,426) 262,408 269,241
716,397 828,553 1,965,003 2,226,429 615,127 345,886
--------- ---------- ---------- ---------- -------- --------
$ 735,852 $ 716,397 $1,875,026 $1,965,003 $877,535 $615,127
========= ========== ========== ========== ======== ========
$ 990 $ 52,961 $ 647 $ 1,153 $ (285) $ 310
========= ========== ========== ========== ======== ========
13,188 106,553 3,386 6,556 11,231 15,991
7,161 3,143 6,466 2,832 3,322 1,562
(15,232) (114,963) (13,684) (17,524) (3,730) (4,614)
--------- ---------- ---------- ---------- -------- --------
5,117 (5,267) (3,832) (8,136) 10,823 12,939
--------- ---------- ---------- ---------- -------- --------
4,356 5,980 1,605 1,840 4,145 9,852
4,092 1,947 1,069 390 1,741 1,056
(8,001) (10,289) (2,360) (1,852) (4,149) (2,272)
--------- ---------- ---------- ---------- -------- --------
447 (2,362) 314 378 1,737 8,636
--------- ---------- ---------- ---------- -------- --------
<Caption>
HARTFORD
INTERNATIONAL OPPORTUNITIES
HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ 25,004 $ 16,314
238,839 196,600
122,374 (14,194)
314 --
---------- ----------
386,531 198,720
---------- ----------
(38,195) --
(4,186) --
(118,052) --
(28,152) --
-- --
-- --
---------- ----------
(188,585) --
---------- ----------
293,361 228,878
156,247 --
(260,149) (191,381)
---------- ----------
189,459 37,497
---------- ----------
56,023 94,277
32,338 --
(68,392) (62,078)
---------- ----------
19,969 32,199
---------- ----------
209,428 69,696
---------- ----------
407,374 268,416
1,571,052 1,302,636
---------- ----------
$1,978,426 $1,571,052
========== ==========
$ 476 $ 16,708
========== ==========
19,972 18,714
10,497 --
(17,758) (15,599)
---------- ----------
12,711 3,115
---------- ----------
3,767 7,839
2,139 --
(4,647) (5,150)
---------- ----------
1,259 2,689
---------- ----------
</Table>
179
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
INTERNATIONAL SMALL COMPANY HARTFORD
HLS FUND MIDCAP HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 3,424 $ 2,324 $ 29,856 $ 9,235
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 55,194 23,748 430,679 415,407
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ 28,897 12,694 (152,452) (27,257)
Payments from (to) affiliate.............................. 11 -- 3,817 513
-------- -------- ---------- ----------
Net increase in net assets resulting from operations...... 87,526 38,766 311,900 397,898
-------- -------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (4,903) (4,436) (27,543) (9,372)
Class IB................................................ (1,571) (1,943) (2,276) (165)
From net realized gain on investments
Class IA................................................ (30,974) (19,153) (396,590) (344,374)
Class IB................................................ (12,576) (9,955) (42,121) (35,210)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
-------- -------- ---------- ----------
Total distributions..................................... (50,024) (35,487) (468,530) (389,121)
-------- -------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 106,451 115,303 445,633 666,939
Issued on reinvestment of distributions............... 35,877 23,589 424,133 353,747
Redeemed.............................................. (67,279) (30,886) (652,603) (692,868)
-------- -------- ---------- ----------
Total capital share transactions........................ 75,049 108,006 217,163 327,818
-------- -------- ---------- ----------
Class IB
Sold.................................................. 30,387 38,303 51,477 57,437
Issued on reinvestment of distributions............... 14,147 11,898 44,397 35,375
Redeemed.............................................. (31,043) (14,379) (60,075) (60,145)
-------- -------- ---------- ----------
Total capital share transactions........................ 13,491 35,822 35,799 32,667
-------- -------- ---------- ----------
Net increase (decrease) from capital share transactions... 88,540 143,828 252,962 360,485
-------- -------- ---------- ----------
Net increase (decrease) in net assets..................... 126,042 147,107 96,332 369,262
NET ASSETS:
Beginning of period....................................... 285,869 138,762 2,784,638 2,415,376
-------- -------- ---------- ----------
End of period............................................. $411,911 $285,869 $2,880,970 $2,784,638
======== ======== ========== ==========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ (166) $ 189 $ 722 $ 483
======== ======== ========== ==========
SHARE ACTIVITY:
Class IA
Sold.................................................. 6,405 7,743 15,118 22,216
Issued on reinvestment of distributions............... 2,185 1,634 15,588 12,353
Redeemed.............................................. (4,079) (2,106) (22,208) (23,170)
-------- -------- ---------- ----------
Total share activity.................................... 4,511 7,271 8,498 11,399
-------- -------- ---------- ----------
Class IB
Sold.................................................. 1,839 2,613 1,740 1,942
Issued on reinvestment of distributions............... 868 833 1,645 1,245
Redeemed.............................................. (1,924) (980) (2,054) (2,054)
-------- -------- ---------- ----------
Total share activity.................................... 783 2,466 1,331 1,133
-------- -------- ---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
180
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
MIDCAP VALUE HLS FUND MONEY MARKET HLS FUND MORTGAGE SECURITIES HLS FUND
------------------------------ ------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
$ 7,202 $ 2,489 $ 81,038 $ 44,998 $ 27,043 $ 27,875
164,735 138,250 1 3 (2,723) (5,212)
6,621 (38,457) -- -- 1,050 (7,517)
980 445 -- -- -- --
---------- ---------- ---------- ---------- -------- --------
179,538 102,727 81,039 45,001 25,370 15,146
---------- ---------- ---------- ---------- -------- --------
(6,285) (4,179) (67,958) (38,276) (43,331) (20,104)
(1,991) (400) (13,080) (6,722) (14,091) (6,761)
(92,107) (68,327) (1) (2) -- --
(48,772) (37,536) -- (1) -- --
-- -- -- -- -- --
-- -- -- -- -- --
---------- ---------- ---------- ---------- -------- --------
(149,155) (110,442) (81,039) (45,001) (57,422) (26,865)
---------- ---------- ---------- ---------- -------- --------
19,776 251,736 1,780,507 4,751,573 39,710 89,049
98,392 72,507 68,099 41,530 43,331 20,104
(138,205) (367,824) (1,644,009) (4,733,793) (109,527) (164,139)
---------- ---------- ---------- ---------- -------- --------
(20,037) (43,581) 204,597 59,310 (26,486) (54,986)
---------- ---------- ---------- ---------- -------- --------
1,562 2,868 300,900 237,251 10,303 16,701
50,763 37,934 13,111 7,288 14,091 6,761
(83,326) (82,751) (258,125) (233,306) (42,979) (37,529)
---------- ---------- ---------- ---------- -------- --------
(31,001) (41,949) 55,886 11,233 (18,585) (14,067)
---------- ---------- ---------- ---------- -------- --------
(51,038) (85,530) 260,483 70,543 (45,071) (69,053)
---------- ---------- ---------- ---------- -------- --------
(20,655) (93,245) 260,483 70,543 (77,123) (80,772)
1,112,895 1,206,140 1,617,876 1,547,333 620,631 701,403
---------- ---------- ---------- ---------- -------- --------
$1,092,240 $1,112,895 $1,878,359 $1,617,876 $543,508 $620,631
========== ========== ========== ========== ======== ========
$ 147 $ 467 $ -- $ -- $ 879 $ 30,369
========== ========== ========== ========== ======== ========
1,405 18,289 1,780,507 4,751,573 3,523 7,669
7,830 5,543 68,099 41,530 3,999 1,755
(9,824) (26,775) (1,644,009) (4,733,793) (9,703) (14,142)
---------- ---------- ---------- ---------- -------- --------
(589) (2,943) 204,597 59,310 (2,181) (4,718)
---------- ---------- ---------- ---------- -------- --------
112 211 300,900 237,251 924 1,449
4,068 2,916 13,111 7,288 1,310 594
(5,951) (6,073) (258,125) (233,306) (3,832) (3,266)
---------- ---------- ---------- ---------- -------- --------
(1,771) (2,946) 55,886 11,233 (1,598) (1,223)
---------- ---------- ---------- ---------- -------- --------
<Caption>
HARTFORD
SMALL COMPANY HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ 2,224 $ (2,447)
280,208 162,093
(107,789) 52,581
1,839 972
---------- ----------
176,482 213,199
---------- ----------
(1,995) --
(310) --
(166,251) --
(46,960) --
-- --
-- --
---------- ----------
(215,516) --
---------- ----------
351,795 472,718
168,246 --
(372,191) (535,159)
---------- ----------
147,850 (62,441)
---------- ----------
127,914 16,785
47,270 --
(77,994) (65,326)
---------- ----------
97,190 (48,541)
---------- ----------
245,040 (110,982)
---------- ----------
206,006 102,217
1,237,581 1,135,364
---------- ----------
$1,443,587 $1,237,581
========== ==========
-- $ 1
========== ==========
17,120 27,806
8,874 --
(17,994) (31,760)
---------- ----------
8,000 (3,954)
---------- ----------
6,160 961
2,541 --
(3,776) (3,946)
---------- ----------
4,925 (2,985)
---------- ----------
</Table>
181
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
SMALLCAP GROWTH HLS FUND STOCK HLS FUND
---------------------------- ----------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 3,507 $ 1,122 $ 65,537 $ 69,252
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 69,364 78,932 646,070 542,806
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ (13,942) 13,575 (4,441) (91,561)
Payments from (to) affiliate.............................. (229) 1,892 5,820 --
---------- --------- ----------- -----------
Net increase in net assets resulting from operations...... 58,700 95,521 712,986 520,497
---------- --------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (2,690) (2,640) (57,414) (91,246)
Class IB................................................ (351) (359) (7,809) (11,661)
From net realized gain on investments
Class IA................................................ (49,201) (38,240) (250,786) --
Class IB................................................ (18,032) (14,866) (42,418) --
From tax-return of capital
Class IA................................................ -- (9,243) -- --
Class IB................................................ -- (3,594) -- --
---------- --------- ----------- -----------
Total distributions..................................... (70,274) (68,942) (358,427) (102,907)
---------- --------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 167,603 556,140 162,487 288,047
Issued on reinvestment of distributions............... 51,891 50,123 308,200 91,246
Redeemed.............................................. (171,018) (424,352) (1,065,093) (1,611,066)
---------- --------- ----------- -----------
Total capital share transactions........................ 48,476 181,911 (594,406) (1,231,773)
---------- --------- ----------- -----------
Class IB
Sold.................................................. 79,810 77,064 33,536 103,222
Issued on reinvestment of distributions............... 18,383 18,820 50,227 11,661
Redeemed.............................................. (91,120) (33,653) (144,888) (119,161)
---------- --------- ----------- -----------
Total capital share transactions........................ 7,073 62,231 (61,125) (4,278)
---------- --------- ----------- -----------
Net increase (decrease) from capital share
transactions..................................... 55,549 244,142 (655,531) (1,236,051)
---------- --------- ----------- -----------
Net increase (decrease) in net assets.............. 43,975 270,721 (300,972) (818,461)
NET ASSETS:
Beginning of period....................................... 976,027 705,306 5,557,775 6,376,236
---------- --------- ----------- -----------
End of period............................................. $1,020,002 $ 976,027 $ 5,256,803 $ 5,557,775
========== ========= =========== ===========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ -- $ -- $ 4,252 $ 835
========== ========= =========== ===========
SHARE ACTIVITY:
Class IA
Sold.................................................. 7,759 27,199 3,194 6,202
Issued on reinvestment of distributions............... 2,481 2,423 5,888 1,889
Redeemed.............................................. (8,077) (20,752) (20,812) (34,543)
---------- --------- ----------- -----------
Total share activity.................................... 2,163 8,870 (11,730) (26,452)
---------- --------- ----------- -----------
Class IB
Sold.................................................. 3,701 3,811 656 2,244
Issued on reinvestment of distributions............... 881 912 962 242
Redeemed.............................................. (4,435) (1,643) (2,835) (2,555)
---------- --------- ----------- -----------
Total share activity.................................... 147 3,080 (1,217) (69)
---------- --------- ----------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
182
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD U.S. GOVERNMENT SECURITIES HARTFORD HARTFORD
TOTAL RETURN BOND HLS FUND HLS FUND VALUE HLS FUND VALUE OPPORTUNITIES HLS FUND
--------------------------- --------------------------- --------------------------- -----------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------ ------------- -------------
$ 185,710 $ 146,946 $ 41,615 $ 30,650 $ 4,580 $ 4,025 $ 7,275 $ 4,539
(23,745) 8,818 (8,996) (10,913) 36,922 10,537 46,699 35,150
22,008 (70,299) 4,926 (7,426) 30,229 9,277 47,434 2,149
107 -- -- -- 33 -- 280 --
---------- ----------- ---------- --------- -------- --------- -------- ---------
184,080 85,465 37,545 12,311 71,764 23,839 101,688 41,838
---------- ----------- ---------- --------- -------- --------- -------- ---------
(146,134) (197,249) (22,204) (15,790) (3,189) (4,525) (5,905) (5,185)
(46,861) (74,748) (10,055) (8,805) (1,169) (2,537) (1,488) (1,585)
(400) (19,030) -- -- (6,002) (2,309) (51,405) (8,272)
(149) (7,689) -- -- (3,835) (1,626) (18,120) (3,381)
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
---------- ----------- ---------- --------- -------- --------- -------- ---------
(193,544) (298,716) (32,259) (24,595) (14,195) (10,997) (76,918) (18,423)
---------- ----------- ---------- --------- -------- --------- -------- ---------
692,110 1,473,648 263,885 755,831 87,474 155,582 124,587 290,951
146,534 216,279 22,204 15,790 9,192 6,834 57,311 13,458
(533,586) (1,298,118) (169,642) (696,805) (48,293) (138,656) (81,630) (190,552)
---------- ----------- ---------- --------- -------- --------- -------- ---------
305,058 391,809 116,447 74,816 48,373 23,760 100,268 113,857
---------- ----------- ---------- --------- -------- --------- -------- ---------
114,885 176,135 31,121 67,804 27,688 22,364 30,780 90,102
47,010 82,437 10,055 8,805 5,003 4,163 19,607 4,966
(189,475) (121,501) (75,234) (42,744) (35,942) (22,574) (44,699) (31,632)
---------- ----------- ---------- --------- -------- --------- -------- ---------
(27,580) 137,071 (34,058) 33,865 (3,251) 3,953 5,688 63,436
---------- ----------- ---------- --------- -------- --------- -------- ---------
277,478 528,880 82,389 108,681 45,122 27,713 105,956 177,293
---------- ----------- ---------- --------- -------- --------- -------- ---------
268,014 315,629 87,675 96,397 102,691 40,555 130,726 200,708
3,813,715 3,498,086 914,927 818,530 323,426 282,871 542,073 341,365
---------- ----------- ---------- --------- -------- --------- -------- ---------
$4,081,729 $ 3,813,715 $1,002,602 $ 914,927 $426,117 $ 323,426 $672,799 $ 542,073
========== =========== ========== ========= ======== ========= ======== =========
$ 4,639 $ 13,086 $ 42,556 $ 32,259 $ 332 $ 128 $ 345 $ 282
========== =========== ========== ========= ======== ========= ======== =========
61,030 124,101 23,908 67,835 7,229 14,333 6,343 16,008
13,029 18,858 2,082 1,426 773 622 3,023 738
(47,107) (109,269) (15,347) (62,553) (4,040) (12,792) (4,203) (10,428)
---------- ----------- ---------- --------- -------- --------- -------- ---------
26,952 33,690 10,643 6,708 3,962 2,163 5,163 6,318
---------- ----------- ---------- --------- -------- --------- -------- ---------
10,191 14,913 2,843 6,089 2,289 2,074 1,570 5,028
4,198 7,228 946 798 427 381 1,042 274
(16,792) (10,349) (6,870) (3,858) (2,997) (2,073) (2,322) (1,761)
---------- ----------- ---------- --------- -------- --------- -------- ---------
(2,403) 11,792 (3,081) 3,029 (281) 382 290 3,541
---------- ----------- ---------- --------- -------- --------- -------- ---------
</Table>
183
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Hartford HLS Funds serve as underlying investment vehicles for certain
variable annuity and variable life insurance separate accounts of Hartford
Life Insurance Company ("HLIC") and its affiliates and certain qualified
retirement plans. Certain Hartford HLS Funds may also serve as underlying
investment options for certain variable annuity and variable life separate
accounts of other insurance companies. Owners of variable annuity contracts
and policyholders of variable life insurance contracts may choose the funds
permitted in the accompanying variable insurance contract prospectus. In
addition, participants in certain qualified retirement plans may choose the
funds permitted by their plans.
Hartford Series Fund, Inc. is comprised of twenty-six portfolios, each a
"Fund" or together the "Funds" (they are Hartford Advisers HLS Fund,
Hartford Capital Appreciation HLS Fund, Hartford Disciplined Equity HLS
Fund, Hartford Dividend and Growth HLS Fund, Hartford Equity Income HLS
Fund, Hartford Focus HLS Fund, Hartford Global Advisers HLS Fund, Hartford
Global Communications HLS Fund, Hartford Global Financial Services HLS Fund,
Hartford Global Health HLS Fund, Hartford Global Leaders HLS Fund, Hartford
Global Technology HLS Fund, Hartford Growth HLS Fund, Hartford High Yield
HLS Fund, Hartford Index HLS Fund, Hartford International Capital
Appreciation HLS Fund, Hartford International Opportunities HLS Fund,
Hartford International Small Company HLS Fund, Hartford MidCap HLS Fund,
Hartford MidCap Value HLS Fund, Hartford Money Market HLS Fund, Hartford
Mortgage Securities HLS Fund, Hartford Small Company HLS Fund, Hartford
Stock HLS Fund, Hartford Total Return Bond HLS Fund and Hartford Value HLS
Fund) and Hartford HLS Series Fund II, Inc. is comprised of ten portfolios,
four are included in these financial statements, each a "Fund" or together
the "Funds" (they are Hartford Growth Opportunities HLS Fund, Hartford
SmallCap Growth HLS Fund, Hartford U.S. Government Securities HLS Fund and
Hartford Value Opportunities HLS Fund) (the "Companies"). The Companies are
organized under the laws of the State of Maryland and are registered with
the Securities and Exchange Commission ("SEC") under the Investment Company
Act of 1940, as amended ("1940 Act"), as diversified open-end management
investment companies, except for Hartford Focus HLS Fund, Hartford Global
Communications HLS Fund, Hartford Global Financial Services HLS Fund,
Hartford Global Health HLS Fund and Hartford Global Technology HLS Fund,
which are non-diversified.
Each Fund is divided into Class IA and Class IB shares. Each class is
offered at net asset value without a sales charge and is subject to the same
expenses, except that the Class IB shares are subject to distribution fees
charged pursuant to Distribution and Service Plans. These Distribution and
Service Plans have been adopted in accordance with Rule 12b-1 of the 1940
Act.
Indemnifications: Under the Funds' organizational documents, their
directors and officers are indemnified against certain liabilities arising
out of the performance of their duties to the Funds. In addition, the Funds'
enter into contracts that contain a variety of indemnifications. The Funds'
maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expect
the risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost. Trade date for
senior floating rate interests purchased in the primary market is
considered the date on which the loan allocations are determined. Trade
date for senior floating rate interests purchased in the secondary
market is the date on which the transaction is entered into.
b) Security Valuation and Investment Income -- Except for Hartford Money
Market HLS Fund, the Funds generally use market prices in valuing
portfolio securities. If market quotations are not readily available or
are deemed unreliable, a Fund will use the fair value of the security as
determined in good faith under policies and procedures established by
and under the supervision of that Fund's Board of Directors. Market
prices may be deemed unreliable, for example, if a security is thinly
traded or if an event has occurred after the close of the exchange on
which a portfolio security is primarily traded but before the close of
the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. Eastern
Time, referred to as the "Valuation Time") that is expected to affect
the value of the portfolio security. The circumstances in which a Fund
may use fair value pricing include, among others: (i) the occurrence of
events that are significant to a particular issuer, such as mergers,
restructuring or defaults; (ii) the occurrence of events that are
significant to an entire market, such as natural disasters in a
particular region or governmental actions; (iii) trading restrictions on
securities; (iv) thinly traded securities and (v) market events such as
trading halts and early market closings. In addition, with respect to
the valuation of securities primarily traded on foreign markets, each
Fund uses a fair value pricing service approved by that Fund's Board of
Directors which employs quantitative models to adjust for "stale" prices
caused by the movement of other markets and other factors occurring
after the close of the foreign markets but before the close of the
Exchange. Securities that are primarily traded on foreign markets may
trade on days that are not business days of the Funds. Because the NAV
of each Fund's shares is determined only on business days of the Funds,
the value of the portfolio securities of a Fund that invests in foreign
securities may change on days when a shareholder will not be able to
purchase or redeem shares of the Fund. Fair value pricing is subjective
in nature and the use of fair value pricing by the Funds may cause the
net asset value of their respective shares to differ significantly from
the net asset value that would have been calculated using market prices
at the close of the exchange on which a portfolio security is primarily
traded but before the close of the Exchange. There can be no assurance
that any Fund could obtain the fair value assigned to a security if the
Fund were to sell the security at approximately the time at which that
Fund determines its NAV per share.
Debt securities (other than short-term investments and Senior Floating
Rate Interests), held by the Fund 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. Senior
Floating Rate Interests generally trade in over-the-counter markets and
are priced through an unaffiliated pricing service utilizing independent
market quotations from loan dealers or financial institutions.
Securities for which prices are not available from an independent
pricing service,
184
- --------------------------------------------------------------------------------
but where an active market exists, are valued using market quotations
obtained from one or more dealers that make markets in securities or from
a widely-used quotation system in accordance with procedures established
by that Fund's Board of Directors. Generally, each Fund may use fair
valuation in regards to debt securities when a Fund holds defaulted or
distressed securities or securities in a company in which reorganization
is pending. Short term investments with a maturity of more than 60 days
when purchased are valued based on market quotations until the remaining
days to maturity become less than 61 days. The Hartford Money Market HLS
Fund's investments and investments that mature in 60 days or less are
valued at amortized cost, which approximates market value.
Exchange traded equity securities shall be valued at the last reported
sale price on the exchange or market on which the security is primarily
traded (the "Primary Market") at the Valuation Time. If the security did
not trade on the Primary Market, it may be valued at the Valuation Time
at the last reported sale price on another exchange where it trades. The
value of an equity security not traded on any exchange but traded on the
Nasdaq Stock Market, Inc. System ("Nasdaq") or another over-the-counter
("OTC") market shall be valued at the last reported sale price or
official closing price on the exchange or market on which the security
is primarily traded as of the Valuation Time. If it is not possible to
determine the last reported sale price or official closing price on the
relevant exchange or market at the Valuation Time, the value of the
security shall be the most recent bid quotation on such exchange or
market at the Valuation Time.
Securities of foreign issuers and non-dollar securities are translated
from the local currency into U.S. dollars using prevailing exchange
rates.
Options contracts on securities, currencies, indexes, futures contracts,
commodities and other instruments shall be valued at their most recent
sales price at the Valuation Time on the Primary Market on which the
instrument is traded. If the instrument did not trade on the Primary
Market, it may be valued at the most recent sales price at the Valuation
Time on another exchange or market where it did trade.
Futures contracts shall be valued at the final settlement price reported
by the applicable futures exchange. If there were no trades as of the
valuation day, then the contract shall be valued at the closing bid
price as of the Valuation Time.
Financial instruments for which prices are not available from an
independent pricing service, but where an active market exists, are
valued using market quotations obtained from one or more dealers that
make markets in securities or from a widely-used quotation system in
accordance with procedures established by that Fund's Board of
Directors.
A forward currency contract shall be valued based on the price of the
underlying currency at the prevailing interpolated exchange rate, which
is a combination of the spot currency rate and the forward currency
rate. Spot currency rates and forward currency rates are obtained from
an independent pricing service on a daily basis not more than one hour
before the Valuation Time. In the event that the applicable pricing
service cannot provide the spot currency rates and forward currency
rates in a timely fashion, such rates may be obtained from a widely-used
quotation system in accordance with procedures established by that
Fund's Board of Directors.
Swaps and other derivative or contractual type instruments shall be
valued using market prices if such instruments trade on an exchange or
market. If such instruments do not trade on an exchange or market, such
instruments shall be valued at a price at which the counterparty to such
contract would repurchase the instrument. In the event that the
counterparty cannot provide a price, such valuation may be determined in
accordance with procedures established by the Fund's Board of Directors.
Dividend income is accrued as of the ex-dividend date, except that
certain dividends for foreign securities where the ex-dividend date may
have passed are recorded as soon as the Fund is informed of the dividend
in the exercise of reasonable diligence. Interest income, including
amortization of premium and accretion of discounts, is accrued on a
daily basis. Income and capital gain distributions from Underlying Funds
are recorded on the ex-dividend date.
c) Foreign Currency Transactions -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of portfolio security valuation
resulting from fluctuations in the foreign currency exchange rates on
portfolio securities from the fluctuations arising from changes in the
market prices of securities held. Such fluctuations are included within
the net realized and unrealized gain or loss on investments in the
accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability
amounts initially stated in foreign currencies and the U.S. dollar value
of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of other assets
and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
d) Securities Lending -- The Funds, except for the Hartford Money Market
HLS Fund, may lend their securities to certain qualified brokers who pay
these Funds negotiated lender fees. The loans are collateralized at all
times with cash, which is then invested in short-term money market
instruments or U.S. government securities with a market value at least
equal to the market value of the securities on loan. The adequacy of the
collateral for securities on loan is monitored on a daily basis. For
instances where the market value of collateral falls below the market
value of the securities out on loan, such collateral is supplemented on
the following day. As with other extensions of credit, these Funds may
bear the risk of delay in recovery of loaned securities or even loss of
rights in the collateral should the borrower of the securities fail
financially.
e) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Funds may transfer uninvested cash balances into a joint
trading account managed by Hartford Investment Management Company
(Hartford Investment Management), a wholly-owned subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford), or Wellington
Management Company LLP (Wellington). These balances may be invested in
one or more repurchase agreements and/or short-term money market
instruments.
185
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
f) Repurchase Agreements -- A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that 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 Funds or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable.
Certain Funds, together with other investment management companies
having investment advisory agreements with Wellington, have an interest
in joint repurchase agreements dated 12/29/06 in the amount of
$2,097,116 due 01/02/07 with the brokers indicated in the table below.
These joint repurchase agreements are collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ---- --------- ---------- ------------------ --------------- ------------
Bank of America.......... 5.31% $475,000 $484,500 FNMA 5.00% 2034
BNP Paribas.............. 5.31% 655,000 668,100 FHLMC 5.00% - 5.50% 2035 - 2036
FNMA 5.00% - 6.00% 2020 - 2036
Deutsche Bank............ 4.80% 7,116 7,226 U.S. Treasury Bill 4.825% 2007
Deutsche Bank............ 5.30% 410,000 418,200 FHLMC 4.50% - 8.00% 2116 - 2036
Morgan Stanley........... 5.30% 140,000 142,800 FHLMC 4.00% - 6.50% 2008 - 2046
FNMA 4.50% - 7.06% 2009 - 2046
UBS Securities LLC....... 5.31% 410,000 418,203 FNLMC 4.50% - 8.00% 2007 - 2036
FNMA 4.50% - 6.00% 2018 - 2046
</Table>
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Advisers HLS Fund.................................. $ 84,691
Hartford Capital Appreciation HLS Fund...................... 369,759
Hartford Disciplined Equity HLS Fund........................ 54,512
Hartford Dividend and Growth HLS Fund....................... 75,643
Hartford Equity Income HLS Fund............................. 7,435
Hartford Focus HLS Fund..................................... 623
Hartford Global Advisers HLS Fund........................... 16,679
Hartford Global Communications HLS Fund..................... 351
Hartford Global Financial HLS Fund.......................... 200
Hartford Global Health HLS Fund............................. 3,200
Hartford Global Leaders HLS Fund............................ 7,955
Hartford Global Technology HLS Fund......................... 883
Hartford Growth HLS Fund.................................... 1,924
Hartford Growth Opportunities HLS Fund...................... 40,840
Hartford International Capital Appreciation HLS Fund........ 25,310
Hartford International Opportunities HLS Fund............... 23,806
Hartford International Small Company HLS Fund............... 3,059
Hartford MidCap HLS Fund.................................... 83,453
Hartford MidCap Value HLS Fund.............................. 10,907
Hartford Small Company HLS Fund............................. 3,463
Hartford SmallCap Growth HLS Fund........................... 1,091
Hartford Stock HLS Fund..................................... 8,922
Hartford Value HLS Fund..................................... 11,435
Hartford Value Opportunities HLS Fund....................... 8,541
</Table>
Certain Funds, together with other investment management companies
having investment advisory agreements with Hartford Investment
Management, have an interest in joint repurchase agreements dated
12/29/06 in the amount of $697,665 due 01/02/07 with the brokers
indicated in the table below. These joint repurchase agreements are
collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ---- --------- ---------- ------------------- --------------- ------------
BNP Paribas................... 4.75% $250,000 $255,050 U.S. Treasury Bonds 5.25% - 8.50% 2020-2029
RBS Greenwich Capital
Markets..................... 4.75% 197,665 201,624 U.S. Treasury Note 12.00% 2013
UBS Securities LLC............ 4.75% 250,000 255,262 U.S. Treasury Bonds 8.125% - 8.875% 2017-2021
U.S. Treasury Note 11.75% 2014
</Table>
186
- --------------------------------------------------------------------------------
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Index HLS Fund..................................... $ 13,734
Hartford Mortgage Securities HLS Fund....................... 8,186
Hartford Small Company HLS Fund............................. 21,069
Hartford SmallCap Growth HLS Fund........................... 2,316
Hartford Total Return Bond HLS Fund......................... 309,937
Hartford U.S. Government Securities HLS Fund................ 106,677
</Table>
g) Futures and Options Transactions -- Certain Funds may invest in futures
and options contracts in order to gain exposure to or protect against
changes in the market. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. When
the Funds enter into futures contracts, they are required to deposit
with a futures commission merchant an amount of initial margin of cash,
commercial paper or U.S. Treasury Bills. Subsequent payments, called
maintenance margin, to and from the broker, are made on a daily basis as
the price of the underlying security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds.
At any time prior to the expiration of the futures contract, a Fund may
close the position by taking an opposite position, which would
effectively 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 use of futures contracts involve elements of market risk, which may
exceed the amounts recognized in the Statements of Assets and
Liabilities. Changes in the value of the futures contracts may decrease
the effectiveness of the Funds' strategies and potentially result in
loss. Certain Funds, as shown in the Schedule of Investments, had
outstanding futures contracts as of December 31, 2006.
The premium paid by the Funds for the purchase of a call or put option
is included in the Funds' Statements of Assets and Liabilities as an
investment and subsequently "marked-to-market" through net unrealized
appreciation (depreciation) of options to reflect the current market
value of the option as of the end of the reporting period.
The Funds may write covered options. "Covered" means that so long as the
Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option and an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to or greater
than the fluctuating market value of the option securities or
currencies. A Fund receives a premium for writing a call or put option,
which is recorded on the Funds' Statements of Assets and Liabilities and
subsequently "marked-to-market" through net unrealized appreciation
(depreciation) of options. There is a risk of loss from a change in the
value of such options, which may exceed the related premiums received.
Transactions involving written option contracts for the Funds during the
year ended December 31, 2006, are summarized below:
<Table>
<Caption>
HARTFORD CAPITAL APPRECIATION HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
---------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 42,696 7,385
Expired..................................................... -- --
Closed...................................................... (42,696) (7,385)
Exercised................................................... -- --
------- -------
End of the period........................................... -- $ --
======= =======
</Table>
<Table>
<Caption>
HARTFORD DISCIPLINED EQUITY HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
---------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 14,931 1,225
Expired..................................................... (4,239) (259)
Closed...................................................... (7,661) (689)
Exercised................................................... (509) (69)
------ ------
End of the period........................................... 2,522 $ 208
====== ======
</Table>
187
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD GLOBAL ADVISERS HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
---------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 2,020,000 19
Expired..................................................... -- --
Closed...................................................... (2,020,000) (19)
Exercised................................................... -- --
----------- ----
End of the period........................................... -- $ --
=========== ====
</Table>
* The number of contracts does not omit 000's.
h) Forward Foreign Currency Contracts -- At December 31, 2006, certain
Funds, as shown in the Schedule of Investments, entered into forward
foreign currency contracts that obligate the Funds to repurchase/replace
or sell currencies at specified future dates. The Funds enter into
forward foreign currency contracts to hedge against adverse fluctuations
in exchange rates between currencies.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statement of Assets and
Liabilities. In addition, risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of the contracts and from unanticipated movements in the value of
the foreign currencies relative to the U.S. dollar.
i) Indexed Securities -- The Funds may invest in indexed securities whose
values are linked to changes in interest rates, indices, or other
underlying instruments. The Funds use these securities to increase or
decrease their exposure to different underlying instruments and to gain
exposure to markets that might be difficult to invest in using
conventional securities. Indexed securities may be more volatile than
their underlying instruments, but any loss is limited to the amount of
the original investment and there may be a limit to the potential
appreciation of the investment. Certain Funds had investments in indexed
securities, as of December 31, 2006, as shown in the Schedule of
Investments under Exchange Traded Funds.
j) (1) 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 (IRC) by distributing
substantially all of their taxable net investment income and net
realized capital gains to their shareholders and otherwise complying
with the requirements of regulated investment companies. The Funds have
distributed substantially all of their income and capital gains in prior
years and each Fund intends to distribute substantially all of its
income and gains prior to the next fiscal year end. Accordingly, no
provision for federal income taxes has been made in the accompanying
financial statements. Distributions from short-term capital gains are
treated as ordinary income distributions for federal income tax
purposes.
j) (2) The tax character of distributions paid for the periods indicated is
as follows (as adjusted for dividends payable):
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------- -----------------------------------
LONG-TERM LONG-TERM TAX
ORDINARY CAPITAL ORDINARY CAPITAL RETURN OF
FUND INCOME GAINS INCOME GAINS CAPITAL
---- -------- ---------- -------- ---------- ---------
Hartford Advisers HLS Fund................................ $515,345 $ 282,069 $471,157 $ 250,471 $138,672
Hartford Capital Appreciation HLS Fund.................... 787,497 1,177,329 340,357 1,659,106 --
Hartford Disciplined Equity HLS Fund...................... 17,225 -- 14,155 -- --
Hartford Dividend and Growth HLS Fund..................... 138,240 486,777 149,221 242,526 --
Hartford Equity Income HLS Fund........................... 7,996 787 4,870 -- --
Hartford Focus HLS Fund................................... 3,929 3,223 2,083 2,526 --
Hartford Global Advisers HLS Fund......................... 17,582 6,391 14,813 -- --
Hartford Global Communications HLS Fund................... 1,350 3,813 1,031 68 --
Hartford Global Financial Services HLS Fund............... 1,063 1,043 1,163 36 --
Hartford Global Health HLS Fund........................... 22,014 39,823 7,034 22,013 --
Hartford Global Leaders HLS Fund.......................... 29,720 44,208 8,693 -- --
Hartford Global Technology HLS Fund....................... -- -- 286 -- --
Hartford Growth HLS Fund.................................. 2,054 33,419 4,299 15,645 --
Hartford Growth Opportunities HLS Fund.................... 48,149 89,358 1,991 73,463 --
Hartford High Yield HLS Fund.............................. 103,905 -- 48,629 -- --
Hartford Index HLS Fund................................... 30,059 203,364 37,778 63,847 --
Hartford International Capital Appreciation HLS Fund...... 47,161 22,551 23,969 6,376 --
Hartford International Opportunities HLS Fund............. 109,112 79,473 -- -- --
Hartford International Small Company HLS Fund............. 32,458 17,566 27,176 8,311 --
Hartford MidCap HLS Fund.................................. 65,602 402,928 56,232 332,889 --
Hartford MidCap Value HLS Fund............................ 49,607 99,548 48,142 62,300 --
Hartford Money Market HLS Fund............................ 81,039 -- 45,001 -- --
</Table>
188
- --------------------------------------------------------------------------------
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------- -----------------------------------
LONG-TERM LONG-TERM TAX
ORDINARY CAPITAL ORDINARY CAPITAL RETURN OF
FUND INCOME GAINS INCOME GAINS CAPITAL
---- -------- ---------- -------- ---------- ---------
Hartford Mortgage Securities HLS Fund..................... $ 57,422 $ -- $ 26,865 $ -- $ --
Hartford Small Company HLS Fund........................... 32,940 182,576 -- -- --
Hartford SmallCap Growth HLS Fund......................... 5,050 65,224 12,859 43,245 12,838
Hartford Stock HLS Fund................................... 128,118 230,309 102,907 -- --
Hartford Total Return Bond HLS Fund....................... 192,995 549 286,964 11,752 --
Hartford U.S. Government Securities HLS Fund.............. 32,259 -- 24,595 -- --
Hartford Value HLS Fund................................... 5,204 8,991 7,062 3,935 --
Hartford Value Opportunities HLS Fund..................... 34,290 42,628 12,269 6,154 --
</Table>
As of December 31, 2006, the components of distributable earnings
(deficit) on a tax basis were as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY LONG-TERM CAPITAL GAINS APPRECIATION EARNINGS
FUND INCOME CAPITAL GAIN (LOSSES)* (DEPRECIATION)@ (DEFICIT)
---- ------------- ------------- ------------- --------------- -----------
Hartford Advisers HLS Fund............ $76,281 $ 52,423 $ -- $ 426,510 $ 555,214
Hartford Capital Appreciation HLS
Fund................................ 81,234 433,398 -- 2,462,262 2,976,894
Hartford Disciplined Equity HLS
Fund................................ 1,000 -- (17,969) 228,085 211,116
Hartford Dividend and Growth HLS
Fund................................ 21,396 67,413 -- 1,517,063 1,605,872
Hartford Equity Income HLS Fund....... 1,993 15,828 -- 61,246 79,067
Hartford Focus HLS Fund............... 5,855 956 -- 4,174 10,985
Hartford Global Advisers HLS Fund..... 3,215 4,741 -- 32,875 40,831
Hartford Global Communications HLS
Fund................................ 599 4,848 -- 5,470 10,917
Hartford Global Financial Services HLS
Fund................................ 842 6,585 -- 6,837 14,264
Hartford Global Health HLS Fund....... 548 11,186 -- 68,547 80,281
Hartford Global Leaders HLS Fund...... 14,597 18,965 (389) 189,557 222,730
Hartford Global Technology HLS Fund... -- -- (49,595) 20,063 (29,532)
Hartford Growth HLS Fund.............. 75 12,139 -- 44,429 56,643
Hartford Growth Opportunities HLS
Fund................................ 17,980 11,359 -- 183,441 212,780
Hartford High Yield HLS Fund.......... 993 -- (33,053) 13,825 (18,235)
Hartford Index HLS Fund............... 1,537 6,441 -- 354,533 362,511
Hartford International Capital
Appreciation HLS Fund............... 13,697 15,666 -- 142,961 172,324
Hartford International Opportunities
HLS Fund............................ 15,677 58,669 (5,720) 297,213 365,839
Hartford International Small Company
HLS Fund............................ 5,706 7,457 -- 51,637 64,800
Hartford MidCap HLS Fund.............. 11,206 59,465 -- 380,509 451,180
Hartford MidCap Value HLS Fund........ 33,678 131,152 -- 184,421 349,251
Hartford Mortgage Securities HLS
Fund................................ 879 -- (19,936) (3,082) (22,139)
Hartford Small Company HLS Fund....... 26,151 33,773 -- 138,496 198,420
Hartford SmallCap Growth HLS Fund..... 1,061 1,357 -- 85,892 88,310
Hartford Stock HLS Fund............... 52,671 57,643 -- 365,274 475,588
Hartford Total Return Bond HLS Fund... 4,098 -- (40,586) (475) (36,963)
Hartford U.S. Government Securities
HLS Fund............................ 42,556 -- (31,992) (3,193) 7,371
Hartford Value HLS Fund............... 3,709 33,289 -- 80,733 117,731
Hartford Value Opportunities HLS
Fund................................ 4,140 8,321 -- 98,634 111,095
</Table>
* Certain Funds had capital loss carryforwards that are identified in
Note 2 (j) (4).
@ The differences between book-basis and tax-basis unrealized
appreciation (depreciation) are attributable primarily to the tax
deferral of losses on wash sales, the mark-to-market adjustment for
certain derivatives in accordance with IRC Sec. 1256, the
mark-to-market of Passive Foreign Investment Companies and basis
differences in real estate investment trusts.
j) (3) Reclassification of Capital Accounts:
In accordance with American Institute of Certified Public Accountants
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, the Funds have recorded several
reclassifications in their capital accounts. These reclassifications had
no impact on the net asset value per share of the Funds and are designed
generally to present accumulated undistributed (distribution in excess
of) net investment income and accumulated net realized gains (losses) on
investments on a tax basis which is considered to be more informative to
a shareholder. The reclassifications are a result of permanent
differences between GAAP and tax accounting for such items as foreign
currency, distributions representing a return of capital, class action
settlements received, expiration of capital loss carryforwards,
expiration of net operating losses, and net operating losses that reduce
short-term capital gain distribution requirements. Adjustments are made
to reflect the impact these items have on current and future
distributions to
189
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
shareholders. Therefore, the source of the Funds' distributions may be
shown in the accompanying Statements of Changes in Net Assets as from net
investment income, from net realized gains on investments or from capital
depending on the type of book and tax differences that exist. For the
year ended December 31, 2006, the Funds recorded the following
reclassifications to increase (decrease) the accounts listed below.
<Table>
<Caption>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN (LOSS) ON PAID-IN-
FUND INCOME (LOSS) INVESTMENTS CAPITAL
---- -------------- -------------- --------
Hartford Advisers HLS Fund.................................. $ 2,798 $ (2,798) $ --
Hartford Capital Appreciation HLS Fund...................... 62,578 (62,578) --
Hartford Disciplined Equity HLS Fund........................ (63) 64 (1)
Hartford Dividend and Growth HLS Fund....................... (340) 340 --
Hartford Equity Income HLS Fund............................. (21) 21 --
Hartford Focus HLS Fund..................................... (23) 24 (1)
Hartford Global Advisers HLS Fund........................... (35) 35 --
Hartford Global Communications HLS Fund..................... (2) 2 --
Hartford Global Financial Services HLS Fund................. 4 (4) --
Hartford Global Health HLS Fund............................. (9) 9 --
Hartford Global Leaders HLS Fund............................ (905) 905 --
Hartford Global Technology HLS Fund......................... 584 32 (616)
Hartford Growth HLS Fund.................................... (99) 99 --
Hartford Growth Opportunities HLS Fund...................... (249) 249 --
Hartford High Yield HLS Fund................................ (167) 8,921 (8,754)
Hartford Index HLS Fund..................................... (298) 298 --
Hartford International Capital Appreciation HLS Fund........ 295 (295) --
Hartford International Opportunities HLS Fund............... 1,059 (1,084) 25
Hartford International Small Company HLS Fund............... 2,692 (2,692) --
Hartford MidCap HLS Fund.................................... (839) 839 --
Hartford MidCap Value HLS Fund.............................. (110) 110 --
Hartford Mortgage Securities HLS Fund....................... 889 (889) --
Hartford Small Company HLS Fund............................. (559) 559 --
Hartford SmallCap Growth HLS Fund........................... (149) 150 (1)
Hartford Stock HLS Fund..................................... 1,327 (1,328) 1
Hartford Total Return Bond HLS Fund......................... (1,269) 1,269 --
Hartford U.S. Government Securities HLS Fund................ 941 (941) --
Hartford Value HLS Fund..................................... (27) 27 --
Hartford Value Opportunities HLS Fund....................... (55) 56 (1)
</Table>
j) (4) Capital Loss Carryforwards:
At December 31, 2006 (tax year-end), the following Funds had capital
loss carryforwards for U.S. Federal income tax purposes of
approximately:
<Table>
<Caption>
YEAR OF EXPIRATION
-----------------------------------------------------------------------------------
2007 2008 2009 2010 2011 2012 2013 2014 TOTAL
------ ------ ------ ------- ------- ------ ------- ------- -------
Hartford Disciplined Equity HLS
Fund.............................. $ -- $5,272 $8,430 $ 758 $ 3,509 $ -- $ -- $ -- $17,969
Hartford Global Leaders HLS Fund.... -- -- 19 370 -- -- -- -- 389
Hartford Global Technology HLS
Fund.............................. -- -- -- 49,595 -- -- -- -- 49,595
Hartford High Yield HLS Fund........ 5,209 3,479 875 -- 20,644 -- -- 2,846 33,053
Hartford International Opportunities
HLS Fund.......................... -- 826 3,848 1,046 -- -- -- -- 5,720
Hartford Mortgage Securities HLS
Fund.............................. -- -- -- -- -- 8,992 2,409 8,362 19,763
Hartford Total Return Bond HLS
Fund.............................. -- -- -- -- -- -- -- 40,586 40,586
Hartford U.S. Government Securities
HLS Fund.......................... 2,513 1,398 -- -- -- 3,025 10,631 13,820 31,387
</Table>
Hartford High Yield HLS Fund had expiration of capital loss carryover in
the amount of $8,764 in 2006.
Based on certain provisions in the Internal Revenue Code, various
limitations regarding the future utilization of the Hartford Disciplined
Equity HLS Fund, Hartford Global Leaders HLS Fund, Hartford High Yield
HLS Fund, Hartford International Opportunities HLS Fund and Hartford
Total Return Bond HLS Fund carryforwards may apply.
190
- --------------------------------------------------------------------------------
For the fiscal year ended December 31, 2006 the following Funds have
elected to defer losses occurring between November 1, 2006 and December
31, 2006 as follows:
<Table>
<Caption>
CAPITAL LOSS
FUND DEFERRED
---- ------------
Hartford Mortgage Securities HLS Fund....................... $173
Hartford U.S. Government Securities HLS Fund................ 605
</Table>
Such deferred losses will be treated as arising on the first day of the
fiscal year ending December 31, 2007.
k) Fund Share Valuation and Dividend Distributions to
Shareholders -- Orders for the Funds' shares are executed in accordance
with the investment instructions of the contract holders or plan
participants. The net asset value of each Fund's shares is determined as
of the close of each business day of the Exchange. The net asset value
per share is determined separately for each class of each Fund by
dividing the Fund's net assets attributable to that class by the number
of shares of the class outstanding. Orders for the purchase of a Fund's
shares received by an insurance company or plan prior to the close of
the Exchange on any day on which the Exchange is open for business are
priced at the per-share net asset value determined as of the close of
the Exchange. Orders received after the close of the Exchange, or on a
day on which the Exchange and/or the Fund is not open for business, are
priced at the next determined per-share net asset value.
Dividends are declared pursuant to a policy adopted by the Funds' Board
of Directors based upon the investment performance of the respective
Funds. The policy of all Funds except Hartford Money Market HLS Fund is
to pay dividends from net investment income and distribute realized
capital gains, if any, at least once a year.
Hartford Money Market HLS Fund seeks to maintain a stable net asset
value per share of $1.00 by declaring a daily dividend from net
investment income, including net short-term capital gains and losses,
and by valuing its investments using the amortized cost method.
Dividends are declared daily and distributed monthly.
Distributions from net investment income, net realized capital gains and
capital are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles with respect to character and timing. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, losses deferred due to
wash sales and excise tax regulations. Permanent book and federal income
tax basis differences relating to shareholder distributions will result
in reclassifications to certain of the Fund's capital accounts (see Note
2(j)(3)).
l) Illiquid and Restricted Securities -- Each Fund is permitted to invest
up to 15% of its net assets in illiquid securities, except for Hartford
Money Market HLS Fund, which may invest up to 10% in such securities.
"Illiquid Securities" are those that may not be sold or disposed of in
the ordinary course of business within seven days, at approximately the
price used to determine a Fund's net asset value per share. A Fund may
not be able to sell illiquid securities or other investments when its
sub-adviser considers it desirable to do so or may have to sell such
securities or investments at a price that is lower than the price that
could be obtained if the securities or investments were more liquid. A
sale of illiquid securities or other investments may require more time
and may result in higher dealer discounts and other selling expenses
than does the sale of those that are liquid. Illiquid securities and
investments also may be more difficult to value, due to the
unavailability of reliable market quotations for such securities or
investments, and investments in them may have an adverse impact on net
asset value. Each Fund may also purchase certain restricted securities,
commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by that Fund's Board of Directors.
m) Securities Purchased on a When-Issued or Delayed-Delivery
Basis -- Delivery and payment for securities that have been purchased by
the Funds on a forward commitment or when-issued or delayed-delivery
basis take place beyond the customary settlement period. During this
period, such securities are subject to market fluctuations, and the Funds
identify securities segregated in their records with value at least equal
to the amount of the commitment. As of December 31, 2006, the Funds
entered into outstanding when-issued or forward commitments as follows:
<Table>
<Caption>
MARKET
FUND VALUE
---- --------
Hartford Global Advisers HLS Fund........................... $ 93,684
Hartford High Yield HLS Fund................................ 4,820
Hartford Mortgage Securities HLS Fund....................... 81,705
Hartford Total Return Bond HLS Fund......................... 370,173
Hartford U.S. Government Securities HLS Fund................ 163,522
</Table>
n) Credit Risk -- Credit risk depends largely on the perceived financial
health of bond issuers. In general, lower rated bonds have higher credit
risk. High yield bond prices can fall on bad news about the economy, an
industry or a company. The share price, yield and total return of a fund
which holds securities with higher credit risk may fluctuate more than
with less aggressive bond funds.
o) Senior Floating Rate Interests -- Certain Funds, as shown in the
Schedule of Investments, may invest in senior floating rate interests.
Senior floating rate interests hold the most senior position in the
capital structure of a business entity (the "Borrower"), are typically
secured by specific collateral, and have a claim on the assets and/or
stock of the Borrower that is senior to that held by subordinated
debtholders and stockholders of the Borrower. Senior floating rate
interests are typically structured and administered by a financial
institution that acts as the agent of the lenders participating in the
floating rate loan. Senior floating rate interests are rated
below-investment-grade, which suggests they are more likely to default
than investment-grade loans. A default could lead to non-payment of
income which would result in a reduction of
191
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
income to the Fund and there can be no assurance that the liquidation of
any collateral would satisfy the Borrower's obligation in the event of
non-payment of scheduled interest or principal payments, or that such
collateral could be readily liquidated.
p) Prepayment Risks -- Most senior floating rate interests and certain debt
securities allow for prepayment of principal without penalty. Senior
floating rate interests and securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise. In
addition, with respect to securities, rising interest rates may cause
prepayments to occur at a slower than expected rate, thereby effectively
lengthening the maturity of the security and making the security more
sensitive to interest rate changes. Prepayment risk is a major risk of
mortgage-backed securities and certain asset-backed securities.
Accordingly, the potential for the value of senior floating rate
interests or securities to increase in response to interest rate
declines is limited. For certain asset-backed securities, the actual
maturity may be less than the stated maturity shown in the Schedule of
Investments. As a result, the timing of income recognition relating to
these securities may vary based upon actual maturity. Senior floating
rate interests or debt securities purchased to replace a prepaid loan or
a debt security may have lower yields than the yield on the prepaid loan
or debt security.
Senior floating rate interests generally are subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions
and because there may be significant economic incentives for the
Borrower to repay, prepayments of senior loans may occur. As a result,
the actual remaining maturity of senior loans held may be substantially
less than the stated maturities shown in the Schedule of Investments.
q) Use of Estimates -- The preparation of financial statements in
conformity with U.S. 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
year. Operating results in the future could vary from the amounts
derived from management's estimates.
r) Credit Default Swaps -- Certain HLS Funds may enter into event linked
swaps, including credit default swaps. The credit default swap market
allows a Fund to manage credit risk through buying and selling credit
protection on a specific issuer, an index, or a basket of issuers. The
transactions are documented through swap documents. A "buyer" of credit
protection agrees to pay a counterparty to assume the credit risk of an
issuer upon the occurrence of certain events. The "seller" of the
protection receives periodic payments and agrees to assume the credit
risk of an issuer upon the occurrence of certain events. A "seller's"
exposure is limited to the total notional amount of the credit default
swap contract. A Fund will generally not buy protection on issuers that
are not currently held by such Fund. A Fund, as shown in the Schedule of
Investments, had outstanding credit default swaps as of December 31,
2006.
s) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Funds' tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Funds' financial statements has not yet been determined.
t) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. As of December 31, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of
certain measurements reported in the Statements of Operations for a
fiscal period.
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors), an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Funds pursuant to investment
management agreements approved by each Fund's Board of Directors and
shareholders, as applicable.
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered, a portion of which is used to compensate
the sub-advisers. Investment management and advisory fees are accrued
daily and paid monthly.
192
- --------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND(1)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.200%
On next $3 billion................................................. 0.100%
On next $5 billion................................................. 0.080%
Over $10 billion................................................... 0.070%
</Table>
(1) Effective November 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.10% of average total net assets until October 31, 2006.
Effective November 1, 2006, HL Advisors has permanently reduced its
management fees for this fund. The new schedule is as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion... 0.100%
Over $3 billion... 0.000%
</Table>
HARTFORD MONEY MARKET HLS FUND(2) AND
HARTFORD MORTGAGE SECURITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.250%
On next $3 billion................................................. 0.200%
On next $5 billion................................................. 0.180%
Over $10 billion................................................... 0.170%
</Table>
(2) Effective January 1, 2007, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until December 31,
2007.
HARTFORD STOCK HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
Over $1 billion.................................................... 0.250%
</Table>
HARTFORD U.S. GOVERNMENT
SECURITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $50 million............................................... 0.500%
On next $4.95 billion.............................................. 0.450%
On next $5 billion................................................. 0.430%
Over $10 billion................................................... 0.420%
</Table>
HARTFORD CAPITAL APPRECIATION HLS FUND,
HARTFORD DISCIPLINED EQUITY HLS FUND,
HARTFORD DIVIDEND AND GROWTH HLS FUND,
HARTFORD GLOBAL ADVISERS HLS FUND,
HARTFORD GLOBAL LEADERS HLS FUND,
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND,
HARTFORD MIDCAP HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
Over $1 billion.................................................... 0.425%
</Table>
HARTFORD FOCUS HLS FUND(3),
HARTFORD GLOBAL COMMUNICATIONS HLS FUND(4),
HARTFORD GLOBAL FINANCIAL SERVICES HLS FUND(4),
HARTFORD GLOBAL HEALTH HLS FUND,
HARTFORD GLOBAL TECHNOLOGY HLS FUND,
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND
AND HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.650%
On next $250 million............................................... 0.600%
Over $500 million.................................................. 0.550%
</Table>
(3) Effective November 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.10% of average total net assets until October 31, 2006.
(4) Effective September 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.40% of average total net assets. This management fee
waiver was discontinued as of November 1, 2006.
193
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
HARTFORD EQUITY INCOME HLS FUND(5),
HARTFORD GROWTH HLS FUND,
HARTFORD MIDCAP VALUE HLS FUND
AND HARTFORD VALUE HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.625%
On next $250 million............................................... 0.575%
On next $500 million............................................... 0.525%
Over $1 billion.................................................... 0.475%
</Table>
(5) HL Advisors voluntarily agreed to waive management fees of 0.10% of average
total net assets until December 31, 2006.
HARTFORD GROWTH OPPORTUNITIES HLS FUND,
HARTFORD SMALLCAP GROWTH HLS FUND
AND HARTFORD VALUE OPPORTUNITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.700%
Over $100 million.................................................. 0.600%
</Table>
HARTFORD ADVISERS HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.480%
On next $250 million............................................... 0.455%
On next $500 million............................................... 0.445%
Over $1 billion.................................................... 0.395%
</Table>
HARTFORD TOTAL RETURN BOND HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
On next $4 billion................................................. 0.250%
On next $5 billion................................................. 0.230%
Over $10 billion................................................... 0.220%
</Table>
HARTFORD HIGH YIELD HLS FUND(6)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
On next $4 billion................................................. 0.425%
On next $5 billion................................................. 0.405%
Over $10 billion................................................... 0.395%
</Table>
(6) Effective November 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until October 31, 2006.
This waiver has been continued until October 31, 2007.
HARTFORD SMALL COMPANY HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
On next $500 million............................................... 0.400%
Over $1.5 billion.................................................. 0.350%
</Table>
Pursuant to sub-advisory agreements between HL Advisors and Wellington,
Wellington provides the day-to-day investment management services to
Hartford Advisers HLS Fund, Hartford Capital Appreciation HLS Fund,
Hartford Disciplined Equity HLS Fund, Hartford Dividend and Growth HLS
Fund, Hartford Equity Income HLS Fund, Hartford Focus HLS Fund, Hartford
Global Advisers HLS Fund, Hartford Global Communications HLS Fund,
Hartford Global Financial Services HLS Fund, Hartford Global Health HLS
Fund, Hartford Global Leaders HLS Fund, Hartford Global Technology HLS
Fund, Hartford Growth HLS Fund, Hartford Growth Opportunities HLS Fund,
Hartford International Capital Appreciation HLS Fund, Hartford
International Opportunities HLS Fund, Hartford International Small
Company HLS Fund, Hartford MidCap HLS Fund, Hartford MidCap Value HLS
Fund, Hartford Small Company HLS Fund, Hartford SmallCap Growth HLS
Fund, Hartford Stock HLS Fund, Hartford Value HLS Fund and Hartford
Value Opportunities HLS Fund.
Pursuant to investment services agreements between HL Advisors and
Hartford Investment Management, Hartford Investment Management provides
the day-to-day investment management services to Hartford High Yield HLS
Fund, Hartford Index HLS Fund, Hartford Money Market HLS Fund, Hartford
Mortgage Securities HLS Fund, Hartford Small Company HLS Fund, Hartford
SmallCap Growth HLS Fund, Hartford Total Return Bond HLS Fund and
Hartford U.S. Government Securities HLS Fund.
Wellington and Hartford Investment Management determine the purchase and
sale of portfolio securities and place such orders for execution in the
name of the respective Fund. In conjunction with their investment
activity, Wellington and Hartford Investment Management regularly
furnish reports to the Funds' Board of Directors concerning economic
forecasts, investment strategy, portfolio activity and performance of
the Funds.
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and each of the following Funds; Hartford
Advisers HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford
Disciplined Equity HLS Fund, Hartford Dividend and Growth HLS Fund,
Hartford Equity Income HLS Fund, Hartford Focus HLS Fund, Hartford
Global Advisers HLS Fund, Hartford Global Communications HLS Fund,
Hartford Global Financial Services HLS Fund, Hartford Global Health HLS
Fund, Hartford Global Leaders HLS Fund, Hartford Global Technology HLS
Fund, Hartford Growth HLS Fund, Hartford High Yield HLS Fund, Hartford
Index HLS Fund, Hartford
194
- --------------------------------------------------------------------------------
International Capital Appreciation HLS Fund, Hartford International
Opportunities HLS Fund, Hartford International Small Company HLS Fund,
Hartford MidCap HLS Fund, Hartford MidCap Value HLS Fund, Hartford Money
Market HLS Fund, Hartford Mortgage Securities HLS Fund, Hartford Small
Company HLS Fund, Hartford Stock HLS Fund, Hartford Total Return Bond HLS
Fund and Hartford Value HLS Fund, HLIC provides administrative services
to the Funds and receives monthly compensation at the annual rate of
0.20% of each Fund's average daily net assets, except for Hartford Index
HLS Fund. Effective November 1, 2006, the Hartford Index HLS Fund pays an
administrative service fee of 0.20% for the first $5 billion in average
net assets, 0.18% of average net assets for the next $5 billion and 0.17%
for average net assets over $10 billion. The Funds assume and pay certain
other expenses (including, but not limited to, accounting, custodian,
state taxes and directors' fees). Directors' fees represent remuneration
paid or accrued to directors not affiliated with HLIC or any other
related company. The Funds' administrative services fees are accrued
daily and paid monthly.
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and Hartford Advisers HLS Fund, Hartford Capital
Appreciation HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford
Dividend and Growth HLS Fund, Hartford Equity Income HLS Fund, Hartford
Focus HLS Fund, Hartford Global Advisors HLS Fund, Hartford Global
Communications HLS Fund, Hartford Global Financial Services HLS Fund,
Hartford Global Health HLS Fund, Hartford Global Leaders HLS Fund,
Hartford Global Technology HLS Fund, Hartford Growth HLS Fund, Hartford
High Yield HLS Fund, Hartford Index HLS Fund, Hartford International
Capital Appreciation HLS Fund, Hartford International Opportunities HLS
Fund, Hartford International Small Company HLS Fund, Hartford MidCap HLS
Fund, Hartford MidCap Value HLS Fund, Hartford Money Market HLS Fund,
Hartford Mortgage Securities HLS Fund, Hartford Small Company HLS Fund,
Hartford Stock HLS Fund, Hartford Total Return Bond HLS Fund and
Hartford Value HLS Fund, HLIC provides accounting services to the Funds
and receives monthly compensation at the annual rate of 0.015% of each
Fund's average daily net assets. The Funds' accounting services fees are
accrued daily and paid monthly.
d) Operating Expenses -- Allocable expenses of the Funds are charged to
each Fund based on the ratio of the average net assets of each Fund to
the combined average net assets of the Funds. Non-allocable expenses are
charged to each fund based on specific identification.
e) Fees Paid Indirectly -- The Funds have entered into agreements with
State Street Global Advisors, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Funds' expenses. In addition, the Funds'
custodian bank has also agreed to reduce its fees when the Funds
maintain cash on deposit in the non-interest-bearing custody account.
For the year ended December 31, 2006, these amounts are included in the
Statements of Operations.
The ratio of expenses to average net assets in the accompanying
financial highlights excludes the reduction in expenses related to fees
paid indirectly. Had the fees paid indirectly been included, the
annualized expense ratios for the years listed below would have been as
follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Advisers HLS
Fund...................... 0.62% 0.87% 0.64% 0.89% 0.66% 0.91%
Hartford Capital
Appreciation HLS Fund..... 0.66 0.91 0.67 0.92 0.67 0.92
Hartford Disciplined Equity
HLS Fund.................. 0.71 0.96 0.72 0.97 0.74 0.99
Hartford Dividend and Growth
HLS Fund.................. 0.66 0.91 0.66 0.91 0.67 0.92
Hartford Equity Income HLS
Fund...................... 0.74 0.99 0.75 1.00 0.88 1.13
Hartford Focus HLS Fund..... 0.83 1.08 0.89 1.14 0.86 1.11
Hartford Global Advisers HLS
Fund...................... 0.80 1.05 0.77 1.03 0.78 1.03
Hartford Global
Communications HLS Fund... 0.64 0.89 0.82 1.06 0.99 1.24
Hartford Global Financial
Services HLS Fund......... 0.61 0.86 0.80 1.05 0.94 1.19
Hartford Global Health HLS
Fund...................... 0.87 1.12 0.86 1.11 0.86 1.11
Hartford Global Leaders HLS
Fund...................... 0.74 0.99 0.68 0.93 0.68 0.93
Hartford Global Technology
HLS Fund.................. 0.93 1.18 0.91 1.16 0.83 1.08
Hartford Growth HLS Fund.... 0.82 1.07 0.82 1.07 0.83 1.08
Hartford Growth
Opportunities HLS Fund.... 0.63 0.88 0.58 0.84 0.57 0.82
Hartford High Yield HLS
Fund...................... 0.72 0.97 0.76 1.01 0.77 1.02
Hartford Index HLS Fund..... 0.33 0.58 0.42 0.67 0.44 0.69
Hartford International
Capital Appreciation HLS
Fund...................... 0.85 1.10 0.86 1.11 0.89 1.14
Hartford International
Opportunities HLS Fund.... 0.73 0.98 0.74 0.99 0.74 0.99
Hartford International Small
Company HLS Fund.......... 0.92 1.17 0.97 1.22 1.01 1.26
Hartford MidCap HLS Fund.... 0.66 0.91 0.68 0.93 0.68 0.93
Hartford MidCap Value HLS
Fund...................... 0.77 1.02 0.78 1.03 0.78 1.03
Hartford Money Market HLS
Fund...................... 0.48 0.73 0.49 0.74 0.48 0.73
Hartford Mortgage Securities
HLS Fund.................. 0.49 0.74 0.49 0.74 0.49 0.74
Hartford Small Company HLS
Fund...................... 0.70 0.95 0.71 0.96 0.70 0.95
Hartford SmallCap Growth HLS
Fund...................... 0.62 0.87 0.62 0.87 0.63 0.88
Hartford Stock HLS Fund..... 0.47 0.72 0.48 0.73 0.48 0.73
</Table>
195
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Total Return Bond
HLS Fund.................. 0.49% 0.74% 0.50% 0.75% 0.50% 0.75%
Hartford U.S. Government
Securities HLS Fund....... 0.48 0.73 0.47 0.72 0.47 0.72
Hartford Value HLS Fund..... 0.84 1.09 0.85 1.10 0.85 1.10
Hartford Value Opportunities
HLS Fund.................. 0.64 0.89 0.64 0.89 0.66 0.91
</Table>
f) Distribution Plan for Class IB shares -- Each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, each Fund
compensates the Distributor, Hartford Securities Distribution Company,
Inc. (a wholly owned, ultimate subsidiary of Hartford Life, Inc.) from
assets attributable to the Class IB shares for services rendered and
expenses borne in connection with activities primarily intended to
result in the sale of the Class IB shares.
The Distribution Plan provides that each Fund may pay annually up to
0.25% of the average daily net assets of a Fund attributable to its
Class IB shares for activities primarily intended to result in the sale
of Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard. The Funds' distribution fees are
accrued daily and paid monthly.
g) Payments from (to) Affiliate -- The Funds are available for purchase by
the separate accounts of different variable universal life policies,
variable annuity products, and funding agreements and they are offered
directly to certain qualified retirement plans ("Products"). Although
existing Products contain transfer restrictions, some Products,
particularly older variable annuity products, did not contain
restrictions on the frequency of transfers. In addition, as the result
of the settlement of litigation against Hartford Life (the issuers of
such variable annuity products), the Funds' ability to restrict
transfers by certain owners of older variable annuity products was
limited. During 2006, these annuity owners surrendered the older
variable annuity contracts that were the subject of prior litigation. In
February 2005, Hartford Life agreed with the Board of Directors of the
Funds to indemnify the Funds for any material harm caused to the Funds
from frequent trading by these contracts owners. Pursuant to the
agreement, the following amounts have been paid (received) to (from) the
Funds indicated in 2006 and 2005. Amounts are recorded as Payments from
(to) Affiliate in the Statements of Operations:
<Table>
<Caption>
FUND 2006 2005
---- ----- ------
Hartford Disciplined Equity HLS Fund........................ $ 104 $ --
Hartford Dividend and Growth HLS Fund....................... 398 --
Hartford Growth HLS Fund.................................... 253 440
Hartford Growth Opportunities HLS Fund...................... 257 1,140
Hartford High Yield HLS Fund................................ 129 4,027
Hartford Index HLS Fund..................................... 90 --
Hartford MidCap HLS Fund.................................... -- 513
Hartford MidCap Value HLS Fund.............................. 821 445
Hartford Small Company HLS Fund............................. 189 972
Hartford SmallCap Growth HLS Fund........................... (350) 1,892
Hartford Stock HLS Fund..................................... 259 --
Hartford Total Return Bond HLS Fund......................... 107 --
Hartford Value Opportunities HLS Fund....................... 220 --
</Table>
In 2005, Hartford SmallCap Growth HLS Fund recorded a receivable from
affiliate for $494 as an estimate of the total due from affiliate for
the calendar year. When the final calculation was completed for the full
indemnification period (which ended in 2006), it was determined the
payment from affiliate should be only $144. The table above reflects the
net payment from affiliate.
On November 8, 2006, the SEC issued an order setting forth the terms of
a settlement reached with three subsidiaries of The Hartford that
resolves the SEC's Division of Enforcement's investigation of aspects of
The Hartford's variable annuity and mutual fund operations related to
directed brokerage and revenue sharing. Under the terms of the
settlement, The Hartford paid a total of $39.6 million to the Funds in
the amounts indicated below. These amounts were recorded on November 8,
2006 and paid on November 22, 2006. The Hartford settled this matter
without admitting or denying the findings of the SEC.
<Table>
<Caption>
FUND AMOUNT
---- -------
Hartford Advisers HLS Fund.................................. $ 6,804
Hartford Capital Appreciation HLS Fund...................... 11,567
Hartford Disciplined Equity HLS Fund........................ 501
Hartford Dividend and Growth HLS Fund....................... 3,856
Hartford Focus HLS Fund..................................... 110
Hartford Global Advisers HLS Fund........................... 572
Hartford Global Communications HLS Fund..................... 11
Hartford Global Financial Services HLS Fund................. 6
Hartford Global Health HLS Fund............................. 116
</Table>
196
- --------------------------------------------------------------------------------
<Table>
<Caption>
FUND AMOUNT
---- -------
Hartford Global Leaders HLS Fund............................ $ 3,344
Hartford Global Technology HLS Fund......................... 88
Hartford Growth HLS Fund.................................... 33
Hartford Growth Opportunities HLS Fund...................... 841
Hartford International Capital Appreciation HLS Fund........ 11
Hartford International Opportunities HLS Fund............... 314
Hartford International Small Company HLS Fund............... 11
Hartford MidCap HLS Fund.................................... 3,817
Hartford MidCap Value HLS Fund.............................. 159
Hartford Small Company HLS Fund............................. 1,650
Hartford SmallCap Growth HLS Fund........................... 121
Hartford Stock HLS Fund..................................... 5,561
Hartford Value HLS Fund..................................... 33
Hartford Value Opportunities HLS Fund....................... 60
</Table>
The total return in the financial highlights includes the impact of the
Payments from (to) Affiliate. The tables below show the impact of each
of the two Payments from (to) Affiliate and the total return for the
years ended December 31, 2006 and December 31, 2005, had the Payment
from (to) Affiliate been excluded.
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
-------------------- ------------------------ --------------------
IMPACT FROM PAYMENT IMPACT FROM PAYMENT TOTAL RETURN
FROM AFFILIATE FOR FROM (TO) AFFILIATE FOR EXCLUDING PAYMENTS
SEC SETTLEMENT UNRESTRICTED TRANSFERS FROM (TO) AFFILIATE
-------------------- ------------------------ --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- ---------- ---------- -------- --------
Hartford Advisers HLS Fund..................... 0.09% 0.09% --% --% 10.61% 10.34%
Hartford Capital Appreciation HLS Fund......... 0.09 0.09 -- -- 16.52 16.23
Hartford Disciplined Equity HLS Fund........... 0.03 0.03 0.01 0.01 12.41 12.13
Hartford Dividend and Growth HLS Fund.......... 0.06 0.06 0.01 0.01 20.29 19.99
Hartford Focus HLS Fund........................ 0.14 0.15 -- -- 9.58 9.30
Hartford Global Advisers HLS Fund.............. 0.17 0.16 -- -- 8.67 8.40
Hartford Global Communications HLS Fund........ 0.05 0.05 -- -- 21.98 21.67
Hartford Global Financial Services HLS Fund.... 0.02 0.02 -- -- 20.79 20.49
Hartford Global Health HLS Fund................ 0.03 0.03 -- -- 11.16 10.88
Hartford Global Leaders HLS Fund............... 0.31 0.32 -- -- 13.83 13.54
Hartford Global Technology HLS Fund............ 0.06 0.07 -- -- 10.29 10.01
Hartford Growth HLS Fund....................... 0.01 0.01 0.04 0.04 4.56 4.30
Hartford Growth Opportunities HLS Fund......... 0.07 0.07 0.02 0.02 11.96 11.70
Hartford High Yield HLS Fund................... -- -- 0.02 0.02 11.15 10.87
Hartford Index HLS Fund........................ -- -- 0.01 0.01 15.45 15.16
Hartford International Capital Appreciation HLS
Fund......................................... -- -- -- -- 24.08 23.77
Hartford International Opportunities HLS
Fund......................................... 0.02 0.02 -- -- 24.44 24.13
Hartford International Small Company HLS
Fund......................................... 0.01 0.00 -- -- 29.33 29.01
Hartford MidCap HLS Fund....................... 0.15 0.15 -- -- 11.59 11.31
Hartford MidCap Value HLS Fund................. 0.02 0.02 0.08 0.09 17.78 17.48
Hartford Small Company HLS Fund................ 0.14 0.14 -- -- 14.29 14.00
Hartford SmallCap Growth HLS Fund.............. 0.01 0.01 (0.03) (0.03) 6.88 6.61
Hartford Stock HLS Fund........................ 0.11 0.12 0.01 0.01 14.53 14.24
Hartford Total Return Bond HLS Fund............ -- -- -- -- 4.80 4.54
Hartford Value HLS Fund........................ 0.01 0.01 -- -- 21.81 21.51
Hartford Value Opportunities HLS Fund.......... 0.01 0.01 0.04 0.05 18.97 18.67
</Table>
197
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2005
---------------------- --------------------
IMPACT OF PAYMENT TOTAL RETURN
FROM AFFILIATE FOR EXCLUDING PAYMENT
UNRESTRICTED TRANSFERS FROM AFFILIATE
---------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB
---- --------- --------- -------- --------
Hartford Growth HLS Fund.................................... 0.09% 0.09% 4.58% 4.33%
Hartford Growth Opportunities HLS Fund...................... 0.11 0.11 16.20 15.91
Hartford High Yield HLS Fund................................ 0.57 0.56 1.56 1.29
Hartford MidCap HLS Fund.................................... 0.02 0.02 16.76 16.47
Hartford MidCap Value HLS Fund.............................. 0.04 0.04 9.95 9.67
Hartford Small Company HLS Fund............................. 0.10 0.10 20.91 20.61
Hartford SmallCap Growth HLS Fund........................... 0.22 0.22 10.80 10.56
</Table>
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the cost of purchases and proceeds
from sales of securities for Hartford Money Market HLS Fund were $18,993,247
and $18,729,737, respectively. The cost of purchases and proceeds from sales
of securities (excluding short-term investments) for the other portfolios
were as follows:
<Table>
<Caption>
COST OF SALES COST OF SALES
PURCHASES PROCEEDS PURCHASES PROCEEDS
EXCLUDING EXCLUDING FOR FOR
U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT
FUND OBLIGATIONS OBLIGATIONS OBLIGATIONS OBLIGATIONS
---- --------------- --------------- --------------- ---------------
Hartford Advisers HLS Fund......................... $ 6,986,202 $ 8,318,448 $ 798,579 $ 1,349,254
Hartford Capital Appreciation HLS Fund............. 10,255,815 12,028,310 -- --
Hartford Disciplined Equity HLS Fund............... 1,170,809 943,574 -- --
Hartford Dividend and Growth HLS Fund.............. 1,793,071 2,064,383 -- --
Hartford Equity Income HLS Fund.................... 193,885 102,576 -- --
Hartford Focus HLS Fund............................ 95,144 110,560 -- --
Hartford Global Advisers HLS Fund.................. 425,429 506,183 20,495 74,189
Hartford Global Communications HLS Fund............ 14,673 19,900 -- --
Hartford Global Financial Services HLS Fund........ 27,497 34,252 -- --
Hartford Global Health HLS Fund.................... 147,539 189,494 -- --
Hartford Global Leaders HLS Fund................... 1,398,412 1,545,322 -- --
Hartford Global Technology HLS Fund................ 197,702 212,073 -- --
Hartford Growth HLS Fund........................... 530,313 534,049 -- --
Hartford Growth Opportunities HLS Fund............. 1,719,202 1,755,120 -- --
Hartford High Yield HLS Fund....................... 1,123,593 1,111,325 -- --
Hartford Index HLS Fund............................ 75,531 406,235 -- --
Hartford International Capital Appreciation HLS
Fund............................................. 1,258,659 1,173,064 -- --
Hartford International Opportunities HLS Fund...... 2,073,088 2,046,904 -- --
Hartford International Small Company HLS Fund...... 388,575 340,481 -- --
Hartford MidCap HLS Fund........................... 2,474,703 2,633,946 -- --
Hartford MidCap Value HLS Fund..................... 447,722 642,003 -- --
Hartford Mortgage Securities HLS Fund.............. 772,243 809,679 114,085 119,826
Hartford Small Company HLS Fund.................... 2,353,214 2,342,351 -- --
Hartford SmallCap Growth HLS Fund.................. 907,716 917,988 -- --
Hartford Stock HLS Fund............................ 5,128,616 6,056,470 -- --
Hartford Total Return Bond HLS Fund................ 10,448,823 10,092,089 8,901,151 9,068,329
Hartford U.S. Government Securities HLS Fund....... 2,322,678 1,928,065 1,027,435 1,256,019
Hartford Value HLS Fund............................ 166,156 142,466 -- --
Hartford Value Opportunities HLS Fund.............. 337,819 305,251 -- --
</Table>
5. LINE OF CREDIT:
The Funds, except for the Hartford Money Market HLS Fund, participate in a
$650,000 committed revolving line of credit facility. The facility is to be
used for temporary or emergency purposes. Under the arrangement, the Funds
are required to own securities having a market value in excess of 300% of
the total bank borrowings. The interest rate on borrowings varies depending
on the nature of the loan. The facility also requires a fee to be paid based
on the amount of the commitment which has not been utilized. During the year
ended December 31, 2006, the Funds did not have any borrowings under this
facility.
198
(This page intentionally left blank)
199
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $22.53 $ 0.58 $0.02 $ 1.81 $ 2.41
Class IB............................... 22.70 0.51 0.02 1.83 2.36
For the Year Ended December 31, 2005
Class IA............................... 23.04 0.54 -- 1.12 1.66
Class IB............................... 23.17 0.47 -- 1.15 1.62
For the Year Ended December 31, 2004
Class IA............................... 22.67 0.51 -- 0.33 0.84
Class IB............................... 22.81 0.48 -- 0.30 0.78
For the Year Ended December 31, 2003
Class IA............................... 19.59 0.42 -- 3.18 3.60
Class IB............................... 19.72 0.41 -- 3.16 3.57
For the Year Ended December 31, 2002
Class IA............................... 23.44(5) 0.51(5) -- (4.10)(5) (3.59)
Class IB............................... 23.60(5) 0.46(5) -- (4.10)(5) (3.64)
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 52.99 0.50 0.04 7.88 8.42
Class IB............................... 52.75 0.36 0.04 7.83 8.23
For the Year Ended December 31, 2005
Class IA............................... 53.43 0.45 -- 7.57 8.02
Class IB............................... 53.18 0.25 -- 7.59 7.84
For the Year Ended December 31, 2004
Class IA............................... 44.91 0.35 -- 8.34 8.69
Class IB............................... 44.76 0.27 -- 8.26 8.53
For the Year Ended December 31, 2003
Class IA............................... 31.70 0.26 -- 13.17 13.43
Class IB............................... 31.63 0.19 -- 13.10 13.29
For the Year Ended December 31, 2002
Class IA............................... 39.75(5) 0.15(5) -- (8.01)(5) (7.86)
Class IB............................... 39.68(5) 0.12(5) -- (8.03)(5) (7.91)
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 12.66 0.14 0.01 1.42 1.57
Class IB............................... 12.58 0.13 0.01 1.39 1.53
For the Year Ended December 31, 2005
Class IA............................... 12.02 0.12 -- 0.67 0.79
Class IB............................... 11.93 0.08 -- 0.68 0.76
For the Year Ended December 31, 2004
Class IA............................... 11.20 0.16 -- 0.79 0.95
Class IB............................... 11.14 0.14 -- 0.76 0.90
For the Year Ended December 31, 2003
Class IA............................... 8.80 0.07 -- 2.45 2.52
Class IB............................... 8.75 0.05 -- 2.43 2.48
For the Year Ended December 31, 2002
Class IA............................... 11.72(5) 0.05(5) -- (2.97)(5) (2.92)
Class IB............................... 11.67(5) 0.04(5) -- (2.96)(5) (2.92)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.57) $(1.77) $ -- $(2.34)
Class IB............................... (0.51) (1.77) -- (2.28)
For the Year Ended December 31, 2005
Class IA............................... (0.77) (1.04) (0.36) (2.17)
Class IB............................... (0.69) (1.04) (0.36) (2.09)
For the Year Ended December 31, 2004
Class IA............................... (0.47) -- -- (0.47)
Class IB............................... (0.42) -- -- (0.42)
For the Year Ended December 31, 2003
Class IA............................... (0.52) -- -- (0.52)
Class IB............................... (0.48) -- -- (0.48)
For the Year Ended December 31, 2002
Class IA............................... (0.26)(5) --(5) -- (0.26)
Class IB............................... (0.24)(5) --(5) -- (0.24)
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.76) (7.16) -- (7.92)
Class IB............................... (0.61) (7.16) -- (7.77)
For the Year Ended December 31, 2005
Class IA............................... (0.52) (7.94) -- (8.46)
Class IB............................... (0.33) (7.94) -- (8.27)
For the Year Ended December 31, 2004
Class IA............................... (0.17) -- -- (0.17)
Class IB............................... (0.11) -- -- (0.11)
For the Year Ended December 31, 2003
Class IA............................... (0.22) -- -- (0.22)
Class IB............................... (0.16) -- -- (0.16)
For the Year Ended December 31, 2002
Class IA............................... (0.19)(5) --(5) -- (0.19)
Class IB............................... (0.14)(5) --(5) -- (0.14)
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.15) -- -- (0.15)
Class IB............................... (0.10) -- -- (0.10)
For the Year Ended December 31, 2005
Class IA............................... (0.15) -- -- (0.15)
Class IB............................... (0.11) -- -- (0.11)
For the Year Ended December 31, 2004
Class IA............................... (0.13) -- -- (0.13)
Class IB............................... (0.11) -- -- (0.11)
For the Year Ended December 31, 2003
Class IA............................... (0.12) -- -- (0.12)
Class IB............................... (0.09) -- -- (0.09)
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.07 $22.60 10.70%(7) $ 7,207,926
Class IB............................... 0.08 22.78 10.43(7) 1,252,293
For the Year Ended December 31, 2005
Class IA............................... (0.51) 22.53 0.07 8,157,354
Class IB............................... (0.47) 22.70 6.97 1,366,216
For the Year Ended December 31, 2004
Class IA............................... 0.37 23.04 3.74 9,699,374
Class IB............................... 0.36 23.17 3.48 1,462,319
For the Year Ended December 31, 2003
Class IA............................... 3.08 22.67 18.49 10,358,449
Class IB............................... 3.09 22.81 18.20 1,263,641
For the Year Ended December 31, 2002
Class IA............................... (3.85) 19.59(5) (13.79) 9,249,397
Class IB............................... (3.88) 19.72(5) (13.99) 672,078
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.50 53.49 16.61(7) 11,746,831
Class IB............................... 0.46 53.21 16.32(7) 2,810,587
For the Year Ended December 31, 2005
Class IA............................... (0.44) 52.99 15.55 11,317,561
Class IB............................... (0.43) 52.75 15.26 2,793,612
For the Year Ended December 31, 2004
Class IA............................... 8.52 53.43 19.36 10,751,945
Class IB............................... 8.42 53.18 19.07 2,505,798
For the Year Ended December 31, 2003
Class IA............................... 13.21 44.91 42.38 8,912,749
Class IB............................... 13.13 44.76 42.02 1,579,399
For the Year Ended December 31, 2002
Class IA............................... (8.05) 31.70(5) (19.70) 6,240,859
Class IB............................... (8.05) 31.63(5) (19.88) 588,013
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.42 14.08 12.45(7) 1,401,619
Class IB............................... 1.43 14.01 12.17(7) 354,559
For the Year Ended December 31, 2005
Class IA............................... 0.64 12.66 6.58 1,019,703
Class IB............................... 0.65 12.58 6.31 340,108
For the Year Ended December 31, 2004
Class IA............................... 0.82 12.02 8.41 770,938
Class IB............................... 0.79 11.93 8.14 270,171
For the Year Ended December 31, 2003
Class IA............................... 2.40 11.20 28.82 685,888
Class IB............................... 2.39 11.14 28.50 155,810
For the Year Ended December 31, 2002
Class IA............................... (2.92) 8.80(5) (24.65) 460,807
Class IB............................... (2.92) 8.75(5) (24.85) 58,930
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64% 0.64% 2.24% 87%
Class IB............................... 0.89 0.89 1.99 --
For the Year Ended December 31, 2005
Class IA............................... 0.66 0.65 1.96 89
Class IB............................... 0.91 0.90 1.72 --
For the Year Ended December 31, 2004
Class IA............................... 0.67 0.67 2.16 36
Class IB............................... 0.92 0.92 1.91 --
For the Year Ended December 31, 2003
Class IA............................... 0.67 0.67 2.03 48
Class IB............................... 0.92 0.92 1.78 --
For the Year Ended December 31, 2002
Class IA............................... 0.67 0.67 2.29 47
Class IB............................... 0.92 0.90 2.07 --
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.67 0.67 0.82 73
Class IB............................... 0.92 0.92 0.57 --
For the Year Ended December 31, 2005
Class IA............................... 0.70 0.70 0.78 97
Class IB............................... 0.95 0.95 0.53 --
For the Year Ended December 31, 2004
Class IA............................... 0.70 0.70 0.77 89
Class IB............................... 0.95 0.95 0.52 --
For the Year Ended December 31, 2003
Class IA............................... 0.69 0.69 0.77 94
Class IB............................... 0.94 0.94 0.52 --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 0.64 94
Class IB............................... 0.94 0.92 0.41 --
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.72 0.72 1.19 63
Class IB............................... 0.97 0.97 0.93 --
For the Year Ended December 31, 2005
Class IA............................... 0.74 0.74 1.07 58
Class IB............................... 0.99 0.99 0.82 --
For the Year Ended December 31, 2004
Class IA............................... 0.75 0.75 1.53 62
Class IB............................... 1.00 1.00 1.28 --
For the Year Ended December 31, 2003
Class IA............................... 0.78 0.78 0.89 73
Class IB............................... 1.03 1.03 0.64 --
For the Year Ended December 31, 2002
Class IA............................... 0.79 0.79 0.65 92
Class IB............................... 1.04 1.02 0.42 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
200
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $20.74 $ 0.40 $0.01 $ 3.77 $ 4.18
Class IB............................... 20.68 0.35 0.01 3.74 4.10
For the Year Ended December 31, 2005
Class IA............................... 20.83 0.36 -- 0.87 1.23
Class IB............................... 20.76 0.29 -- 0.89 1.18
For the Year Ended December 31, 2004
Class IA............................... 18.77 0.32 -- 2.01 2.33
Class IB............................... 18.72 0.27 -- 2.00 2.27
For the Year Ended December 31, 2003
Class IA............................... 15.09 0.24 -- 3.79 4.03
Class IB............................... 15.07 0.21 -- 3.76 3.97
For the Year Ended December 31, 2002
Class IA............................... 18.80(5) 0.25(5) -- (3.64)(5) (3.39)
Class IB............................... 18.79(5) 0.24(5) -- (3.66)(5) (3.42)
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 12.01 0.26 -- 2.22 2.48
Class IB............................... 11.98 0.25 -- 2.20 2.45
For the Year Ended December 31, 2005
Class IA............................... 11.64 0.21 -- 0.36 0.57
Class IB............................... 11.62 0.17 -- 0.36 0.53
For the Year Ended December 31, 2004
Class IA............................... 10.75 0.12 -- 0.89 1.01
Class IB............................... 10.74 0.10 -- 0.88 0.98
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 10.00 0.02 -- 0.75 0.77
Class IB............................... 10.00 0.02 -- 0.74 0.76
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 10.56 0.09 0.01 0.82 0.92
Class IB............................... 10.53 0.06 0.01 0.82 0.89
For the Year Ended December 31, 2005
Class IA............................... 10.18 0.10 -- 0.87 0.97
Class IB............................... 10.13 0.04 -- 0.89 0.93
For the Year Ended December 31, 2004
Class IA............................... 9.90 0.10 -- 0.21 0.31
Class IB............................... 9.86 0.08 -- 0.20 0.28
For the Year Ended December 31, 2003
Class IA............................... 7.74 0.03 -- 2.16 2.19
Class IB............................... 7.71 0.02 -- 2.15 2.17
For the Year Ended December 31, 2002
Class IA............................... 10.38(5) 0.03(5) -- (2.66)(5) (2.63)
Class IB............................... 10.37(5) 0.02(5) -- (2.67)(5) (2.65)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.41) $(1.72) $ -- $(2.13)
Class IB............................... (0.34) (1.72) -- (2.06)
For the Year Ended December 31, 2005
Class IA............................... (0.40) (0.92) -- (1.32)
Class IB............................... (0.34) (0.92) -- (1.26)
For the Year Ended December 31, 2004
Class IA............................... (0.27) -- -- (0.27)
Class IB............................... (0.23) -- -- (0.23)
For the Year Ended December 31, 2003
Class IA............................... (0.25) (0.10) -- (0.35)
Class IB............................... (0.22) (0.10) -- (0.32)
For the Year Ended December 31, 2002
Class IA............................... (0.23)(5) (0.09)(5) -- (0.32)
Class IB............................... (0.21)(5) (0.09)(5) -- (0.30)
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.26) (0.03) -- (0.29)
Class IB............................... (0.21) (0.03) -- (0.24)
For the Year Ended December 31, 2005
Class IA............................... (0.20) -- -- (0.20)
Class IB............................... (0.17) -- -- (0.17)
For the Year Ended December 31, 2004
Class IA............................... (0.12) -- -- (0.12)
Class IB............................... (0.10) -- -- (0.10)
From inception October 31, 2003 through
December 31, 2003
Class IA............................... (0.02) -- -- (0.02)
Class IB............................... (0.02) -- -- (0.02)
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.09) (0.83) -- (0.92)
Class IB............................... (0.05) (0.83) -- (0.88)
For the Year Ended December 31, 2005
Class IA............................... (0.19) (0.40) -- (0.59)
Class IB............................... (0.13) (0.40) -- (0.53)
For the Year Ended December 31, 2004
Class IA............................... (0.03) -- -- (0.03)
Class IB............................... (0.01) -- -- (0.01)
For the Year Ended December 31, 2003
Class IA............................... (0.03) -- -- (0.03)
Class IB............................... (0.02) -- -- (0.02)
For the Year Ended December 31, 2002
Class IA............................... --(5) (0.01)(5) -- (0.01)
Class IB............................... --(5) (0.01)(5) -- (0.01)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.05 $22.79 20.36%(7) $ 5,671,552
Class IB............................... 2.04 22.72 20.06(7) 1,603,952
For the Year Ended December 31, 2005
Class IA............................... (0.09) 20.74 5.96 4,978,773
Class IB............................... (0.08) 20.68 5.70 1,506,556
For the Year Ended December 31, 2004
Class IA............................... 2.06 20.83 12.42 4,719,663
Class IB............................... 2.04 20.76 12.14 1,393,412
For the Year Ended December 31, 2003
Class IA............................... 3.68 18.77 26.80 3,927,415
Class IB............................... 3.65 18.72 26.48 902,779
For the Year Ended December 31, 2002
Class IA............................... (3.71) 15.09(5) (14.23) 2,810,625
Class IB............................... (3.72) 15.07(5) (14.42) 327,617
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 2.19 14.20 20.79 360,210
Class IB............................... 2.21 14.19 20.49 106,733
For the Year Ended December 31, 2005
Class IA............................... 0.37 12.01 4.81 231,151
Class IB............................... 0.36 11.98 4.56 79,417
For the Year Ended December 31, 2004
Class IA............................... 0.89 11.64 9.43 90,197
Class IB............................... 0.88 11.62 9.16 24,876
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 0.75 10.75 26.80(2) 8,511
Class IB............................... 0.74 10.74 26.48(2) 1,609
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... -- 10.56 9.72(7) 48,852
Class IB............................... 0.01 10.54 9.45(7) 34,041
For the Year Ended December 31, 2005
Class IA............................... 0.38 10.56 9.88 52,679
Class IB............................... 0.40 10.53 9.60 41,972
For the Year Ended December 31, 2004
Class IA............................... 0.28 10.18 3.16 49,519
Class IB............................... 0.27 10.13 2.90 41,587
For the Year Ended December 31, 2003
Class IA............................... 2.16 9.90 28.37 49,891
Class IB............................... 2.15 9.86 28.05 39,674
For the Year Ended December 31, 2002
Class IA............................... (2.64) 7.74(5) (24.59) 35,237
Class IB............................... (2.66) 7.71(5) (24.76) 18,361
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.67% 0.67% 1.77% 27%
Class IB............................... 0.92 0.92 1.52 --
For the Year Ended December 31, 2005
Class IA............................... 0.67 0.67 1.70 26
Class IB............................... 0.92 0.92 1.45 --
For the Year Ended December 31, 2004
Class IA............................... 0.68 0.68 1.73 27
Class IB............................... 0.93 0.93 1.48 --
For the Year Ended December 31, 2003
Class IA............................... 0.69 0.69 1.61 31
Class IB............................... 0.94 0.94 1.36 --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 1.56 43
Class IB............................... 0.94 0.92 1.33 --
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.85 0.75 2.32 28
Class IB............................... 1.10 1.00 2.07 --
For the Year Ended December 31, 2005
Class IA............................... 0.86 0.76 2.27 21
Class IB............................... 1.11 1.01 2.03 --
For the Year Ended December 31, 2004
Class IA............................... 0.90 0.90 1.99 18
Class IB............................... 1.15 1.15 1.74 --
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 1.13(1) 1.13(1) 1.50(1) 2
Class IB............................... 1.38(1) 1.38(1) 1.25(1) --
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.94 0.85 0.80 112
Class IB............................... 1.19 1.10 0.55 --
For the Year Ended December 31, 2005
Class IA............................... 0.92 0.91 0.77 136
Class IB............................... 1.17 1.16 0.52 --
For the Year Ended December 31, 2004
Class IA............................... 0.90 0.90 1.06 111
Class IB............................... 1.15 1.15 0.81 --
For the Year Ended December 31, 2003
Class IA............................... 0.90 0.90 0.40 129
Class IB............................... 1.15 1.15 0.15 --
For the Year Ended December 31, 2002
Class IA............................... 0.88 0.88 0.40 212
Class IB............................... 1.13 1.11 0.17 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
201
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $12.48 $ 0.23 $0.02 $ 0.83 $ 1.08
Class IB............................... 12.41 0.20 0.02 0.83 1.05
For the Year Ended December 31, 2005
Class IA............................... 12.53 0.21 -- 0.20 0.41
Class IB............................... 12.44 0.23 -- 0.14 0.37
For the Year Ended December 31, 2004
Class IA............................... 11.15 0.19 -- 1.19 1.38
Class IB............................... 11.09 0.14 -- 1.21 1.35
For the Year Ended December 31, 2003
Class IA............................... 9.16 0.12 -- 1.95 2.07
Class IB............................... 9.12 0.11 -- 1.93 2.04
For the Year Ended December 31, 2002
Class IA............................... 10.07(5) (0.50)(5) -- (0.41)(5) (0.91)
Class IB............................... 10.05(5) (0.41)(5) -- (0.52)(5) (0.93)
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 10.05 0.18 -- 1.47 1.65
Class IB............................... 10.02 0.14 -- 1.47 1.61
For the Year Ended December 31, 2005
Class IA............................... 8.84 0.27 -- 1.33 1.60
Class IB............................... 8.79 0.23 -- 1.35 1.58
For the Year Ended December 31, 2004
Class IA............................... 7.17 0.16 -- 1.51 1.67
Class IB............................... 7.15 0.15 -- 1.49 1.64
For the Year Ended December 31, 2003
Class IA............................... 4.47 0.01 -- 2.69 2.70
Class IB............................... 4.47 0.01 -- 2.67 2.68
For the Year Ended December 31, 2002
Class IA............................... 6.37(5) 0.01(5) -- (1.89)(5) (1.88)
Class IB............................... 6.37(5) 0.01(5) -- (1.89)(5) (1.88)
HARTFORD GLOBAL FINANCIAL SERVICES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 11.57 0.21 -- 2.11 2.32
Class IB............................... 11.55 0.18 -- 2.09 2.27
For the Year Ended December 31, 2005
Class IA............................... 10.85 0.21 -- 0.89 1.10
Class IB............................... 10.79 0.15 -- 0.93 1.08
For the Year Ended December 31, 2004
Class IA............................... 9.65 0.18 -- 1.02 1.20
Class IB............................... 9.63 0.17 -- 0.99 1.16
For the Year Ended December 31, 2003
Class IA............................... 7.51 0.13 -- 2.14 2.27
Class IB............................... 7.50 0.11 -- 2.13 2.24
For the Year Ended December 31, 2002
Class IA............................... 9.37(5) 0.08(5) -- (1.86)(5) (1.78)
Class IB............................... 9.36(5) 0.07(5) -- (1.86)(5) (1.79)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.38) $(0.47) $ -- $(0.85)
Class IB............................... (0.32) (0.47) -- (0.79)
For the Year Ended December 31, 2005
Class IA............................... (0.46) -- -- (0.46)
Class IB............................... (0.40) -- -- (0.40)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... (0.08) -- -- (0.08)
Class IB............................... (0.07) -- -- (0.07)
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.18) (1.73) -- (1.91)
Class IB............................... (0.15) (1.73) -- (1.88)
For the Year Ended December 31, 2005
Class IA............................... (0.37) (0.02) -- (0.39)
Class IB............................... (0.33) (0.02) -- (0.35)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (0.02)(5) --(5) -- (0.02)
Class IB............................... (0.02)(5) --(5) -- (0.02)
HARTFORD GLOBAL FINANCIAL SERVICES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... (0.23) (0.50) -- (0.73)
Class IB............................... (0.17) (0.50) -- (0.67)
For the Year Ended December 31, 2005
Class IA............................... (0.37) (0.01) -- (0.38)
Class IB............................... (0.31) (0.01) -- (0.32)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... (0.13) -- -- (0.13)
Class IB............................... (0.11) -- -- (0.11)
For the Year Ended December 31, 2002
Class IA............................... (0.08)(5) --(5) -- (0.08)
Class IB............................... (0.07)(5) --(5) -- (0.07)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.23 $12.71 8.84%(7) $ 306,498
Class IB............................... 0.26 12.67 8.56(7) 64,076
For the Year Ended December 31, 2005
Class IA............................... (0.05) 12.48 3.37 332,169
Class IB............................... (0.03) 12.41 3.11 71,346
For the Year Ended December 31, 2004
Class IA............................... 1.38 12.53 12.75 362,757
Class IB............................... 1.35 12.44 12.47 86,937
For the Year Ended December 31, 2003
Class IA............................... 1.99 11.15 22.26 312,492
Class IB............................... 1.97 11.09 21.97 41,594
For the Year Ended December 31, 2002
Class IA............................... (0.91) 9.16(5) (8.95) 269,329
Class IB............................... (0.93) 9.12(5) (9.15) 16,078
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.26) 9.79 22.03(7) 14,745
Class IB............................... (0.27) 9.75 21.72(7) 13,510
For the Year Ended December 31, 2005
Class IA............................... 1.21 10.05 18.61 16,542
Class IB............................... 1.23 10.02 18.32 12,412
For the Year Ended December 31, 2004
Class IA............................... 1.67 8.84 23.21 17,537
Class IB............................... 1.64 8.79 22.90 12,119
For the Year Ended December 31, 2003
Class IA............................... 2.70 7.17 60.37 17,302
Class IB............................... 2.68 7.15 59.97 10,288
For the Year Ended December 31, 2002
Class IA............................... (1.90) 4.47(5) (29.36) 8,177
Class IB............................... (1.90) 4.47(5) (29.50) 2,707
HARTFORD GLOBAL FINANCIAL SERVICES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 1.59 13.16 20.81(7) 20,921
Class IB............................... 1.60 13.15 20.51(7) 17,244
For the Year Ended December 31, 2005
Class IA............................... 0.72 11.57 10.42 20,433
Class IB............................... 0.76 11.55 10.14 18,131
For the Year Ended December 31, 2004
Class IA............................... 1.20 10.85 12.35 22,010
Class IB............................... 1.16 10.79 12.07 19,773
For the Year Ended December 31, 2003
Class IA............................... 2.14 9.65 30.29 18,940
Class IB............................... 2.13 9.63 29.96 16,056
For the Year Ended December 31, 2002
Class IA............................... (1.86) 7.51(5) (18.87) 15,486
Class IB............................... (1.86) 7.50(5) (19.04) 6,477
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.82% 0.82% 1.73% 88%
Class IB............................... 1.07 1.07 1.48 --
For the Year Ended December 31, 2005
Class IA............................... 0.83 0.83 1.59 502
Class IB............................... 1.09 1.09 1.33 --
For the Year Ended December 31, 2004
Class IA............................... 0.84 0.84 1.27 511
Class IB............................... 1.09 1.09 1.02 --
For the Year Ended December 31, 2003
Class IA............................... 0.84 0.84 1.26 455
Class IB............................... 1.09 1.09 1.01 --
For the Year Ended December 31, 2002
Class IA............................... 0.83 0.83 2.05 288
Class IB............................... 1.08 1.06 1.82 --
HARTFORD GLOBAL COMMUNICATIONS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.05 0.68 1.80 54
Class IB............................... 1.30 0.93 1.54 --
For the Year Ended December 31, 2005
Class IA............................... 1.00 0.85 2.55 66
Class IB............................... 1.25 1.09 2.26 --
For the Year Ended December 31, 2004
Class IA............................... 1.01 1.01 1.83 85
Class IB............................... 1.26 1.26 1.58 --
For the Year Ended December 31, 2003
Class IA............................... 1.01 1.01 0.19 90
Class IB............................... 1.26 1.26 (0.06) --
For the Year Ended December 31, 2002
Class IA............................... 1.01 1.01 0.66 100
Class IB............................... 1.26 1.24 0.43 --
HARTFORD GLOBAL FINANCIAL SERVICES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 0.99 0.62 1.59 73
Class IB............................... 1.24 0.87 1.35 --
For the Year Ended December 31, 2005
Class IA............................... 0.96 0.81 1.56 22
Class IB............................... 1.21 1.06 1.31 --
For the Year Ended December 31, 2004
Class IA............................... 0.98 0.98 1.84 77
Class IB............................... 1.23 1.23 1.59 --
For the Year Ended December 31, 2003
Class IA............................... 0.98 0.98 1.63 120
Class IB............................... 1.23 1.23 1.38 --
For the Year Ended December 31, 2002
Class IA............................... 1.15 1.15 1.11 80
Class IB............................... 1.40 1.38 0.88 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
202
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD GLOBAL HEALTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $17.66 $ 0.02 $ -- $ 1.75 $ 1.77
Class IB............................... 17.47 (0.02) -- 1.72 1.70
For the Year Ended December 31, 2005
Class IA............................... 16.92 0.01 -- 1.94 1.95
Class IB............................... 16.78 (0.01) -- 1.90 1.89
For the Year Ended December 31, 2004
Class IA............................... 15.52 -- -- 1.95 1.95
Class IB............................... 15.43 (0.01) -- 1.90 1.89
For the Year Ended December 31, 2003
Class IA............................... 11.91 0.01 -- 3.81 3.82
Class IB............................... 11.85 -- -- 3.78 3.78
For the Year Ended December 31, 2002
Class IA............................... 14.72(5) 0.01(5) -- (2.79)(5) (2.78)
Class IB............................... 14.68(5) 0.01(5) -- (2.81)(5) (2.80)
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 18.74 0.10 0.05 2.48 2.63
Class IB............................... 18.66 0.05 0.05 2.47 2.57
For the Year Ended December 31, 2005
Class IA............................... 18.41 0.14 -- 0.33 0.47
Class IB............................... 18.32 0.07 -- 0.35 0.42
For the Year Ended December 31, 2004
Class IA............................... 15.53 0.12 -- 2.85 2.97
Class IB............................... 15.47 0.10 -- 2.82 2.92
For the Year Ended December 31, 2003
Class IA............................... 11.50 0.07 -- 4.02 4.09
Class IB............................... 11.47 0.04 -- 4.00 4.04
For the Year Ended December 31, 2002
Class IA............................... 14.43(5) 0.13(5) -- (2.95)(5) (2.82)
Class IB............................... 14.40(5) 0.12(5) -- (2.96)(5) (2.84)
HARTFORD GLOBAL TECHNOLOGY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 5.48 (0.02) -- 0.59 0.57
Class IB............................... 5.43 (0.04) -- 0.58 0.54
For the Year Ended December 31, 2005
Class IA............................... 4.94 (0.02) -- 0.57 0.55
Class IB............................... 4.90 (0.03) -- 0.56 0.53
For the Year Ended December 31, 2004
Class IA............................... 4.88 -- -- 0.06 0.06
Class IB............................... 4.84 0.01 -- 0.05 0.06
For the Year Ended December 31, 2003
Class IA............................... 3.02 -- -- 1.86 1.86
Class IB............................... 3.01 -- -- 1.83 1.83
For the Year Ended December 31, 2002
Class IA............................... 4.92(5) (0.05)(5) -- (1.85)(5) (1.90)
Class IB............................... 4.90(5) (0.04)(5) -- (1.85)(5) (1.89)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD GLOBAL HEALTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.01) $(2.58) $ -- $(2.59)
Class IB............................... -- (2.58) -- (2.58)
For the Year Ended December 31, 2005
Class IA............................... (0.01) (1.20) -- (1.21)
Class IB............................... -- (1.20) -- (1.20)
For the Year Ended December 31, 2004
Class IA............................... (0.01) (0.54) -- (0.55)
Class IB............................... -- (0.54) -- (0.54)
For the Year Ended December 31, 2003
Class IA............................... (0.01) (0.20) -- (0.21)
Class IB............................... -- (0.20) -- (0.20)
For the Year Ended December 31, 2002
Class IA............................... --(5) (0.03)(5) -- (0.03)
Class IB............................... --(5) (0.03)(5) -- (0.03)
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.16) (1.12) -- (1.28)
Class IB............................... (0.09) (1.12) -- (1.21)
For the Year Ended December 31, 2005
Class IA............................... (0.14) -- -- (0.14)
Class IB............................... (0.08) -- -- (0.08)
For the Year Ended December 31, 2004
Class IA............................... (0.09) -- -- (0.09)
Class IB............................... (0.07) -- -- (0.07)
For the Year Ended December 31, 2003
Class IA............................... (0.06) -- -- (0.06)
Class IB............................... (0.04) -- -- (0.04)
For the Year Ended December 31, 2002
Class IA............................... (0.11)(5) --(5) -- (0.11)
Class IB............................... (0.09)(5) --(5) -- (0.09)
HARTFORD GLOBAL TECHNOLOGY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2005
Class IA............................... (0.01) -- -- (0.01)
Class IB............................... -- -- -- --
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD GLOBAL HEALTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ (0.82) $16.84 11.19%(7) $ 319,896
Class IB............................... (0.88) 16.59 10.91(7) 119,000
For the Year Ended December 31, 2005
Class IA............................... 0.74 17.66 12.43 309,235
Class IB............................... 0.69 17.47 12.15 123,593
For the Year Ended December 31, 2004
Class IA............................... 1.40 16.92 12.80 309,640
Class IB............................... 1.35 16.78 12.52 125,592
For the Year Ended December 31, 2003
Class IA............................... 3.61 15.52 32.31 268,844
Class IB............................... 3.58 15.43 31.98 103,592
For the Year Ended December 31, 2002
Class IA............................... (2.81) 11.91(5) (16.97) 172,037
Class IB............................... (2.83) 11.85(5) (17.16) 48,470
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.35 20.09 14.14(7) 942,258
Class IB............................... 1.36 20.02 13.86(7) 280,283
For the Year Ended December 31, 2005
Class IA............................... 0.33 18.74 2.59 935,539
Class IB............................... 0.34 18.66 2.33 280,050
For the Year Ended December 31, 2004
Class IA............................... 2.88 18.41 19.19 1,004,850
Class IB............................... 2.85 18.32 18.89 273,202
For the Year Ended December 31, 2003
Class IA............................... 4.03 15.53 35.57 728,049
Class IB............................... 4.00 15.47 35.24 129,315
For the Year Ended December 31, 2002
Class IA............................... (2.93) 11.50(5) (19.51) 544,901
Class IB............................... (2.93) 11.47(5) (19.70) 55,421
HARTFORD GLOBAL TECHNOLOGY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.57 6.05 10.35(7) 104,147
Class IB............................... 0.54 5.97 10.08(7) 44,413
For the Year Ended December 31, 2005
Class IA............................... 0.54 5.48 11.15 103,808
Class IB............................... 0.53 5.43 10.88 44,554
For the Year Ended December 31, 2004
Class IA............................... 0.06 4.94 1.35 111,876
Class IB............................... 0.06 4.90 1.10 46,112
For the Year Ended December 31, 2003
Class IA............................... 1.86 4.88 61.50 138,243
Class IB............................... 1.83 4.84 61.10 44,432
For the Year Ended December 31, 2002
Class IA............................... (1.90) 3.02(5) (38.59) 54,596
Class IB............................... (1.89) 3.01(5) (38.69) 13,609
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD GLOBAL HEALTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.88% 0.88% 0.11% 34%
Class IB............................... 1.13 1.13 (0.13) --
For the Year Ended December 31, 2005
Class IA............................... 0.87 0.87 0.12 46
Class IB............................... 1.12 1.12 (0.13) --
For the Year Ended December 31, 2004
Class IA............................... 0.88 0.88 0.07 46
Class IB............................... 1.13 1.13 (0.18) --
For the Year Ended December 31, 2003
Class IA............................... 0.89 0.89 0.15 37
Class IB............................... 1.14 1.14 (0.10) --
For the Year Ended December 31, 2002
Class IA............................... 0.90 0.90 0.10 60
Class IB............................... 1.15 1.13 (0.13) --
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.76 0.76 0.48 116
Class IB............................... 1.01 1.01 0.23 --
For the Year Ended December 31, 2005
Class IA............................... 0.77 0.77 0.74 262
Class IB............................... 1.02 1.02 0.48 --
For the Year Ended December 31, 2004
Class IA............................... 0.78 0.78 0.83 255
Class IB............................... 1.03 1.03 0.58 --
For the Year Ended December 31, 2003
Class IA............................... 0.80 0.80 0.54 292
Class IB............................... 1.05 1.05 0.29 --
For the Year Ended December 31, 2002
Class IA............................... 0.81 0.81 1.06 324
Class IB............................... 1.06 1.03 0.84 --
HARTFORD GLOBAL TECHNOLOGY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.96 0.96 (0.34) 135
Class IB............................... 1.21 1.21 (0.58) --
For the Year Ended December 31, 2005
Class IA............................... 0.95 0.95 (0.41) 117
Class IB............................... 1.20 1.20 (0.66) --
For the Year Ended December 31, 2004
Class IA............................... 0.91 0.91 0.31 164
Class IB............................... 1.16 1.16 0.06 --
For the Year Ended December 31, 2003
Class IA............................... 0.90 0.90 (0.55) 157
Class IB............................... 1.15 1.15 (0.80) --
For the Year Ended December 31, 2002
Class IA............................... 0.91 0.91 (0.69) 155
Class IB............................... 1.16 1.13 (0.92) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
203
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $12.54 $ 0.01 $0.01 $ 0.56 $ 0.58
Class IB............................... 12.42 (0.02) 0.01 0.55 0.54
For the Year Ended December 31, 2005
Class IA............................... 12.47 0.01 0.01 0.53 0.55
Class IB............................... 12.38 (0.04) 0.01 0.55 0.52
For the Year Ended December 31, 2004
Class IA............................... 11.16 0.01 -- 1.39 1.40
Class IB............................... 11.11 0.01 -- 1.35 1.36
For the Year Ended December 31, 2003
Class IA............................... 8.66 (0.01) -- 2.85 2.84
Class IB............................... 8.64 (0.02) -- 2.83 2.81
From inception April 30, 2002 through
December 31, 2002
Class IA............................... 10.00 -- -- (1.34) (1.34)
Class IB............................... 10.00 -- -- (1.36) (1.36)
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 30.07 0.22 0.03 3.27 3.52
Class IB............................... 29.85 0.14 0.03 3.25 3.42
For the Year Ended December 31, 2005
Class IA............................... 27.63 0.09 0.03 4.36 4.48
Class IB............................... 27.44 0.01 0.03 4.35 4.39
For the Year Ended December 31, 2004
Class IA............................... 23.57 0.05 -- 4.01 4.06
Class IB............................... 23.48 0.03 -- 3.93 3.96
For the Year Ended December 31, 2003
Class IA............................... 16.40 (0.01) -- 7.18 7.17
Class IB............................... 16.37 (0.01) -- 7.12 7.11
For the Year Ended December 31, 2002
Class IA............................... 22.66 (0.03) -- (6.23) (6.26)
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 21.16 (0.01) -- (4.78) (4.79)
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 9.80 0.72 -- 0.31 1.03
Class IB............................... 9.70 0.69 -- 0.30 0.99
For the Year Ended December 31, 2005
Class IA............................... 10.26 0.74 0.05 (0.58) 0.21
Class IB............................... 10.17 0.71 0.05 (0.59) 0.17
For the Year Ended December 31, 2004
Class IA............................... 10.06 0.58 -- 0.12 0.70
Class IB............................... 9.98 0.64 -- 0.03 0.67
For the Year Ended December 31, 2003
Class IA............................... 8.49 0.19 -- 1.75 1.94
Class IB............................... 8.44 0.28 -- 1.63 1.91
For the Year Ended December 31, 2002
Class IA............................... 9.64(5) 0.63(5) -- (1.73)(5) (1.10)
Class IB............................... 9.61(5) 0.49(5) -- (1.61)(5) (1.12)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.01) $(0.79) $ -- $(0.80)
Class IB............................... -- (0.79) -- (0.79)
For the Year Ended December 31, 2005
Class IA............................... -- (0.48) -- (0.48)
Class IB............................... -- (0.48) -- (0.48)
For the Year Ended December 31, 2004
Class IA............................... -- (0.09) -- (0.09)
Class IB............................... -- (0.09) -- (0.09)
For the Year Ended December 31, 2003
Class IA............................... -- (0.34) -- (0.34)
Class IB............................... -- (0.34) -- (0.34)
From inception April 30, 2002 through
December 31, 2002
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.24) (3.22) -- (3.46)
Class IB............................... (0.15) (3.22) -- (3.37)
For the Year Ended December 31, 2005
Class IA............................... (0.06) (1.98) -- (2.04)
Class IB............................... -- (1.98) -- (1.98)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... -- -- -- --
From inception April, 30 2002 through
December 31, 2002
Class IB............................... -- -- -- --
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (1.48) -- -- (1.48)
Class IB............................... (1.42) -- -- (1.42)
For the Year Ended December 31, 2005
Class IA............................... (0.67) -- -- (0.67)
Class IB............................... (0.64) -- -- (0.64)
For the Year Ended December 31, 2004
Class IA............................... (0.50) -- -- (0.50)
Class IB............................... (0.48) -- -- (0.48)
For the Year Ended December 31, 2003
Class IA............................... (0.37) -- -- (0.37)
Class IB............................... (0.37) -- -- (0.37)
For the Year Ended December 31, 2002
Class IA............................... (0.05)(5) --(5) -- (0.05)
Class IB............................... (0.05)(5) --(5) -- (0.05)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ (0.22) $12.32 4.61%(7) $ 379,601
Class IB............................... (0.25) 12.17 4.35(7) 190,063
For the Year Ended December 31, 2005
Class IA............................... 0.07 12.54 4.67(7) 345,558
Class IB............................... 0.04 12.42 4.42(7) 206,105
For the Year Ended December 31, 2004
Class IA............................... 1.31 12.47 12.49 249,473
Class IB............................... 1.27 12.38 12.21 170,895
For the Year Ended December 31, 2003
Class IA............................... 2.50 11.16 32.81 127,944
Class IB............................... 2.47 11.11 32.48 90,188
From inception April 30, 2002 through
December 31, 2002
Class IA............................... (1.34) 8.66 (13.43)(2) 13,452
Class IB............................... (1.36) 8.64 (13.57)(2) 7,937
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.06 30.13 12.05(7) 1,103,590
Class IB............................... 0.05 29.90 11.79(7) 197,797
For the Year Ended December 31, 2005
Class IA............................... 2.44 30.07 16.31(7) 1,012,774
Class IB............................... 2.41 29.85 16.02(7) 179,308
For the Year Ended December 31, 2004
Class IA............................... 4.06 27.63 17.18 848,674
Class IB............................... 3.96 27.44 16.89 112,896
For the Year Ended December 31, 2003
Class IA............................... 7.17 23.57 43.79 696,900
Class IB............................... 7.11 23.48 43.43 59,686
For the Year Ended December 31, 2002
Class IA............................... (6.26) 16.40 (27.65) 478,045
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.79) 16.37 (22.65)(2) 5,287
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.45) 9.35 11.17(7) 471,327
Class IB............................... (0.43) 9.27 10.89(7) 264,525
For the Year Ended December 31, 2005
Class IA............................... (0.46) 9.80 2.13(7) 443,859
Class IB............................... (0.47) 9.70 1.85(7) 272,538
For the Year Ended December 31, 2004
Class IA............................... 0.20 10.26 7.40 518,881
Class IB............................... 0.19 10.17 7.14 309,672
For the Year Ended December 31, 2003
Class IA............................... 1.57 10.06 23.18 481,315
Class IB............................... 1.54 9.98 22.88 259,544
For the Year Ended December 31, 2002
Class IA............................... (1.15) 8.49(5) (6.89) 200,017
Class IB............................... (1.17) 8.44(5) (7.14) 57,084
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.84% 0.84% 0.10% 95%
Class IB............................... 1.09 1.09 (0.14) --
For the Year Ended December 31, 2005
Class IA............................... 0.84 0.84 0.02 76
Class IB............................... 1.09 1.09 (0.23) --
For the Year Ended December 31, 2004
Class IA............................... 0.86 0.86 0.09 79
Class IB............................... 1.11 1.11 (0.16) --
For the Year Ended December 31, 2003
Class IA............................... 0.88 0.88 (0.20) 111
Class IB............................... 1.13 1.13 (0.45) --
From inception April 30, 2002 through
December 31, 2002
Class IA............................... 0.99(1) 0.99(1) 0.01(1) 76
Class IB............................... 1.24(1) 1.24(1) (0.25)(1) --
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.65 0.65 0.71 139
Class IB............................... 0.90 0.90 0.46 --
For the Year Ended December 31, 2005
Class IA............................... 0.64 0.64 0.33 140
Class IB............................... 0.89 0.89 0.06 --
For the Year Ended December 31, 2004
Class IA............................... 0.63 0.63 0.23 137
Class IB............................... 0.88 0.88 (0.03) --
For the Year Ended December 31, 2003
Class IA............................... 0.64 0.64 (0.05) 145
Class IB............................... 0.89 0.89 (0.30) --
For the Year Ended December 31, 2002
Class IA............................... 0.66 0.66 (0.16) 189
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 0.84(1) 0.84(1) (0.10)(1) --
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.77 0.72 7.39 160
Class IB............................... 1.02 0.97 7.14 --
For the Year Ended December 31, 2005
Class IA............................... 0.77 0.76 6.51 138
Class IB............................... 1.02 1.01 6.25 --
For the Year Ended December 31, 2004
Class IA............................... 0.77 0.77 6.31 92
Class IB............................... 1.02 1.02 6.06 --
For the Year Ended December 31, 2003
Class IA............................... 0.78 0.78 7.00 44
Class IB............................... 1.03 1.03 6.75 --
For the Year Ended December 31, 2002
Class IA............................... 0.82 0.82 9.33 60
Class IB............................... 1.07 1.05 9.10 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
204
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $31.97 $ 0.56 $ -- $ 4.05 $ 4.61
Class IB............................... 31.84 0.44 -- 4.06 4.50
For the Year Ended December 31, 2005
Class IA............................... 32.17 0.51 -- 0.90 1.41
Class IB............................... 32.02 0.40 -- 0.93 1.33
For the Year Ended December 31, 2004
Class IA............................... 29.60 0.50 -- 2.56 3.06
Class IB............................... 29.49 0.44 -- 2.53 2.97
For the Year Ended December 31, 2003
Class IA............................... 23.46 0.36 -- 6.23 6.59
Class IB............................... 23.39 0.31 -- 6.19 6.50
For the Year Ended December 31, 2002
Class IA............................... 31.81(5) 0.32(5) -- (8.29)(5) (7.97)
Class IB............................... 31.75(5) 0.28(5) -- (8.30)(5) (8.02)
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 12.48 0.10 -- 2.84 2.94
Class IB............................... 12.40 0.06 -- 2.83 2.89
For the Year Ended December 31, 2005
Class IA............................... 12.45 0.11 -- 0.60 0.71
Class IB............................... 12.37 0.06 -- 0.61 0.67
For the Year Ended December 31, 2004
Class IA............................... 10.20 0.05 -- 2.44 2.49
Class IB............................... 10.16 0.06 -- 2.39 2.45
For the Year Ended December 31, 2003
Class IA............................... 7.09 -- -- 3.61 3.61
Class IB............................... 7.08 -- -- 3.58 3.58
For the Year Ended December 31, 2002
Class IA............................... 8.59(5) 0.03(5) -- (1.51)(5) (1.48)
Class IB............................... 8.59(5) 0.01(5) -- (1.51)(5) (1.50)
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 13.59 0.22 -- 3.05 3.27
Class IB............................... 13.52 0.18 -- 3.07 3.25
For the Year Ended December 31, 2005
Class IA............................... 11.86 0.14 -- 1.59 1.73
Class IB............................... 11.83 0.13 -- 1.56 1.69
For the Year Ended December 31, 2004
Class IA............................... 10.11 0.10 -- 1.73 1.83
Class IB............................... 10.09 0.08 -- 1.72 1.80
For the Year Ended December 31, 2003
Class IA............................... 7.66 0.09 -- 2.44 2.53
Class IB............................... 7.66 0.07 -- 2.43 2.50
For the Year Ended December 31, 2002
Class IA............................... 9.53(5) 0.17(5) -- (1.94)(5) (1.77)
Class IB............................... 9.51(5) 0.14(5) -- (1.91)(5) (1.77)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.56) $(3.66) $ -- $(4.22)
Class IB............................... (0.46) (3.66) -- (4.12)
For the Year Ended December 31, 2005
Class IA............................... (0.61) (1.00) -- (1.61)
Class IB............................... (0.51) (1.00) -- (1.51)
For the Year Ended December 31, 2004
Class IA............................... (0.39) (0.10) -- (0.49)
Class IB............................... (0.34) (0.10) -- (0.44)
For the Year Ended December 31, 2003
Class IA............................... (0.37) (0.08) -- (0.45)
Class IB............................... (0.32) (0.08) -- (0.40)
For the Year Ended December 31, 2002
Class IA............................... (0.28)(5) (0.10)(5) -- (0.38)
Class IB............................... (0.24)(5) (0.10)(5) -- (0.34)
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.11) (1.13) -- (1.24)
Class IB............................... (0.06) (1.13) -- (1.19)
For the Year Ended December 31, 2005
Class IA............................... (0.10) (0.58) -- (0.68)
Class IB............................... (0.06) (0.58) -- (0.64)
For the Year Ended December 31, 2004
Class IA............................... -- (0.24) -- (0.24)
Class IB............................... -- (0.24) -- (0.24)
For the Year Ended December 31, 2003
Class IA............................... -- (0.50) -- (0.50)
Class IB............................... -- (0.50) -- (0.50)
For the Year Ended December 31, 2002
Class IA............................... (0.02)(5) --(5) -- (0.02)
Class IB............................... (0.01)(5) --(5) -- (0.01)
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... (0.40) (1.23) -- (1.63)
Class IB............................... (0.18) (1.23) -- (1.41)
For the Year Ended December 31, 2005
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2004
Class IA............................... (0.08) -- -- (0.08)
Class IB............................... (0.06) -- -- (0.06)
For the Year Ended December 31, 2003
Class IA............................... (0.08) -- -- (0.08)
Class IB............................... (0.07) -- -- (0.07)
For the Year Ended December 31, 2002
Class IA............................... (0.10)(5) --(5) -- (0.10)
Class IB............................... (0.08)(5) --(5) -- (0.08)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.39 $32.36 15.46%(7) $ 1,598,176
Class IB............................... 0.38 32.22 15.17(7) 276,850
For the Year Ended December 31, 2005
Class IA............................... (0.20) 31.97 4.50 1,701,424
Class IB............................... (0.18) 31.84 4.24 263,579
For the Year Ended December 31, 2004
Class IA............................... 2.57 32.17 10.39 1,973,470
Class IB............................... 2.53 32.02 10.12 252,959
For the Year Ended December 31, 2003
Class IA............................... 6.14 29.60 28.13 1,934,490
Class IB............................... 6.10 29.49 27.81 195,900
For the Year Ended December 31, 2002
Class IA............................... (8.35) 23.46(5) (22.45) 1,553,260
Class IB............................... (8.36) 23.39(5) (22.63) 68,832
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 1.70 14.18 24.08(7) 574,806
Class IB............................... 1.70 14.10 23.77(7) 302,729
For the Year Ended December 31, 2005
Class IA............................... 0.03 12.48 6.16 370,555
Class IB............................... 0.03 12.40 5.89 244,572
For the Year Ended December 31, 2004
Class IA............................... 2.25 12.45 24.72 208,703
Class IB............................... 2.21 12.37 24.40 137,183
For the Year Ended December 31, 2003
Class IA............................... 3.11 10.20 51.02 67,147
Class IB............................... 3.08 10.16 50.65 63,698
For the Year Ended December 31, 2002
Class IA............................... (1.50) 7.09(5) (17.21) 21,368
Class IB............................... (1.51) 7.08(5) (17.40) 13,878
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 1.64 15.23 24.46(7) 1,596,055
Class IB............................... 1.84 15.36 24.15(7) 382,371
For the Year Ended December 31, 2005
Class IA............................... 1.73 13.59 14.62 1,251,426
Class IB............................... 1.69 13.52 14.33 319,626
For the Year Ended December 31, 2004
Class IA............................... 1.75 11.86 18.08 1,054,884
Class IB............................... 1.74 11.83 17.79 247,752
For the Year Ended December 31, 2003
Class IA............................... 2.45 10.11 33.10 823,760
Class IB............................... 2.43 10.09 32.76 76,246
For the Year Ended December 31, 2002
Class IA............................... (1.87) 7.66(5) (17.93) 646,903
Class IB............................... (1.85) 7.66(5) (18.12) 26,641
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.42% 0.33% 1.60% 4%
Class IB............................... 0.67 0.58 1.36 --
For the Year Ended December 31, 2005
Class IA............................... 0.42 0.42 1.46 5
Class IB............................... 0.67 0.67 1.21 --
For the Year Ended December 31, 2004
Class IA............................... 0.44 0.44 1.60 5
Class IB............................... 0.69 0.69 1.35 --
For the Year Ended December 31, 2003
Class IA............................... 0.44 0.44 1.40 3
Class IB............................... 0.69 0.69 1.15 --
For the Year Ended December 31, 2002
Class IA............................... 0.44 0.44 1.18 15
Class IB............................... 0.69 0.67 0.95 --
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.88 0.88 0.70 164
Class IB............................... 1.13 1.13 0.48 --
For the Year Ended December 31, 2005
Class IA............................... 0.93 0.93 1.05 179
Class IB............................... 1.18 1.18 0.79 --
For the Year Ended December 31, 2004
Class IA............................... 0.97 0.97 0.86 215
Class IB............................... 1.22 1.22 0.61 --
For the Year Ended December 31, 2003
Class IA............................... 1.01 1.01 0.23 244
Class IB............................... 1.26 1.26 (0.02) --
For the Year Ended December 31, 2002
Class IA............................... 1.26 1.26 0.59 285
Class IB............................... 1.51 1.49 0.36 --
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 0.75 0.75 1.47 119
Class IB............................... 1.00 1.00 1.24 --
For the Year Ended December 31, 2005
Class IA............................... 0.78 0.78 1.22 120
Class IB............................... 1.03 1.03 0.97 --
For the Year Ended December 31, 2004
Class IA............................... 0.80 0.80 1.13 142
Class IB............................... 1.05 1.05 0.88 --
For the Year Ended December 31, 2003
Class IA............................... 0.83 0.83 1.08 144
Class IB............................... 1.08 1.08 0.83 --
For the Year Ended December 31, 2002
Class IA............................... 0.81 0.81 1.23 161
Class IB............................... 1.06 1.04 1.00 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
205
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $14.84 $ 0.18 $ -- $ 4.08 $ 4.26
Class IB............................... 14.71 0.15 -- 4.04 4.19
For the Year Ended December 31, 2005
Class IA............................... 14.52 0.11 -- 2.44 2.55
Class IB............................... 14.42 0.08 -- 2.40 2.48
For the Year Ended December 31, 2004
Class IA............................... 12.62 0.16 -- 1.96 2.12
Class IB............................... 12.56 0.14 -- 1.94 2.08
For the Year Ended December 31, 2003
Class IA............................... 8.89 0.09 -- 4.68 4.77
Class IB............................... 8.86 0.08 -- 4.64 4.72
For the Year Ended December 31, 2002
Class IA............................... 9.39(5) 0.02(5) -- (0.52)(5) (0.50)
Class IB............................... 9.38(5) 0.01(5) -- (0.53)(5) (0.52)
HARTFORD MIDCAP HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 28.73 0.33 0.04 2.92 3.29
Class IB............................... 28.53 0.25 0.04 2.89 3.18
For the Year Ended December 31, 2005
Class IA............................... 28.61 0.11 0.01 4.60 4.72
Class IB............................... 28.42 0.01 0.01 4.59 4.61
For the Year Ended December 31, 2004
Class IA............................... 24.63 0.12 -- 3.93 4.05
Class IB............................... 24.50 0.08 -- 3.87 3.95
For the Year Ended December 31, 2003
Class IA............................... 17.93 0.04 -- 6.71 6.75
Class IB............................... 17.84 (0.01) -- 6.67 6.66
For the Year Ended December 31, 2002
Class IA............................... 20.93(5) (0.01)(5) -- (2.99)(5) (3.00)
Class IB............................... 20.84(5) --(5) -- (3.00)(5) (3.00)
HARTFORD MIDCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 14.01 0.10 0.01 2.11 2.22
Class IB............................... 13.96 0.07 0.01 2.10 2.18
For the Year Ended December 31, 2005
Class IA............................... 14.16 0.06 0.01 1.23 1.30
Class IB............................... 14.08 (0.02) 0.01 1.27 1.26
For the Year Ended December 31, 2004
Class IA............................... 12.37 0.03 -- 1.96 1.99
Class IB............................... 12.32 0.02 -- 1.93 1.95
For the Year Ended December 31, 2003
Class IA............................... 8.63 0.01 -- 3.73 3.74
Class IB............................... 8.62 0.01 -- 3.69 3.70
For the Year Ended December 31, 2002
Class IA............................... 9.95(5) 0.02(5) -- (1.32)(5) (1.30)
Class IB............................... 9.94(5) 0.01(5) -- (1.32)(5) (1.31)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.32) $(2.01) $ -- $(2.33)
Class IB............................... (0.25) (2.01) -- (2.26)
For the Year Ended December 31, 2005
Class IA............................... (0.38) (1.85) -- (2.23)
Class IB............................... (0.34) (1.85) -- (2.19)
For the Year Ended December 31, 2004
Class IA............................... -- (0.22) -- (0.22)
Class IB............................... -- (0.22) -- (0.22)
For the Year Ended December 31, 2003
Class IA............................... (0.11) (0.93) -- (1.04)
Class IB............................... (0.09) (0.93) -- (1.02)
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
HARTFORD MIDCAP HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.33) (4.70) -- (5.03)
Class IB............................... (0.25) (4.70) -- (4.95)
For the Year Ended December 31, 2005
Class IA............................... (0.12) (4.48) -- (4.60)
Class IB............................... (0.02) (4.48) -- (4.50)
For the Year Ended December 31, 2004
Class IA............................... (0.07) -- -- (0.07)
Class IB............................... (0.03) -- -- (0.03)
For the Year Ended December 31, 2003
Class IA............................... (0.05) -- -- (0.05)
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
HARTFORD MIDCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.12) (1.93) -- (2.05)
Class IB............................... (0.08) (1.93) -- (2.01)
For the Year Ended December 31, 2005
Class IA............................... (0.08) (1.37) -- (1.45)
Class IB............................... (0.01) (1.37) -- (1.38)
For the Year Ended December 31, 2004
Class IA............................... (0.01) (0.19) -- (0.20)
Class IB............................... -- (0.19) -- (0.19)
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (0.02)(5) --(5) -- (0.02)
Class IB............................... (0.01)(5) --(5) -- (0.01)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.93 $16.77 29.34%(7) $ 294,660
Class IB............................... 1.93 16.64 29.01(7) 117,251
For the Year Ended December 31, 2005
Class IA............................... 0.32 14.84 18.60 193,712
Class IB............................... 0.29 14.71 18.30 92,157
For the Year Ended December 31, 2004
Class IA............................... 1.90 14.52 16.96 84,012
Class IB............................... 1.86 14.42 16.67 54,750
For the Year Ended December 31, 2003
Class IA............................... 3.73 12.62 53.73 44,088
Class IB............................... 3.70 12.56 53.35 22,704
For the Year Ended December 31, 2002
Class IA............................... (0.50) 8.89(5) (5.08) 16,722
Class IB............................... (0.52) 8.86(5) (5.30) 5,130
HARTFORD MIDCAP HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (1.74) 26.99 11.74(7) 2,606,275
Class IB............................... (1.77) 26.76 11.46(7) 274,695
For the Year Ended December 31, 2005
Class IA............................... 0.12 28.73 16.78(7) 2,529,805
Class IB............................... 0.11 28.53 16.49(7) 254,833
For the Year Ended December 31, 2004
Class IA............................... 3.98 28.61 16.44 2,193,649
Class IB............................... 3.92 28.42 16.15 221,727
For the Year Ended December 31, 2003
Class IA............................... 6.70 24.63 37.67 1,946,881
Class IB............................... 6.66 24.50 37.33 179,439
For the Year Ended December 31, 2002
Class IA............................... (3.00) 17.93(5) (14.22) 1,340,265
Class IB............................... (3.00) 17.84(5) (14.42) 89,336
HARTFORD MIDCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.17 14.18 17.88(7) 721,469
Class IB............................... 0.17 14.13 17.59(7) 370,771
For the Year Ended December 31, 2005
Class IA............................... (0.15) 14.01 9.99(7) 721,631
Class IB............................... (0.12) 13.96 9.71(7) 391,264
For the Year Ended December 31, 2004
Class IA............................... 1.79 14.16 16.30 770,328
Class IB............................... 1.76 14.08 16.01 435,812
For the Year Ended December 31, 2003
Class IA............................... 3.74 12.37 43.29 592,014
Class IB............................... 3.70 12.32 42.93 318,093
For the Year Ended December 31, 2002
Class IA............................... (1.32) 8.63(5) (13.02) 275,556
Class IB............................... (1.32) 8.62(5) (13.21) 98,964
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 0.93% 0.93% 1.05% 99%
Class IB............................... 1.18 1.18 0.82 --
For the Year Ended December 31, 2005
Class IA............................... 1.00 1.00 1.19 95
Class IB............................... 1.25 1.25 0.97 --
For the Year Ended December 31, 2004
Class IA............................... 1.08 1.08 1.53 119
Class IB............................... 1.33 1.33 1.28 --
For the Year Ended December 31, 2003
Class IA............................... 1.23 1.23 1.35 150
Class IB............................... 1.48 1.48 1.10 --
For the Year Ended December 31, 2002
Class IA............................... 1.71 1.71 0.23 183
Class IB............................... 1.96 1.96 (0.01) --
HARTFORD MIDCAP HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.68 0.68 1.06 89
Class IB............................... 0.93 0.93 0.82 --
For the Year Ended December 31, 2005
Class IA............................... 0.70 0.70 0.39 70
Class IB............................... 0.95 0.95 0.14 --
For the Year Ended December 31, 2004
Class IA............................... 0.70 0.70 0.47 60
Class IB............................... 0.95 0.95 0.22 --
For the Year Ended December 31, 2003
Class IA............................... 0.72 0.72 0.20 75
Class IB............................... 0.97 0.97 (0.05) --
For the Year Ended December 31, 2002
Class IA............................... 0.72 0.72 0.09 90
Class IB............................... 0.97 0.94 (0.14) --
HARTFORD MIDCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.78 0.78 0.73 41
Class IB............................... 1.03 1.03 0.51 --
For the Year Ended December 31, 2005
Class IA............................... 0.79 0.79 0.35 49
Class IB............................... 1.04 1.04 0.10 --
For the Year Ended December 31, 2004
Class IA............................... 0.80 0.80 0.34 87
Class IB............................... 1.05 1.05 0.09 --
For the Year Ended December 31, 2003
Class IA............................... 0.83 0.83 0.25 59
Class IB............................... 1.08 1.08 -- --
For the Year Ended December 31, 2002
Class IA............................... 0.88 0.88 0.36 42
Class IB............................... 1.13 1.12 0.12 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
206
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.00 $ 0.05 $ -- $ -- $ 0.05
Class IB............................... 1.00 0.04 -- -- 0.04
For the Year Ended December 31, 2005
Class IA............................... 1.00 0.03 -- -- 0.03
Class IB............................... 1.00 0.03 -- -- 0.03
For the Year Ended December 31, 2004
Class IA............................... 1.00 -- -- -- --
Class IB............................... 1.00 -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 1.00 0.01 -- -- 0.01
Class IB............................... 1.00 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... 1.00 0.01 -- -- 0.01
Class IB............................... 1.00 0.01 -- -- 0.01
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 11.50 0.54 -- (0.03) 0.51
Class IB............................... 11.40 0.50 -- (0.02) 0.48
For the Year Ended December 31, 2005
Class IA............................... 11.71 0.55 -- (0.28) 0.27
Class IB............................... 11.61 0.53 -- (0.29) 0.24
For the Year Ended December 31, 2004
Class IA............................... 11.84 0.42 -- 0.05 0.47
Class IB............................... 11.75 0.45 -- (0.02) 0.43
For the Year Ended December 31, 2003
Class IA............................... 12.01 0.35 -- (0.08) 0.27
Class IB............................... 11.94 0.38 -- (0.14) 0.24
For the Year Ended December 31, 2002
Class IA............................... 11.54(5) 0.37(5) -- 0.15(5) 0.52
Class IB............................... 11.50(5) 0.31(5) -- 0.18(5) 0.49
HARTFORD SMALL COMPANY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 19.66 0.05 0.02 2.75 2.82
Class IB............................... 19.38 -- 0.02 2.70 2.72
For the Year Ended December 31, 2005
Class IA............................... 16.25 (0.04) 0.02 3.43 3.41
Class IB............................... 16.06 (0.05) 0.02 3.35 3.32
For the Year Ended December 31, 2004
Class IA............................... 14.49 (0.07) -- 1.83 1.76
Class IB............................... 14.35 (0.09) -- 1.80 1.71
For the Year Ended December 31, 2003
Class IA............................... 9.29 (0.04) -- 5.24 5.20
Class IB............................... 9.23 (0.04) -- 5.16 5.12
For the Year Ended December 31, 2002
Class IA............................... 13.32(5) (0.08)(5) -- (3.95)(5) (4.03)
Class IB............................... 13.26(5) (0.06)(5) -- (3.97)(5) (4.03)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.05) $ -- $ -- $(0.05)
Class IB............................... (0.04) -- -- (0.04)
For the Year Ended December 31, 2005
Class IA............................... (0.03) -- -- (0.03)
Class IB............................... (0.03) -- -- (0.03)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... (0.01) -- -- (0.01)
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (0.01) -- -- (0.01)
Class IB............................... (0.01) -- -- (0.01)
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (1.19) -- -- (1.19)
Class IB............................... (1.13) -- -- (1.13)
For the Year Ended December 31, 2005
Class IA............................... (0.48) -- -- (0.48)
Class IB............................... (0.45) -- -- (0.45)
For the Year Ended December 31, 2004
Class IA............................... (0.58) (0.02) -- (0.60)
Class IB............................... (0.55) (0.02) -- (0.57)
For the Year Ended December 31, 2003
Class IA............................... (0.38) (0.06) -- (0.44)
Class IB............................... (0.37) (0.06) -- (0.43)
For the Year Ended December 31, 2002
Class IA............................... (0.05)(5) --(5) -- (0.05)
Class IB............................... (0.05)(5) --(5) -- (0.05)
HARTFORD SMALL COMPANY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.04) (3.37) -- (3.41)
Class IB............................... (0.02) (3.37) -- (3.39)
For the Year Ended December 31, 2005
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... --(5) --(5) -- --
Class IB............................... --(5) --(5) -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ -- $ 1.00 4.69% $ 1,558,433
Class IB............................... -- 1.00 4.43 319,926
For the Year Ended December 31, 2005
Class IA............................... -- 1.00 2.84 1,353,836
Class IB............................... -- 1.00 2.58 264,040
For the Year Ended December 31, 2004
Class IA............................... -- 1.00 0.94 1,294,525
Class IB............................... -- 1.00 0.69 252,808
For the Year Ended December 31, 2003
Class IA............................... -- 1.00 0.75 1,609,439
Class IB............................... -- 1.00 0.50 240,930
For the Year Ended December 31, 2002
Class IA............................... -- 1.00 1.47 2,319,456
Class IB............................... -- 1.00 1.24 261,914
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.68) 10.82 4.68 406,971
Class IB............................... (0.65) 10.75 4.41 136,537
For the Year Ended December 31, 2005
Class IA............................... (0.21) 11.50 2.36 457,600
Class IB............................... (0.21) 11.40 2.11 163,031
For the Year Ended December 31, 2004
Class IA............................... (0.13) 11.71 4.12 521,171
Class IB............................... (0.14) 11.61 3.86 180,232
For the Year Ended December 31, 2003
Class IA............................... (0.17) 11.84 2.29 587,833
Class IB............................... (0.19) 11.75 2.03 180,982
For the Year Ended December 31, 2002
Class IA............................... 0.47 12.01(5) 8.15 727,323
Class IB............................... 0.44 11.94(5) 7.89 116,549
HARTFORD SMALL COMPANY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.59) 19.07 14.43(7) 1,138,830
Class IB............................... (0.67) 18.71 14.14(7) 304,757
For the Year Ended December 31, 2005
Class IA............................... 3.41 19.66 21.01(7) 1,017,271
Class IB............................... 3.32 19.38 20.71(7) 220,310
For the Year Ended December 31, 2004
Class IA............................... 1.76 16.25 12.18 904,912
Class IB............................... 1.71 16.06 11.90 230,452
For the Year Ended December 31, 2003
Class IA............................... 5.20 14.49 55.87 851,283
Class IB............................... 5.12 14.35 55.48 190,456
For the Year Ended December 31, 2002
Class IA............................... (4.03) 9.29(5) (30.23) 495,074
Class IB............................... (4.03) 9.23(5) (30.39) 66,378
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.48% 0.48% 4.63% --
Class IB............................... 0.73 0.73 4.38 --
For the Year Ended December 31, 2005
Class IA............................... 0.49 0.49 2.79 --
Class IB............................... 0.75 0.75 2.54 --
For the Year Ended December 31, 2004
Class IA............................... 0.48 0.48 0.93 --
Class IB............................... 0.73 0.73 0.68 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 0.75 --
Class IB............................... 0.74 0.74 0.50 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 1.43 --
Class IB............................... 0.74 0.72 1.20 --
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.49 0.49 4.76 45%
Class IB............................... 0.74 0.74 4.51 --
For the Year Ended December 31, 2005
Class IA............................... 0.49 0.49 4.25 131
Class IB............................... 0.74 0.74 4.00 --
For the Year Ended December 31, 2004
Class IA............................... 0.49 0.49 3.29 100
Class IB............................... 0.74 0.74 3.04 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 2.84 338
Class IB............................... 0.74 0.74 2.59 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 3.86 339
Class IB............................... 0.74 0.73 3.62 --
HARTFORD SMALL COMPANY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.73 0.73 0.21 177
Class IB............................... 0.98 0.98 (0.03) --
For the Year Ended December 31, 2005
Class IA............................... 0.75 0.75 (0.08) 106
Class IB............................... 1.00 1.00 (0.34) --
For the Year Ended December 31, 2004
Class IA............................... 0.75 0.75 (0.41) 141
Class IB............................... 1.00 1.00 (0.66) --
For the Year Ended December 31, 2003
Class IA............................... 0.76 0.76 (0.49) 171
Class IB............................... 1.01 1.01 (0.74) --
For the Year Ended December 31, 2002
Class IA............................... 0.77 0.77 (0.30) 222
Class IB............................... 1.02 1.00 (0.53) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
207
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $20.88 $ 0.09 $ -- $ 1.35 $ 1.44
Class IB............................... 20.83 0.04 -- 1.35 1.39
For the Year Ended December 31, 2005
Class IA............................... 20.26 0.05 0.04 2.13 2.22
Class IB............................... 20.21 (0.02) 0.04 2.15 2.17
For the Year Ended December 31, 2004
Class IA............................... 17.55 0.04 -- 2.67 2.71
Class IB............................... 17.55 0.03 -- 2.63 2.66
For the Year Ended December 31, 2003
Class IA............................... 11.70 -- -- 5.85 5.85
Class IB............................... 11.73 (0.01) -- 5.83 5.82
For the Year Ended December 31, 2002
Class IA............................... 16.44 (0.02) -- (4.72) (4.74)
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 15.96 (0.01) -- (4.22) (4.23)
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 49.21 0.72 0.06 6.41 7.19
Class IB............................... 49.10 0.56 0.06 6.42 7.04
For the Year Ended December 31, 2005
Class IA............................... 45.72 0.66 -- 3.72 4.38
Class IB............................... 45.59 0.51 -- 3.74 4.25
For the Year Ended December 31, 2004
Class IA............................... 44.37 0.74 -- 1.10 1.84
Class IB............................... 44.29 0.64 -- 1.08 1.72
For the Year Ended December 31, 2003
Class IA............................... 35.46 0.46 -- 8.93 9.39
Class IB............................... 35.42 0.38 -- 8.88 9.26
For the Year Ended December 31, 2002
Class IA............................... 47.36(5) 0.43(5) -- (11.94)(5) (11.51)
Class IB............................... 47.31(5) 0.38(5) -- (11.95)(5) (11.57)
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 11.27 0.55 -- (0.01) 0.54
Class IB............................... 11.20 0.51 -- -- 0.51
For the Year Ended December 31, 2005
Class IA............................... 11.94 0.44 -- (0.14) 0.30
Class IB............................... 11.86 0.43 -- (0.17) 0.26
For the Year Ended December 31, 2004
Class IA............................... 12.32 0.40 -- 0.12 0.52
Class IB............................... 12.25 0.45 -- 0.04 0.49
For the Year Ended December 31, 2003
Class IA............................... 11.95 0.36 -- 0.57 0.93
Class IB............................... 11.90 0.40 -- 0.50 0.90
For the Year Ended December 31, 2002
Class IA............................... 11.46(5) 0.56(5) -- (0.01)(5) 0.55
Class IB............................... 11.43(5) 0.46(5) -- 0.07(5) 0.53
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $(0.08) $(1.45) $ -- $(1.53)
Class IB............................... (0.03) (1.45) -- (1.48)
For the Year Ended December 31, 2005
Class IA............................... (0.08) (1.22) (0.30) (1.60)
Class IB............................... (0.03) (1.22) (0.30) (1.55)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... -- -- -- --
Class IB............................... -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... -- -- -- --
From inception April, 30 2002 through
December 31, 2002
Class IB............................... -- -- -- --
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.71) (3.12) -- (3.83)
Class IB............................... (0.57) (3.12) -- (3.69)
For the Year Ended December 31, 2005
Class IA............................... (0.89) -- -- (0.89)
Class IB............................... (0.74) -- -- (0.74)
For the Year Ended December 31, 2004
Class IA............................... (0.49) -- -- (0.49)
Class IB............................... (0.42) -- -- (0.42)
For the Year Ended December 31, 2003
Class IA............................... (0.48) -- -- (0.48)
Class IB............................... (0.39) -- -- (0.39)
For the Year Ended December 31, 2002
Class IA............................... (0.39)(5) --(5) -- (0.39)
Class IB............................... (0.32)(5) --(5) -- (0.32)
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.57) -- -- (0.57)
Class IB............................... (0.52) -- -- (0.52)
For the Year Ended December 31, 2005
Class IA............................... (0.88) (0.09) -- (0.97)
Class IB............................... (0.83) (0.09) -- (0.92)
For the Year Ended December 31, 2004
Class IA............................... (0.58) (0.32) -- (0.90)
Class IB............................... (0.56) (0.32) -- (0.88)
For the Year Ended December 31, 2003
Class IA............................... (0.50) (0.06) -- (0.56)
Class IB............................... (0.49) (0.06) -- (0.55)
For the Year Ended December 31, 2002
Class IA............................... (0.05)(5) (0.01)(5) -- (0.06)
Class IB............................... (0.05)(5) (0.01)(5) -- (0.06)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ (0.09) $20.79 6.86%(7) $ 746,266
Class IB............................... (0.09) 20.74 6.59(7) 273,736
For the Year Ended December 31, 2005
Class IA............................... 0.62 20.88 11.02(7) 704,168
Class IB............................... 0.62 20.83 10.78(7) 271,859
For the Year Ended December 31, 2004
Class IA............................... 2.71 20.26 15.43 503,717
Class IB............................... 2.66 20.21 15.14 201,589
For the Year Ended December 31, 2003
Class IA............................... 5.85 17.55 50.06 346,380
Class IB............................... 5.82 17.55 49.70 74,592
For the Year Ended December 31, 2002
Class IA............................... (4.74) 11.70 (28.83) 184,062
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.23) 11.73 (26.51)(2) 7,150
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 3.36 52.57 14.65(7) 4,498,001
Class IB............................... 3.35 52.45 14.37(7) 758,802
For the Year Ended December 31, 2005
Class IA............................... 3.49 49.21 9.62 4,787,612
Class IB............................... 3.51 49.10 9.35 770,163
For the Year Ended December 31, 2004
Class IA............................... 1.35 45.72 4.17 5,657,942
Class IB............................... 1.30 45.59 3.91 718,293
For the Year Ended December 31, 2003
Class IA............................... 8.91 44.37 26.47 6,014,675
Class IB............................... 8.87 44.29 26.16 562,979
For the Year Ended December 31, 2002
Class IA............................... (11.90) 35.46(5) (24.25) 5,094,276
Class IB............................... (11.89) 35.42(5) (24.42) 296,767
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.03) 11.24 4.80(7) 3,041,321
Class IB............................... (0.01) 11.19 4.54(7) 1,040,408
For the Year Ended December 31, 2005
Class IA............................... (0.67) 11.27 2.45 2,745,115
Class IB............................... (0.66) 11.20 2.19 1,068,600
For the Year Ended December 31, 2004
Class IA............................... (0.38) 11.94 4.62 2,507,021
Class IB............................... (0.39) 11.86 4.36 991,065
For the Year Ended December 31, 2003
Class IA............................... 0.37 12.32 7.85 2,332,343
Class IB............................... 0.35 12.25 7.58 734,768
For the Year Ended December 31, 2002
Class IA............................... 0.49 11.95(5) 10.08 2,145,266
Class IB............................... 0.47 11.90(5) 9.83 382,864
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64% 0.64% 0.42% 92%
Class IB............................... 0.89 0.89 0.17 --
For the Year Ended December 31, 2005
Class IA............................... 0.63 0.63 0.20 77
Class IB............................... 0.88 0.88 (0.05) --
For the Year Ended December 31, 2004
Class IA............................... 0.64 0.64 0.27 88
Class IB............................... 0.89 0.89 0.02 --
For the Year Ended December 31, 2003
Class IA............................... 0.66 0.66 (0.01) 101
Class IB............................... 0.91 0.91 (0.26) --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 (0.18) 99
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 0.89(1) 0.89(1) (0.13)(1) --
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.49 0.49 1.27 97
Class IB............................... 0.74 0.74 1.02 --
For the Year Ended December 31, 2005
Class IA............................... 0.50 0.50 1.21 91
Class IB............................... 0.75 0.75 0.96 --
For the Year Ended December 31, 2004
Class IA............................... 0.49 0.49 1.61 30
Class IB............................... 0.74 0.74 1.36 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 1.18 37
Class IB............................... 0.74 0.74 0.93 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 0.97 44
Class IB............................... 0.74 0.72 0.75 --
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.50 0.50 4.82 344
Class IB............................... 0.75 0.75 4.56 --
For the Year Ended December 31, 2005
Class IA............................... 0.50 0.50 4.09 190
Class IB............................... 0.75 0.75 3.84 --
For the Year Ended December 31, 2004
Class IA............................... 0.50 0.50 3.72 164
Class IB............................... 0.75 0.75 3.47 --
For the Year Ended December 31, 2003
Class IA............................... 0.50 0.50 3.74 215
Class IB............................... 0.75 0.75 3.49 --
For the Year Ended December 31, 2002
Class IA............................... 0.51 0.51 5.58 108
Class IB............................... 0.76 0.75 5.34 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
208
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL
VALUE AT INVESTMENT FROM GAIN FROM
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS
--------- ---------- --------- ----------- ----------
HARTFORD U.S. GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $11.09 $ 0.49 $ -- $ (0.06) $ 0.43
Class IB............................... 11.03 0.46 -- (0.06) 0.40
For the Year Ended December 31, 2005
Class IA............................... 11.24 0.35 -- (0.17) 0.18
Class IB............................... 11.19 0.37 -- (0.22) 0.15
For the Year Ended December 31, 2004
Class IA............................... 11.43 0.29 -- (0.07) 0.22
Class IB............................... 11.39 0.37 -- (0.18) 0.19
For the Year Ended December 31, 2003
Class IA............................... 11.36 0.31 -- (0.07) 0.24
Class IB............................... 11.34 0.27 -- (0.05) 0.22
For the Year Ended December 31, 2002
Class IA............................... 10.79 0.22 -- 0.89 1.11
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 10.51 0.15 -- 0.68 0.83
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 11.18 0.15 -- 2.23 2.38
Class IB............................... 11.14 0.13 -- 2.21 2.34
For the Year Ended December 31, 2005
Class IA............................... 10.73 0.15 -- 0.71 0.86
Class IB............................... 10.67 0.10 -- 0.73 0.83
For the Year Ended December 31, 2004
Class IA............................... 9.72 0.13 -- 0.91 1.04
Class IB............................... 9.69 0.12 -- 0.89 1.01
For the Year Ended December 31, 2003
Class IA............................... 7.61 0.10 -- 2.08 2.18
Class IB............................... 7.60 0.09 -- 2.06 2.15
For the Year Ended December 31, 2002
Class IA............................... 9.94(5) 0.08(5) -- (2.33)(5) (2.25)
Class IB............................... 9.93(5) 0.07(5) -- (2.33)(5) (2.26)
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 18.93 0.25 0.01 3.14 3.40
Class IB............................... 18.83 0.21 0.01 3.11 3.33
For the Year Ended December 31, 2005
Class IA............................... 18.16 0.14 -- 1.34 1.48
Class IB............................... 18.06 0.09 -- 1.33 1.42
For the Year Ended December 31, 2004
Class IA............................... 15.33 0.13 -- 2.75 2.88
Class IB............................... 15.27 0.11 -- 2.72 2.83
For the Year Ended December 31, 2003
Class IA............................... 10.86 0.06 -- 4.48 4.54
Class IB............................... 10.84 0.08 -- 4.41 4.49
For the Year Ended December 31, 2002
Class IA............................... 14.83 0.07 -- (3.68) (3.61)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 13.51 0.02 -- (2.69) (2.67)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM
FROM NET REALIZED DISTRIBUTIONS
INVESTMENT CAPITAL FROM TOTAL
INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ------------- ------------- -------------
HARTFORD U.S. GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $(0.39) $ -- $ -- $(0.39)
Class IB............................... (0.36) -- -- (0.36)
For the Year Ended December 31, 2005
Class IA............................... (0.33) -- -- (0.33)
Class IB............................... (0.31) -- -- (0.31)
For the Year Ended December 31, 2004
Class IA............................... (0.41) -- -- (0.41)
Class IB............................... (0.39) -- -- (0.39)
For the Year Ended December 31, 2003
Class IA............................... (0.17) -- -- (0.17)
Class IB............................... (0.17) -- -- (0.17)
For the Year Ended December 31, 2002
Class IA............................... (0.54) -- -- (0.54)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... -- -- -- --
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.15) (0.35) -- (0.50)
Class IB............................... (0.10) (0.35) -- (0.45)
For the Year Ended December 31, 2005
Class IA............................... (0.27) (0.14) -- (0.41)
Class IB............................... (0.22) (0.14) -- (0.36)
For the Year Ended December 31, 2004
Class IA............................... (0.03) -- -- (0.03)
Class IB............................... (0.03) -- -- (0.03)
For the Year Ended December 31, 2003
Class IA............................... (0.07) -- -- (0.07)
Class IB............................... (0.06) -- -- (0.06)
For the Year Ended December 31, 2002
Class IA............................... (0.08)(5) --(5) -- (0.08)
Class IB............................... (0.07)(5) --(5) -- (0.07)
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.26) (2.33) -- (2.59)
Class IB............................... (0.19) (2.33) -- (2.52)
For the Year Ended December 31, 2005
Class IA............................... (0.26) (0.45) -- (0.71)
Class IB............................... (0.20) (0.45) -- (0.65)
For the Year Ended December 31, 2004
Class IA............................... (0.05) -- -- (0.05)
Class IB............................... (0.04) -- -- (0.04)
For the Year Ended December 31, 2003
Class IA............................... (0.07) -- -- (0.07)
Class IB............................... (0.06) -- -- (0.06)
For the Year Ended December 31, 2002
Class IA............................... (0.09) (0.27) -- (0.36)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... -- -- -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------
NET NET
INCREASE ASSET
(DECREASE) VALUE
IN NET AT END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------ -----------
HARTFORD U.S. GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ 0.04 $11.13 4.01% $ 711,639
Class IB............................... 0.04 11.07 3.75 290,963
For the Year Ended December 31, 2005
Class IA............................... (0.15) 11.09 1.55 591,007
Class IB............................... (0.16) 11.03 1.30 323,920
For the Year Ended December 31, 2004
Class IA............................... (0.19) 11.24 2.07 523,819
Class IB............................... (0.20) 11.19 1.82 294,711
For the Year Ended December 31, 2003
Class IA............................... 0.07 11.43 2.15 514,243
Class IB............................... 0.05 11.39 1.89 239,023
For the Year Ended December 31, 2002
Class IA............................... 0.57 11.36 10.73 590,626
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.83 11.34 7.96(2) 100,867
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.88 13.06 21.82(7) 277,982
Class IB............................... 1.89 13.03 21.52(7) 148,135
For the Year Ended December 31, 2005
Class IA............................... 0.45 11.18 8.13 193,655
Class IB............................... 0.47 11.14 7.86 129,771
For the Year Ended December 31, 2004
Class IA............................... 1.01 10.73 10.71 162,644
Class IB............................... 0.98 10.67 10.43 120,227
For the Year Ended December 31, 2003
Class IA............................... 2.11 9.72 28.60 155,085
Class IB............................... 2.09 9.69 28.28 99,825
For the Year Ended December 31, 2002
Class IA............................... (2.33) 7.61(5) (22.64) 69,388
Class IB............................... (2.33) 7.60(5) (22.81) 34,006
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.81 19.74 19.02(7) 508,648
Class IB............................... 0.81 19.64 18.73(7) 164,151
For the Year Ended December 31, 2005
Class IA............................... 0.77 18.93 8.32 390,113
Class IB............................... 0.77 18.83 8.05 151,960
For the Year Ended December 31, 2004
Class IA............................... 2.83 18.16 18.87 259,593
Class IB............................... 2.79 18.06 18.58 81,772
For the Year Ended December 31, 2003
Class IA............................... 4.47 15.33 41.87 156,879
Class IB............................... 4.43 15.27 41.52 32,572
For the Year Ended December 31, 2002
Class IA............................... (3.97) 10.86 (24.95) 88,793
From inception April 30, 2002 through
December 31, 2002
Class IB............................... (2.67) 10.84 (19.74)(2) 3,160
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD U.S. GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.48% 0.48% 4.48% 199%
Class IB............................... 0.73 0.73 4.21 --
For the Year Ended December 31, 2005
Class IA............................... 0.47 0.47 3.60 257
Class IB............................... 0.72 0.72 3.34 --
For the Year Ended December 31, 2004
Class IA............................... 0.47 0.47 3.08 247
Class IB............................... 0.72 0.72 2.83 --
For the Year Ended December 31, 2003
Class IA............................... 0.47 0.47 2.74 191
Class IB............................... 0.72 0.72 2.49 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 3.47 283
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.74(1) 0.74(1) 5.13(1) --
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.85 0.85 1.37 40
Class IB............................... 1.10 1.10 1.10 --
For the Year Ended December 31, 2005
Class IA............................... 0.86 0.86 1.42 30
Class IB............................... 1.11 1.11 1.17 --
For the Year Ended December 31, 2004
Class IA............................... 0.87 0.87 1.36 45
Class IB............................... 1.12 1.12 1.11 --
For the Year Ended December 31, 2003
Class IA............................... 0.87 0.87 1.53 40
Class IB............................... 1.12 1.12 1.28 --
For the Year Ended December 31, 2002
Class IA............................... 0.89 0.89 1.30 37
Class IB............................... 1.14 1.12 1.07 --
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64 0.64 1.31 52
Class IB............................... 0.89 0.89 1.05 --
For the Year Ended December 31, 2005
Class IA............................... 0.65 0.65 1.05 52
Class IB............................... 0.90 0.90 0.79 --
For the Year Ended December 31, 2004
Class IA............................... 0.67 0.67 1.10 80
Class IB............................... 0.92 0.92 0.85 --
For the Year Ended December 31, 2003
Class IA............................... 0.71 0.71 0.62 48
Class IB............................... 0.96 0.96 0.37 --
For the Year Ended December 31, 2002
Class IA............................... 0.73 0.73 0.60 67
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.91(1) 0.91(1) 1.06(1) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
209
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Hartford Series Fund, Inc. and
Hartford HLS Series Fund II, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Hartford Advisers HLS Fund, Hartford Capital
Appreciation HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Dividend
and Growth HLS Fund, Hartford Equity Income HLS Fund, Hartford Focus HLS Fund,
Hartford Global Advisers HLS Fund, Hartford Global Communications HLS Fund,
Hartford Global Financial Services HLS Fund, Hartford Global Health HLS Fund,
Hartford Global Leaders HLS Fund, Hartford Global Technology HLS Fund, Hartford
Growth HLS Fund, Hartford High Yield HLS Fund, Hartford Index HLS Fund, Hartford
International Capital Appreciation HLS Fund, Hartford International
Opportunities HLS Fund, Hartford International Small Company HLS Fund, Hartford
MidCap HLS Fund, Hartford MidCap Value HLS Fund, Hartford Money Market HLS Fund,
Hartford Mortgage Securities HLS Fund, Hartford Small Company HLS Fund, Hartford
Stock HLS Fund, Hartford Total Return Bond HLS Fund, and Hartford Value HLS Fund
(twenty-six portfolios constituting the Hartford Series Fund, Inc.) and Hartford
Growth Opportunities HLS Fund, Hartford SmallCap Growth HLS Fund, Hartford U.S.
Government Securities HLS Fund, and Hartford Value Opportunities HLS Fund (four
of the ten portfolios constituting the Hartford HLS Series Fund II, Inc.)
(collectively, the "Funds") as of December 31, 2006, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian,
agent banks or brokers or by other appropriate auditing procedures where replies
from agent banks or brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds listed above constituting portfolios within Hartford Series Fund,
Inc. and Hartford HLS Series Fund II, Inc. at December 31, 2006, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
210
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Funds and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the funds
pursuant to the Investment Company Act of 1940. Each officer and three of the
Funds' directors, as noted in the chart below, are "interested" persons of the
funds. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by each Fund can
be found in the Statement of Operations herein. The Funds do not pay salaries or
compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
211
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
DIRECTORS AND OFFICERS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms.
Fleege was Counsel for Ameriprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005.
212
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities and a record of how the Funds
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Funds file a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
SHAREHOLDER MEETING RESULTS
The following proposal was addressed and approved at a special meeting of
shareholders held on October 24, 2006.
1. Proposal to approve a sub-advisory agreement between HL Investment Advisors,
LLC ("HL Advisors"), the Fund's investment manager, and Hartford Investment
Management Company ("Hartford Investment Management"), an affiliate of HL
Advisors pursuant to which Hartford Investment Management will serve as an
additional sub-adviser of the Hartford SmallCap Growth HLS Fund (the "Fund")
and manage a portion of the Fund's assets.
<Table>
<Caption>
FUND FOR AGAINST ABSTAIN
---- -------------- ------------- -------------
Hartford SmallCap Growth HLS Fund 35,769,980.346 1,480,665.687 3,222,626.038
</Table>
213
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,102.32 $3.34
Class IB........... $1,000.00 $1,099.84 $4.66
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,121.09 $3.53
Class IB........... $1,000.00 $1,158.66 $4.95
HARTFORD DISCIPLINED
EQUITY HLS FUND
Class IA........... $1,000.00 $1,101.47 $3.76
Class IB........... $1,000.00 $1,116.88 $5.12
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,138.54 $3.61
Class IB........... $1,000.00 $1,195.97 $5.09
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,022.03 $3.21 0.63% 184 365
Class IB........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD DISCIPLINED
EQUITY HLS FUND
Class IA........... $1,000.00 $1,021.63 $3.62 0.71% 184 365
Class IB........... $1,000.00 $1,020.37 $4.89 0.96% 184 365
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.83 $3.41 0.67% 184 365
Class IB........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
</Table>
214
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD EQUITY
INCOME HLS FUND
Class IA........... $1,000.00 $1,125.15 $4.02
Class IB........... $1,000.00 $1,199.89 $5.54
HARTFORD FOCUS HLS
FUND
Class IA........... $1,000.00 $1,119.92 $4.70
Class IB........... $1,000.00 $1,088.81 $5.95
HARTFORD GLOBAL
ADVISERS HLS FUND
Class IA........... $1,000.00 $1,055.43 $4.20
Class IB........... $1,000.00 $1,080.29 $5.56
HARTFORD GLOBAL
COMMUNICATIONS HLS
FUND
Class IA........... $1,000.00 $1,271.61 $4.52
Class IB........... $1,000.00 $1,211.97 $5.80
HARTFORD GLOBAL
FINANCIAL SERVICES
HLS FUND
Class IA........... $1,000.00 $1,133.84 $3.76
Class IB........... $1,000.00 $1,200.30 $5.27
HARTFORD GLOBAL
HEALTH HLS FUND
Class IA........... $1,000.00 $1,095.86 $4.70
Class IB........... $1,000.00 $1,103.34 $6.04
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,081.57 $3.94
Class IB........... $1,000.00 $1,133.56 $5.38
HARTFORD GLOBAL
TECHNOLOGY HLS FUND
Class IA........... $1,000.00 $1,119.14 $5.13
Class IB........... $1,000.00 $1,094.67 $6.39
HARTFORD GROWTH HLS
FUND
Class IA........... $1,000.00 $1,072.36 $4.39
Class IB........... $1,000.00 $1,038.03 $5.60
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,100.93 $3.50
Class IB........... $1,000.00 $1,113.35 $4.85
HARTFORD HIGH YIELD
HLS FUND
Class IA........... $1,000.00 $1,078.15 $3.82
Class IB........... $1,000.00 $1,103.98 $5.20
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,123.98 $1.82
Class IB........... $1,000.00 $1,148.71 $3.20
HARTFORD
INTERNATIONAL
CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,147.67 $4.66
Class IB........... $1,000.00 $1,232.13 $6.25
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,135.15 $3.93
Class IB........... $1,000.00 $1,236.54 $5.52
HARTFORD
INTERNATIONAL SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,163.35 $5.02
Class IB........... $1,000.00 $1,284.22 $6.74
HARTFORD MIDCAP HLS
FUND
Class IA........... $1,000.00 $1,078.89 $3.56
Class IB........... $1,000.00 $1,109.94 $4.95
HARTFORD MIDCAP VALUE
HLS FUND
Class IA........... $1,000.00 $1,102.62 $4.13
Class IB........... $1,000.00 $1,170.67 $5.64
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.53 $2.45
Class IB........... $1,000.00 $1,040.60 $3.75
HARTFORD MORTGAGE
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,045.71 $2.53
Class IB........... $1,000.00 $1,040.39 $3.81
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD EQUITY
INCOME HLS FUND
Class IA........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
Class IB........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
HARTFORD FOCUS HLS
FUND
Class IA........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
Class IB........... $1,000.00 $1,019.51 $5.75 1.13% 184 365
HARTFORD GLOBAL
ADVISERS HLS FUND
Class IA........... $1,000.00 $1,021.12 $4.13 0.81% 184 365
Class IB........... $1,000.00 $1,019.86 $5.40 1.06% 184 365
HARTFORD GLOBAL
COMMUNICATIONS HLS
FUND
Class IA........... $1,000.00 $1,021.22 $4.02 0.79% 184 365
Class IB........... $1,000.00 $1,019.96 $5.30 1.04% 184 365
HARTFORD GLOBAL
FINANCIAL SERVICES
HLS FUND
Class IA........... $1,000.00 $1,021.68 $3.57 0.70% 184 365
Class IB........... $1,000.00 $1,020.42 $4.84 0.95% 184 365
HARTFORD GLOBAL
HEALTH HLS FUND
Class IA........... $1,000.00 $1,020.72 $4.53 0.89% 184 365
Class IB........... $1,000.00 $1,019.46 $5.80 1.14% 184 365
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
Class IB........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
HARTFORD GLOBAL
TECHNOLOGY HLS FUND
Class IA........... $1,000.00 $1,020.37 $4.89 0.96% 184 365
Class IB........... $1,000.00 $1,019.11 $6.16 1.21% 184 365
HARTFORD GROWTH HLS
FUND
Class IA........... $1,000.00 $1,020.97 $4.28 0.84% 184 365
Class IB........... $1,000.00 $1,019.71 $5.55 1.09% 184 365
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD HIGH YIELD
HLS FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,023.49 $1.73 0.34% 184 365
Class IB........... $1,000.00 $1,022.23 $3.01 0.59% 184 365
HARTFORD
INTERNATIONAL
CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,020.87 $4.38 0.86% 184 365
Class IB........... $1,000.00 $1,019.61 $5.65 1.11% 184 365
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD
INTERNATIONAL SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
Class IB........... $1,000.00 $1,019.31 $5.96 1.17% 184 365
HARTFORD MIDCAP HLS
FUND
Class IA........... $1,000.00 $1,021.78 $3.47 0.68% 184 365
Class IB........... $1,000.00 $1,020.52 $4.74 0.93% 184 365
HARTFORD MIDCAP VALUE
HLS FUND
Class IA........... $1,000.00 $1,021.27 $3.97 0.78% 184 365
Class IB........... $1,000.00 $1,020.01 $5.24 1.03% 184 365
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.79 $2.45 0.48% 184 365
Class IB........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
HARTFORD MORTGAGE
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,022.74 $2.50 0.49% 184 365
Class IB........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
</Table>
215
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
EXPENSE EXAMPLE (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,069.12 $3.81
Class IB........... $1,000.00 $1,136.42 $5.28
HARTFORD SMALLCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,058.45 $3.32
Class IB........... $1,000.00 $1,061.43 $4.62
HARTFORD SMALLCAP
VALUE HLS FUND
Class IA........... $1,000.00 $1,108.38 $5.31
Class IB........... $1,000.00 $1,173.90 $6.85
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,133.32 $2.63
Class IB........... $1,000.00 $1,139.95 $3.99
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,051.37 $2.59
Class IB........... $1,000.00 $1,041.65 $3.86
HARTFORD U.S.
GOVERNMENT
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,037.93 $2.41
Class IB........... $1,000.00 $1,033.91 $3.69
HARTFORD VALUE HLS
FUND
Class IA........... $1,000.00 $1,127.63 $4.56
Class IB........... $1,000.00 $1,209.67 $6.13
HARTFORD VALUE
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,132.44 $3.49
Class IB........... $1,000.00 $1,182.73 $4.95
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD SMALLCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.98 $3.26 0.64% 184 365
Class IB........... $1,000.00 $1,020.72 $4.53 0.89% 184 365
HARTFORD SMALLCAP
VALUE HLS FUND
Class IA........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
Class IB........... $1,000.00 $1,018.90 $6.36 1.25% 184 365
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,022.74 $2.50 0.49% 184 365
Class IB........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,022.68 $2.55 0.50% 184 365
Class IB........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
HARTFORD U.S.
GOVERNMENT
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,022.84 $2.40 0.47% 184 365
Class IB........... $1,000.00 $1,021.58 $3.67 0.72% 184 365
HARTFORD VALUE HLS
FUND
Class IA........... $1,000.00 $1,020.92 $4.33 0.85% 184 365
Class IB........... $1,000.00 $1,019.66 $5.60 1.10% 184 365
HARTFORD VALUE
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.93 $3.31 0.65% 184 365
Class IB........... $1,000.00 $1,020.67 $4.58 0.90% 184 365
</Table>
216
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
the continuation of the mutual fund's investment advisory and sub-advisory
agreements after an initial two year period.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each Fund with an agreement up for renewal
with HL Investment Advisors, LLC ("HL Advisors") and the investment sub-advisory
agreements between HL Advisors and each Fund's respective sub-adviser(s)
("sub-advisers," and together with HL Advisors, "advisers") -- Hartford
Investment Management Company ("Hartford Investment") and Wellington Management
Company, LLP ("Wellington") (collectively, the "agreements"). In the months
preceding this meeting, the Board requested, received, and reviewed written
responses from the advisers to questions posed to them on behalf of the
Independent Directors and supporting materials relating to those questions and
responses. In addition, the Board received in-person presentations about each
Fund and the related agreements by Fund officers and representatives of HL
Advisors at the Board's meetings on June 20-21, 2006 and August 1-2, 2006. In
considering the approval of the agreements, the Board also took into account
information provided to the Board at its meetings throughout the year, including
reports on Fund performance, compliance, shareholder services, and the other
services provided to the Funds by the advisers and their affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
Nature, Extent and Quality of Services
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as well as
its willingness to consider and implement organizational and operational
changes, including hiring additional personnel designed to improve services to
the Funds, and its investments in infrastructure in light of increased
regulatory requirements and other developments. The Board considered the
progress that Hartford Investment has made in developing an equity management
capability. In addition, the Board considered the quality of each adviser's
communications with the Board and responsiveness to Board inquiries.
- ---------------
1 Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life Insurance
Company ("Hartford Life"), under which Hartford Life provides certain
administrative services to those Funds. For those Funds that have separate
management and administrative agreements, the Board considered the fees
payable under both agreements in the aggregate.
217
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
Performance of the Funds, HL Advisors, and the Sub-Advisers
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each Fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, that HL Advisors
is addressing the Board's concerns about investment performance, and the Board
had continued confidence in HL Advisors' and the sub-advisers' overall
capabilities to manage each Fund.
Costs of the Services and Profitability of HL Advisors and the Sub-Advisers
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
218
- --------------------------------------------------------------------------------
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability. In evaluating such sub-adviser's profitability with respect to
the Funds, the Board considered primarily HL Advisors' and the sub-advisers'
representations that HL Advisors had negotiated the sub-advisory fees at arm's
length, and the sub-advisers' representations that the fees charged to HL
Advisors were comparable to fees charged by the sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
Comparison of Fees and Services Provided by HL Advisors and the Sub-Advisers
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer funds. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio, net of these reductions. The following reductions were agreed to at the
meeting:
- - High Yield HLS Fund -- 5 bps fee waiver, effective;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - Money Market HLS Fund -- 5 bps fee waiver
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
Economies of Scale
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by
219
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
HL Advisors, Lipper, and the Consultant, the Board recognized that there is no
uniform methodology for establishing breakpoints, or uniform pattern in asset
levels that trigger breakpoints or the amounts of breakpoints triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from certain Funds for providing certain
administrative services for those Funds, and that Hartford Life also receives
fees for fund accounting and related services from each of the Funds, and the
Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds' transfer agent and an
affiliate of HL Advisors, receives transfer agency compensation from the Funds,
and the Board reviewed information on the expected profitability of the Funds'
transfer agency function to HISC. The Board considered information provided by
HL Advisors indicating that the fees charged by HISC to the Funds are reasonable
and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds, receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the HLS Funds of
approximately $480,000 per year.
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
* * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
220
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
HARTFORD SERIES FUND, INC.
HARTFORD HLS SERIES FUND II, INC.
TABLE OF CONTENTS
<Table>
Manager Discussions (Unaudited) 1
Hartford Series Fund, Inc. and Hartford HLS Series
Fund II, Inc. Financial Statements:
Schedule of Investments as of December 31, 2006:
Hartford Advisers HLS Fund 58
Hartford Blue Chip Stock HLS Fund 64
Hartford Capital Appreciation HLS Fund 66
Hartford Capital Opportunities HLS Fund 70
Hartford Disciplined Equity HLS Fund 71
Hartford Dividend and Growth HLS Fund 73
Hartford Equity Income HLS Fund 75
Hartford Focus HLS Fund 77
Hartford Global Advisers HLS Fund 79
Hartford Global Leaders HLS Fund 88
Hartford Growth HLS Fund 90
Hartford Growth Opportunities HLS Fund 92
Hartford High Yield HLS Fund 94
Hartford Index HLS Fund 100
Hartford International Capital Appreciation HLS Fund 106
Hartford International Opportunities HLS Fund 109
Hartford International Small Company HLS Fund 112
Hartford International Stock HLS Fund 116
Hartford LargeCap Growth HLS Fund 118
Hartford MidCap Growth HLS Fund (formerly Hartford
MidCap Stock HLS Fund) 119
Hartford Money Market HLS Fund 121
Hartford Mortgage Securities HLS Fund 123
Hartford SmallCap Growth HLS Fund 126
Hartford SmallCap Value HLS Fund 131
Hartford Stock HLS Fund 137
Hartford Total Return Bond HLS Fund 139
Hartford U.S. Government Securities HLS Fund 149
Hartford Value HLS Fund 152
Hartford Value Opportunities HLS Fund 154
Statements of Assets and Liabilities as of December 31,
2006 158
Statements of Operations for the Year Ended December 31,
2006 164
Statements of Changes in Net Assets for the Years Ended
December 31, 2006 and 2005 170
Notes to Financial Statements 180
Financial Highlights 197
Report of Independent Registered Public Accounting Firm 207
Directors and Officers (Unaudited) 208
How to Obtain a Copy of the Funds' Proxy Voting Policies
and Proxy Voting Records (Unaudited) 210
Shareholder Meeting Results (Unaudited) 210
Expense Example (Unaudited) 211
Approval of Investment Management, and Investment
Sub-Advisory Agreements (Unaudited) 214
</Table>
This report is prepared for the general information of contract owners
and is not an offer of contracts. It should not be used in connection
with any offer, except in conjunction with the appropriate prospectus
which contains all pertinent information including the applicable
sales, administrative and other charges.
The views expressed in each Fund's Manager Discussion under "Why did
the Fund perform this way?" and "What is the outlook?" are views of the
Fund's sub-advisers and portfolio management team.
Hartford Advisers HLS Fund inception 3/31/1983
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND
ADVISERS IA S&P 500 INDEX INDEX
----------- ------------- ----------------------
12/96 10000 10000 10000
10437 10624 10012
10478 10708 10033
10182 10269 9914
10642 10881 10059
11118 11542 10153
11600 12060 10274
12321 13018 10589
11712 12289 10470
12208 12962 10635
11986 12529 10805
12344 13109 10862
12/97 12451 13334 10976
12631 13481 11130
13252 14453 11108
13755 15193 11142
13975 15346 11198
13855 15082 11318
14373 15695 11434
14474 15528 11443
13213 13283 11666
13754 14134 12000
14439 15283 11915
14989 16209 11986
12/98 15520 17143 12016
15862 17860 12101
15494 17305 11813
15967 17997 11872
16390 18694 11901
15990 18253 11779
16592 19266 11742
16256 18664 11709
16109 18571 11700
15929 18062 11805
16473 19205 11836
16604 19595 11829
12/99 17163 20749 11757
16566 19707 11754
16464 19334 11902
17579 21224 12074
17208 20586 12015
17000 20164 12004
17252 20661 12249
17091 20338 12379
17701 21601 12553
17239 20460 12601
17351 20374 12680
16789 18769 12896
12/00 17035 18861 13151
17389 19529 13371
16727 17750 13509
16045 16626 13571
16712 17916 13470
16837 18036 13547
16410 17598 13612
16429 17425 13951
15806 16335 14131
15187 15016 14261
15542 15303 14622
16199 16477 14382
12/01 16245 16622 14269
16031 16379 14374
15942 16063 14496
16228 16668 14202
15375 15658 14477
15279 15543 14610
14631 14436 14735
14133 13311 14912
14146 13398 15247
13216 11943 15574
13836 12993 15426
14496 13757 15435
12/02 14004 12949 15844
13759 12611 15843
13664 12422 16125
13690 12543 16104
14391 13575 16276
14982 14289 16739
15101 14472 16672
15181 14728 15973
15348 15014 16078
15296 14855 16588
15791 15695 16377
15901 15832 16420
12/03 16594 16662 16582
16688 16968 16733
16828 17204 16938
16669 16944 17093
16376 16679 16568
16512 16907 16484
16785 17236 16551
16395 16665 16726
16492 16732 17080
16468 16913 17140
16485 17172 17288
16792 17866 17096
12/04 17215 18474 17278
17047 18024 17398
17270 18403 17283
16909 18077 17162
16870 17735 17419
17317 18298 17637
17331 18325 17753
17795 19006 17553
17896 18832 17815
17971 18985 17582
17776 18668 17431
18300 19374 17521
12/05 18461 19380 17687
18825 19894 17655
18792 19947 17702
18868 20196 17508
19046 20467 17453
18662 19878 17443
18486 19905 17484
18563 20027 17711
19007 20503 17991
19349 21031 18167
19839 21716 18282
20310 22128 18496
12/06 20437 22439 18355
</Table>
<Table>
--- ADVISERS IA --- S&P 500 INDEX -- LEHMAN BROTHERS
$10,000 starting value $10,000 starting value GOVERNMENT/
$20,437 ending value $22,439 ending value CREDIT BOND INDEX
$10,000 starting value
$18,355 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX is an unmanaged,
market-value-weighted index of all debt obligations of the U.S. Treasury and
U.S. Government agencies (excluding mortgage-backed securities) and of all
publicly issued fixed-rate, nonconvertible, investment grade domestic corporate
debt.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------
Advisers IA 10.70% 4.70% 7.41%
- --------------------------------------------------------
Advisers IB(3) 10.43% 4.44% 7.17%
- --------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- --------------------------------------------------------
Lehman Brothers
Government/Credit Bond
Index 3.78% 5.17% 6.26%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA JOHN C. KEOGH CHRISTOPHER L. GOOTKIND, CFA
Senior Vice Vice President Senior Vice President, Vice President
President, Partner Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Advisers HLS Fund returned 10.70% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78%, and outperforming the Lehman Brothers
Government/Credit Bond Index, which returned 3.78% for the same period. The Fund
also underperformed the 11.67% return of the average fund in the Lipper VA
Mixed-Asset Target Allocation Growth Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Financial markets have been strong for the past twelve month period. Equity
markets as measured by the S&P 500 hit record highs and were up 15.78% while the
bond market as measured by the Lehman Brothers Government/Credit Bond Index
increased 3.78%. The Fund has three primary levers to generate investment
performance: equity investments, fixed income investments, and asset allocation
among stocks, bonds, and cash. During the past year both the equity portion and
the fixed income portion of the Fund underperformed their respective benchmarks.
Asset Allocation contributed positively to the Fund's performance as the Fund's
consistent overweight to equities helped during the year.
The Equity portion of the Fund underperformed due primarily to negative stock
selection within the Consumer Discretionary, Health Care and Materials sectors.
This was offset somewhat by strong stock selection within Information
Technology, Industrials and Financials.
Stocks that detracted the most from relative (i.e. performance of the Fund as
measured against the benchmark) returns included XM Satellite, Boston
Scientific, Marvell Technology and Dollar General. Media company XM Satellite
came under pressure as decelerating customer addition trends and regulatory
review of product compliance caused investors to question the market
opportunity. The Fund continues to hold the stock based on positive long-term
trends in satellite radio due to original equipment manufacturer (OEM) adoption.
Boston Scientific had a tough year, suffering from erosion of its Implantable
Cardioverter Defibrillator (ICD) market share, concerns surrounding its drug
eluting stent business, and continued issues with cardiac product recalls from
its recently acquired Guidant business. We retain our position as the
fundamentals of the company remain sound and the stock is attractively priced.
Chip maker Marvell declined on disruption in the hard disk drive market and
worries over stock option grants. Discount retailer Dollar General disappointed
due
1
- --------------------------------------------------------------------------------
to high gasoline prices hitting Dollar General customers and thus impacting the
company's top line. Additionally, Dollar General has been selling a greater
proportion of lower-margin "highly consumable products" than anticipated. These
are products like perishable foods and cleaning supplies that are used up
quickly by consumers and need to be replaced frequently, but carry thin margins.
The Fund's overweight (i.e. the Fund's sector position was more than the
benchmark position) allocation to Health Care, which posted positive absolute
(i.e. total return) returns but lagged the market, also hurt returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and Lexmark. The Fund also benefited from not owning
Intel, whose shares declined during the year. AT&T is benefiting from the
stabilization of its long distance pricing. Also, cost-cutting from its recent
acquisitions is going well. Cisco's revenue and earnings growth has surprised
the market on the upside. The strong secular move of enterprise and service
provider networks toward all-IP networks plays into Cisco's strength. We
continue to hold a position in the stock. UBS, the Swiss-based financial
institution, posted outstanding results due primarily to its well-performing
wealth management business. UBS remains one of our top holdings. We initiated a
position in Broadcom during a low in its share price during the summer after it
guided down estimates and faced pressures due to options investigations. Despite
its solid gains, Broadcom remains a material holding as we see strong business
prospects for many years to come and valuation is still reasonable. Shares in
Lexmark, a manufacturer and supplier of printing and imaging solutions, rose as
the company recovered from its product and distribution missteps last year.
Other positive contributors to absolute performance included Exxon Mobil, Bank
of America, Citigroup and Munich Re.
While absolute performance was positive in the fixed income portion of the Fund,
relative returns slightly lagged the benchmark. The bonds underperformed their
benchmark during the year due mainly to starting the year with a longer
duration. Additionally sector allocation produced mixed results. The benefit
derived from the Fund's overweight allocations to structured sectors such as
mortgage pass-throughs and commercial mortgage-backed securities (CMBS) was more
than offset by our out-of-benchmark allocation to Treasury Inflation Protected
Securities (TIPS). Weakness in the commodity markets, as well as several
below-trend reports on CPI (Consumer Price Index), caused TIPS to underperform
during the period. We believe an economic growth slowdown is apparent, but a
hard landing is unlikely. We continue to overweight the non-government sectors
with a preference towards structured securities and MBS. We view the current
environment, with strong balance sheets and solid earnings and cash flow
generation, as being favorable for investment grade credit. While we acknowledge
that the best is probably behind us, with corporations starting to increase
balance sheet leverage, the low default environment is likely to continue into
2007. While valuations are not compelling historically, they are likely fair for
the current environment. Security selection continues to be important given the
frequency of capital restructurings through Leveraged buyouts. We maintain an
underweight allocation to the credit sector.
WHAT IS THE OUTLOOK?
The stock portion of the Fund is managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio. We look for companies that exhibit some or all of the following
characteristics: industry leadership, strong balance sheets, solid management
teams, high return on equity, accelerating earnings, and/or attractive valuation
with a catalyst. At the end of the period, the equity portion of the Fund was
overweight positions in Information Technology and Health Care and underweight
positions in Energy and Financials.
The equity and fixed income managers will continue to work collaboratively to
make decisions regarding portfolio weights in stocks, bonds, and cash. As of
December 31, 2006, the Fund's equity exposure was at 68% compared to 60% in its
benchmark and at the upper end of the 50-70% range, as we expect equities to
continue to outperform bonds and cash.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.6%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 6.8
- -------------------------------------------------------------------
Consumer Staples 5.3
- -------------------------------------------------------------------
Energy 4.2
- -------------------------------------------------------------------
Finance 23.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 7.4
- -------------------------------------------------------------------
Other Direct Federal Obligations 2.2
- -------------------------------------------------------------------
Services 7.2
- -------------------------------------------------------------------
Technology 20.2
- -------------------------------------------------------------------
Transportation 0.1
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 10.1
- -------------------------------------------------------------------
Utilities 1.2
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Backed Securities 2.9%
- -------------------------------------------------------------------
Common Stock 67.8
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 0.1
- -------------------------------------------------------------------
Corporate Bonds: Non Investment Grade 10.5
- -------------------------------------------------------------------
Municipal Bonds 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 12.3
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
2
Hartford Blue Chip Stock HLS Fund inception 5/1/1996
(subadvised by Hartford Investment Management Company*)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment
(LINE GRAPH)
<Table>
<Caption>
BLUE CHIP STOCK IA RUSSELL 1000 GROWTH INDEX S&P 500 INDEX
------------------ ------------------------- -------------
12/96 10000 10000 10000
10404 10701 10624
10428 10629 10708
9981 10054 10269
10417 10721 10881
11021 11495 11546
11480 11955 12059
12337 13012 13018
11786 12251 12289
12353 12854 12961
12057 12379 12528
12425 12904 13109
12/97 12700 13049 13334
12846 13439 13481
13811 14450 14453
14436 15026 15193
14577 15234 15346
14215 14802 15082
14850 15708 15694
14695 15604 15528
12338 13262 13283
13077 14281 14134
14186 15429 15283
15055 16603 16209
12/98 16264 18100 17143
16749 19162 17859
16279 18287 17304
16886 19250 17997
17319 19275 18693
16828 18682 18253
17858 19991 19266
17254 19356 18664
17068 19672 18571
16738 19259 18062
17916 20713 19204
18305 21831 19595
12/99 19498 24101 20749
18874 22971 19707
19069 24094 19334
20710 25819 21224
20114 24590 20586
19674 23352 20163
20854 25122 20660
20443 24074 20338
22163 26254 21600
21060 23771 20460
20580 22646 20373
18605 19308 18768
12/00 19016 18697 18860
19292 19988 19529
17240 16595 17750
15783 14789 16626
17351 16660 17916
17487 16414 18036
17053 16034 17598
16614 15634 17424
15444 14355 16335
14324 12922 15016
14898 13600 15303
16062 14906 16477
12/01 16276 14878 16622
15792 14615 16379
15323 14009 16063
16044 14493 16667
15041 13311 15657
14788 12989 15542
13509 11787 14436
12525 11139 13311
12757 11172 13398
11440 10013 11943
12541 10932 12993
13151 11526 13757
12/02 12305 10730 12949
12068 10469 12611
11943 10421 12422
12145 10615 12542
13150 11400 13574
13828 11969 14289
13999 12134 14471
14304 12436 14727
14473 12745 15013
14264 12609 14854
15028 13317 15694
15185 13456 15832
12/03 15910 13922 16661
16220 14206 16967
16359 14296 17203
16208 14031 16943
15850 13868 16678
16092 14126 16906
16349 14303 17235
15583 13494 16664
15563 13428 16731
15848 13555 16912
16077 13767 17171
16749 14240 17865
12/04 17327 14799 18473
16815 14305 18023
16766 14457 18402
16446 14194 18076
16127 13924 17734
16935 14597 18297
17045 14543 18324
17773 15254 19005
17519 15058 18831
17623 15127 18984
17530 14980 18667
18354 15626 19373
12/05 18340 15577 19379
18853 15851 19893
18735 15826 19946
18881 16059 20195
18937 16038 20466
18199 15494 19877
18124 15433 19904
17902 15139 20026
18444 15611 20502
18968 16040 21030
19468 16604 21715
19730 16934 22127
12/06 19814 16991 22438
</Table>
<Table>
--- BLUE CHIP STOCK IA --- RUSSELL 1000 GROWTH INDEX -- S&P 500 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$19,814 ending value $16,991 ending value $22,438 ending value
</Table>
RUSSELL 1000 GROWTH INDEX is an unmanaged index which measures the performance
of those Russell 1000 Index companies with higher price-to-book ratios and
higher forecasted growth values. (The Russell 1000 Index is an unmanaged index
that measures the performance of the 1,000 largest companies in the Russell 3000
Index, which measures the performance of the 3,000 largest U.S. companies based
on total market capitalization.)
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
The Fund has changed its benchmark from the S&P 500 Index to the Russell 1000
Growth Index because the Fund's investment manager believes that the Russell
1000 Growth Index is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
* As of 11/13/2006, the sub-adviser changed from T. Rowe Price Associates, Inc.
to Hartford Investment Management Company.
AVERAGE ANNUAL RETURNS(1) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -----------------------------------------------------------
Blue Chip Stock IA 8.04% 4.01% 7.08%
- -----------------------------------------------------------
Russell 1000 Growth Index 9.07% 2.69% 5.44%
- -----------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -----------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
HUGH WHELAN, CFA
Executive Vice President
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Blue Chip Stock HLS Fund returned 8.04% for
the year, trailing the Standard & Poor's 500 Stock Index, which gained 15.78%
and the Russell 1000 Growth Index which gained 9.07%. The Fund outperformed the
6.31% return of the average fund in the Lipper VA Large Cap Growth Funds peer
group, a group of funds with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Stock selection produced outperformance in the Materials, Industrials and
Business Services sectors relative to the S&P index. Stock selection and
overweighting (i.e. the Fund's sector position was more than the benchmark
position) of Health Care and Information Technology sectors generated relative
(i.e. performance of the Fund as measured against the benchmark)
underperformance. Underweighting the strong Energy sector also detracted, as did
the avoidance of Utilities stocks.
Overweighting Monsanto, maker of genetically altered crop seeds, produced the
greatest contribution in the Materials sector. Metals and mining companies Nucor
and BHP Billiton also contributed behind strong commodity prices and demand, but
were eliminated from the Fund in the second half.
Stock selection benefited the Industrials and Business Services sector, yielding
relative outperformance. Overweighting machinery maker Danaher and defense
company General Dynamics produced strong results. General Dynamics was sold in
late 2006.
Health Care was the worst performing sector for the year, and the Fund was
notably overweight in these stocks. It was the only portfolio sector with a
negative return. Service providers slumped amid concerns over pricing and
enrollment growth and investigations of stock-options backdating. The portfolio
was overweighted in providers, and UnitedHealth Group was the industry's most
significant detractor. Slowing sales of stents and implantable cardiofibrillator
devices and worries over Medicare reimbursement rates hurt our overweighted
holdings in equipment companies St. Jude Medical and Medtronic. St. Jude Medical
and Medtronic were eliminated from the Fund in the fourth quarter.
3
- --------------------------------------------------------------------------------
In Information Technology, semiconductor company Marvell Technology Group
stumbled on lower demand expectations and investor worries about its acquisition
of an Intel processor business. Yahoo! traded lower as competitor Google
outdistanced its rivals in search and advertising revenues. Dell moved lower in
an unfavorable personal computer market, combined with its executive miscues.
All three positions were sold in late 2006.
Weakness in consumer finance, diversified financial services, and insurance
holdings weighed on relative performance of the Financials sector, although it
was one of the Fund's top absolute (i.e. total return) positive contributors.
Capital markets firms Goldman Sachs and UBS were among the portfolio's top
contributors. Laggards included disappointing funds manager Legg Mason, insurer
Marsh & McLennan, and student loan firm SLM Corp., which declined on fears of
lender-unfriendly legislation from the new Congress. During the fourth quarter
we eliminated our positions in UBS, Legg Mason, Marsh & McLennan and SLM Corp.
Energy was the second strongest sector in the index for the period, and the
portfolio was hurt on a relative basis by underweighting as well as by stock
selection. The primary source of selection weakness was underweighting Exxon
Mobil, the leading oil producer, while favoring energy equipment and services
companies. We continue to hold Exxon Mobil at year end.
WHAT IS YOUR OUTLOOK AND STRATEGY?
On November 13, 2006, Hartford Investment Management Company replaced T. Rowe
Price Associates, Inc. as sub-adviser for the Fund. The Fund's approach aligns
the investment process with the portfolio's Russell 1000(R) Growth benchmark,
investing in a broad range of large-cap stocks. The process uses a systematic
approach that weighs more than 80 fundamental characteristics across four broad
categories, including business behavior, management behavior, valuation and
investor behavior. Our team uses this analysis to build a broadly diversified
portfolio of companies, with sector weightings determined largely by the
attractiveness of specific stocks within the Fund's investment universe. Our
team invests in companies that we believe have compelling stock characteristics
versus the Russell 1000 Growth Index. Our team constructs the Fund to have a
consistent fundamental advantage, which we believe will yield attractive
risk-adjusted returns relative to the Russell 1000 Growth Index over the long
term.
In addition, on February 5, 2007, the Fund will merge with Hartford Capital
Opportunities HLS Fund and Hartford Large Cap Growth HLS Fund. As of February 5,
2007, the Fund will change its name to the Hartford LargeCap Growth HLS Fund.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 0.6%
- -------------------------------------------------------------------
Capital Goods 5.2
- -------------------------------------------------------------------
Consumer Cyclical 15.4
- -------------------------------------------------------------------
Consumer Staples 4.7
- -------------------------------------------------------------------
Energy 2.4
- -------------------------------------------------------------------
Finance 13.9
- -------------------------------------------------------------------
Health Care 15.3
- -------------------------------------------------------------------
Investment Pools and Funds 0.5
- -------------------------------------------------------------------
Services 10.1
- -------------------------------------------------------------------
Technology 27.7
- -------------------------------------------------------------------
Transportation 3.1
- -------------------------------------------------------------------
Utilities 0.7
- -------------------------------------------------------------------
Short-Term Investments 22.3
- -------------------------------------------------------------------
Other Assets & Liabilities (21.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
4
Hartford Capital Appreciation HLS Fund inception 4/2/1984
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
CAPITAL APPRECIATION IA S&P 500 INDEX RUSSELL 3000 INDEX
----------------------- ------------- ------------------
12/96 10000 10000 10000
10384 10624 10553
10185 10708 10565
9612 10269 10087
9857 10881 10584
10981 11542 11307
11456 12060 11777
12405 13018 12700
12258 12289 12185
13072 12962 12876
12289 12529 12443
12192 13109 12920
12/97 12234 13334 13178
12124 13481 13247
13271 14453 14194
13795 15193 14898
14039 15346 15044
13421 15082 14673
13681 15695 15169
13338 15528 14894
10683 13283 12612
11313 14134 13472
12418 15283 14495
13193 16209 15381
12/98 14128 17143 16359
14742 17860 16915
14091 17305 16317
15181 17997 16915
15897 18694 17678
15672 18253 17342
16543 19266 18218
16367 18664 17666
16168 18571 17465
15620 18062 17018
16672 19205 18085
17566 19595 18591
12/99 19420 20749 19777
19027 19707 19002
21963 19334 19179
22496 21224 20680
21315 20586 19951
20609 20164 19391
21893 20661 19965
21927 20338 19612
24144 21601 21067
23268 20460 20113
22602 20374 19827
20728 18769 17999
12/00 21988 18861 18301
23301 19529 18927
22253 17750 17197
21046 16626 16076
22677 17916 17365
22987 18036 17504
22315 17598 17182
21492 17425 16899
20417 16335 15902
18066 15016 14499
18590 15303 14837
19931 16477 15979
12/01 20463 16622 16205
19916 16379 16002
19493 16063 15674
20241 16668 16361
19151 15658 15502
19080 15543 15322
17389 14436 14219
15989 13311 13089
16364 13398 13150
15129 11943 11768
16254 12993 12705
17510 13757 13473
12/02 16432 12949 12712
16098 12611 12401
15922 12422 12196
15738 12543 12324
16920 13575 13331
18262 14289 14136
18744 14472 14327
19086 14728 14655
19803 15014 14981
19727 14855 14818
21275 15695 15715
21809 15832 15931
12/03 23395 16662 16660
23780 16968 17007
24648 17204 17236
24663 16944 17031
23731 16679 16679
24237 16907 16922
25264 17236 17258
24002 16665 16605
23641 16732 16674
24486 16913 16930
25049 17172 17208
26875 17866 18008
12/04 27925 18474 18650
27258 18024 18153
28286 18403 18553
27187 18077 18239
26353 17735 17842
27129 18298 18519
27647 18325 18648
29110 19006 19413
29380 18832 19228
30478 18985 19396
29917 18668 19033
31575 19374 19775
12/05 32267 19380 19791
34034 19894 20452
33679 19947 20489
34252 20196 20843
35243 20467 21069
33858 19878 20394
33464 19905 20430
33196 20027 20411
34023 20503 20911
34510 21031 21379
36064 21716 22148
37166 22128 22630
12/06 37628 22439 22901
</Table>
<Table>
--- CAPITAL APPRECIATION IA -- RUSSELL 3000 INDEX --- S&P 500 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$37,628 ending value $22,901 ending value $22,439 ending value
</Table>
RUSSELL 3000 INDEX is an unmanaged index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
The Fund has changed its benchmark from the S&P 500 Index to the Russell 3000
Index because the Fund's investment manager believes that the Russell 3000 Index
is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Capital Appreciation IA 16.61% 12.96% 14.17%
- ------------------------------------------------------
Capital Appreciation
IB(3) 16.32% 12.68% 13.92%
- ------------------------------------------------------
Russell 3000 Index 15.72% 7.16% 8.64%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SAUL J. PANNELL, CFA FRANK D. CATRICKES, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Capital Appreciation HLS Fund returned
16.61% for the twelve month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Index, which returned 15.72% for the same period.
The Fund also outperformed the 14.45% return of the average fund in the Lipper
VA Multi-Cap Core Funds peer group, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets posted a strong return for the year. US large cap equities
performed well (+15.5% as measured by the Russell 1000 Index) but continued to
lag smaller companies as the small cap Russell 2000 rose 18.4%. Value stocks
extended their lead over their growth oriented peers, with the broad market
Russell 3000 Value finishing ahead of the Russell 3000 Growth by nearly thirteen
percentage points. Every sector in the benchmark Russell 3000 finished with
positive returns, led by Telecommunication Services, Utilities, and Energy.
Health Care and Technology stocks had positive returns, but lagged the
benchmark.
Outperformance in this robust environment was driven by stock selection.
Performance was particularly positive in Financials, Industrials, and Materials
stocks. In Financials, Brazilian bank Unibanco rose over 54% during the year,
making it a top relative (i.e. performance of the Fund as measured against the
benchmark) and absolute (i.e. total return) contributor. Two other top relative
and absolute contributors, Citi Access India and JPM Access India, are so-called
"market access" products. These are securities that allow investors to obtain
the economic exposure of stock ownership through a counterparty without
obtaining direct ownership in the underlying security. Market access products
are subject to the same risks as direct investments in securities of foreign
issuers, as well as the risk that the counterparty issuing the security may
default. Both market access products held in the Fund take the form of warrants.
In the case of Citi Access India, the warrants are for Bharti Televentures, the
dominant wireless provider in India. The Indian wireless market is growing
rapidly, and Bharti is garnering most of the new subscriber growth. The JPM
Access India position represents warrants for ICICI bank, India's largest bank
by market capitalization. The company is benefiting from the growth of credit to
Indian consumers.
Other top absolute and relative contributors during the year included nickel
miner Inco, defense contractor Lockheed Martin, and telecommunications giant
AT&T. Inco rose on news that it was being acquired by CVRD. Shares in Lockheed
Martin gained throughout the year on continued strong defense spending by the US
and its allies. AT&T's stock rose on optimism surrounding its merger with
BellSouth, which closed at the end of the year.
5
- --------------------------------------------------------------------------------
Stock selection was weakest in the Energy and Health Care sectors. Within Health
Care, medical device company Boston Scientific fell on safety concerns regarding
the company's implantable defibrillators and a Wall Street Journal article
stating that drug-eluting stents could be linked to higher incidences of blood
clots. We have exited our position in the stock. Shares in Israeli generic drug
company Teva traded lower as the market absorbed news that Merck would be
pricing its Zocor drug competitively when it came off patent. We continue to
hold Teva as we believe the market is overestimating the impact of this
development. Lagging performance in Energy was primarily a result of not holding
a position in rising Exxon Mobil stock and owning shares of coal miner Arch
Coal, which fell during the year. Other negative relative and absolute
contributors included global semiconductor company Marvell, flash storage
company SanDisk, and credit card company Capital One Financial.
WHAT IS THE OUTLOOK?
Beginning January 8, 2007, the Fund will shift to a multiple portfolio manager
model consisting of two investment teams. The first team is comprised of the
Fund's current managers, Saul Pannell and Frank Catrickes. The second team will
be comprised of a combination of multiple Wellington Management investment
professionals with complementary investment approaches, each separately managing
a portion of the Fund in a distinct style and in combination seeking to achieve
the Fund's investment objective.
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on hold for interest rate
hikes over the next year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. At the end of the period, our stock-by-stock
investment process resulted in greater-than-benchmark weights in Materials,
Industrials, and Information Technology stocks and less-than-benchmark weights
in Financials, Consumer Staples, and Health Care. Our largest absolute sector
weights at year-end were in the Financials, Technology, and Industrials sectors.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 0.3
- -------------------------------------------------------------------
Brazil 4.5
- -------------------------------------------------------------------
Canada 3.3
- -------------------------------------------------------------------
China 0.7
- -------------------------------------------------------------------
France 1.2
- -------------------------------------------------------------------
Germany 1.2
- -------------------------------------------------------------------
India 0.7
- -------------------------------------------------------------------
Israel 0.9
- -------------------------------------------------------------------
Japan 3.9
- -------------------------------------------------------------------
Liberia 0.3
- -------------------------------------------------------------------
Luxembourg 0.7
- -------------------------------------------------------------------
Netherlands 0.3
- -------------------------------------------------------------------
Russia 0.7
- -------------------------------------------------------------------
South Africa 0.8
- -------------------------------------------------------------------
South Korea 1.0
- -------------------------------------------------------------------
Switzerland 1.9
- -------------------------------------------------------------------
Taiwan 0.7
- -------------------------------------------------------------------
Turkey 1.6
- -------------------------------------------------------------------
United Kingdom 4.5
- -------------------------------------------------------------------
United States 68.0
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 12.7%
- -------------------------------------------------------------------
Capital Goods 9.2
- -------------------------------------------------------------------
Consumer Cyclical 6.5
- -------------------------------------------------------------------
Consumer Staples 3.7
- -------------------------------------------------------------------
Energy 6.8
- -------------------------------------------------------------------
Exchange Traded Funds 3.2
- -------------------------------------------------------------------
Finance 14.4
- -------------------------------------------------------------------
Health Care 4.1
- -------------------------------------------------------------------
Services 5.5
- -------------------------------------------------------------------
Technology 27.3
- -------------------------------------------------------------------
Transportation 0.6
- -------------------------------------------------------------------
Utilities 3.7
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
6
Hartford Capital Opportunities HLS Fund inception 5/1/2000
(subadvised by Holland Capital Management, LLP)
PERFORMANCE OVERVIEW 5/1/00 - 12/31/06
Growth of a $10,000 investment
(LINE GRAPH)
<Table>
<Caption>
CAPITAL OPPORTUNITIES IA S&P 500 INDEX
------------------------ -------------
5/00 10000 10000
9477 9795
9895 10036
9719 9880
10559 10493
10074 9939
9802 9897
8315 9117
12/00 8832 9162
9558 9487
8348 8622
7505 8076
8245 8703
8165 8761
7797 8548
7457 8464
6714 7935
5741 7294
6065 7434
6589 8004
12/01 6746 8074
6399 7957
6286 7803
6628 8097
6201 7606
6013 7550
5397 7013
4863 6467
4911 6509
4394 5802
4748 6312
5163 6683
12/02 4800 6291
4691 6126
4583 6034
4620 6093
5049 6594
5356 6941
5456 7030
5529 7154
5685 7293
5547 7216
5795 7624
5839 7691
12/03 6114 8094
6281 8242
6386 8357
6186 8231
6065 8102
6145 8213
6187 8373
6024 8095
5992 8128
6137 8216
6243 8341
6504 8679
12/04 6721 8974
6503 8755
6611 8940
6414 8781
6189 8615
6426 8889
6428 8902
6667 9232
6653 9148
6690 9222
6591 9068
6715 9411
12/05 6706 9414
6843 9664
6714 9690
6840 9810
6869 9942
6598 9656
6617 9669
6617 9729
6787 9960
6967 10216
7083 10549
7208 10749
12/06 7235 10900
</Table>
<Table>
--- CAPITAL OPPORTUNITIES IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$7,235 ending value $10,900 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(1) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------
Capital Opportunities IA 7.89% 1.41% -4.74%
- ------------------------------------------------------------
S&P 500 Index 15.78% 6.19% 1.30%*
- ------------------------------------------------------------
</Table>
* Return is from 4/30/00.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
LOUIS A. HOLLAND
Managing Partner & Chief Investment Officer
MONICA L. WALKER
Partner & Portfolio Manager
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Capital Opportunities HLS Fund returned
7.89% for the one-year period ended December 31, 2006, underperforming its
benchmark, the S&P 500 Index, which returned 15.78% for the same period. The
Fund also underperformed the 14.45% return of the average fund in the Lipper VA
Multi-Cap Core peer group, a group of funds with investment strategies similar
to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The Fund underperformed the general market S&P 500 Index mainly due to
unfavorable stock selection. Additionally, the Fund's conservative growth at a
reasonable price bias had a negative impact on performance relative (i.e.
performance of the Fund as measured against the benchmark) to the benchmark as
growth stocks and indexes continued to underperform value and core stocks and
indexes.
The best performing Fund holdings were First Marblehead, in financials, and
Manitowoc, in the Industrial space. First Marblehead rose significantly due to
good economic details of their most recent securitization (i.e. loans are pooled
to create a single security) of student loans and Manitowoc was buoyed by
continued strong demand for its products.
In contrast, a number of Health Care holdings were among the major detractors.
Teva Pharmaceutical Industries slipped on fears that the generic drug market is
becoming too competitive given the recent aggressive tactics by branded drug
companies. We remain holders of the stock because it has the broadest pipeline
of any generic drug manufacturer globally and its recent merger has positioned
the company to deliver strong earnings growth over the next several years. Aetna
was sold after reporting earnings results, which in our view, showed signs of
aggressive pricing by the company and competitive pricing pressures within the
industry, which has historically been negative for managed care stocks overall.
Boston Scientific fell due to a material slowdown in a key market and concerns
about its Guidant acquisition and the safety of drug eluting stents. A change in
momentum in any of these issues could help move the stock, which perked up
recently on signs of a recovery in its key market and a better than expected FDA
report on drug eluting stents.
In Information Technology, Apple, which was added during the year, was one of
the best performing holdings and was a top contributor, as was Microsoft. On the
other hand, Intel and Linear Technology were major detractors. Intel continues
to languish because of competition from Advanced Micro Devices and meaningful
gross margin compression. We remain holders of the stock as a pending rebound in
the space, aided by Microsoft's Vista launch, should bode well for this company.
Concerns about the semiconductor cycle continue to negatively impact Linear
Technology and earnings results during the most recent quarter were below
expectations. The Fund has also been negatively impacted by a lack of exposure
to better performing communications equipment stocks held in the index.
7
- --------------------------------------------------------------------------------
Kohl's Corporation was a standout in the Consumer Discretionary space, climbing
higher on strong operating results and a solid long-term earnings forecast. Yet,
Westwood One and Cheesecake Factory were poor performers. Westwood One, which
was sold, exhibited poor results and a lackluster advertising environment had
caused negative sentiment on the name. Cheesecake Factory was hurt by slower
restaurant traffic and an investigation into its options practices. After
bottoming out in August, the stock has partially recovered some of its losses,
in part due to resolution of the options investigation.
The Fund benefited from an overweight in the strong performing Energy sector;
however, Fund holdings did not perform as well as those in the index. Exxon
Mobil was a top contributor and the best performing holding in the sector, but
was underweighted (i.e. the Fund's sector position was less than the benchmark
position) versus the benchmark, which had a negative impact on relative
performance. Additionally, BJ Services was hurt by worries about a downturn in
the North American natural gas drilling market.
WHAT IS THE OUTLOOK?
Despite the double-digit stock returns achieved during 2006, the S&P 500 Index
is up only +1.1% annually over the past seven years due to the negative returns
experienced during the first several years of the decade (the post-bubble
years). We expect real stock returns over the next several years to average in
the mid-to-high single-digit range as compared to the mid-teen range experienced
during the 20 years that ended in 2000. This view is based on expectations of
single-digit earnings growth for S&P 500 stocks versus the double-digit growth
rates experienced over the past several years and economic growth in the low
single-digit range. Yet, we remain optimistic about large cap growth stocks
despite the outperformance of small cap stocks in seven of the past eight
calendar years. Typically, during the early stages of an economic upturn, small
companies perform better, while during a slowing economy large companies perform
better due to their size, exposure to foreign markets, cost-cutting potential,
higher dividend paying potential, and perceived safety. A continuation of
moderate economic growth could provide a favorable environment for large cap
stocks. While growth stocks were in favor during the latter part of the 90's,
value stocks have beat growth stocks during the recent post-bubble years. We
believe that this trend is also likely to reverse and expect investors to favor
companies with the fastest, most stable earnings growth. In recent years, low
quality stocks have performed better than high quality stocks as investors took
on more risk in order to gain higher returns. We believe that in an uncertain
environment higher quality stocks will be the investment of choice.
At a Special Meeting of Shareholders held on January 23, 2007, shareholders of
Hartford Capital Opportunities HLS Fund approved the reorganization of the Fund
into the Hartford Blue Chip Stock HLS Fund, which is sub-advised by Hartford
Investment Management Company. The reorganization is expected to occur on
February 5, 2007. In connection with the reorganization, the Blue Chip Stock HLS
Fund will be renamed the Hartford LargeCap Growth HLS Fund.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Capital Goods 1.0%
- -------------------------------------------------------------------
Consumer Cyclical 7.8
- -------------------------------------------------------------------
Consumer Staples 3.0
- -------------------------------------------------------------------
Energy 10.2
- -------------------------------------------------------------------
Finance 16.5
- -------------------------------------------------------------------
Health Care 16.9
- -------------------------------------------------------------------
Services 12.8
- -------------------------------------------------------------------
Technology 29.1
- -------------------------------------------------------------------
Transportation 1.6
- -------------------------------------------------------------------
Utilities 1.0
- -------------------------------------------------------------------
Short-Term Investments 0.4
- -------------------------------------------------------------------
Other Assets & Liabilities (0.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
8
Hartford Disciplined Equity HLS Fund inception 5/29/1998
(subadvised by Wellington Management Company, LLC)
PERFORMANCE OVERVIEW 5/29/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
DISCIPLINED EQUITY IA S&P 500 INDEX
--------------------- -------------
5/98 10000 10000
10406 10406
10407 10295
9003 8807
9619 9371
10516 10133
11109 10747
12/98 11905 11366
12305 11841
11852 11473
12415 11932
12802 12394
12558 12102
13373 12774
13112 12375
12929 12313
12540 11976
13100 12733
13461 12992
12/99 14503 13757
13701 13066
13672 12819
15171 14072
14555 13649
14203 13369
14747 13699
14646 13485
15646 14322
14717 13566
14645 13508
13472 12444
12/00 13684 12505
14370 12949
13209 11769
12481 11023
13512 11879
13631 11958
13352 11668
13066 11553
12303 10830
11282 9956
11641 10146
12478 10925
12/01 12587 11021
12301 10860
11946 10651
12391 11051
11543 10381
11432 10305
10482 9572
9752 8826
9821 8883
8754 7919
9545 8615
10049 9121
12/02 9484 8586
9178 8362
9043 8236
9091 8316
9803 9000
10333 9474
10431 9595
10581 9764
10813 9954
10815 9849
11447 10405
11619 10497
12/03 12217 11047
12415 11250
12556 11406
12368 11234
12206 11058
12200 11209
12483 11427
11980 11049
11986 11093
12119 11214
12202 11385
12726 11845
12/04 13245 12248
12999 11950
13263 12201
13012 11985
12784 11758
13247 12132
13400 12149
13890 12601
13859 12486
14001 12587
13618 12377
14138 12845
12/05 14116 12849
14467 13189
14458 13225
14605 13390
14758 13569
14351 13179
14365 13197
14387 13278
14704 13594
15002 13944
15363 14398
15631 14671
12/06 15874 14877
</Table>
<Table>
--- DISCIPLINED EQUITY IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$15,874 ending value $14,877 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION*
- --------------------------------------------------------
Disciplined Equity IA 12.45% 4.75% 5.52%
- --------------------------------------------------------
Disciplined Equity IB 12.17% 4.49% 5.28%
- --------------------------------------------------------
S&P 500 Index 15.78% 6.19% 4.73%
- --------------------------------------------------------
</Table>
* Return is from 05/31/98.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
JAMES A. RULLO, CFA MAMMEN CHALLY, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Disciplined Equity HLS Fund Class IA shares returned 12.45% for the
twelve-month period ended December 31, 2006, underperforming both its benchmark,
the S&P 500 Index, which returned 15.78% and the Lipper VA Large Cap Core
Average, a group of funds with investment strategies similar to those of the
Fund, which returned 13.29%.
WHY DID THE FUND PERFORM THIS WAY?
During the period, US equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return. Mid cap stocks trailed
small and larger cap stocks during the period, as measured by the S&P 400
Midcap, Russell 2000 and S&P 500 indices, respectively. Value stocks continued
to outperform growth during the period, as measured by the Russell 1000 Growth
and Russell 1000 Value indices. Within the S&P 500 Index, the Fund's benchmark,
the Telecommunication Services, Energy and Utilities sectors dominated posting
high double-digit returns.
The key driver of performance was poor stock selection within six of the ten
broad economic sectors of the market. In particular, stock selection was weakest
within Consumer Discretionary, Health Care, and Energy. At the margin, aggregate
sector allocation, a fall-out of stock selection, also detracted from
performance. Key detractors to relative (i.e. performance of the Fund as
measured against the benchmark) performance included D.R. Horton (Consumer
Discretionary), Motorola (Information Technology) and our below benchmark
position in Exxon Mobil (Energy). In addition, on an absolute basis, owning
Intel (Information Technology) and Amgen (Health Care) detracted from
performance.
D.R. Horton, a Southwest US homebuilder, experienced declines as sales of new
homes softened due to higher interest rates and high energy prices. We initiated
a position in Motorola after the stock launched its successful RAZR product
line. The stock fell on market concerns regarding their product pipeline as the
RAZR matures and as competitors gain traction. Our underweight position in Exxon
Mobil, relative to the benchmark, detracted as the company's stock price
continued to benefit from strong energy prices. Semiconductor chip-maker Intel's
shares struggled following news that the company sold its communications and
applications processing business to a competitor. Amgen faced near-term
challenges with Enbrel, a psoriasis drug, and with its pending lawsuit with
Roche (Health Care) over a patent issue with Epogen, a drug to treat anemia. We
eliminated Intel and D.R. Horton during the period.
Strong stock selection across several sectors, particularly Information
Technology and Financials, partially offset disappointments during the period.
Within Financials, Goldman Sachs was the top performer on both an absolute and
relative basis. The company's shares benefited from strong earnings results
during the year which were driven by their investment banking business. Bank of
America and Citigroup were also notable contributors to relative performance.
Bank of America's shares
9
- --------------------------------------------------------------------------------
increased due to the company's diversified business model, which insulated it
from a weakening consumer. Citigroup's share rose following company management's
announcement that they continue to be focused on organic growth and expansion
within the international markets. Within Information Technology, Cisco Systems
was additive to performance as the company's shares rose following market
expectations that they will benefit from increased broadband traffic which will
result in an increased demand for routing and transport services. We reduced our
position in Cisco during the period. In addition, aerospace and defense stock
Lockheed Martin contributed to absolute performance. Lockheed's shares increased
as the company continued to gain market share by winning key technical service
and intelligence contracts within the US government.
WHAT IS THE OUTLOOK?
The residential housing slowdown is well-advanced, with house prices declining
compared to a year ago. Still, the full adverse impact on consumption and the
labor market has yet to materialize. Consumption spending in the fall of 2006
was helped by lower energy prices and favorable comparisons. However, looking
into the first half of 2007, slowing employment and salary growth should support
real consumption growth of 2%. We believe that sometime this spring should mark
the trough in consumption and housing, as well as an inventory correction in
manufacturing. Once these brakes on the economy are removed, the stage will be
set for stronger activity in the later part of 2007.
In this environment, and in keeping with our bottom-up investment process, at
the end of the period the Fund was overweight the Health Care, Telecommunication
Services, Information Technology and Energy sectors and underweight the Consumer
Staples, Utilities, Materials, Financials, Industrials and Consumer
Discretionary sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.7%
- -------------------------------------------------------------------
Capital Goods 5.1
- -------------------------------------------------------------------
Consumer Cyclical 7.6
- -------------------------------------------------------------------
Consumer Staples 1.6
- -------------------------------------------------------------------
Energy 10.1
- -------------------------------------------------------------------
Finance 23.2
- -------------------------------------------------------------------
Health Care 12.6
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 21.7
- -------------------------------------------------------------------
Transportation 0.2
- -------------------------------------------------------------------
Utilities 2.4
- -------------------------------------------------------------------
Short-Term Investments 4.8
- -------------------------------------------------------------------
Other Assets & Liabilities (1.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
10
Hartford Dividend and Growth HLS Fund inception 3/9/1994
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
DIVIDEND AND GROWTH IA S&P 500 INDEX
---------------------- -------------
12/96 10000 10000
10524 10624
10680 10708
10280 10269
10635 10881
11330 11543
11954 12060
12665 13019
12068 12290
12797 12963
12419 12531
12938 13110
12/97 13189 13335
13380 13482
13975 14454
14736 15194
14666 15347
14630 15083
14630 15695
14529 15529
12688 13283
13533 14135
14476 15284
14913 16210
12/98 15354 17143
15223 17860
15002 17305
15387 17997
16331 18694
15918 18253
16463 19266
15947 18665
15535 18572
15136 18062
16025 19205
15948 19595
12/99 16170 20750
15519 19707
14665 19335
16286 21225
16090 20586
16431 20164
15926 20661
15924 20338
16849 21601
17007 20461
17363 20374
17016 18769
12/00 17941 18861
17684 19530
17511 17750
16954 16626
17826 17916
18146 18036
17688 17598
17818 17425
17239 16335
16115 15017
16123 15303
17020 16477
12/01 17216 16622
17257 16380
17540 16064
18029 16668
17273 15658
17437 15543
16506 14436
15179 13312
15075 13398
13412 11943
14431 12993
15425 13757
12/02 14767 12949
14265 12611
13974 12422
13949 12543
14993 13575
15959 14290
16104 14472
16265 14728
16627 15014
16436 14855
17219 15695
17544 15833
12/03 18724 16662
18781 16968
19138 17204
18897 16945
18723 16679
18740 16907
19230 17236
18806 16666
18957 16732
19290 16914
19505 17172
20332 17867
12/04 21050 18474
20539 18024
21280 18403
20862 18078
20427 17735
20788 18299
20895 18325
21638 19006
21644 18833
22039 18985
21529 18669
22195 19374
12/05 22305 19381
23105 19894
22988 19948
23363 20196
23985 20467
23468 19879
23509 19905
23942 20028
24389 20504
24842 21032
25697 21716
26309 22129
12/06 26846 22439
</Table>
<Table>
--- DIVIDEND AND GROWTH IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$26,846 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Dividend and Growth IA 20.36% 9.29% 10.38%
- -------------------------------------------------------
Dividend and Growth
IB(3) 20.06% 9.02% 10.13%
- -------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
EDWARD P. BOUSA, CFA
Senior Vice President, Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Dividend and Growth HLS Fund Class IA shares returned 20.36% for
the twelve-month period ended December 31, 2006. The Fund outperformed its
benchmark, the S&P 500 Index, which returned 15.78% over the same period and the
average return of the Lipper VA Equity Income Funds, a group of funds with
investment strategies similar to those of the Fund, which returned 18.19%.
WHY DID THE FUND PERFORM THIS WAY?
During the period, US equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) returns for the period. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's S&P 500
benchmark posted strong positive returns. Telecommunication Services, Energy and
Utilities were the top performers.
The Fund's outperformance relative (i.e. performance of the Fund as measured
against the benchmark) to the S&P 500 was attributable to a combination of
strong stock selection and sector allocation. Stock selection was strongest
within Industrials, Consumer Discretionary and Health Care. Additionally, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) position in Energy and underweight position in Information Technology
were additive to performance.
Key contributors to performance during the period were Exxon Mobil (Energy),
AT&T (Telecommunication Services) and Chevron (Energy). Exxon Mobil and
Chevron's shares were supported by the continued supply/demand imbalance in
energy and higher prices. AT&T benefited from its strongly anticipated merger
with BellSouth. All three stocks were held in the Fund at the end of the period.
In addition, not owning chip-maker Intel (Information Technology) for much of
the period was additive to relative performance, as shares struggled following
news that the company sold its communications and applications processing
business to a competitor.
The largest detractors from returns on an absolute basis included Sprint Nextel
(Telecommunication Services), Newmont Mining (Materials) and Eli Lilly (Health
Care). Sprint Nextel's shares struggled as the company continues to consolidate
their networks and convert subscribers from their merger. Newmont Mining's stock
fell as production declined while costs increased. Eli Lilly's shares declined
due to the negative story in the New York Times that alleged the company knew of
negative side effects from Zyprexa, the drug that treats both schizophrenia and
bipolar disorder. We held our positions in these stocks at the end of the
period. In addition, on a relative basis, not owning Cisco Systems (Information
Technology) and owning Motorola (Telecommunications Services) detracted from
performance. Cisco's shares rose due to the market's expectations that they will
benefit from increased
11
- --------------------------------------------------------------------------------
broadband traffic which will result in an increased demand for routing and
transport services. Motorola's shares fell on concerns of their product line as
the RAZR matures and competitors gain traction in the cell phone market. We held
Motorola at the end of the period.
WHAT IS THE OUTLOOK?
The Fund takes a long-term view. Our discipline focuses primarily on the
supply/demand balance across sectors. While our long-term bet on Energy
continues to pay off, we are reducing our exposure to this sector on strength.
We are cautious of the US economy as consumer spending moderates, but we expect
modest growth to continue in 2007. Housing is a major concern for us, and as a
result, we are underweight in Regional Banks and Retail, where we believe there
is excess supply. That excess will become quite evident in the face of a
weakening consumer. We believe that our strategy of buying high quality
companies with above-average dividends will continue to be successful versus the
S&P 500 Index.
Based on these views and our bottom-up stock selection, at the end of the
period, the Fund was overweight Energy, Materials, Telecommunication Services,
Utilities and Consumer Staples and underweight Industrials, Health Care,
Consumer Discretionary, Financials and Information Technology, relative to the
S&P 500 Index.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.1%
- -------------------------------------------------------------------
Capital Goods 5.1
- -------------------------------------------------------------------
Consumer Cyclical 8.2
- -------------------------------------------------------------------
Consumer Staples 5.4
- -------------------------------------------------------------------
Energy 15.7
- -------------------------------------------------------------------
Finance 17.9
- -------------------------------------------------------------------
Health Care 9.3
- -------------------------------------------------------------------
Services 7.0
- -------------------------------------------------------------------
Technology 17.9
- -------------------------------------------------------------------
Transportation 0.5
- -------------------------------------------------------------------
Utilities 5.0
- -------------------------------------------------------------------
Short-Term Investments 16.9
- -------------------------------------------------------------------
Other Assets & Liabilities (16.0)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
12
Hartford Equity Income HLS Fund inception 10/31/2003
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 10/31/03 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
EQUITY INCOME IA RUSSELL 1000 VALUE INDEX
---------------- ------------------------
10/03 10000 10000
10070 10136
12/03 10765 10760
10695 10950
10900 11184
10801 11086
10603 10815
10644 10926
10805 11184
10577 11026
10788 11183
10917 11357
11009 11545
11439 12129
12/04 11780 12535
11604 12313
12037 12721
11746 12546
11704 12322
11764 12618
11831 12756
12167 13125
12131 13068
12320 13252
12069 12915
12327 13340
12/05 12347 13419
12681 13941
12895 14026
12908 14216
13403 14577
13118 14209
13212 14300
13570 14647
13776 14892
13976 15189
14336 15686
14526 16044
12/06 14915 16405
</Table>
<Table>
--- EQUITY INCOME IA --- RUSSELL 1000 VALUE
$10,000 starting value INDEX
$14,915 ending value $10,000 starting value
$16,405 ending value
</Table>
RUSSELL 1000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 1000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
- -------------------------------------------------
Equity Income IA 20.79% 13.44%
- -------------------------------------------------
Equity Income IB 20.49% 13.16%
- -------------------------------------------------
Russell 1000 Value Index 22.25% 16.90%
- -------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
JOHN R. RYAN, CFA
Senior Vice President, Managing Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ending December 31, 2006, Hartford Equity Income HLS
Fund Class IA shares returned 20.79%, trailing the Russell 1000 Value Index
return of 22.25% but outperforming the Lipper VA Equity Income peer group
average return of 18.19%, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's Russell
1000 Value benchmark posted positive double-digit returns. In addition, small
cap stocks continued to dominate large and mid cap stocks. The Russell 2000
Small Cap Index returned 18.37%, compared to the S&P 500 Large Cap Index return
of 15.78% and the S&P 400 Mid Cap Index return of 10.32%.
While the Fund's investment strategy is based on bottom-up fundamental research,
the primary driver of the Fund's benchmark relative (i.e. performance of the
Fund as measured against the benchmark) underperformance was unfavorable stock
selection within Materials, Energy, Utilities, Consumer Discretionary and
Consumer Staples. In addition, the Fund's slight overweight (i.e. the Fund's
sector position was more than the benchmark position) to Energy and underweight
to Industrials detracted from returns. Key detractors on a relative basis were
Materials stocks Dow Chemical and Alcoa, and ConocoPhillips (Energy). Alcoa
continued to face cost pressures which were higher than their underlying
pricing, due to their aggressive acquisition program over the last several
years. Dow Chemical shares struggled due to increasing cost pressures.
ConocoPhillips underperformed primarily because of sliding commodity prices
combined with market fears of Conoco's ever-expanding capital expenditures
program and due to the company's leverage to the softening North American
natural gas market (which came with its recent acquisition of Burlington
Resources). In addition, on an absolute basis, Sprint Nextel (Telecommunication
Services) and Halliburton (Energy) disappointed. Sprint Nextel's shares
struggled as the company continues to try to consolidate their networks and
convert subscribers from their merger. Halliburton's shares continued to
struggle due to the political risk overhang from the company's former
relationship with Vice President Cheney and from its dealings in Iraq. We held
our positions in each of the stocks mentioned above at the end of the period.
Partially offsetting these results was a combination of strong stock performance
within Financials, Industrials, Telecommunication Services, and Health Care. Key
contributors on a relative basis
13
- --------------------------------------------------------------------------------
were Caterpillar (Industrials) and AT&T (Telecommunication Services).
Caterpillar's stock rose during the year due to strong demand for its
agricultural products. AT&T's shares benefited from its much anticipated merger
with BellSouth. On an absolute basis, Exxon Mobil (Energy), whose shares climbed
due to high demand for energy and higher prices, was additive to performance.
Additionally, not owning Capital One Financial (Financials) was beneficial. The
company's stock declined on market perception that they paid too much to acquire
North Fork Bancorp. We sold Caterpillar during the period.
WHAT IS YOUR OUTLOOK?
We expect the global economy to transition from slower activity in the first
half of 2007 to stronger activity in the second half and beyond. We believe
weakness in the U.S. and Continental Europe should be partially offset by more
robust growth in the United Kingdom and Japan, as well as ongoing strength in
the emerging economies. The temporary global growth pause will likely reduce
inflationary pressures and allow central banks to maintain a steady hand,
setting the stage for a resumed expansion in 2008. Moderate inflation, stable
monetary policies and the outlook for stronger global growth next year should
provide a favorable backdrop for financial markets.
In this environment, we favor industrials with exposure to international capital
spending growth and want to avoid consumer durables, which would be challenged
by a slowdown in consumer spending. Large caps seem particularly attractive,
with low relative valuations, greater access to capital, and in many cases,
globally diversified footprints. Additionally, if there is a reversal in the net
outflow of foreign investment in U.S. equities, the largest, most liquid
companies would benefit. At the end of the period, relative to the Russell 1000
Value Index, the Fund was overweight Industrials, Utilities, Materials, Consumer
Staples and Telecommunication Services, and underweight Health Care, Energy,
Information Technology, Financials and Consumer Discretionary.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 8.8%
- -------------------------------------------------------------------
Capital Goods 6.2
- -------------------------------------------------------------------
Consumer Cyclical 3.3
- -------------------------------------------------------------------
Consumer Staples 6.6
- -------------------------------------------------------------------
Energy 10.6
- -------------------------------------------------------------------
Finance 31.5
- -------------------------------------------------------------------
Health Care 6.4
- -------------------------------------------------------------------
Services 2.2
- -------------------------------------------------------------------
Technology 11.7
- -------------------------------------------------------------------
Utilities 11.1
- -------------------------------------------------------------------
Short-Term Investments 3.1
- -------------------------------------------------------------------
Other Assets & Liabilities (1.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
14
Hartford Focus HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
FOCUS IA S&P 500 INDEX
-------- -------------
4/01 10000 10000
10111 10067
9963 9822
9783 9726
9572 9117
8758 8381
9111 8542
9948 9197
12/01 10394 9278
10062 9142
9957 8966
10201 9303
9261 8739
9015 8675
8281 8058
7867 7430
7849 7478
6948 6666
7638 7252
8399 7678
12/02 7838 7228
7674 7039
7467 6933
7502 7001
8039 7577
8520 7976
8594 8078
8945 8220
9019 8380
8824 8291
9399 8760
9480 8837
12/03 10061 9300
10126 9471
10153 9602
9923 9457
9723 9309
9847 9437
10132 9620
9907 9302
9882 9339
9850 9440
9687 9584
10095 9972
12/04 10379 10311
10142 10060
10353 10271
9987 10090
9955 9898
10361 10213
10341 10228
10875 10608
10863 10511
11019 10596
10917 10420
11345 10813
12/05 11404 10817
11628 11103
11516 11134
11604 11272
11759 11423
11429 11095
11129 11110
10951 11178
11312 11444
11567 11738
11874 12121
12348 12351
12/06 12513 12524
</Table>
<Table>
--- FOCUS IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$12,513 ending value $12,524 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -----------------------------------------------
Focus IA 9.72% 3.78% 4.03%
- -----------------------------------------------
Focus IB 9.45% 3.53% 3.79%
- -----------------------------------------------
S&P 500 Index 15.78% 6.19% 4.05%
- -----------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Focus HLS Fund returned 9.72% for the
twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the S&P 500 Index, which returned 15.78% and the 13.29% return of the
average fund in the Lipper VA Large Cap Core Funds peer group, a group of funds
with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Robust merger and acquisition activity and a better-than-expected retail
environment helped equity markets end the year on a strong note, marking the
fourth straight year of positive returns for the S&P 500. The S&P 500 finished
the year at record levels, returning 15.78%, posting positive results in all ten
sectors. Sector results were led by Telecommunication Services, Energy,
Utilities, and Materials. Health Care, Information Technology, Industrials and
Consumer Staples all posted positive returns but lagged the general market.
The Fund's performance versus the benchmark was driven primarily by security
selection. Stock selection was weakest within the Consumer Discretionary, Health
Care and Telecommunications sectors. Stocks that detracted the most from
relative (i.e. performance of the Fund as measured against the benchmark)
returns included XM Satellite, Boston Scientific, Dollar General, Marvell
Technology and Sprint Nextel. Media company XM Satellite came under pressure as
decelerating customer addition trends and regulatory review of product
compliance caused investors to question the market opportunity. The Fund
continues to hold the stock based on positive long-term trends in satellite
radio due to original equipment manufacturer (OEM) adoption. Boston Scientific
had a tough year, suffering from erosion of its Implantable Cardioverter
Defibrillator (ICD) market share, concerns surrounding its drug eluting stent
business, and continued issues with cardiac product recalls from its recently
acquired Guidant business. We retain our position as the fundamentals of the
company remain sound and the stock is attractively priced. Discount retailer
Dollar General disappointed due to high gasoline prices hitting Dollar General
customers and thus impacting the company's top line. Additionally, Dollar
General has been selling a greater proportion of lower-margin "highly consumable
products" than anticipated. These are products like perishable foods and
cleaning supplies that are used up quickly by consumers and need to be replaced
frequently, but carry thin margins. Chip maker Marvell declined on disruption in
the hard disk drive market and worries over stock option grants. Sprint came
under pressure as it continues to lose ground to other wireless carriers.
Stock selection was strongest within the Information Technology and Financials
sectors. Top relative contributors to the Fund included Cisco Systems, Munich
Re, UBS, Accenture and Lexmark. Cisco's revenue and earnings growth has
surprised the market on the upside. The strong secular move of enterprise and
service provider networks toward all-IP networks plays into Cisco's
15
- --------------------------------------------------------------------------------
strength. We continue to hold a position in the stock. German reinsurance
company Munich Re reported better-than-expected results due to higher profits
from investments and fewer claims due to low levels of natural catastrophes. The
company continues to generate a good return on capital and is improving its
capital management. UBS, the Swiss-based financial institution, posted
outstanding results due primarily to its well-performing wealth management
business. UBS remains one of our top positions. Shares in Lexmark, a
manufacturer and supplier of printing and imaging solutions, rose as the company
recovered from its product and distribution missteps last year. We have
eliminated our position in Lexmark. Accenture, a global management consulting
company, has seen solid results due to robust demand for its consulting and
outsourcing services. Additionally, the company has a solid pipeline of new
bookings, is well run, and is aggressively returning cash to shareholders. Other
positive contributors to absolute (i.e. total return) performance included
ExxonMobil, AT&T and Citigroup.
WHAT IS THE OUTLOOK?
The Hartford Focus HLS Fund continues to be managed with a large cap, core
investment approach. We apply a bottom-up investment process in constructing the
portfolio and look for companies that exhibit industry leadership, strong
balance sheets, solid management, high return on equity, accelerating earnings,
and/or attractive valuation with a catalyst. Our bottom-up investment approach
resulted in the Fund being most overweight Health Care, Information Technology
and Telecommunications, and most underweight Financials, Energy and Utilities at
the end of the period.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.5%
- -------------------------------------------------------------------
Capital Goods 3.9
- -------------------------------------------------------------------
Consumer Cyclical 6.8
- -------------------------------------------------------------------
Consumer Staples 4.2
- -------------------------------------------------------------------
Energy 4.3
- -------------------------------------------------------------------
Finance 20.3
- -------------------------------------------------------------------
Health Care 11.5
- -------------------------------------------------------------------
Services 10.4
- -------------------------------------------------------------------
Technology 33.3
- -------------------------------------------------------------------
Short-Term Investments 0.8
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
16
Hartford Global Advisers HLS Fund inception 3/1/1995
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS GLOBAL
MSCI WORLD GROWTH AGGREGATE INDEX USD
GLOBAL ADVISERS IA INDEX HEDGED INDEX MSCI WORLD INDEX
------------------ ----------------- ---------------------- ----------------
12/96 10000 10000 10000 10000
9982 10142 10065 10122
10045 10257 10106 10240
10006 10020 10017 10040
10020 10482 10150 10370
10433 11097 10234 11011
10798 11711 10375 11562
11064 12255 10601 12097
10601 11345 10551 11289
11017 12001 10720 11904
10549 11236 10835 11280
10501 11523 10899 11481
12/97 10552 11631 11017 11623
10726 12088 11163 11948
11182 12945 11198 12759
11535 13394 11261 13299
11752 13474 11315 13431
11862 13327 11439 13265
11889 13898 11517 13582
12022 13877 11583 13562
10954 12254 11781 11755
10814 12531 12049 11965
11305 13622 12016 13049
11760 14502 12115 13827
12/98 11960 15562 12093 14505
12224 16112 12242 14824
12006 15472 12089 14432
12444 16045 12184 15035
12810 16020 12277 15630
12456 15462 12207 15061
12752 16414 12095 15765
12947 16233 12044 15720
12959 16435 12053 15694
13016 16463 12126 15544
13286 17542 12158 16355
13744 18572 12201 16817
12/99 14731 20699 12188 18180
14258 19402 12166 17141
14880 20078 12282 17189
14894 21275 12445 18380
14413 19849 12456 17605
14096 18673 12489 17161
14502 19815 12644 17741
14273 18819 12743 17244
14447 19488 12836 17807
14045 17763 12941 16862
13688 17017 13038 16582
13415 15706 13257 15577
12/00 13754 15411 13448 15832
13871 15877 13632 16139
13257 13853 13752 14777
12808 12736 13843 13809
13320 13768 13777 14833
13239 13494 13859 14649
13091 13025 13928 14192
12977 12833 14134 14005
12552 12044 14266 13336
11963 11046 14380 12162
12213 11517 14642 12397
12866 12394 14520 13132
12/01 12894 12457 14422 13216
12666 12052 14490 12817
12666 12086 14567 12709
12878 12389 14413 13298
12690 11863 14607 12827
12900 11805 14675 12857
12424 11126 14828 12079
11882 10343 14983 11062
11860 10343 15198 11085
11097 9319 15402 9868
11787 10046 15363 10598
12389 10413 15381 11171
12/02 11741 10015 15641 10632
11686 9655 15713 10311
11611 9554 15870 10134
11531 9641 15856 10107
12279 10335 15942 11009
12801 10766 16217 11644
12971 10920 16166 11850
13106 11132 15833 12093
13315 11358 15825 12356
13126 11424 16113 12435
13690 12106 15961 13174
13899 12280 15983 13378
12/03 14354 12871 16137 14221
14745 13136 16231 14452
15077 13298 16394 14699
15304 13167 16476 14608
14906 12910 16224 14316
15023 13044 16181 14446
15348 13224 16210 14760
14649 12591 16321 14282
14649 12556 16583 14350
15072 12810 16654 14626
15428 13125 16777 14988
15962 13792 16812 15782
12/04 16184 14314 16932 16389
15830 13929 17060 16023
15684 14289 16989 16538
15390 14017 17016 16225
15357 13718 17227 15882
15624 14082 17394 16176
15756 14151 17542 16323
16018 14738 17445 16897
16223 14874 17620 17032
16312 15205 17535 17479
15959 14883 17451 17059
16404 15370 17534 17637
12/05 16729 15707 17683 18032
17475 16433 17669 18840
17197 16269 17720 18820
17364 16680 17566 19243
17683 17070 17505 19837
17124 16424 17730 19177
17184 16400 17729 19179
16935 16269 17938 19303
17276 16704 18207 19814
17486 16855 18338 20056
17738 17457 18437 20796
18178 17902 18597 21316
12/06 18207 18138 18330 21755
</Table>
<Table>
--- GLOBAL ADVISERS IA --- MSCI WORLD GROWTH -- LEHMAN BROTHERS --- MSCI WORLD INDEX
$10,000 INDEX GLOBAL AGGREGATE $10,000
starting value $10,000 INDEX USD HEDGED starting value
$18,207 starting value $10,000 $21,755
ending value $18,138 starting value ending value
ending value $18,330
ending value
</Table>
MSCI WORLD GROWTH INDEX is a broad-based unmanaged market
capitalization-weighted total return index which measures the performance of
growth securities in 23 developed-country global equity markets including the
United States, Canada, Europe, Australia, New Zealand and the Far East.
LEHMAN BROTHERS GLOBAL AGGREGATE INDEX USD HEDGED provides a broad-based measure
of the global investment-grade fixed income markets (the three major components
of this index are the U.S. Aggregate, the Pan-European Aggregate, and the
Asian-Pacific Aggregate Indices; it also includes Eurodollar and Euro-Yen
corporate bonds, Canadian Government securities, and USD investment grade 144A
securities).
MSCI WORLD INDEX is a broad-based unmanaged market capitalization weighted total
return index which measures performance of 23 developed-country global stock
markets, including the United States, Canada, Europe, Australia, New Zealand and
the Far East.
The Fund has changed its benchmark from the MSCI World Index to the MSCI World
Growth Index because the fund's investment manager believes that the MSCI World
Growth Index is better suited to the growth strategy of the fund due to a
greater similarity in the characteristics of the securities in the Fund and this
index.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ----------------------------------------------------------------
Global Advisers IA 8.84% 7.14% 6.18%
- ----------------------------------------------------------------
Global Advisers IB(3) 8.56% 6.88% 5.93%
- ----------------------------------------------------------------
MSCI World Growth Index 15.48% 7.80% 6.14%
- ----------------------------------------------------------------
MSCI World Index 20.65% 10.48% 8.08%
- ----------------------------------------------------------------
Lehman Brothers Global Aggregate
Index USD Hedged 3.66% 4.91% 6.25%
- ----------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA ROBERT L. EVANS SCOTT M. ELLIOTT EVAN S. GRACE, CFA
Senior Vice President, Vice-President Vice President Senior Vice Senior Vice Vice President
Partner President, President, Partner
Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Global Advisers HLS Fund returned 8.84% for
the year ended December 31, 2006, underperforming the benchmark, the MSCI World
Growth Index, which returned 15.48%, while outperforming the Lehman Brothers
Global Aggregate Hedged Index, which returned 3.66% for the same period. The
Fund also underperformed the 15.77% return of the average fund in the Lipper
Global Flexible Portfolio VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Global markets rose with moderating inflation expectations in recent months,
helping to offset data suggesting a slowing global economy. The long-awaited
pause in the Federal Reserve Bank's (the "Fed") monetary tightening cycle
finally occurred, calming investor fears that the Fed would over tighten and tip
the US economy into recession. The drop in oil and gas prices from record highs
also bolstered optimism. The MSCI World Growth Index was up 15.5% for the year
while the Lehman Brothers Global Aggregate Hedged Index was up 3.7%. Within the
MSCI World Growth Index, Utilities, Materials, and Telecommunication
17
- --------------------------------------------------------------------------------
Services led all sectors, while Health Care and Information Technology performed
well but lagged the index returns for the period.
The Fund's underperformance versus its benchmark reflected weak performance in
the equity and fixed income sleeves of the Fund, partially offset by positive
asset allocation decisions, specifically an overweight in equities.
The equity portion of the Fund underperformed its benchmark for the year. Sector
allocation, which is primarily a result of bottom-up stock selection, was the
main source of underperformance relative (i.e. performance of the Fund as
measured against the benchmark) to the Index for the period. Underweight
positions in outperforming Materials and Consumer Staples stocks had a negative
impact on performance. Strong security selection, primarily in the Financials
and Industrials sectors, partially offset the impact of sector allocation.
However, stock selection was weak in the Consumer Discretionary sector.
Among the top detractors to the equity sleeve on a relative and absolute (i.e.
total return) basis were Rakuten, SanDisk, and Sirius Satellite. Although there
were no fundamental disappointments within Japanese online retailer Rakuten's
core business, the stock was negatively impacted by issues in its peripheral
business, rumors of its president being arrested, and a meltdown in JASDAQ
(Japan stock trading system) stocks as retail investors fled "new Japan"
companies in light of the Livedoor and Murakami Fund scandals. Shares in flash
storage device maker SanDisk fell as price declines in NAND flash memory raised
concerns about an over-supplied market. We expect pricing declines to moderate,
but we reduced the position to better reflect industry competition. Despite
these changing dynamics, the company stands to benefit from innovation in cell
phone features, which drives long-term memory growth. Shares of Sirius, a US
subscription-based satellite radio broadcaster, declined on signs that
subscriber growth will be less than anticipated and, importantly, that the cost
to retain and attract new customers will be greater than anticipated. True to
our investment process, we sold our shares after meeting with management and
determining that the drivers of earnings growth were no longer in place. Among
other detractors from absolute performance was global semiconductor company
Marvell Technology, which declined on weak earnings and lowered guidance.
The leading contributors to the equity portion of the sleeve on both an absolute
and relative basis during the twelve month period were Las Vegas Sands,
Nintendo, and America Movil. Casino owner and operator Las Vegas Sands was our
strongest performer for the year. It remains one of our largest holdings as good
results from its Macau operations and further planned expansion into mainland
China will provide significant opportunities for growth. Video game console and
software maker Nintendo successfully launched extremely popular Wii game
consoles this holiday season. The company also benefited from solid earnings
growth driven by robust sales of its touch-screen DS portable game player.
Mexican wireless provider America Movil reported strong earnings and benefited
from robust subscriber growth in Latin America. We also saw outperformance from
several global investment banks, including Goldman Sachs.
The fixed income portion of the fund underperformed its benchmark during the
period, largely due to our currency and country rotation strategies. This was
partially offset by positive performance in duration and credit strategies.
Major drivers of currency performance were our overweight positions in the US
dollar and underweight positions in the Canadian dollar. As the U.S. dollar lost
ground to several major currencies, and low-yielding currencies appreciated
relative to high-yielding currencies, our long US dollar bias suffered. In
Canada, we believed that the currency would depreciate due to the continued
narrowing of Canada's interest rate spread differential with the rest of the
world. In fact, we have believed for some time that Canadian asset values do not
reflect rising inflation in that country. We have expressed this view primarily
through underweight positions in the Canadian dollar. However, the recent
depreciation of the Canadian dollar should allow inflationary pressures to feed
through to the broader economy, and so we have rotated much of our underweight
position from the currency to Canadian bonds during the fourth quarter. In our
country rotation strategies, overweight positions in Germany, the United Kingdom
and the U.S. versus Sweden and Canada were also detractors. On a positive note,
our duration and credit strategies contributed positively to the portfolio's
results. In particular, long Japanese 7-year bonds, long Mexican 20-year bonds,
short German 5-year bonds, and short Japan 20-year bonds were all positions
which performed well in the year. Finally, the Fund's position in structured
mortgage backed securities helped performance during the year.
Asset allocation was a positive contributor to the Fund's overall performance
for the year as the Fund was consistently overweight strongly performing
equities and underweight the fixed income sector. Fixed income generated
positive absolute returns but lagged equity returns.
WHAT IS THE OUTLOOK?
In the equity portion of the Fund, positioning is the result of bottom-up stock
selection. At year-end, the Fund's largest overweight positions were in the
Information Technology and Financial sectors. The largest relative underweight
positions were in Health Care, Industrials and Materials.
In the fixed income component, we currently have a pro-cyclical bias and are
underweight duration as we believe the Fed is unlikely to be in a position to
validate the market's current rate cut expectations. In terms of country
rotation, the portfolio is overweight Australian bonds, primarily versus
Canadian bonds. The outlook for individual currency markets in the current
environment will depend on each country's position in the economic cycle. We
expect the US dollar will be range-bound the first half of 2007. We expect
select emerging market currencies to outperform given strong domestic growth and
positive external balances. We expect Asian currencies, excluding Japan, to
outperform as positive economic fundamentals, large trade surpluses, and foreign
exchange reserve accumulation support
18
- --------------------------------------------------------------------------------
further appreciation. We continue to focus our credit efforts in the
non-government sectors. While credit fundamentals show no sign of widespread
deterioration, global credit spreads remain vulnerable over the medium-term. We
continue to focus our exposure on the US corporate market, where valuations are
most attractive. In the collateralized sector, we continue to prefer commercial
mortgage-backed securities to pass-through securities.
While we remain constructive on the equity markets longer-term, we feel that
equity markets had a strong run this past year. Additionally, we believe bond
yields may continue to rise, causing near-term valuation concerns. Therefore,
from an asset allocation standpoint, the Fund ended the year with a neutral
equity position, an underweight to fixed income and an overweight to cash.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.9%
- -------------------------------------------------------------------
Austria 0.7
- -------------------------------------------------------------------
Belgium 2.3
- -------------------------------------------------------------------
Brazil 0.7
- -------------------------------------------------------------------
Canada 2.1
- -------------------------------------------------------------------
Chile 0.1
- -------------------------------------------------------------------
Denmark 0.2
- -------------------------------------------------------------------
Dutch Antilles 1.2
- -------------------------------------------------------------------
Finland 0.1
- -------------------------------------------------------------------
France 2.8
- -------------------------------------------------------------------
Germany 1.4
- -------------------------------------------------------------------
Ireland 1.3
- -------------------------------------------------------------------
Japan 7.5
- -------------------------------------------------------------------
Luxembourg 0.6
- -------------------------------------------------------------------
Mexico 2.1
- -------------------------------------------------------------------
Netherlands 1.9
- -------------------------------------------------------------------
Norway 0.3
- -------------------------------------------------------------------
Poland 0.1
- -------------------------------------------------------------------
Qatar 0.1
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
Singapore 0.3
- -------------------------------------------------------------------
South Korea 0.9
- -------------------------------------------------------------------
Sweden 0.1
- -------------------------------------------------------------------
Switzerland 2.5
- -------------------------------------------------------------------
Taiwan 0.8
- -------------------------------------------------------------------
United Kingdom 9.8
- -------------------------------------------------------------------
United States 52.2
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.5%
- -------------------------------------------------------------------
Capital Goods 1.3
- -------------------------------------------------------------------
Consumer Cyclical 6.6
- -------------------------------------------------------------------
Consumer Staples 4.2
- -------------------------------------------------------------------
Energy 3.3
- -------------------------------------------------------------------
Finance 27.0
- -------------------------------------------------------------------
Foreign Governments 4.0
- -------------------------------------------------------------------
Health Care 6.3
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 22.5
- -------------------------------------------------------------------
Transportation 0.5
- -------------------------------------------------------------------
U.S. Government Agencies 6.3
- -------------------------------------------------------------------
U.S. Government Securities 0.3
- -------------------------------------------------------------------
Utilities 0.9
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Common Stock 59.1%
- -------------------------------------------------------------------
Asset & Commercial Mortgage Backed Securities 10.3
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 18.0
- -------------------------------------------------------------------
U.S. Government Securities 0.3
- -------------------------------------------------------------------
U.S. Government Agencies 6.3
- -------------------------------------------------------------------
Short-Term Investments 6.9
- -------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
19
Hartford Global Leaders HLS Fund inception 9/30/1998
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 9/30/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GLOBAL LEADERS IA MSCI WORLD GROWTH INDEX MSCI WORLD INDEX
----------------- ----------------------- ----------------
9/98 10000 10000 10000
11346 10871 10906
12212 11573 11556
12/98 13188 12419 12122
13799 12858 12389
13410 12348 12062
14140 12805 12566
14488 12784 13063
13962 12339 12587
14974 13099 13176
15199 12955 13138
15118 13115 13117
14930 13138 12991
15905 13999 13668
17087 14821 14055
12/99 19830 16518 15194
19086 15484 14326
21213 16023 14366
21161 16979 15361
20137 15840 14713
19563 14901 14342
20430 15813 14827
19746 15018 14412
20868 15552 14882
19982 14175 14093
18833 13581 13858
17723 12534 13019
12/00 18429 12299 13231
18436 12670 13488
16744 11055 12350
15624 10164 11541
16849 10987 12397
16516 10769 12243
16215 10394 11861
15819 10241 11705
14951 9612 11145
13654 8815 10165
14039 9191 10361
15284 9891 10975
12/01 15373 9941 11046
14870 9618 10712
14782 9645 10621
15250 9887 11114
14742 9467 10720
15056 9421 10745
14111 8879 10095
12961 8254 9245
12831 8254 9264
11285 7437 8247
12455 8017 8857
13558 8310 9337
12/02 12375 7992 8886
12089 7705 8617
11818 7624 8470
11656 7694 8447
12962 8247 9201
13754 8592 9731
14076 8715 9904
14418 8884 10106
14833 9064 10327
14454 9117 10392
15595 9661 11011
15972 9800 11181
12/03 16777 10272 11885
17427 10483 12078
18038 10612 12285
18358 10508 12208
17685 10302 11965
17934 10410 12073
18545 10553 12336
17124 10048 11936
17052 10020 11993
17918 10222 12224
18579 10474 12526
19598 11007 13190
12/04 19995 11423 13697
19263 11116 13391
18844 11403 13822
18183 11186 13560
17962 10947 13273
18405 11238 13519
18592 11293 13642
19236 11762 14122
19617 11870 14235
19735 12134 14609
19064 11877 14257
19923 12266 14740
12/05 20513 12535 15070
22095 13114 15746
21539 12983 15729
22011 13311 16082
22705 13623 16579
21430 13107 16027
21573 13088 16029
20936 12983 16132
21511 13331 16559
21902 13451 16762
22374 13931 17380
23322 14287 17815
12/06 23415 14475 18182
</Table>
<Table>
--- GLOBAL LEADERS IA --- MSCI WORLD INDEX -- MSCI WORLD GROWTH INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$23,415 ending value $18,182 ending value $14,475 ending value
</Table>
MSCI WORLD INDEX is a broad-based unmanaged market capitalization weighted total
return index which measures performance of 23 developed-country global stock
markets, including the United States, Canada, Europe, Australia, New Zealand and
the Far East.
MSCI WORLD GROWTH INDEX is a broad-based unmanaged market
capitalization-weighted total return index which measures the performance of
growth securities in 23 developed-country global equity markets including the
United States, Canada, Europe, Australia, New Zealand and the Far East.
The Fund has changed its benchmark from the MSCI World Index to the MSCI World
Growth Index because the fund's investment manager believes that the MSCI World
Growth Index is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- --------------------------------------------------
Global Leaders
IA 14.14% 8.78% 10.86%
- --------------------------------------------------
Global Leaders
IB 13.86% 8.51% 10.61%
- --------------------------------------------------
MSCI World
Growth Index 15.48% 7.80% 4.58%
- --------------------------------------------------
MSCI World Index 20.65% 10.48% 7.51%
- --------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA
Senior Vice President, Partner Vice President Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Global Leaders HLS Fund returned 14.14% for
the twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the MSCI World Growth Index, which returned 15.48% for the same
period. The Fund underperformed the 18.78% return of the average fund in the
Lipper VA Global Large Cap Growth Funds peer group, a group of funds with
investment strategies similar to those of the fund.
WHY DID THE FUND PERFORM THIS WAY?
Global equities rose with moderating inflation expectations in recent months,
helping to offset data suggesting a slowing global economy. The long-awaited
pause in the Federal Reserve's monetary tightening cycle finally occurred,
calming investor fears that the Fed would over tighten and tip the US economy
into recession. The drop in oil and gas prices from record highs also bolstered
optimism. Within the MSCI World Growth Index, Utilities, Materials, and
Telecommunication Services led all sectors, while Health Care and Information
Technology performed well but lagged the index returns for the twelve month
period ended December 31, 2006.
Sector allocation, which is primarily a result of bottom-up stock selection, was
the main source of underperformance relative (i.e. performance of the Fund as
measured against the benchmark) to the Index for the period. Underweight (i.e.
the Fund's sector position was less than the benchmark position) positions to
outperforming Materials and Consumer Staples stocks had a negative impact on
performance. Strong security selection, primarily in the Financials and
Industrials sectors, partially offset the impact of sector allocation. However,
stock selection was weak in the Consumer Discretionary sector.
Among the top detractors on a relative and absolute (i.e. total return) basis
were Rakuten, SanDisk, and Sirius Satellite. Although there were no fundamental
disappointments within Japanese online retailer Rakuten's core business, the
stock was negatively impacted by issues in its peripheral business, rumors of
its president being arrested, and a meltdown in JASDAQ (Japan stock trading
system) stocks as retail investors fled "new Japan" companies in light of the
Livedoor and Murakami Fund scandals. Shares in flash storage
20
- --------------------------------------------------------------------------------
device maker SanDisk fell as price declines in NAND flash memory raised concerns
about an over-supplied market. We expect pricing declines to moderate, but we
reduced the position to better reflect industry competition. Despite these
changing dynamics, the company stands to benefit from innovation in cell phone
features, which drives long-term memory growth. Shares of Sirius, a US
subscription-based satellite radio broadcaster, declined on signs that
subscriber growth will be less than anticipated and, importantly, that the cost
to retain and attract new customers will be greater than anticipated. True to
our investment process, we sold our shares after meeting with management and
determining that the drivers of earnings growth were no longer in place. Among
other detractors from absolute performance was global semiconductor company
Marvell Technology, which declined on weak earnings and lowered guidance.
The leading contributors to both absolute and relative performance during the
twelve month period were Las Vegas Sands, Nintendo, and America Movil. Casino
owner and operator Las Vegas Sands was our strongest performer for the year. It
remains one of our largest holdings as good results from its Macau operations
and further planned expansion into mainland China will provide significant
opportunities for growth. Video game console and software maker Nintendo
successfully launched extremely popular Wii game consoles this holiday season.
The company also benefited from solid earnings growth coming from robust sales
of its touch-screen DS portable game player. Mexican wireless provider America
Movil reported strong earnings and benefited from robust subscriber growth in
Latin America, while cell phone companies' increased spending to support
subscriber growth and enhanced coverage. We also saw outperformance from several
global investment banks, including Goldman Sachs.
WHAT IS THE OUTLOOK?
Our focus remains on stock and sector selections that result from intense
bottom-up research, diligently meeting with the managements of leading companies
globally, and leveraging the strong research capabilities of our firm. At the
end of the year, the Fund's largest overweights relative to the MSCI World
Growth Index were to the Information Technology, Financials, and
Telecommunication Services sectors. Within the Information Technology sector we
continue to like mobile equipment makers and companies with accelerating growth
from product upgrades or new product launches. Our largest underweights continue
to be to the Health Care sector, following the elimination of several
pharmaceutical companies due to development delays in key pipeline drugs, and to
Industrials stocks at the end of the twelve month period.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 1.3
- -------------------------------------------------------------------
Belgium 0.9
- -------------------------------------------------------------------
Brazil 1.1
- -------------------------------------------------------------------
Canada 2.7
- -------------------------------------------------------------------
Dutch Antilles 1.9
- -------------------------------------------------------------------
France 2.1
- -------------------------------------------------------------------
Germany 2.2
- -------------------------------------------------------------------
Ireland 2.0
- -------------------------------------------------------------------
Japan 11.6
- -------------------------------------------------------------------
Mexico 3.2
- -------------------------------------------------------------------
Netherlands 2.5
- -------------------------------------------------------------------
Norway 0.5
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
South Korea 1.3
- -------------------------------------------------------------------
Switzerland 4.2
- -------------------------------------------------------------------
Taiwan 1.4
- -------------------------------------------------------------------
United Kingdom 11.5
- -------------------------------------------------------------------
United States 46.6
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.7%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 8.8
- -------------------------------------------------------------------
Consumer Staples 6.6
- -------------------------------------------------------------------
Energy 3.7
- -------------------------------------------------------------------
Finance 15.8
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 9.7
- -------------------------------------------------------------------
Technology 34.8
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 0.4
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
Total 100.0%
- -------------------------------------------------------------------
</Table>
21
Hartford Growth HLS Fund inception 4/30/2002
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/02 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GROWTH IA RUSSELL 1000 GROWTH INDEX
--------- -------------------------
4/02 10000 10000
9774 9758
8954 8855
8406 8368
8559 8393
7939 7523
8722 8213
9204 8659
12/02 8657 8061
8455 7865
8311 7828
8577 7974
9282 8563
9741 8991
9968 9115
10144 9341
10378 9574
10355 9471
11156 10004
11303 10108
12/03 11497 10458
11878 10671
12023 10739
11987 10540
11833 10417
12331 10612
12596 10744
11624 10137
11335 10087
11838 10183
11953 10342
12400 10697
12/04 12934 11117
12387 10746
12236 10860
11950 10662
11873 10459
12589 10965
12730 10925
12988 11459
12900 11311
13103 11364
12848 11253
13438 11739
12/05 13537 11702
14002 11907
13689 11888
13850 12064
14194 12047
13197 11639
13154 11593
12776 11372
13139 11727
13455 12049
13745 12473
14146 12721
12/06 14162 12764
</Table>
<Table>
--- GROWTH IA --- RUSSELL 1000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$14,162 ending value $12,764 ending value
</Table>
RUSSELL 1000 GROWTH INDEX is an unmanaged index which measures the performance
of those Russell 1000 Index companies with higher price-to-book ratios and
higher forecasted growth values. (The Russell 1000 Index is an unmanaged index
that measures the performance of the 1,000 largest companies in the Russell 3000
Index, which measures the performance of the 3,000 largest U.S. companies based
on total market capitalization.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
- --------------------------------------------------
Growth IA 4.61% 7.73%
- --------------------------------------------------
Growth IB 4.35% 7.46%
- --------------------------------------------------
Russell 1000 Growth Index 9.07% 5.36%
- --------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW J. SHILLING, CFA JOHN A. BOSELLI, CFA
Senior Vice President, Partner Senior Vice President, Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Growth HLS Fund returned 4.61% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
Russell 1000 Growth Index, which returned 9.07% for the same period. The Fund
also underperformed the 6.31% return of the average fund in the Lipper VA Large
Cap Growth Funds peer group, a group of funds with investment strategies similar
to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets posted a strong return for the period. US large cap equities
performed well (+15.46% as measured by the Russell 1000 Index) but continued to
lag smaller companies as the small cap Russell 2000 rose 18.37%. Value stocks
extended their lead over their growth oriented peers, with the broad market
Russell 3000 Value finishing ahead of the Russell 3000 Growth by nearly thirteen
percentage points. Every sector in the benchmark Russell 1000 Growth finished
with positive returns, led by Utilities, Telecommunication Services and
Materials. Health Care and Energy stocks lagged.
The Fund's underperformance was mainly due to poor stock selection. Stock
selection focused predominately in the Technology, Health Care, and Consumer
Staples sectors. Allocations to sectors, which are primarily a result of
bottom-up stock selection, also had a negative impact, mostly due to an
underweight (i.e. the Fund's sector position was less than the benchmark
position) to outperforming Consumer Discretionary stocks and an overweight to
lagging Health Care stocks.
The top three detractors on a relative (i.e. performance of the Fund as measured
against the benchmark) and absolute (i.e. total return) basis were Marvell
Technology, Electronic Arts, and SanDisk. Global semiconductor company Marvell
Technology declined on weak earnings and lowered guidance. We eliminated our
position due to decelerating growth and lowered expectations in the disk drive
business. We also eliminated our position in video game retailer Electronic Arts
after video game stocks fell as consumers delayed purchases in anticipation of
next generation console launches. Shares in flash storage device maker SanDisk
fell as price declines in NAND flash memory raised concerns about an
over-supplied market. We expect pricing declines to moderate, but we reduced the
position to better reflect industry competition. Despite these changing
dynamics, the company stands to benefit from innovation in cell phone features,
which drives long-term memory growth.
Strong stock selection in the Industrials and Telecommunications Services
sectors partially mitigated the impact of weaker selection elsewhere. The Fund
also benefited from an overweight among high-returning Financials stocks. The
best performing stock for the
22
- --------------------------------------------------------------------------------
year on an absolute and relative basis was Network Appliance. Shares in the data
management firm rose in conjunction with strong revenue growth and a broadening
product lineup. Another strong relative and absolute contributor, Chicago
Mercantile Exchange, continued to move up due to rising trading volumes and
expansion of its electronic trading platform, Globex. Absolute performance in
the Industrials sector was lifted by strong orders for Boeing's new 787
"Dreamliner" plane, which boosted the company's stock. Finally, relative
performance benefited from not owning shares in Intel, a large benchmark
position that fell during the year.
WHAT IS THE OUTLOOK?
Our focus is on bottom up research to identify stocks with attractive
fundamentals and strong growth prospects. Based on stock-by-stock decisions, we
have recently increased exposure to the Industrials sector, where the
globalization of labor markets and strong, worldwide spending in infrastructure,
aerospace, and power generation are driving industry revenues. We established a
new position in Fluor to take advantage of these trends. Exposure to Financials
also rose during the year via a new position in State Street Bank.
The largest reduction in weight during the year was in Health Care, where we
eliminated Amgen and trimmed AstraZeneca, neutralizing our relative exposure to
pharmaceutical stocks. We also maintain a significant underweight to
consumer-related sectors, which we believe remain relatively unattractive.
At year-end our largest overweights relative to the Russell 1000 Growth Index
were in the Financials and Industrials sectors, while the greatest underweights
were among Consumer Discretionary and Consumer Staples stocks.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.2%
- -------------------------------------------------------------------
Capital Goods 4.9
- -------------------------------------------------------------------
Consumer Cyclical 1.8
- -------------------------------------------------------------------
Consumer Staples 1.1
- -------------------------------------------------------------------
Energy 2.8
- -------------------------------------------------------------------
Finance 19.4
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 18.0
- -------------------------------------------------------------------
Technology 31.8
- -------------------------------------------------------------------
Transportation 3.7
- -------------------------------------------------------------------
Utilities 1.4
- -------------------------------------------------------------------
Short-Term Investments 4.8
- -------------------------------------------------------------------
Other Assets & Liabilities (4.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
23
Hartford Growth Opportunities HLS Fund inception 3/24/1987
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GROWTH OPPORTUNITIES IA RUSSELL 3000 GROWTH INDEX
----------------------- -------------------------
12/96 10000 10000
10435 10657
9859 10532
9222 9946
9339 10539
10296 11367
10706 11815
11727 12818
11352 12174
11924 12811
11420 12306
11317 12745
12/97 11242 12874
11094 13205
12018 14214
12608 14784
12672 14978
12371 14491
13021 15312
12387 15106
10136 12739
10933 13741
11457 14815
11888 15944
12/98 13380 17382
13796 18385
12736 17483
13432 18383
13449 18517
13081 17992
14077 19229
14056 18618
14325 18850
14388 18505
15451 19838
17278 20977
12/99 20761 23262
20490 22233
26505 23622
24053 24958
22014 23675
20679 22422
23832 24201
23094 23118
26244 25233
26276 22922
24006 21783
19450 18523
12/00 21589 18047
21231 19309
18551 16075
16547 14347
18203 16157
18050 15965
18015 15657
17605 15200
16428 13976
13905 12523
14619 13214
16085 14473
12/01 16655 14505
16496 14231
15521 13618
16338 14136
15553 13041
15358 12693
13657 11525
12326 10813
12042 10843
11090 9739
11880 10607
12964 11213
12/02 12050 10438
11903 10182
11747 10121
12081 10307
13170 11083
14175 11680
14599 11845
14744 12182
15400 12510
15211 12362
16541 13084
17082 13243
12/03 17326 13670
17865 13982
18132 14063
18291 13827
17753 13624
18431 13880
19002 14075
17434 13240
17204 13158
18127 13330
18430 13547
19322 14070
12/04 20304 14617
19611 14115
19450 14269
19094 13985
18614 13666
19797 14352
20561 14342
21747 15069
21856 14873
22351 14946
21932 14765
22937 15419
12/05 23615 15373
25176 15749
24833 15718
25303 15999
25734 15975
24301 15378
23963 15323
23260 14988
23821 15453
24266 15851
25027 16447
26213 16779
12/06 26461 16827
</Table>
<Table>
--- GROWTH OPPORTUNITIES IA --- RUSSELL 3000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$26,461 ending value $16,827 ending value
</Table>
RUSSELL 3000 GROWTH INDEX is an unmanaged index that measures the performance of
those Russell 3000 Index companies with higher price-to-book ratios and higher
forecasted growth values. (The Russell 3000 Index is an unmanaged index that
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Growth Opportunities IA 12.05% 9.70% 10.22%
- -------------------------------------------------------
Growth Opportunities
IB(2) 11.79% 9.43% 9.95%
- -------------------------------------------------------
Russell 3000 Growth Index 9.46% 3.01% 5.34%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
MICHAEL T. CARMEN, CFA MARIO E. ABULARACH, CFA
Senior Vice President, Vice President and Equity
Partner Research Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Growth Opportunities HLS Fund returned
12.05% for the twelve-month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Growth Index, which returned 9.46% for the same
period. The Fund also outperformed the 7.70% return of the average fund in the
Lipper VA Multi-Cap Growth VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
As measured by the Russell 3000 Growth Index, equity markets ended higher for
the fourth fiscal year in a row. Three of the last four quarters were positive,
with the April -to- July period showing the only significant decline as
investors moved away from stocks in favor of less risky assets. Every sector in
the benchmark posted positive returns for the period, led by a disparate group
of sectors: Utilities, Telecommunication Services, and Materials. The laggards
were Health Care, Energy, and Information Technology. These positive returns
took place against a backdrop of a weakening housing market, declining energy
prices, and continued turmoil in Iraq. In addition, small cap stocks continued
to dominate large and mid cap stocks. The Russell 2000 Small Cap Index returned
18.37%, compared to the S&P 500 Large Cap Index return of 15.78% and the S&P 400
MidCap Index return of 10.32%.
The Fund outperformed by maintaining its focus on stock selection. Selection
within the Information Technology and Heath Care sectors contributed most to
relative (i.e. performance of the Fund as measured against the benchmark)
performance. Network Appliance (Information Technology), Redback Networks
(Information Technology), and Digene (Health Care) were among the top
contributors to relative and absolute (i.e. total return) performance. Network
Appliance benefited as sales of the company's mid-range storage solution,
FAS3000, remained strong. Redback Networks, a manufacturer of advanced
telecommunications networking equipment, advanced on a takeover offer from
Ericsson. Diagnostic test provider Digene rose on strong sales of its test to
detect HPV, a virus that is a known causative agent in cervical cancer. Non-
benchmark holding Melco International (Capital Goods) contributed most on a
relative basis. The Hong Kong-based conglomerate was up on news of a deal that
would positively impact the company's plans to open its first casino in Macau.
We sold our positions in Redback Networks and Melco International during the
period and continue to own Network Appliance and Digene.
The Fund's results in Financials and Consumer Discretionary stocks detracted
from relative performance. In the Consumer Discretionary sector, shares of
satellite radio providers XM Satellite and Sirius declined on concerns of rising
subscriber acquisition costs. We eliminated our positions in the stocks. Other
significant
24
- --------------------------------------------------------------------------------
detractors from relative and absolute performance included Marvell Technology
(Information Technology), St. Jude Medical (Health Care) and Cree (Information
Technology). Weakness in the disk drive industry led to an earnings miss at
Marvell, while St. Jude Medical fell on overall weakness in the implantable
cardiac defibrillator market. Cree, a semiconductor product manufacturer, fell
after management issued a profit warning reflecting weak light-emitting diode
(LED) sales, unfavorable LED mix shifts, and margin erosion from production
problems. We eliminated Marvell and Cree and continue to hold St. Jude Medical.
Cisco Systems (Information Technology) also detracted from relative performance
as we did not own the stock in the second half of the year when the company's
shares rebounded. Finally, the Fund's slight underweight to Energy also hurt
benchmark-relative performance.
WHAT IS YOUR OUTLOOK?
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on "hold" over the next
year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. Currently our largest exposure is to Information
Technology, followed by Health Care and Industrials. We would note that we have
reduced our exposure to the Energy sector, reflecting our recognition that our
bullish energy view has become more conservative. Our lowest weights are in the
Utilities, Telecommunication Services and Consumer Staples sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.6%
- -------------------------------------------------------------------
Capital Goods 2.7
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 2.2
- -------------------------------------------------------------------
Energy 1.9
- -------------------------------------------------------------------
Finance 8.5
- -------------------------------------------------------------------
Health Care 18.2
- -------------------------------------------------------------------
Services 12.3
- -------------------------------------------------------------------
Technology 30.4
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 2.6
- -------------------------------------------------------------------
Short-Term Investments 11.9
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
25
Hartford High Yield HLS Fund inception 9/30/1998
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 9/30/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS HIGH YIELD
HIGH YIELD IA CORPORATE INDEX
------------- --------------------------
9/98 10000 10000
9992 9795
10340 10202
12/98 10368 10213
10528 10364
10531 10303
10695 10402
10898 10603
10693 10460
10703 10437
10696 10479
10620 10363
10599 10289
10660 10221
10797 10341
12/99 10856 10457
10758 10412
10730 10431
10637 10212
10674 10229
10576 10123
10840 10330
10960 10408
11113 10479
11067 10388
10867 10056
10596 9657
12/00 10968 9844
11691 10581
11742 10722
11489 10469
11337 10339
11419 10525
11018 10230
11198 10381
11300 10503
10592 9797
11030 10039
11378 10406
12/01 11263 10363
11156 10436
10818 10290
10905 10538
11061 10706
10993 10647
10409 9862
9928 9431
10053 9700
9791 9573
9822 9489
10385 10077
12/02 10487 10218
10764 10558
10952 10688
11148 10995
11687 11647
11860 11768
12077 12106
11790 11973
11936 12111
12267 12442
12474 12693
12632 12886
12/03 12919 13177
13061 13429
13025 13395
13070 13486
12904 13394
12669 13168
12831 13356
13009 13538
13227 13803
13411 14004
13668 14257
13738 14429
12/04 13875 14644
13815 14625
14028 14840
13571 14408
13464 14268
13717 14521
13914 14806
14093 15065
14114 15094
13966 14943
13857 14839
14022 14916
12/05 14170 15045
14331 15285
14436 15387
14530 15479
14633 15574
14629 15572
14561 15517
14692 15669
14927 15923
15099 16149
15331 16369
15562 16644
12/06 15753 16827
</Table>
<Table>
--- HIGH YIELD IA --- LEHMAN BROTHERS HIGH YIELD CORPORATE
$10,000 starting value INDEX
$15,753 ending value $10,000 starting value
$16,827 ending value
</Table>
LEHMAN BROTHERS HIGH YIELD CORPORATE INDEX is an unmanaged broad-based market
value-weighted index that tracks the total return performance of non-investment
grade, fixed-rate, publicly placed, dollar denominated and nonconvertible debt
registered with the SEC.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ---------------------------------------------------------------
High Yield IA 11.17% 6.94% 5.66%
- ---------------------------------------------------------------
High Yield IB 10.89% 6.67% 5.42%
- ---------------------------------------------------------------
Lehman Brothers High
Yield Corporate Index 11.85% 10.18% 6.50%
- ---------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
MARK NILAND, CFA NASRI TOUTOUNGI JAMES SERHANT
Executive Vice President Managing Director Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford High Yield HLS Fund returned 11.17% for the
year, underperforming its benchmark, the Lehman Brothers High Yield Corporate
Index, which returned 11.85%. The Fund outpaced the 9.89% average return of the
Lipper VA High Yield Funds category, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The primary drivers of Fund performance during the year ended December 31, 2006
were security selection and sector allocation. Security selection added to
performance while sector allocation detracted.
From the sector perspective, the main challenge we faced was our underweight
(i.e. the Fund's sector position was less than the benchmark position) in the
Automobile sector, which outperformed the market significantly. Though the Fund
had more than 9% allocated to this sector at year end -- more than many peers
and up to a level we deemed prudent given the high degree of correlation within
the industry -- this was underweight the benchmark's 13.57% allocation. Many
automotive companies performed well, especially GM, Ford Motor Company and their
finance subsidiaries, as bankruptcy fears faded with each company taking major
steps in restructuring their operations. In the Media Cable sector, the Fund
benefited from both sector allocation and security selection outperformance, as
Charter Communications was a strong performer. Security selection also boosted
performance in the Wireline sector, specifically Citizens Communications and
Qwest Communications. Outperformance derived from security selection came from
many other sectors, including Electric, Food and Beverage, and Healthcare.
At the end of June, the Fund's investment guidelines eased with respect to
restrictions on allocations to CCC-rated securities, increasing the amount
allowed to 25% from 10% of the portfolio. The narrower restriction had hindered
performance during the first half of the year, as CCC-rated securities performed
well in the low default environment the market experienced. By year end, our
analysts had identified additional attractive opportunities and we increased
these securities to 16% of the portfolio.
WHAT IS YOUR OUTLOOK?
As we begin 2007, our main concern regarding the high yield market is current
valuation levels. The narrowing of credit risk premiums paid to investors
generated meaningful price appreciation in 2006. However, this has the effect of
reducing the income component investors will receive going forward. In addition,
the prospect for further price appreciation on top of last year's performance is
somewhat limited given the relatively tight levels of risk premiums (i.e.
difference between the risk associated with buying or holding a Treasury and
holding a high yield bond).
26
- --------------------------------------------------------------------------------
Mitigating these concerns is the fact that valuations do reflect the strong
fundamental backdrop the high yield market currently enjoys. Earnings and cash
flow generating capabilities remain quite strong, and equity market behavior and
private equity transactions are indicating that asset values are generally
sufficient to cover the debt being placed on many companies' balance sheets. As
a result, credit default experience is expected to remain below historical
averages. We will remain keenly focused on the prospect that the fundamental
picture remains relatively strong and sustainable, in a soft landing type of
context. To the extent that indications emerge that the economic backdrop either
slows down or accelerates to the point that the Federal Reserve begins to
aggressively tighten monetary policy, we will then have to revisit our
"soft-landing" economic assumptions and the implications for our asset class.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 12.1%
- -------------------------------------------------------------------
Capital Goods 1.7
- -------------------------------------------------------------------
Consumer Cyclical 13.9
- -------------------------------------------------------------------
Consumer Staples 2.5
- -------------------------------------------------------------------
Energy 3.7
- -------------------------------------------------------------------
Finance 13.8
- -------------------------------------------------------------------
Health Care 5.6
- -------------------------------------------------------------------
Services 18.9
- -------------------------------------------------------------------
Technology 19.5
- -------------------------------------------------------------------
Transportation 1.3
- -------------------------------------------------------------------
Utilities 6.1
- -------------------------------------------------------------------
Short-Term Investments 21.8
- -------------------------------------------------------------------
Other Assets & Liabilities (20.9)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
CREDIT QUALITY HOLDINGS
- -------------------------------------------------------------------
AAA 0.3%
- -------------------------------------------------------------------
BB 18.4
- -------------------------------------------------------------------
B 61.4
- -------------------------------------------------------------------
CCC 19.3
- -------------------------------------------------------------------
NR 0.6
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
27
Hartford Index HLS Fund inception 5/1/1987
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INDEX IA S&P 500 INDEX
-------- -------------
12/96 10000 10000
10615 10624
10695 10708
10246 10269
10857 10881
11516 11543
12022 12060
12973 13019
12243 12290
12909 12963
12474 12531
13041 13110
12/97 13261 13335
13404 13482
14364 14454
15093 15194
15241 15347
14970 15083
15577 15695
15405 15529
13172 13283
14014 14135
15148 15284
16056 16210
12/98 16982 17143
17680 17860
17124 17305
17803 17997
18482 18694
18034 18253
19035 19266
18431 18665
18338 18572
17832 18062
18951 19205
19329 19595
12/99 20461 20750
19427 19707
19052 19335
20902 21225
20267 20586
19843 20164
20326 20661
20001 20338
21235 21601
20108 20461
20016 20374
18433 18769
12/00 18518 18861
19166 19530
17412 17750
16304 16626
17564 17916
17674 18036
17236 17598
17060 17425
15986 16335
14683 15017
14960 15303
16102 16477
12/01 16237 16622
15992 16380
15678 16064
16263 16668
15271 15658
15150 15543
14069 14436
12967 13312
13047 13398
11625 11943
12646 12993
13383 13757
12/02 12592 12949
12258 12611
12070 12422
12183 12543
13188 13575
13875 14290
14045 14472
14288 14728
14560 15014
14400 14855
15209 15695
15337 15833
12/03 16135 16662
16423 16968
16647 17204
16390 16945
16128 16679
16341 16907
16649 17236
16096 16666
16158 16732
16326 16914
16570 17172
17233 17867
12/04 17812 18474
17373 18024
17730 18403
17413 18078
17073 17735
17613 18299
17633 18325
18281 19006
18111 18833
18251 18985
17940 18669
18611 19374
12/05 18614 19381
19106 19894
19152 19948
19387 20196
19639 20467
19069 19879
19091 19905
19204 20028
19657 20504
20159 21032
20809 21716
21201 22129
12/06 21491 22439
</Table>
<Table>
--- INDEX IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,491 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Index IA 15.46% 5.77% 7.95%
- ------------------------------------------------------
Index IB(3) 15.17% 5.51% 7.70%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
DEANE GYLLENHAAL
Vice President
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Index HLS Fund returned 15.46% on a net
basis for the year, underperforming its benchmark, the S&P 500 Index, which
returned 15.78%. The Fund outperformed the 15.35% return of the average fund in
the Lipper VA S&P 500 Index Objective Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Although economic data was mixed during the last quarter of 2006, the U.S.
economy appeared to be growing at a healthy pace. By year end, many were
forecasting that fourth quarter gross domestic product (GDP) growth would
ultimately be at or above the third-quarter growth rate of 2.2%. These
expectations were fueled by stronger-than-expected manufacturing, housing, and
consumer confidence reports released in the last week of December, which also
served to temper ongoing speculation that weakness in the housing and auto
sectors would exert a considerable drag on the economy and perhaps lead to an
ease in monetary policy by the Federal Open Market Committee (the "Fed").
Although the Fed maintained its target federal funds rate at 5.25% for the
second consecutive quarter, it continued to reiterate that although inflation
pressures had subsided somewhat, the rate of core inflation still remained
outside their comfort zone and any future actions regarding interest rates would
rely heavily on economic data.
The broad domestic stock market, as measured by the S&P 500 Index, increased for
the fourth consecutive year since the end of the bear market in 2002, returning
15.78% during 2006. The largest individual contributors to the benchmark's
performance were Exxon and Cisco Systems. Driven by the rise in oil prices,
Exxon returned 39.1%, which comprised 3.3% of the benchmark and added 1.2% to
the overall benchmark return. Cisco Systems returned 59.6%, was 1.1% of the
benchmark, and contributed 0.6% for the year. The two biggest detractors to the
benchmark's performance were Intel and Yahoo. Intel dropped 17.2% dragging
overall performance by 0.3%. Yahoo, the internet giant, lost 34.8% for the year,
detracting 0.2%.
By design, the Fund is managed to mimic the performance of the S&P 500 Index.
Due to this approach, the Fund is expected to perform in line with the Index.
The Fund may engage in futures trading to more efficiently maintain exposure to
the Index and also to offset brokerage commissions. This period these results
were insignificant. Early in the year, corporate action decisions had a positive
impact upon the Fund. The largest corporate action contribution came from the
Jefferson-Pilot/Lincoln National Corp. deal. The S&P 500 Index reflected Lincoln
National Corp.'s
28
- --------------------------------------------------------------------------------
acquisition of Jefferson-Pilot by removing Jefferson-Pilot from the Index at its
closing price on its last day of trading. Rather than selling the stock, the
Fund received a mix of stock and cash because it was a better value.
WHAT IS YOUR OUTLOOK?
Economic data continues to deliver mixed messages about the direction of the
U.S. economy. Employment and consumer spending data has been positive, helping
to offset some of the weakness seen in other sectors of the market. While there
are signs of improvement in the housing sector, the market will continue to be
highly sensitive to future housing data. Although some economists are
forecasting monetary easing, the Fed continues to acknowledge the potential for
inflation risks that may justify additional rate hikes. We believe current
market pricing reflects an overly pessimistic view about the underlying strength
of the economy and, while economic fundamentals warrant higher interest rates,
monetary policy is likely to remain steady through the first quarter of 2007.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 4.4
- -------------------------------------------------------------------
Consumer Cyclical 9.0
- -------------------------------------------------------------------
Consumer Staples 5.5
- -------------------------------------------------------------------
Energy 9.3
- -------------------------------------------------------------------
Finance 23.6
- -------------------------------------------------------------------
Health Care 10.4
- -------------------------------------------------------------------
Services 6.9
- -------------------------------------------------------------------
Technology 22.2
- -------------------------------------------------------------------
Transportation 1.3
- -------------------------------------------------------------------
Utilities 3.5
- -------------------------------------------------------------------
Short-Term Investments 7.6
- -------------------------------------------------------------------
Other Assets & Liabilities (6.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
29
Hartford International Capital Appreciation HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL CAPITAL
APPRECIATION IA MSCI EAFE INDEX MSCI EAFE GROWTH INDEX
--------------------- --------------- ----------------------
4/01 10000 10000 10000
9406 9655 9601
8978 9264 9137
8834 9096 8915
8353 8868 8509
7351 7971 7706
7710 8175 8013
8359 8477 8425
12/01 8602 8528 8474
8253 8076 8017
8394 8133 8125
8844 8616 8477
8727 8639 8488
8822 8756 8512
8407 8411 8295
7654 7582 7411
7563 7566 7355
6678 6756 6716
7229 7120 7097
7823 7443 7306
12/02 7121 7194 7138
7201 6894 6785
7062 6736 6639
6860 6609 6575
7675 7265 7151
8344 7711 7527
8574 7902 7661
8864 8095 7762
9242 8292 7905
9272 8549 8174
10059 9082 8645
10185 9286 8848
12/03 10755 10011 9457
11205 10154 9642
11730 10390 9826
12017 10452 9837
11437 10225 9600
11647 10256 9583
12028 10498 9714
11179 10159 9320
11212 10206 9331
11812 10474 9563
12313 10832 9883
13010 11575 10567
12/04 13413 12084 11015
12977 11863 10762
12846 12378 11195
12355 12072 10925
12249 11802 10723
12373 11820 10764
12429 11981 10853
12885 12349 11184
13262 12665 11507
13550 13232 11993
12993 12846 11666
13455 13164 11888
12/05 14239 13777 12517
15344 14624 13289
15119 14594 13140
15582 15082 13655
16339 15814 14282
15490 15219 13692
15337 15225 13712
15259 15377 13777
15673 15804 14111
15779 15832 14034
16349 16449 14513
17170 16945 14938
12/06 17668 17478 15358
</Table>
<Table>
--- INTERNATIONAL CAPITAL --- MSCI EAFE GROWTH INDEX -- MSCI EAFE
APPRECIATION IA $10,000 starting value INDEX
$10,000 starting value $15,358 ending value $10,000 starting value
$17,668 ending value $17,478 ending value
</Table>
MSCI EAFE GROWTH INDEX is a free float-adjusted market capitalization index that
is designed to measure developed market equity performance (excluding the U.S.
and Canada of growth securities with the MSCI EAFE Index.
MSCI EAFE INDEX is a free float-adjusted market capitalization index that is
designed to measure developed market equity performance, excluding the U.S. and
Canada.
The Fund has changed its benchmark from the MSCI EAFE Index to the MSCI EAFE
Growth Index because the Fund's investment manager believes that the MSCI EAFE
Growth Index is better suited to the investment strategy of the Fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- -------------------------------------------------------
International Capital
Appreciation IA 24.08% 15.48% 10.55%
- -------------------------------------------------------
International Capital
Appreciation IB 23.77% 15.20% 10.29%
- -------------------------------------------------------
MSCI EAFE Growth
Index 22.69% 12.63% 7.85%
- -------------------------------------------------------
MSCI EAFE Index 26.86% 15.43% 10.34%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA
Senior Vice President, Vice President Vice President
Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford International Capital Appreciation HLS Fund
returned 24.08% for the twelve-month period ended December 31, 2006,
outperforming the benchmark, the MSCI EAFE Growth Index, which returned 22.69%
for the same period. The Fund underperformed the 24.61% return of the average
fund in the Lipper VA International Growth Funds peer group, a group of funds
with investment strategies similar to those of the fund.
WHY DID THE FUND PERFORM THIS WAY?
International equities advanced during the twelve-month period, led by
Utilities, Telecommunication Services, and Consumer Staples stocks. While all
sectors within the MSCI EAFE Growth Index advanced, Information Technology and
Health Care stocks were among the weakest performing areas of the market. The
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) allocations to traditional growth sectors such as Information
Technology and underweight allocations to more defensive sectors created a
headwind for the Fund during the past twelve months. However, strong stock
selection more than offset the impact of sector allocation.
The Fund's outperformance relative (i.e. performance of the Fund as measured
against the benchmark) to the benchmark reflected strong stock selection,
primarily within Financials, Information Technology and Industrials. Within
Financials, London Stock Exchange benefited from strong earnings growth due to
robust trading volumes. Within Industrials, Vallourec, a French maker of
seamless steel tubes used in the oil and gas industries, benefited from the
tight supply environment that afforded the company better pricing. Leading
manufacturer and provider of mobile communications devices Research In Motion
(Information Technology) reported better-than-expected subscriber growth for its
Blackberry email service. Video game console and software maker Nintendo
(Information Technology) successfully launched extremely popular Wii game
consoles this holiday season. The company also benefited from solid earnings
growth coming from robust sales of its touch-screen dual screen (DS) portable
game player. Veolia Environment (Utilities) was another top contributor to
performance. The world's largest water management company benefited from an
upsurge in global demand for clean water, pollution control, and energy saving
resources, particularly in China.
30
- --------------------------------------------------------------------------------
Partially offsetting these results was weaker stock selection in other areas,
particularly in the Consumer Discretionary sector. Within Consumer
Discretionary, Rakuten and SES Global were the greatest detractors from relative
performance. Rakuten was negatively impacted by volatility in Japanese internet
stocks but did not have any fundamental disappointments, thus we continued to
hold the stock as of the end of the period. We eliminated SES Global, Europe's
largest satellite operator. The Fund's performance was also hurt by Norwegian
oil and gas company Statoil, which reported lower-than-expected quarterly
profits and reduced guidance for full-year production volumes, and NAND flash
memory and flat panel component maker Samsung Electronics which was hurt by
fears of a consumer recession. Our view remains positive and we continue to hold
Samsung given the growth in the diversified array of devices requiring memory
chips and reducing cyclicality within the technology industry.
WHAT IS THE OUTLOOK?
We continue to pick stocks one at a time, focusing on fundamental bottom-up
research. As a result of our bottom-up research and stock analysis at the end of
the year the largest overweight allocations relative to the MSCI EAFE Growth
Index were to the Information Technology and Consumer Staples sectors. Within
Information Technology, we continue to like mobile communications equipment
makers and companies leveraged to product upgrade cycles. The largest
underweights were to Health Care and Industrials stocks. We increased our
underweight to Health Care following the elimination of several pharmaceutical
companies due to development delays in key pipeline drugs.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 1.5%
- -------------------------------------------------------------------
Austria 1.3
- -------------------------------------------------------------------
Belgium 1.3
- -------------------------------------------------------------------
Brazil 1.1
- -------------------------------------------------------------------
Canada 7.1
- -------------------------------------------------------------------
China 0.4
- -------------------------------------------------------------------
Denmark 0.5
- -------------------------------------------------------------------
Finland 1.0
- -------------------------------------------------------------------
France 9.6
- -------------------------------------------------------------------
Germany 6.7
- -------------------------------------------------------------------
Hong Kong 1.4
- -------------------------------------------------------------------
Ireland 2.5
- -------------------------------------------------------------------
Japan 19.4
- -------------------------------------------------------------------
Mexico 3.0
- -------------------------------------------------------------------
Netherlands 5.5
- -------------------------------------------------------------------
Norway 0.7
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
South Korea 1.0
- -------------------------------------------------------------------
Sweden 1.5
- -------------------------------------------------------------------
Switzerland 9.8
- -------------------------------------------------------------------
Taiwan 1.8
- -------------------------------------------------------------------
United Kingdom 18.0
- -------------------------------------------------------------------
Short-Term Investments 7.0
- -------------------------------------------------------------------
Other Assets & Liabilities (3.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 11.6%
- -------------------------------------------------------------------
Capital Goods 2.6
- -------------------------------------------------------------------
Consumer Cyclical 12.5
- -------------------------------------------------------------------
Consumer Staples 9.9
- -------------------------------------------------------------------
Energy 1.0
- -------------------------------------------------------------------
Finance 18.3
- -------------------------------------------------------------------
Health Care 7.2
- -------------------------------------------------------------------
Services 3.0
- -------------------------------------------------------------------
Technology 25.0
- -------------------------------------------------------------------
Transportation 2.1
- -------------------------------------------------------------------
Utilities 2.9
- -------------------------------------------------------------------
Short-Term Investments 7.0
- -------------------------------------------------------------------
Other Assets & Liabilities (3.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
31
Hartford International Opportunities HLS Fund inception 7/2/1990
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL
OPPORTUNITIES IA MSCI AC WORLD EX US INDEX
---------------- -------------------------
12/96 10000 10000
9899 9816
9942 9996
9951 9975
9889 10059
10538 10681
11027 11270
11353 11498
10519 10594
11092 11167
10253 10216
10091 10088
12/97 10034 10204
10151 10510
10837 11211
11353 11598
11615 11681
11693 11469
11713 11426
11836 11535
10112 9908
9724 9699
10436 10715
11042 11291
12/98 11355 11680
11682 11667
11401 11406
12052 11957
12512 12555
11994 11965
12581 12515
12903 12808
12922 12853
12999 12940
13434 13421
14204 13958
12/99 15880 15289
14988 14460
16076 14850
15930 15409
15051 14549
14420 14177
14982 14780
14520 14197
14717 14373
13954 13575
13285 13144
12686 12554
12/00 13164 12983
13243 13178
12182 12134
11316 11277
12163 12044
11692 11711
11320 11262
11072 11011
10765 10738
9629 9599
9885 9868
10473 10319
12/01 10698 10452
10219 10004
10250 10076
10821 10665
10771 10693
10902 10809
10424 10342
9365 9334
9257 9335
8161 8345
8767 8793
9179 9215
12/02 8780 8918
8394 8605
8152 8430
7986 8267
8719 9063
9221 9641
9371 9908
9644 10171
9999 10474
10083 10768
10686 11466
10906 11716
12/03 11686 12610
11833 12813
12111 13138
12195 13219
11864 12808
11948 12837
12248 13127
11692 12745
11711 12847
12064 13260
12515 13721
13284 14673
12/04 13799 15303
13558 15040
13955 15782
13630 15354
13388 14975
13458 15069
13725 15352
14402 15919
14792 16326
15321 17168
14715 16543
15030 17100
12/05 15816 17922
16936 19172
16627 19117
17190 19672
18156 20686
17357 19732
17285 19713
17346 19914
17794 20479
17621 20492
18298 21327
19002 22101
12/06 19684 22790
</Table>
<Table>
--- INTERNATIONAL OPPORTUNITIES IA --- MSCI AC WORLD EX US INDEX
$10,000 starting value $10,000 starting value
$19,684 ending value $22,790 ending value
</Table>
MSCI AC WORLD EX U.S. INDEX is a broad based, unmanaged, market capitalization
weighted, total return index that measures the performance of both developed and
emerging stock markets, excluding the U.S. The index is calculated to exclude
companies and share classes which cannot be freely purchased by foreigners.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------------
International Opportunities IA 24.46% 12.97% 7.01%
- -------------------------------------------------------------
International Opportunities
IB(3) 24.15% 12.69% 6.77%
- -------------------------------------------------------------
MSCI AC World ex US Index 27.16% 16.87% 8.59%
- -------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
<Table>
NICOLAS M. CHOUMENKOVITCH
Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford International Opportunities HLS Fund
returned 24.46% for the twelve-month period ended December 31, 2006,
underperforming its benchmark, the MSCI All Country World ex US Index, which
returned 27.16% for the same period. However, the Fund outperformed the 24.35%
return of the average fund in the Lipper VA International Large Cap Core Funds
peer group, a group of funds with investment strategies similar to those of the
Fund.
WHY DID THE FUND PERFORM THIS WAY?
International equity markets advanced in 2006 as corporate earnings growth
remained strong. Every sector in the benchmark rose in US dollar terms, led by
Utilities, Materials, and Telecommunication Services. Even the laggards in this
market posted attractive absolute (i.e. total return) returns. Technology
stocks, Health Care stocks and Energy stocks gained between twelve and twenty
percent.
The Fund's underperformance versus its benchmark reflected the cross currents of
positive overall stock selection offset by negative sector allocation results.
In particular, performance suffered as a result of the Fund's underweights (i.e.
the Fund's sector position was less than the benchmark position) in the
high-performing Utilities and Telecommunication sectors and an overweight in
lagging Health Care stocks.
Stock selection was strongest in the Materials, Financial, Technology and Health
Care sectors. New to the Fund in 2006, Xstrata (Materials) was the top
contributing stock to both relative (i.e. performance of the Fund as measured
against the benchmark) and absolute performance during the year. The value of
coal assets amid rising energy prices was finally recognized in the market,
boosting the company's stock price. Other top contributors in the Materials
sector included CVRD and Inco, mining companies that announced plans to merge
during the year. In the Financials sector, shares in Hong Kong Exchanges had
strong performance during the beginning of the year driven by higher trading
fees. Although market volumes are down, the company remains a proxy for growth
in China. Other positive contributors to relative and absolute returns included
Electricite de France, a French Utility, and Banco Bilbao Vizcaya, a Spanish
commercial bank.
Key detractors from relative and absolute performance included Seven & I
(Consumer Staples), Matsui Securities (Financials), and Rakuten (Consumer
Discretionary). Seven & I, operator of Denny's and Seven Eleven stores in Japan,
and consumer financial company Matsui Securities suffered a downdraft along with
other Japanese consumer related stocks on concerns that the economy is
32
- --------------------------------------------------------------------------------
not recovering as quickly as hoped. Rakuten's stock price fell as a temporary
rise in the costs necessary to grow a healthy sales base of this Japanese
internet retailer disappointed investors. The company also had adverse press
which hit the stock hard. We remain confident in Rakuten's leading market
position and added to our holdings on weakness.
WHAT IS THE OUTLOOK?
Effective December 15, 2006, Nicolas Choumenkovitch took over as lead Portfolio
Manager of the Fund. He has been part of the portfolio management team on the
Fund since 2000.
Our emphasis is on bottom-up stock selection. We recently reduced our exposures
to Consumer Staples (Nestle, Carrefour and Seven & I) and Health Care (Daiichi
Sankyo and Terumo) and increased exposure to Materials (Freeport-McMoran, Impala
Platinum) and Consumer Discretionary. We increased our airline exposure and
reduced our weight in Financials by selling banking stocks. At the end of the
year, our largest overweight sectors were Consumer Staples and Materials and our
largest underweight sectors were Financials and Utilities.
Based on our bottom-up stock selection, we ended the year with overweight
positions in continental Europe and Latin America, offset by underweight
positions in the United Kingdom and Asia Pacific ex-Japan.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 16.6%
- -------------------------------------------------------------------
Consumer Cyclical 11.2
- -------------------------------------------------------------------
Consumer Staples 6.9
- -------------------------------------------------------------------
Energy 7.6
- -------------------------------------------------------------------
Finance 21.3
- -------------------------------------------------------------------
Health Care 8.7
- -------------------------------------------------------------------
Services 1.3
- -------------------------------------------------------------------
Technology 15.8
- -------------------------------------------------------------------
Transportation 7.1
- -------------------------------------------------------------------
Utilities 2.0
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Belgium 0.9%
- -------------------------------------------------------------------
Brazil 4.0
- -------------------------------------------------------------------
Canada 6.5
- -------------------------------------------------------------------
Egypt 1.5
- -------------------------------------------------------------------
France 11.1
- -------------------------------------------------------------------
Germany 7.3
- -------------------------------------------------------------------
Hong Kong 3.1
- -------------------------------------------------------------------
India 1.6
- -------------------------------------------------------------------
Ireland 1.9
- -------------------------------------------------------------------
Italy 5.4
- -------------------------------------------------------------------
Japan 17.2
- -------------------------------------------------------------------
Korea (Republic of) 0.8
- -------------------------------------------------------------------
Luxembourg 0.2
- -------------------------------------------------------------------
Mexico 2.0
- -------------------------------------------------------------------
Netherlands 4.1
- -------------------------------------------------------------------
Norway 1.0
- -------------------------------------------------------------------
Panama 0.7
- -------------------------------------------------------------------
Russia 3.3
- -------------------------------------------------------------------
Singapore 0.9
- -------------------------------------------------------------------
South Africa 1.2
- -------------------------------------------------------------------
Spain 0.9
- -------------------------------------------------------------------
Sweden 2.0
- -------------------------------------------------------------------
Switzerland 5.1
- -------------------------------------------------------------------
Taiwan 1.5
- -------------------------------------------------------------------
United Kingdom 12.0
- -------------------------------------------------------------------
United States 2.3
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
33
Hartford International Small Company HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
S&P/CITIGROUP EXTENDED MARKET
INTERNATIONAL SMALL COMPANY IA EURO PACIFIC INDEX
------------------------------ -----------------------------
4/01 10000 10000
10356 10051
9781 9730
9610 9365
9631 9388
8374 8233
8926 8554
9559 8875
12/01 9402 8758
9241 8585
9229 8792
9643 9305
10043 9565
10328 9980
10222 9671
9621 9000
9384 8917
8412 8188
8487 8117
8750 8408
12/02 8924 8345
8673 8223
8635 8207
8611 8157
9629 8834
10403 9576
10562 10030
11039 10357
11564 11015
12315 11642
13064 12443
13114 12432
12/03 13719 13194
14045 13691
14379 14117
14948 14484
14691 14113
14417 14116
14859 14613
14046 14028
13932 14139
14133 14562
14638 15016
15433 16191
12/04 16047 16992
16470 17232
16891 18014
16425 17637
15922 17128
16041 17210
16444 17537
17108 18172
17463 18693
17910 19398
17461 18832
17823 19517
12/05 19031 20747
20478 22263
20477 22281
21331 23268
22397 24427
21411 23296
21074 23016
21251 22832
21885 23586
22168 23751
22760 24368
23782 25392
12/06 24614 26255
</Table>
<Table>
--- INTERNATIONAL SMALL COMPANY IA --- S&P/CITIGROUP EXTENDED MARKET
$10,000 starting value EURO-PACIFIC INDEX
$24,614 ending value $10,000 starting value
$26,255 ending value
</Table>
S&P/CITIGROUP EXTENDED MARKET EURO-PACIFIC INDEX is a global equity index
comprised of the smallest 20% of each country's market capitalization in the
S&P/Citigroup Broad Market Global Index. (The S&P/Citigroup Broad Market Global
Index captures all companies in developed and emerging markets with free float
market capitalization of at least $100 million as of the annual index
reconstitution.) All developed countries are included except the U.S. and
Canada.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ----------------------------------------------------------------
International Small Company IA 29.34% 21.23% 17.20%
- ----------------------------------------------------------------
International Small Company IB 29.01% 20.93% 16.93%
- ----------------------------------------------------------------
S&P/Citigroup Extended Market
Euro-Pacific Index 26.55% 24.56% 18.55%
- ----------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SIMON THOMAS DANIEL MAGUIRE
Vice President Equity Research Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford International Small Company HLS Fund Class IA shares returned
29.34% for the twelve-month period ended December 31, 2006, outperforming its
benchmark, the S&P/ Citigroup Extended Market Euro-Pacific Index, which returned
26.55% for the same period. The Fund also outperformed the 24.35% return of the
average fund in the Lipper International Core VP-UF peer group, a group of funds
with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
International small cap equity markets advanced markedly during the year. The
benchmark rose in nine of the twelve months with only the May -- July period
showing negative results as investors sold off riskier assets. Every sector in
the benchmark rose, led by Utilities, Energy, and Materials. Even the laggards
posted strong absolute (i.e. total return) returns as the bottom three sectors,
Technology, Consumer Discretionary, and Consumer Staples, all rose.
Fund returns during the period were helped by strong stock selection,
particularly among Industrials, Consumer Discretionary, and Health Care stocks.
Sector allocation, an outgrowth of the bottom-up stock selection process, was
negative due to underweights (i.e. the Fund's sector position was less than the
benchmark position) among strong Utilities and Financials stocks and an
overweight position in the lagging Technology sector.
From a country perspective, positive results also were driven by stock
selection. On a relative basis, Japan was the greatest source of stock selection
value-added, followed by South Korea and Germany. Selection was weakest in the
United Kingdom and Australia/New Zealand. Country allocation was negative for
the year, mostly due to an underweight to high-returning United Kingdom stocks
and an overweight among lagging Japanese shares.
The Fund's strongest relative (i.e. performance of the Fund as measured against
the benchmark) and absolute contributors to performance for the period included:
Cambridge Antibody, a United Kingdom biotechnology company, whose shares soared
on the news that pharmaceutical giant AstraZeneca would be buying the 80% of the
company it did not already own; GEA Group, a German engineering company that
supplies production equipment to chemical, oil, and industrial customers, whose
stock rose as the company continued to benefit from a recent restructuring and
increased profitability; Hellenic Technodomiki, Greece's largest construction
company, which benefited from strong new business wins; German aircraft engine
maker MTU Aero Engines, whose shares gained on strong profitability trends; and
Danish brewer
34
- --------------------------------------------------------------------------------
Carlsberg, whose shares moved up on robust revenue and earnings growth, in part
due to the World Cup in Germany and the successful integration of Russian
breweries.
The largest detractors to relative and absolute performance included: GCAP
Media, a British media company that suffered in a weakening United Kingdom
advertising market and some concerns over a format change involving fewer ads
per minute; AWB, an Australian wheat exporter which was impacted by a weak
harvest and political concerns arising from contracts with middle eastern
clients; and Wolfson Microelectronics, a British supplier of mixed-signal
semiconductors for consumer electronic products whose shares fell when the
company lowered profit and revenue guidance unexpectedly.
WHAT IS THE OUTLOOK?
Our focus is on bottom-up research to identify stocks with attractive
fundamentals. Based on stock-by-stock decisions, we finished the period with the
largest overweight positions in Health Care, Industrials, and Technology. In
Health Care we are seeing opportunity in biotechnology stocks, with recent
purchases of Lundbeck, Ipsen, and Elan. We have recently reduced exposure in
Industrials and Technology as stocks hit our target prices, but remain
overweight versus the benchmark. Our largest underweights are in the Utilities,
Financials, and Consumer Discretionary sectors. We have reduced our underweight
in Financials following several company site visits, adding to Japanese regional
banks where we discovered a number of under-researched stocks with the potential
for significant upside as the Japanese economy normalizes. At year-end our
greatest underweight position was in Europe, mostly due to less than benchmark
exposures to the United Kingdom, Spain, and France, offset by overweight
positions in Asia ex-Japan and Japan.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 11.6%
- -------------------------------------------------------------------
Capital Goods 7.4
- -------------------------------------------------------------------
Consumer Cyclical 16.6
- -------------------------------------------------------------------
Consumer Staples 3.4
- -------------------------------------------------------------------
Energy 3.1
- -------------------------------------------------------------------
Finance 21.3
- -------------------------------------------------------------------
Health Care 11.3
- -------------------------------------------------------------------
Services 10.0
- -------------------------------------------------------------------
Technology 10.2
- -------------------------------------------------------------------
Transportation 3.6
- -------------------------------------------------------------------
Utilities 0.8
- -------------------------------------------------------------------
Short-Term Investments 23.9
- -------------------------------------------------------------------
Other Assets & Liabilities (23.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 5.5%
- -------------------------------------------------------------------
Belgium 1.6
- -------------------------------------------------------------------
Brazil 0.5
- -------------------------------------------------------------------
Canada 0.3
- -------------------------------------------------------------------
China 1.2
- -------------------------------------------------------------------
Denmark 4.2
- -------------------------------------------------------------------
Finland 1.5
- -------------------------------------------------------------------
France 7.3
- -------------------------------------------------------------------
Germany 10.6
- -------------------------------------------------------------------
Greece 1.3
- -------------------------------------------------------------------
Hong Kong 3.8
- -------------------------------------------------------------------
Ireland 0.6
- -------------------------------------------------------------------
Italy 5.8
- -------------------------------------------------------------------
Japan 19.7
- -------------------------------------------------------------------
Liechtenstein 1.2
- -------------------------------------------------------------------
Malaysia 0.8
- -------------------------------------------------------------------
Mexico 0.6
- -------------------------------------------------------------------
Netherlands 4.6
- -------------------------------------------------------------------
Portugal 0.7
- -------------------------------------------------------------------
South Korea 1.9
- -------------------------------------------------------------------
Spain 1.6
- -------------------------------------------------------------------
Sweden 3.8
- -------------------------------------------------------------------
Switzerland 6.0
- -------------------------------------------------------------------
United Kingdom 10.3
- -------------------------------------------------------------------
United States 3.9
- -------------------------------------------------------------------
Short-Term Investments 23.9
- -------------------------------------------------------------------
Other Assets & Liabilities (23.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
35
Hartford International Stock HLS Fund inception 1/3/1995
(subadvised by Lazard Asset Management LLC)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL STOCK IA MSCI EAFE INDEX
---------------------- ---------------
12/96 10000 10000
9762 9652
10010 9813
10242 9850
10186 9905
10602 10552
11262 11136
11505 11319
10806 10476
11704 11065
10982 10217
11053 10115
12/97 11199 10206
11469 10675
12109 11362
12825 11715
13079 11810
13395 11756
13276 11847
13492 11970
11640 10490
11030 10171
11869 11234
12605 11812
12/98 13043 12281
12915 12247
12627 11958
13086 12460
13705 12968
13253 12303
13767 12786
14250 13169
14539 13220
14549 13356
14807 13859
15109 14343
12/99 16173 15633
15020 14643
15035 15040
15734 15626
15130 14806
14931 14448
15558 15016
15173 14389
15222 14517
14564 13813
14377 13490
14051 12987
12/00 14591 13451
14507 13445
13724 12438
12685 11614
13349 12429
13045 12000
12607 11514
12133 11305
11967 11021
10586 9908
10728 10161
11017 10536
12/01 11064 10599
10556 10037
10745 10107
11474 10708
11501 10736
11686 10882
11283 10453
10166 9422
10288 9403
9334 8396
9932 8848
10219 9251
12/02 9987 8941
9465 8568
9408 8372
9357 8213
10155 9028
10704 9584
10817 9821
10880 10060
11069 10305
11306 10624
11890 11287
12213 11540
12/03 12984 12442
13190 12619
13420 12912
13301 12990
12902 12707
12934 12746
13158 13047
12689 12625
12851 12684
13258 13017
13650 13462
14423 14385
12/04 14972 15017
14646 14743
15209 15383
14819 15003
14447 14667
14421 14689
14555 14890
14954 15347
15454 15740
16052 16444
15647 15965
15886 16360
12/05 16678 17122
17646 18174
17560 18137
18194 18744
18957 19653
18272 18913
18168 18920
18304 19110
18741 19640
18747 19674
19418 20441
19914 21058
12/06 20426 21720
</Table>
<Table>
--- INTERNATIONAL STOCK IA --- MSCI EAFE INDEX
$10,000 starting value $10,000 starting value
$20,426 ending value $21,720 ending value
</Table>
MSCI EAFE -- THE MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALASIA AND
FAR EAST INDEX is a free float-adjusted market capitalization index that is
designed to measure developed market equity performance, excluding the U.S. and
Canada.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(1) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
International Stock IA 22.47% 13.04% 7.40%
- ------------------------------------------------------
MSCI EAFE Index 26.86% 15.43% 8.07%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
JOHN R. REINSBERG
Deputy Chairman, International and Global Products
MICHAEL A. BENNETT
Managing Director
MICHAEL G. FRY
Managing Director
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford International Stock HLS Fund returned 22.47%
on a net basis for the year, underperforming its benchmark, the MSCI EAFE Index,
which returned 26.86%. The Fund also underperformed the 24.35% return of the
average fund in the Lipper VA International Large Core Funds peer group, a group
of funds with investment strategies similar to those of the Fund
WHY DID THE FUND PERFORM THIS WAY?
International stocks performed well in 2006, overcoming concerns about the
slowing U.S. housing market, stubbornly high oil prices, and the sustainability
of strong corporate-earnings growth. Much of the gains came during a strong
fourth-quarter rally, which saw many global-equity indices finally exceed the
peaks reached in early 2000. Gains were broad-based by sector during the year,
with all groups positive. Utilities were the strongest-performing sector, as the
group was helped by investors' continued demand for yield as well as more recent
industry consolidation. Commodity producers continued their outperformance, as
metals prices remained near all-time highs, while telecom services stocks
rebounded from a few years of weakness. Energy shares lagged the broad market,
even as oil prices averaged over $65 a barrel, roughly $10 above their average
levels in 2005. Technology stocks continued their extended period of
underperformance, weighed down by Japanese technology shares and semiconductor
makers. Health Care lagged, as major blockbuster drugs lost patent protection,
and a number of new drugs were delayed or dropped due to safety concerns.
Regionally, European stocks performed best in 2006, followed by Asian markets
outside of Japan. Japanese stocks lagged significantly.
Stock selection in consumer staples benefited performance, as Gallaher shares
posted solid gains. The U.K. tobacco company received a takeover bid from Japan
Tobacco. Inbev shares also continued to perform well, after the Belgian-based
brewer announced profits that far exceeded analysts' estimates. Shares of U.K.
supermarket retailer, Tesco, also performed well. Stock selection in Materials
also boosted returns, as shares of Lafarge, the world's largest cement maker,
posted solid gains. The company's third-quarter earnings, which exceeded
analysts' expectations, increased by 32 percent due to higher cement prices.
Shares of building-materials supplier CRH also rose, after the company announced
solid progress in integrating its largest acquisition to date. Stock selection
in Energy also helped performance, as shares of Statoil, ENI, and Total rallied
despite weakening oil prices. In addition, increased exposure to
emerging-markets stocks added value in the period.
Conversely, stock selection in Industrials detracted from performance, as shares
of Yamato Holdings fell, due to disappointing quarterly-earnings results.
Negative factors that impacted the company's results included rising personnel
expenses, weakness in non-core businesses, and pricing declines in door-to-door
delivery
36
- --------------------------------------------------------------------------------
services. THK Co., Ltd. shares also declined, as slowing momentum in the
company's monthly order data as well as general macroeconomic concerns resulted
in significant market price decrease, despite better-than-expected results in
the latest quarter. Stock selection in Financials detracted from performance, as
Japanese holdings, Mitsubishi UFJ, Sumitomo Mitsui, and Nomura underperformed
along with the overall Japanese market. An overweight (i.e. the Fund's sector
position was more than the benchmark position) position and stock selection in
Health Care hurt performance, as the shares of Sanofi-Aventis declined. The
company reported lower-than-expected sales, due, in part, to government health
spending cuts in France and Germany and the late delivery of U.S. flu vaccines.
We believe the stock's attractive valuation already reflects much of this bad
news, but does not adequately recognize the positive impact the company's
pipeline of new drug therapies could have on future earnings.
WHAT IS YOUR OUTLOOK?
Overall, the valuation of the broader stock market is reasonable in the context
of historic valuations. However, our concerns, looking forward, are that the
historically high margins and returns in many cyclical stocks and sectors are
not sustainable, especially given the beginning of an economic slowdown. The
focus of the Fund will continue to be on those companies with valuations that
are attractive and earnings that are more sustainable. We will seek to avoid
those areas of the market where we believe earnings to be unsustainably high. As
ever, good stock selection will be the key factor to a successful year ahead.
Our investment process is focused on individual stock selection, which is based
on company fundamentals, not on macroeconomic considerations. A complicating
factor, from a fundamental perspective, is the continuation of a strong equity
market and abundant liquidity, which we believe is fueling an extraordinary
merger and acquisition cycle.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 2.2%
- -------------------------------------------------------------------
Capital Goods 4.2
- -------------------------------------------------------------------
Consumer Cyclical 11.4
- -------------------------------------------------------------------
Consumer Staples 11.2
- -------------------------------------------------------------------
Energy 9.4
- -------------------------------------------------------------------
Finance 27.6
- -------------------------------------------------------------------
Health Care 9.4
- -------------------------------------------------------------------
Services 4.9
- -------------------------------------------------------------------
Technology 12.0
- -------------------------------------------------------------------
Transportation 0.7
- -------------------------------------------------------------------
Utilities 5.1
- -------------------------------------------------------------------
Short-Term Investments 26.0
- -------------------------------------------------------------------
Other Assets & Liabilities (24.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Belgium 1.8%
- -------------------------------------------------------------------
Brazil 1.5
- -------------------------------------------------------------------
Egypt 0.7
- -------------------------------------------------------------------
Finland 0.9
- -------------------------------------------------------------------
France 13.9
- -------------------------------------------------------------------
Germany 4.2
- -------------------------------------------------------------------
Ireland 2.2
- -------------------------------------------------------------------
Italy 7.5
- -------------------------------------------------------------------
Japan 18.2
- -------------------------------------------------------------------
Netherlands 1.8
- -------------------------------------------------------------------
New Zealand 1.0
- -------------------------------------------------------------------
Norway 0.9
- -------------------------------------------------------------------
Russia 0.5
- -------------------------------------------------------------------
Singapore 1.3
- -------------------------------------------------------------------
South Korea 1.3
- -------------------------------------------------------------------
Spain 2.0
- -------------------------------------------------------------------
Sweden 1.0
- -------------------------------------------------------------------
Switzerland 9.8
- -------------------------------------------------------------------
Turkey 0.9
- -------------------------------------------------------------------
United Kingdom 26.7
- -------------------------------------------------------------------
Short-Term Investments 26.0
- -------------------------------------------------------------------
Other Assets & Liabilities (24.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
37
Hartford LargeCap Growth HLS Fund inception 5/1/1998
(subadvised by Holland Capital Management, L.P.)
PERFORMANCE OVERVIEW 5/1/98 - 12/31/06
Growth of a $10,000 investment
(LINE GRAPH)
<Table>
<Caption>
LARGECAP GROWTH IA S&P 500 INDEX
------------------ -------------
5/98 10000 10000
9798 9828
10439 10227
10592 10118
8773 8655
9185 9210
10084 9959
10647 10562
12/98 11861 11171
12972 11638
12448 11276
13036 11727
12900 12181
12470 11894
13572 12554
13207 12162
13046 12102
12853 11770
13798 12514
14100 12769
12/99 15090 13521
14349 12842
14210 12599
15981 13830
15473 13414
14903 13139
15355 13463
15248 13253
16022 14075
14392 13333
14033 13276
12480 12230
12/00 12382 12290
13413 12726
11352 11566
10459 10834
11687 11675
11645 11753
11048 11467
10800 11354
9877 10644
9048 9785
9466 9972
10417 10737
12/01 10538 10831
9995 10673
9523 10467
9946 10861
9139 10203
8956 10128
8298 9407
7703 8674
7860 8730
7089 7782
7685 8466
7884 8964
12/02 7267 8438
7020 8218
6905 8095
7148 8173
7810 8846
8049 9311
8020 9430
8308 9597
8442 9783
8273 9680
8742 10227
8710 10317
12/03 8969 10857
9210 11056
9432 11210
9377 11041
9161 10868
9308 11017
9415 11231
9124 10859
9080 10903
9241 11021
9348 11189
9702 11642
12/04 10004 12038
9723 11744
9865 11991
9594 11779
9370 11556
9660 11923
9641 11940
9993 12384
9974 12271
10038 12371
9929 12164
10124 12624
12/05 10103 12628
10252 12963
10036 12998
10181 13160
10248 13336
9862 12953
9924 12970
10010 13050
10212 13360
10470 13704
10609 14150
10730 14419
12/06 10757 14621
</Table>
<Table>
--- LARGECAP GROWTH IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$10,757 ending value $14,621 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(1) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------
LargeCap Growth IA 6.47% 0.41% 0.85%
- ------------------------------------------------------------
S&P 500 Index 15.78% 6.19% 4.48%*
- ------------------------------------------------------------
</Table>
* Return is from 4/30/98.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
LOUIS A. HOLLAND
Managing Partner & Chief Investment Officer
MONICA L. WALKER
Partner & Portfolio Manager
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Large Cap Growth HLS Fund returned 6.47% for
the one-year period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78% for the same period. The Fund outperformed
the 6.31% return of the average fund in the Lipper VA Large Cap Growth peer
group, a group of funds with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The Fund underperformed the general market S&P 500 Index mainly due to
unfavorable stock selection in health care and information technology.
Additionally, the Fund's conservative growth at a reasonable price bias had a
negative impact on performance relative (i.e. performance of the Fund as
measured against the benchmark) to the benchmark as growth stocks and indexes
continued to underperform value and core stocks and indexes.
In Health Care, Laboratory Corporation of America rose. However, a number of
other Health Care holdings were major detractors to overall performance. Teva
Pharmaceutical Industries slipped on fears that the generic drug market is
becoming too competitive given the recent aggressive tactics by branded drug
companies. We remain holders of the stock because it has the broadest pipeline
of any generic drug manufacturer globally and its recent merger has positioned
the company to deliver strong earnings growth over the next several years. Aetna
was sold after reporting earnings results, which in our view, showed signs of
aggressive pricing by the company and competitive pricing pressures within the
industry, which has historically been negative for managed care stocks overall.
Boston Scientific fell due to a material slowdown in a key market and concerns
about its Guidant acquisition and the safety of drug eluting stents. A change in
momentum in any of these issues could help move the stock, which perked up
recently on signs of a recovery in its key market and a better than expected FDA
report on drug eluting stents.
In Information Technology, Apple, which was added during the year, was one of
the best performing holdings and was a top contributor, as was Microsoft. In
contrast, Intel was a major detractor. Intel continues to languish because of
competition from Advanced Micro Devices and meaningful gross margin compression.
We remain holders of the stock as a pending rebound in the space, aided by
Microsoft's Vista launch, should bode well for this name. The Fund has also been
negatively impacted by a lack of exposure to better performing Communications
Equipment stocks held in the index.
Comcast and Kohl's Corporation were standouts in the Consumer Discretionary
space and were among the best performing Fund holdings. Results for Comcast have
been driven by customers signing up for their new Triple Play bundled product
offering: high-speed internet, digital voice, and digital cable. Kohl's
Corporation climbed higher on strong operating results and a solid long-term
earnings forecast. On the other hand, Cheesecake Factory was hurt because of
slower restaurant traffic and an
38
- --------------------------------------------------------------------------------
investigation into their options practices. After bottoming out in August, the
stock has partially recovered some of its losses, in part due to resolution of
the options investigation.
The Fund benefited from an overweight in the strong performing Energy sector;
however, Fund holdings did not perform as well as those in the index. Exxon
Mobil was a top contributor and the best performing holding in the sector, but
was underweighted (i.e. the Fund's sector position was less than the benchmark
position) versus the benchmark, which had a negative impact on relative
performance. Additionally, BJ Services was hurt by worries about a downturn in
the North American natural gas drilling market.
WHAT IS THE OUTLOOK?
Despite the double-digit stock returns achieved during 2006, the S&P 500 Index
is up only +1.1% annually over the past seven years due to the negative returns
experienced during the first several years of the decade (the post-bubble
years). We expect real stock returns over the next several years to average in
the mid-to-high single-digit range as compared to the mid-teen range experienced
during the 20 years that ended in 2000. This view is based on expectations of
single-digit earnings growth for S&P 500 stocks versus the double-digit growth
rates experienced over the past several years and economic growth in the low
single-digit range. Yet, we remain optimistic about large cap growth stocks,
despite the outperformance of small cap stocks in seven of the past eight
calendar years. Typically, during the early stages of an economic upturn, small
companies perform better, while during a slowing economy large companies perform
better due to their size, exposure to foreign markets, cost-cutting potential,
higher dividend paying potential, and perceived safety. A continuation of
moderate economic growth could provide a favorable environment for large cap
stocks. While growth stocks were in favor during the latter part of the 90's,
value stocks have beaten growth stocks during the recent post-bubble years. We
believe that this trend is also likely to reverse and expect investors to favor
companies with the fastest, most stable earnings growth. In recent years, low
quality stocks have performed better than high quality stocks as investors took
on more risk in order to gain higher returns. We believe that in an uncertain
environment higher quality stocks will be the investment of choice.
At a Special Meeting of Shareholders held on January 23, 2007, shareholders of
Hartford Large Cap Growth HLS Fund approved the reorganization of the Fund into
the Hartford Blue Chip Stock HLS Fund, which is sub-advised by Hartford
Investment Management Company. The reorganization is expected to occur on
February 5, 2007. In connection with the reorganization, the Blue Chip Stock HLS
Fund will be renamed the Hartford LargeCap Growth HLS Fund.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Consumer Cyclical 5.8%
- -------------------------------------------------------------------
Consumer Staples 3.3
- -------------------------------------------------------------------
Energy 10.3
- -------------------------------------------------------------------
Finance 15.0
- -------------------------------------------------------------------
Health Care 19.6
- -------------------------------------------------------------------
Services 11.7
- -------------------------------------------------------------------
Technology 30.3
- -------------------------------------------------------------------
Transportation 1.1
- -------------------------------------------------------------------
Utilities 1.0
- -------------------------------------------------------------------
Short-Term Investments 1.9
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
39
Hartford MidCap Growth HLS Fund inception 5/1/1998
(formerly Hartford MidCap Stock HLS Fund)
(subadvised by Hartford Investment Management Company**)
PERFORMANCE OVERVIEW 5/1/98 - 12/31/06
Growth of a $10,000 investment
(LINE GRAPH)
<Table>
<Caption>
RUSSELL MIDCAP GROWTH
MIDCAP STOCK IA INDEX S&P MIDCAP 400 INDEX
--------------- --------------------- --------------------
5/98 10000 10000 10000
9541 9589 9550
9490 9860 9611
9144 9438 9238
7428 7636 7519
7916 8214 8220
8298 8819 8955
8779 9414 9402
12/98 9711 10389 10537
9426 10700 10128
8904 10177 9597
9091 10744 9866
9510 11233 10643
9531 11089 10690
10111 11863 11261
9902 11485 11022
9703 11366 10645
9390 11269 10316
9796 12140 10842
10140 13397 11411
12/99 10776 15717 12089
10322 15714 11748
11146 19018 12571
11915 19037 13623
11515 17189 13147
11299 15936 12983
11542 17627 13174
11563 16511 13382
12725 19001 14877
12375 18072 14776
11994 16835 14275
10767 13177 13197
12/00 11715 13871 14207
11824 14663 14523
10988 12127 13694
10303 10391 12677
11525 12123 14075
11688 12066 14403
11473 12073 14345
11276 11258 14132
10926 10442 13669
9621 8717 11969
10076 9633 12498
10726 10670 13428
12/01 11227 11075 14121
11192 10716 14046
11266 10108 14064
11966 10880 15068
12033 10304 15002
11861 9996 14751
11097 8893 13672
10030 8029 12346
10104 8001 12408
9380 7366 11408
9677 7936 11902
10009 8557 12591
12/02 9761 8040 12074
9543 7961 11721
9304 7892 11442
9432 8039 11539
10079 8586 12377
10829 9413 13402
10861 9547 13573
11213 9888 14055
11592 10432 14692
11426 10230 14467
12284 11055 15561
12721 11350 16103
12/03 12791 11474 16375
13002 11853 16730
13199 12052 17132
13210 12029 17205
12682 11689 16640
12936 11965 16985
13225 12156 17372
12668 11351 16561
12555 11211 16518
13102 11629 17007
13303 12024 17279
13838 12645 18308
12/04 14433 13250 19074
13941 12896 18588
14080 13222 19211
13943 13029 18998
13254 12514 18260
13955 13230 19360
14079 13476 19809
14679 14263 20849
14546 14176 20617
14639 14359 20775
14150 13936 20329
15029 14693 21322
12/05 15089 14854 21469
16066 15743 22734
15938 15549 22544
16607 15984 23107
16676 16052 23432
15731 15296 22375
15626 15234 22380
15005 14688 21742
15422 15026 21990
15917 15369 22138
16398 15959 23059
17074 16585 23800
12/06 16940 16437 23685
</Table>
<Table>
--- MIDCAP GROWTH IA --- RUSSELL MIDCAP GROWTH INDEX -- S&P MIDCAP 400 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$16,940 ending value $16,437 ending value $23,685 ending value
</Table>
RUSSELL MIDCAP GROWTH INDEX is an unmanaged index measuring the performance of
the mid-size company segment of the U.S. market.
S&P MIDCAP 400 INDEX is an unmanaged index of common stocks of companies chosen
by S&P designed to represent price movements in the madcap U.S. equity market.
The Fund has changed its benchmark from the S&P MidCap 400 Index to the Russell
MidCap Growth Index because the Fund's investment manager believes that the
Russell MidCap Growth Index is better suited to the investment strategy of the
fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(1) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------
MidCap Growth IA 12.27% 8.58% 6.27%
- ------------------------------------------------------
Russell MidCap
Growth Index 10.66% 8.22% 5.90%*
- ------------------------------------------------------
S&P MidCap 400 Index 10.32% 10.90% 10.45%*
- ------------------------------------------------------
</Table>
* Return is from 4/30/98.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
** Effective 12/04/2006, the sub-adviser changed from Northern
Capital Management LLC, to Hartford Investment Management
Company.
PORTFOLIO MANAGER
MARK WATERHOUSE
Executive Vice President
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford MidCap Growth Stock HLS Fund returned 12.27%
for the year ended December 31, 2006, outperforming its benchmark, the Russell
Mid-Cap Growth Index, which returned 10.66%. The Fund outperformed the 8.66%
return of the average fund in the Lipper VA Mid-Cap Growth Funds peer group, a
group of funds with investment strategies similar to those of the Fund.
On December 4, 2006, Hartford Investment Management Company replaced Northern
Capital Management as sub-adviser for the Fund. In addition, in December, the
name of the Fund changed from The Hartford MidCap Stock HLS Fund to the current
name.
WHY DID THE FUND PERFORM THIS WAY?
The Fund's best performing sectors were Telecom, Media & Internet, Energy,
Industrials and Technology. The top performing stock was Akamai which gained
165% in 2006 as the company continues to benefit from the exploding growth in
demand for video over the internet. The strong performance in Energy came
primarily from our positions in Cameco and Weatherford International. Cameco
continues to benefit from the growing interest in nuclear fuels while demand for
Weatherford's oilfield services remained robust with oil prices sustaining their
high levels. The strength in Industrials resulted from our positions in Allied
Waste, Terex and Precision Castparts, which have all benefited from the
continued strength in industrial production. We have subsequently sold
Weatherford International, Allied Waste, Terex and Precision Castparts. In the
Technology sector there were numerous companies up 30% to 70% including MEMC
Electronics, Network Appliances, Amphenol, Varian Semiconductor and Polycom.
Network Appliances, Amphenol, Varian Semiconductor and Polycom were sold before
year end.
The relative (i.e. performance of the Fund as measured against the benchmark)
gains were partially offset by weakness in the Materials sector (underweighting
the sector group compared to the benchmark and poor performance by Florida
Rock), Financials (H&R Block and insurance holdings Berkley Corp. and
Montpelier) and in the Healthcare segment (Kinetic Concepts, Endo
Pharmaceuticals and Express Scripts). While overall Technology holdings
outperformed, the portfolio was negatively impacted by weakness in Jabil on
concerns about slowing growth in 2007 and Choicepoint, where there was a
reduction in earnings guidance. The same was also true in the Consumer
Discretionary area where
40
- --------------------------------------------------------------------------------
we benefited from our underexposure to the housing stocks but were hurt by Royal
Caribbean and Carter's.
WHAT IS THE OUTLOOK?
The Fund will take a long-term approach in identifying growth industries and
selecting the best-positioned companies within those industries with earnings
power that, we believe, justify higher stock prices. We believe the economy will
continue to experience a period of more moderate economic growth, sustained low
interest rates (by historical standards) and contained inflation, which we think
is an attractive environment for mid-cap growth stocks in 2007 and 2008. On a
sector level, we feel this economic environment will benefit particularly the
Health Care, Information Technology and Services sectors, although we continue
to believe the Consumer Discretionary sector could face "headwinds" in the near
term. Overall, we are optimistic that mid-cap growth will be an attractive asset
class over the next 24 months and we are confident that our investment approach
of identifying companies will suit our investors well in the upcoming months.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 6.9%
- -------------------------------------------------------------------
Capital Goods 2.9
- -------------------------------------------------------------------
Consumer Cyclical 6.6
- -------------------------------------------------------------------
Consumer Staples 5.2
- -------------------------------------------------------------------
Energy 4.4
- -------------------------------------------------------------------
Finance 10.8
- -------------------------------------------------------------------
Health Care 14.6
- -------------------------------------------------------------------
Services 12.2
- -------------------------------------------------------------------
Technology 27.2
- -------------------------------------------------------------------
Transportation 1.9
- -------------------------------------------------------------------
Utilities 4.5
- -------------------------------------------------------------------
Short-Term Investments 30.6
- -------------------------------------------------------------------
Other Assets & Liabilities (27.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
41
Hartford Mortgage Securities HLS Fund inception 1/1/1985
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS MORTGAGE BACKED
MORTGAGE SECURITIES IA SECURITIES INDEX
---------------------- -------------------------------
12/96 10000 10000
10063 10074
10088 10108
10002 10013
10157 10172
10247 10272
10359 10392
10557 10587
10533 10562
10662 10696
10778 10815
10806 10850
12/97 10901 10949
11010 11058
11025 11082
11067 11128
11129 11192
11215 11266
11267 11320
11326 11377
11441 11480
11564 11619
11537 11604
11592 11662
12/98 11634 11711
11706 11795
11668 11748
11741 11827
11791 11881
11711 11815
11660 11773
11600 11693
11611 11693
11782 11883
11826 11951
11839 11958
12/99 11810 11928
11732 11825
11849 11962
11964 12093
11969 12101
11987 12107
12206 12366
12279 12445
12447 12634
12564 12765
12637 12856
12844 13050
12/00 13025 13260
13207 13466
13286 13543
13365 13622
13360 13641
13423 13731
13445 13761
13682 14005
13783 14129
13960 14340
14144 14539
14046 14404
12/01 14001 14350
14117 14483
14245 14648
14109 14493
14359 14767
14452 14874
14550 14997
14727 15168
14855 15288
14985 15396
15003 15455
15004 15444
12/02 15143 15605
15201 15643
15284 15748
15275 15749
15333 15815
15366 15828
15370 15853
15057 15557
15158 15667
15375 15933
15334 15878
15378 15911
12/03 15490 16081
15601 16182
15724 16318
15791 16390
15526 16098
15482 16063
15582 16204
15724 16350
15951 16602
15985 16627
16104 16762
16030 16720
12/04 16128 16837
16216 16926
16133 16848
16101 16816
16281 17003
16393 17137
16453 17199
16376 17113
16518 17265
16426 17174
16335 17053
16383 17109
12/05 16509 17277
16541 17332
16600 17413
16485 17265
16482 17267
16462 17234
16486 17267
16697 17514
16913 17768
17048 17892
17163 18023
17337 18229
12/06 17281 18179
</Table>
<Table>
--- MORTGAGE SECURITIES IA --- LEHMAN BROTHERS MORTGAGE BACKED
$10,000 starting value SECURITIES INDEX
$17,281 ending value $10,000 starting value
$18,179 ending value
</Table>
LEHMAN BROTHERS MORTGAGE BACKED SECURITIES INDEX is an index of mortgage backed
pass-through securities of the Government National Mortgage Association, Federal
National Mortgage Association and Federal Home Loan Mortgage Corporation.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ----------------------------------------------------
Mortgage Securities IA 4.68% 4.30% 5.62%
- ----------------------------------------------------
Mortgage Securities
IB(3) 4.41% 4.04% 5.37%
- ----------------------------------------------------
Lehman Brothers
Mortgage Backed
Securities Index 5.23% 4.84% 6.16%
- ----------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
CHRISTOPHER HANLON, CFA RUSSELL M. REGENAUER
Senior Vice President Senior Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford Mortgage Securities HLS Fund gained 4.68%
for the year, underperforming the Lehman Brothers Mortgage Backed Securities
Index, which gained 5.23%. The Fund outpaced the 4.39% average return of the
Lipper VA U.S. Mortgage Funds category, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
In keeping with the Fund's regulatory mandate for diversification, we held
significant weightings outside of the traditional Mortgage-Backed Securities
(MBS) sector, though these holdings were consistent with our emphasis on
maintaining the highest credit quality. Specifically, the Fund ended the period
with a 14% weighting in Commercial Mortgage-Backed Securities (CMBS) and a 10%
weighting in Asset-Backed Securities (ABS). While both sectors outperformed
Treasuries during the period, ABS did not keep pace with the returns of the MBS
sector. CMBS, on the other hand, contributed positively to the Fund's returns.
Within MBS, the vast majority of the portfolio's exposure was to Agency
Mortgage-Backed Securities. Overweights (i.e. the Fund's sector position was
more than the benchmark position) to 30-year agency MBS relative to 15-year MBS
contributed to performance as longer-term yields fell more than intermediates
during the period. Holdings of newly issued mortgage pools performed the best
and added to performance while underweights to 5.50% coupon mortgages hurt
performance as these securities were favored by Asian investors for much of the
year.
WHAT IS YOUR OUTLOOK?
We believe that the Federal Reserve Bank (the "Fed") has been successful in
laying the groundwork for a likely "soft landing," characterized by a moderately
slower economy and easing inflation pressures. Several key supports remain
intact for the economy to stay out of recession, including continued strength in
employment, softening oil prices and what appears to be a stabilizing housing
market. Growth also looks strong in the rest of the world, a necessary
development to address the twin budget and trade deficits in the U.S.
Within this environment, we anticipate keeping the portfolio's duration (i.e.
sensitivity to changes in interest rates) modestly conservative, with a neutral
to slightly short duration relative to the benchmark. Should longer-term yields
reach attractive levels (a development we see as likely in the first quarter of
2007), we
42
- --------------------------------------------------------------------------------
would take the opportunity both to lengthen the portfolio's duration and to
reposition the portfolio along the yield curve. We believe that Mortgage-Backed
Securities should continue to do well in such an environment, though we have
also positioned the Fund conservatively with regard to volatility and housing
turnover until the market and economic environment become clearer.
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Mortgage Backed Securities 25.8%
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 86.2
- -------------------------------------------------------------------
U.S. Government Securities 0.8
- -------------------------------------------------------------------
Short-Term Investments 1.6
- -------------------------------------------------------------------
Other Assets & Liabilities (14.6)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY RATING
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
RATING HOLDINGS
- -------------------------------------------------------------------
AAA 86.0%
- -------------------------------------------------------------------
AA 6.6
- -------------------------------------------------------------------
A 1.0
- -------------------------------------------------------------------
NR 6.4
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
43
Hartford SmallCap Growth HLS Fund inception 5/2/1994
(subadvised by: Wellington Management Company, LLP
Hartford Investment Management Company*)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
SMALLCAP GROWTH IA RUSSELL 2000 GROWTH INDEX
------------------ -------------------------
12/96 10000 10000
9889 10250
8771 9631
8086 8951
7851 8848
9178 10177
9447 10523
9966 11062
9733 11394
10379 12303
9927 11564
9906 11288
12/97 10143 11295
9942 11144
11019 12128
11728 12636
11698 12714
11093 11790
11529 11911
10679 10916
8479 8396
9010 9247
9631 9730
10820 10485
12/98 12290 11433
13182 11948
11533 10855
12416 11241
12882 12234
13002 12253
14724 12899
14994 12500
15332 12033
16000 12265
18287 12579
20487 13909
12/99 25717 16360
26111 16208
36120 19979
32599 17879
27295 16074
23413 14666
28812 16561
26690 15142
31949 16734
30140 15903
27409 14612
19734 11959
12/00 21839 12691
22181 13718
18181 11838
16353 10761
17943 12079
17942 12359
18629 12696
17292 11613
16172 10887
13195 9131
14532 10009
16165 10844
12/01 17433 11520
16878 11110
15948 10391
17596 11294
16857 11050
15678 10403
14220 9521
12297 8058
12266 8054
11252 7472
12133 7850
13457 8628
12/02 12406 8033
12004 7815
11469 7606
11618 7721
12693 8452
14182 9404
14552 9585
15544 10310
16618 10864
16633 10589
17892 11504
18351 11879
12/03 18616 11932
19732 12559
19704 12539
19553 12598
18691 11966
18899 12204
19533 12610
17967 11478
17717 11231
18681 11852
19281 12140
20615 13166
12/04 21489 13639
20542 13024
21122 13203
20866 12708
19926 11899
21393 12738
22029 13150
23538 14069
23135 13871
23118 13981
22348 13464
23691 14227
12/05 23857 14205
25693 15576
25305 15493
26090 16246
25725 16199
23932 15059
24012 15068
22844 14285
23193 14703
23528 14803
25153 15762
25606 16139
12/06 25493 16101
</Table>
<Table>
--- SMALLCAP GROWTH IA --- RUSSELL 2000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$25,493 ending value $16,101 ending value
</Table>
RUSSELL 2000 GROWTH INDEX is an unmanaged index of those Russell 2000 Index
growth companies with higher price-to-book ratios and higher forecasted growth
values. (The Russell 2000 Index is a broad-based unmanaged index comprised of
2000 of the smallest U.S. domiciled company common stocks (on the basis of
capitalization) that are traded in the United States on the New York Stock
Exchange, American Stock Exchange and NASDAQ.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
SmallCap Growth IA 6.86% 7.90% 9.81%
- -------------------------------------------------------
SmallCap Growth IB(2) 6.59% 7.64% 9.54%
- -------------------------------------------------------
Russell 2000 Growth Index 13.35% 6.93% 4.88%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
* Effective November 13, 2006, Hartford Investment Management
Company was added as a sub-adviser to the Fund.
PORTFOLIO MANAGERS
<Table>
<Caption>
WELLINGTON MANAGEMENT COMPANY, LLP HARTFORD INVESTMENT MANAGEMENT COMPANY
DAVID J. ELLIOTT, CFA DORIS T. DWYER HUGH WHELAN
Vice President Vice President Executive Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Small Cap Growth HLS Fund returned 6.86%
for the twelve-month period ended December 31, 2006, underperforming its
benchmark, the Russell 2000 Growth Index, which returned 13.35% for the period.
The Fund also underperformed the 11.12% return of the average fund in the
Lipper VA Small Cap Growth Funds peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
US equity markets rose during the period, led by small cap stocks. The small cap
Russell 2000 Index moved up 18.37%, outpacing the 15.37% return for the large
cap Russell 1000 Index and the 10.32% return for the S&P Mid Cap Index. Value
again led growth; the broad market Russell 3000 Value Index bested the Russell
3000 Growth Index by nearly 13 percentage points.
The Fund's lagging performance was driven by stock selection; allocation among
sectors had a negligible effect during the year. Stock selection was
particularly weak within Health Care, Consumer Discretionary, and Financials.
Scottish Re (Insurance), NPS Pharmaceuticals (Pharmaceutical Biotechnology),
Standard Pacific (Consumer Durables), and Onyx Pharmaceuticals (Pharmaceutical
Biotechnology) were the largest relative (i.e. performance of the Fund as
measured against the benchmark) and absolute (i.e. total return) detractors from
the Fund during the year. Shares of Bermuda-based reinsurer Scottish Re fell
after a series of earnings shortfalls, following which we exited the position.
Biotechnology company NPS saw its shares tumble on concerns about its
experimental osteoporosis drug Preos after the FDA requested a new clinical
trial. Shares in homebuilder Standard Pacific fell on investor worries about a
deteriorating housing market. Shares of Onyx Pharmaceuticals ratcheted lower
after data showed that its kidney cancer drug Nexavar was not efficacious in
patients with advanced skin cancer.
Stock selection added to relative performance in the Energy, Technology, and
Materials sectors. Skechers (Consumer Discretionary), iMergent (Technology),
Frontier Oil (Energy), and Digital River (Technology) were the top absolute and
relative contributors for the year. Shoe company Skechers, which posted above
consensus quarterly results on a strong back to school season, provided
favorable guidance for the remainder of 2006 and
44
- --------------------------------------------------------------------------------
into 2007. Energy company Frontier Oil saw its shares gain with rising oil
prices earlier in the year. Shares of eCommerce software providers iMergent and
Digital River pushed higher throughout the year on favorable operating and
financial performance.
On November 13, 2006, Hartford Investment Management Company was added as an
additional sub-adviser to the Fund.
WHAT IS THE OUTLOOK?
A mid-cycle slowdown is underway, led by a housing correction. We expect further
housing price and transaction weakness ahead. Consumers continue to face
headwinds and fading sources of stimulus. In this environment we will continue
to employ a combination of fundamental and quantitative research to identify the
most attractive stocks, while maintaining appropriate risk controls relative to
the benchmark. The result is a portfolio built one stock at a time that is well
diversified across all sectors of the Russell 2000 Growth Index.
As a result of the Fund's investment approach, sector positioning is in-line
with the Russell 2000 Growth Index, resulting in the greatest exposure to
Information Technology, Health Care, and Consumer Discretionary sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.7%
- -------------------------------------------------------------------
Capital Goods 4.8
- -------------------------------------------------------------------
Consumer Cyclical 13.2
- -------------------------------------------------------------------
Consumer Staples 0.1
- -------------------------------------------------------------------
Energy 4.6
- -------------------------------------------------------------------
Finance 11.2
- -------------------------------------------------------------------
Health Care 15.7
- -------------------------------------------------------------------
Services 14.0
- -------------------------------------------------------------------
Technology 24.4
- -------------------------------------------------------------------
Transportation 4.3
- -------------------------------------------------------------------
Short-Term Investments 8.5
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
45
Hartford SmallCap Value HLS Fund** inception 5/1/1998
(subadvised by: Kayne Anderson Rudnick Investment Management, LLC
Metropolitan West Capital Management, LLC
SSgA Funds Management, Inc.)
PERFORMANCE OVERVIEW 5/1/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
SMALLCAP VALUE IA RUSSELL 2000 VALUE INDEX
----------------- ------------------------
5/98 10000 10000
9579 9646
9640 9591
9231 8840
7641 7456
8136 7877
9042 8111
9179 8330
12/98 9452 8591
9451 8396
8755 7823
8851 7759
10051 8467
10481 8727
10993 9043
10735 8829
10351 8506
10298 8336
10172 8169
10497 8211
12/99 10901 8464
10464 8242
10391 8746
11268 8787
11273 8839
11640 8704
11271 8959
11687 9257
12659 9671
12472 9616
12663 9582
12448 9387
12/00 13844 10395
14669 10682
14436 10668
14125 10497
15107 10982
15506 11265
16109 11718
15838 11455
15572 11416
13412 10155
14384 10421
15633 11169
12/01 16753 11853
16975 12011
16888 12084
18013 12989
18229 13446
17426 13001
17032 12713
14634 10824
14629 10777
13061 10007
13409 10157
14787 10968
12/02 14212 10500
13853 10204
13535 9861
13618 9966
14598 10913
15862 12027
15979 12231
16785 12841
17643 13329
17167 13176
18154 14250
18772 14797
12/03 19677 15332
20076 15862
20382 16169
20641 16393
19965 15545
20100 15732
20907 16531
20071 15771
20261 15926
20792 16556
21057 16813
22146 18305
12/04 22429 18742
21766 18017
22569 18375
22337 17997
21432 17068
22228 18109
22983 18910
24123 19986
23703 19527
23977 19495
23330 19005
24313 19776
12/05 24249 19625
25516 21247
25123 21246
26028 22275
26071 22335
25350 21410
25766 21673
25304 21372
25725 22011
26073 22226
27600 23357
28646 24023
12/06 28688 24232
</Table>
<Table>
--- SMALLCAP VALUE IA --- RUSSELL 2000 VALUE INDEX
$10,000 starting value $10,000 starting value
$28,688 ending value $24,232 ending value
</Table>
RUSSELL 2000 VALUE INDEX is a broad-based unmanaged index comprised of 2,000 of
the smallest U.S. domiciled company common stocks (on the basis of
capitalization) that are traded in the United States on the New York Stock
Exchange, American Stock Exchange and Nasdaq.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
** On March 20, 2006, Janus Capital Management LLC and Perkins, Wolf, McDonnell
and Company, LLC were terminated as sub-advisers to the Fund. They were
replaced by Kayne Anderson Rudnick Investment Management, LLC, Metropolitan
West Capital Management, LLC and SSgA Funds Management, Inc., with each
sub-adviser responsible for managing a sleeve of the Fund.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------
SmallCap Value IA 18.31% 11.36% 12.92%
- ------------------------------------------------------------
SmallCap Value IB(3) 18.02% 11.14% 12.67%
- ------------------------------------------------------------
Russell 2000 Value Index 23.48% 15.37% 10.74%*
- ------------------------------------------------------------
</Table>
* Return is from 4/30/98.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on July 1, 2003. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
KAYNE ANDERSON RUDNICK INVESTMENT MANAGEMENT, LLC
ROBERT A. SCHWARZKOPF, CFA SANDI L. GLEASON, CFA
Managing Director
METROPOLITAN WEST CAPITAL MANAGEMENT, LLC
GARY W. LISENBEE
President
SSGA FUNDS MANAGEMENT, INC.
RIC THOMAS, CFA
Principal
CHUCK MARTIN, CFA
Principal
JOHN O'CONNELL
Principal
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Small Cap Value HLS Fund returned 18.31% for
the year ended December 31, 2006. The Fund underperformed the 23.48% return of
the Russell 2000 Value Index and outperformed the 17.31% return of the Lipper VA
Small Cap Value peer group average, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The financial markets finished another good year in 2006, their fourth year in a
row. The primary U.S. stock market indices provided double-digit returns, with
the Russell 2000 Value Index leading the way up 23.48% for the year.
On March 20, 2006, Kayne Anderson Rudnick, Metropolitan West Capital and SSgA
Funds Management replaced Janus Capital as sub-advisers. During the last three
quarters of 2006, the complementary style of the three sub-advisers blended well
and the Fund outperformed both its benchmark and Lipper peer group.
Stock selection was the primary driver of our performance during the year.
Overall, Energy was our largest contributor to relative (i.e. performance of the
Fund as measured against the benchmark) performance. In particular, Oceaneering
International (a provider of underwater products and services to the oil and gas
industry) and World Fuel Services (a marine and aviation fuel products and
services) were top performers as a result of posting strong financial results.
In the third quarter, another Energy holding, Veritas (a provider of high-tech
geophysical land surveys to oil companies) agreed to be acquired by a strategic
buyer (CGG Inc.). Other strong performers for the Fund included one of our
largest holdings, MCG Capital Corp (a financial services capital provider)
46
- --------------------------------------------------------------------------------
and American Capital Strategies (an alternative asset manager). Both of these
companies rose during the year due to higher than expected financial results.
Detractors from performance included USA Truck (a medium load truckload carrier)
and Landstar System Inc. (a transportation and systems logistics company).
Investors punished USA Truck's stock for increased insurance and claims expense
after the company settled some of its outstanding claims. However, this move
should enhance the company's competitive position over the longer term and we
continue to hold this security. Landstar System decreased on analyst downgrades
due to lowered earnings guidance.
WHAT IS THE OUTLOOK?
With the S&P 500 finishing a fourth year of solid positive returns, corporate
profit margins running near historical highs, and global financial conditions
remaining warmly accommodative, it is easy to wonder if these positive
influences can continue to bolster the markets through 2007. Equity valuations
have begun to expand, but there is still potential for additional upside.
Sentiment, while often tricky to measure, does not appear unduly exuberant. And
volatility, even though it seems to have plenty of room to rise, may remain
under pressure as investors seek to profit from even the slightest market
inefficiencies. Over the full year, we think equities in 2007 may find it
difficult to match the impressive prosperity of 2006, but the positive trends of
recent years seem unlikely to reverse quickly.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 8.7%
- -------------------------------------------------------------------
Capital Goods 6.0
- -------------------------------------------------------------------
Consumer Cyclical 11.9
- -------------------------------------------------------------------
Consumer Staples 2.2
- -------------------------------------------------------------------
Energy 4.0
- -------------------------------------------------------------------
Finance 27.8
- -------------------------------------------------------------------
Health Care 5.3
- -------------------------------------------------------------------
Investment Pools and Funds 1.3
- -------------------------------------------------------------------
Services 15.7
- -------------------------------------------------------------------
Technology 8.3
- -------------------------------------------------------------------
Transportation 3.5
- -------------------------------------------------------------------
Utilities 2.4
- -------------------------------------------------------------------
Short-Term Investments 29.5
- -------------------------------------------------------------------
Other Assets & Liabilities (26.6)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
47
Hartford Stock HLS Fund inception 8/31/1977
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
STOCK IA S&P 500 INDEX
-------- -------------
12/96 10000 10000
10629 10624
10682 10708
10316 10269
10914 10881
11570 11543
12206 12060
13091 13019
12260 12290
12908 12963
12487 12531
13029 13110
12/97 13138 13335
13302 13482
14311 14454
15112 15194
15448 15347
15183 15083
15944 15695
16095 15529
13739 13283
14353 14135
15647 15284
16611 16210
12/98 17535 17143
18073 17860
17668 17305
18467 17997
19234 18694
18635 18253
19825 19266
19259 18665
19025 18572
18545 18062
19556 19205
19837 19595
12/99 21004 20750
19866 19707
19550 19335
21570 21225
20931 20586
20554 20164
20801 20661
20395 20338
21402 21601
20445 20461
20562 20374
19318 18769
12/00 19525 18861
20046 19530
18642 17750
17366 16626
18645 17916
18800 18036
17993 17598
17788 17425
16558 16335
15405 15017
15779 15303
17011 16477
12/01 17137 16622
16715 16380
16476 16064
17076 16668
15607 15658
15385 15543
14299 14436
13413 13312
13302 13398
11825 11943
12898 12993
13871 13757
12/02 12981 12949
12643 12611
12393 12422
12445 12543
13398 13575
14056 14290
14266 14472
14625 14728
14818 15014
14580 14855
15353 15695
15496 15833
12/03 16418 16662
16505 16968
16629 17204
16342 16945
16127 16679
16340 16907
16700 17236
16103 16666
16116 16732
16064 16914
16042 17172
16555 17867
12/04 17102 18474
16802 18024
17158 18403
16669 18078
16516 17735
17083 18299
17050 18325
17821 19006
17872 18833
18068 18985
17848 18669
18587 19374
12/05 18748 19381
19336 19894
19270 19948
19501 20196
19822 20467
19223 19879
18925 19905
18932 20028
19464 20504
19914 21032
20606 21716
21207 22129
12/06 21495 22439
</Table>
<Table>
--- STOCK IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,495 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------
Stock IA 14.65% 4.64% 7.95%
- -------------------------------------------
Stock IB(3) 14.37% 4.38% 7.71%
- -------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Stock HLS Fund returned 14.65% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78% for the same period. However, the Fund
outperformed the 13.29% return of the average fund in the Lipper VA Large Cap
Core Funds peer group, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Robust merger and acquisition activity and a better-than-expected retail
environment helped equity markets end the year on a strong note, marking the
fourth straight year of positive returns for the S&P 500. The S&P 500 finished
the year at record levels, returning 15.78%, posting positive results in all ten
sectors. Sector results were led by Telecommunication Services, Energy,
Utilities, and Materials. Health Care, Information Technology, Industrials and
Consumer Staples all posted positive returns but lagged the general market.
The Fund's performance versus the benchmark was driven by both security
selection and aggregate sector allocations which results from our bottom-up
stock picking. Stock selection was weakest within the Consumer Discretionary,
Health Care and Materials sectors. Stocks that detracted the most from relative
(i.e. performance of the Fund as measured against the benchmark) returns
included XM Satellite, Boston Scientific, Marvell Technology and Dollar General.
Media company XM Satellite came under pressure as decelerating customer addition
trends and regulatory review of product compliance caused investors to question
the market opportunity. The Fund continues to hold the stock based on positive
long-term trends in satellite radio due to OEM adoption. Boston Scientific had a
tough year, suffering from erosion of its Implantable Cardioverter Defibrillator
(ICD) market share, concerns surrounding its drug eluting stent business and
continued issues with cardiac product recalls from its recently acquired Guidant
business. We retain our position as the fundamentals of the company remain sound
and the stock is attractively priced. Chip maker Marvell declined on disruption
in the hard disk drive market and worries over stock option grants. Discount
retailer Dollar General disappointed due to high gasoline prices hitting Dollar
General customers and thus impacting the company's top line. Additionally,
Dollar General has been selling a greater proportion of lower-margin "highly
consumable products" than anticipated. These are products like perishable foods
and cleaning supplies that are used up quickly by consumers and need to be
replaced frequently, but carry thin margins. In terms of sector allocations, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) in Health Care,
48
- --------------------------------------------------------------------------------
which posted positive absolute returns. However, it lagged the market and hurt
relative returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and Lexmark. The Fund also benefited from not owning
Intel, whose shares declined during the year. AT&T is benefiting from the
stabilization of its long distance pricing. Also, cost-cutting from its
acquisitions is going well. Cisco's revenue and earnings growth has surprised
the market on the upside. The strong secular (i.e. long term) move of enterprise
and service provider networks toward all-IP networks plays into Cisco's
strength. We continue to hold a position in the stock. UBS, the Swiss-based
financial institution, posted outstanding results due primarily to its
well-performing wealth management business. UBS remains one of our top holdings.
We initiated a position in Broadcom during a low in its share price during the
summer after it guided down estimates and faced pressures due to options
investigations. Despite its solid gains, Broadcom remains a material holding as
we see strong business prospects for many years to come and valuation is still
reasonable. Shares in Lexmark, a manufacturer and supplier of printing and
imaging solutions, rose as the company recovered from its product and
distribution missteps last year. Other positive contributors to performance
included ExxonMobil, Bank of America and Citigroup.
WHAT IS THE OUTLOOK?
Hartford Stock HLS Fund continues to be managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio and look for companies that exhibit industry leadership, strong
balance sheets, solid management, high return on equity, accelerating earnings,
and/or attractive valuation with a catalyst. Our bottom-up investment approach
resulted in the Fund being most overweight Information Technology, Health Care
and Materials, and most underweight Energy, Utilities and Financials at the end
of the period.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.1%
- -------------------------------------------------------------------
Capital Goods 2.6
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 6.2
- -------------------------------------------------------------------
Energy 6.2
- -------------------------------------------------------------------
Finance 22.4
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 8.9
- -------------------------------------------------------------------
Technology 28.3
- -------------------------------------------------------------------
Utilities 1.0
- -------------------------------------------------------------------
Short-Term Investments 0.5
- -------------------------------------------------------------------
Other Assets & Liabilities (0.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
49
Hartford Total Return Bond HLS Fund inception 8/31/1977
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS U.S AGGREGATE BOND
TOTAL RETURN BOND IA INDEX
-------------------- ----------------------------------
12/96 10000 10000
10042 10031
10087 10056
9981 9944
10112 10094
10224 10190
10371 10311
10722 10589
10610 10499
10778 10655
10915 10809
10985 10859
12/97 11135 10968
11288 11109
11278 11100
11333 11138
11382 11196
11502 11302
11611 11398
11608 11422
11710 11608
12020 11880
11892 11817
12012 11884
12/98 12042 11920
12137 12004
11828 11794
11899 11859
11962 11897
11803 11792
11733 11755
11708 11705
11686 11700
11800 11835
11846 11879
11854 11878
12/99 11799 11821
11777 11782
11920 11924
12103 12082
12083 12047
12091 12041
12368 12291
12446 12403
12603 12583
12682 12662
12716 12746
12907 12955
12/00 13214 13196
13521 13411
13596 13527
13631 13595
13607 13538
13686 13619
13670 13671
13995 13977
14171 14138
14206 14302
14461 14601
14406 14399
12/01 14361 14307
14415 14423
14476 14563
14273 14321
14569 14599
14725 14723
14722 14850
14754 15029
15038 15283
15169 15531
15244 15459
15415 15455
12/02 15809 15775
15942 15789
16195 16007
16216 15994
16425 16126
16803 16427
16794 16394
16295 15843
16424 15948
16860 16370
16751 16218
16828 16257
12/03 17049 16422
17200 16555
17340 16734
17442 16859
17031 16420
16971 16355
17054 16447
17200 16610
17499 16927
17574 16973
17749 17115
17682 16979
12/04 17837 17135
17928 17243
17873 17141
17769 17053
18003 17284
18152 17471
18285 17566
18171 17406
18377 17629
18198 17447
18047 17309
18118 17386
12/05 18274 17551
18303 17552
18342 17610
18191 17438
18175 17406
18148 17387
18173 17424
18392 17660
18668 17930
18819 18088
18976 18207
19204 18419
12/06 19152 18312
</Table>
<Table>
--- TOTAL RETURN BOND IA --- LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX
$10,000 starting value $10,000 starting value
$19,152 ending value $18,312 ending value
</Table>
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is an unmanaged index and is composed
of securities from the Lehman Brothers Government/Credit Bond Index,
Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial
Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------------
Total Return Bond IA 4.80% 5.93% 6.71%
- ------------------------------------------------------------
Total Return Bond IB(3) 4.54% 5.67% 6.48%
- ------------------------------------------------------------
Lehman Brothers U.S. Aggregate
Bond Index 4.33% 5.06% 6.24%
- ------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
NASRI TOUTOUNGI
Managing Director
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford Total Return Bond HLS Fund gained 4.80% for
the year, vs. the Lehman Brothers U.S. Aggregate Bond Index which gained 4.33%.
The Fund also outpaced the 4.14% average return of the Lipper VA Intermediate
Investment Grade Funds category, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Sector allocation, duration (i.e. sensitivity to changes in interest rates)
positioning and security selection all contributed to Fund outperformance during
2006. Sector allocation accounted for more than half of the Fund's
outperformance during the period. The Fund was underweight (i.e. the Fund's
sector position was less than the benchmark position) Treasuries versus the
benchmark, which proved beneficial, as Treasuries underperformed the overall
market. Our positions in the High Yield sector, driven largely by exposure to
industrial issuers in the automotive industry (GMAC and Ford Motor Company),
boosted performance. The Fund's underweight to mortgages detracted from
performance, as this sector had positive excess returns.
Interest rate positioning accounted for more than a quarter of outperformance,
with most of the value added during the first six months of the year. Early in
the year, the strong economy, core inflation numbers and upward pressure on
energy prices led to our view that the Federal Reserve Bank (the "Fed") would
continue to raise rates, which proved accurate. Thus, the Fund's shorter
duration (i.e. sensitivity to changes in interest rates) position during this
period enhanced returns.
Security selection within the Investment Grade Corporate sector was also a
positive performance driver. Leading this outperformance was the Fund's
overweight to the hybrid sector of the corporate bond market. Research by our
analyst team led to investment in these securities, which have generally
provided superior yields with high liquidity. Also beneficial were tactical
purchases on the long end (i.e. longer maturity) of the Industrial Investment
Grade Corporate sector, as well as Technology, Media and Telecommunication
holdings which underperformed early in the year but outperformed during the
second half. Although spread tightening (i.e. the difference between short and
long term interest rates narrowing) reduced overall attractiveness for emerging
markets, we were able to identify a number of opportunities in specific issuers
within the sector that added to the Fund's excess returns.
50
- --------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK?
Economic leading indicators suggest that we are entering an environment of
sub-par, though non-recessionary, growth. Employment and income data have offset
weakness in housing. Monetary policy should remain on hold in the near future
given the Fed's cautious outlook on inflation amidst moderating growth. As such,
we have positioned the portfolio to be neutral on interest rates, but anticipate
adding duration over the coming weeks and months. Having increased our
allocations to investment grade corporate bonds and to high yield in the third
quarter, we will maintain this stance unless more evidence arises that either
inflation is out of hand or that leading indicators of growth point to a
recession. If either of these unlikely scenarios becomes more apparent, we would
seek to protect the portfolio's performance by migrating toward safer bonds such
as Treasuries and Agencies. In the interim, given the amount of excess liquidity
driven by foreign demand for U.S. assets, we remain optimistic on the prospects
for credit to perform. We find little value in non-dollar (i.e. foreign)
denominated sovereigns and corporates, as rates are expected to rise in Europe
and Asia more so than in the U.S. That said, we view the dollar as overvalued,
in particular versus the Japanese Yen. As a result, we may opportunistically
invest in short duration, Yen-denominated securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 0.9
- -------------------------------------------------------------------
Consumer Cyclical 3.4
- -------------------------------------------------------------------
Consumer Staples 0.7
- -------------------------------------------------------------------
Energy 2.2
- -------------------------------------------------------------------
Finance 31.5
- -------------------------------------------------------------------
Foreign Governments 0.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 2.0
- -------------------------------------------------------------------
Services 4.3
- -------------------------------------------------------------------
Technology 5.5
- -------------------------------------------------------------------
Transportation 0.8
- -------------------------------------------------------------------
U.S. Government Agencies 31.8
- -------------------------------------------------------------------
U.S. Government Securities 5.6
- -------------------------------------------------------------------
Utilities 1.9
- -------------------------------------------------------------------
Short-Term Investments 20.8
- -------------------------------------------------------------------
Other Assets & Liabilities (15.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
CREDIT QUALITY HOLDINGS
- -------------------------------------------------------------------
AAA 54.7%
- -------------------------------------------------------------------
AA 4.5
- -------------------------------------------------------------------
A 10.0
- -------------------------------------------------------------------
BBB 14.2
- -------------------------------------------------------------------
BB 10.8
- -------------------------------------------------------------------
B 5.7
- -------------------------------------------------------------------
NR 0.1
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</Table>
51
Hartford U.S. Government Securities HLS Fund inception 3/24/1987
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS INTERMEDIATE GOV'T
U.S. GOVERNMENT SECURITIES IA BOND INDEX
----------------------------- ----------------------------------
12/96 10000 10000
10034 10038
10051 10054
9935 9997
10089 10110
10173 10189
10291 10276
10551 10465
10465 10426
10620 10539
10760 10662
10791 10686
12/97 10908 10772
11061 10913
11040 10901
11080 10934
11124 10987
11240 11063
11348 11137
11359 11179
11600 11390
11869 11656
11807 11676
11850 11639
12/98 11876 11685
11927 11737
11687 11577
11750 11653
11788 11684
11666 11613
11621 11631
11580 11632
11567 11648
11709 11748
11724 11772
11713 11780
12/99 11647 11743
11596 11703
11717 11801
11862 11935
11840 11930
11844 11963
12065 12153
12160 12233
12344 12370
12448 12478
12542 12564
12767 12748
12/00 13022 12973
13174 13145
13305 13266
13367 13362
13294 13319
13344 13374
13369 13416
13648 13667
13789 13789
14043 14084
14274 14304
14072 14133
12/01 13999 14066
14092 14126
14251 14243
14069 14028
14336 14291
14458 14391
14586 14571
14864 14844
15077 15014
15350 15272
15311 15261
15214 15141
12/02 15501 15421
15514 15387
15707 15561
15694 15564
15767 15608
15993 15853
15974 15827
15442 15443
15504 15470
15796 15806
15692 15651
15713 15652
12/03 15834 15774
15918 15859
16058 16011
16147 16122
15790 15762
15734 15711
15793 15751
15898 15865
16111 16101
16115 16107
16209 16206
16073 16055
12/04 16161 16142
16200 16163
16120 16073
16086 16033
16247 16220
16350 16349
16398 16403
16281 16263
16458 16444
16340 16317
16257 16249
16315 16315
12/05 16412 16414
16425 16413
16441 16416
16380 16365
16390 16380
16385 16385
16410 16415
16583 16587
16775 16773
16890 16895
16970 16975
17127 17110
12/06 17071 17045
</Table>
<Table>
--- U.S. GOVERNMENT SECURITIES IA --- LEHMAN BROTHERS INTERMEDIATE GOV'T
$10,000 starting value BOND INDEX
$17,071 ending value $10,000 starting value
$17,045 ending value
</Table>
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX is an unmanaged index of
government bonds with maturities of between one and ten years.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
U.S. Government
Securities IA 4.01% 4.05% 5.49%
- -------------------------------------------------------
U.S. Government
Securities IB(2) 3.75% 3.79% 5.23%
- -------------------------------------------------------
Lehman Brothers
Intermediate Gov't Bond
Index 3.84% 3.92% 5.48%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
CHRISTOPHER HANLON, CFA RUSSELL M. REGENAUER
Senior Vice President Senior Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA Shares of the Hartford U.S. Government Securities HLS Fund gained
4.01% for the year, outperforming the Lehman Brothers Intermediate Government
Bond Index, which gained 3.84%. The Fund also outperformed the 2.81% average
return of the Lipper VA U.S. Government Securities Funds category, a group of
funds with investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The primary driver of the Fund's outperformance was its above-benchmark exposure
to Mortgage-Backed Securities (MBS), a posture we maintained throughout 2006. We
continued to emphasize MBS in the portfolio in the belief that long-term rates
would remain in a narrow trading range, providing a supportive environment for
the sector. While there were brief periods of volatility in the markets, this
environment largely came to pass, and MBS strongly outperformed other AAA
sectors.
Within MBS, the vast majority of the portfolio's exposure was to agency
Mortgage-Backed Securities. Overweights (i.e. the Fund's sector position was
more than the benchmark position) to 30-year agency MBS relative to 15-year MBS
contributed to performance as longer-term yields fell more than intermediates
during the period. Holdings of newly issued mortgage pools performed the best
and added to performance while underweights to 5.50% coupon mortgages hurt
performance as these securities were favored by Asian investors for much of the
year. Finally, the addition of high quality floating-rate Commercial
Mortgage-Back Securities (CMBS) added to returns.
In addition to the CMBS, we also continued to add to the Fund's agency exposure
as part of a broader effort to supplement the portfolio's exposure to highly
rated securities with a yield advantage over Treasuries. We increased the Fund's
exposure to U.S. Government guaranteed Small Business Administration (SBA) loans
during the period and funded these purchases with the sale of Treasuries.
Other positions were less beneficial for performance. Duration (i.e. sensitivity
to changes in interest rates) positioning ranged between defensive to slightly
neutral to the benchmark over the course of the year and, as a result, was
slightly negative in terms of relative (i.e. performance of the Fund as measured
against the benchmark) gains. Although the portfolio benefited from an
underweight to Treasuries, our security selection within that sector muted
returns. We also largely eliminated the Fund's small exposure to Treasury
52
- --------------------------------------------------------------------------------
inflation protected securities (TIPS) during the period in order to avoid
further losses in this underperforming sector. We would, however, anticipate
adding more of these securities should their prices reach attractive levels.
WHAT IS YOUR OUTLOOK?
We believe that the Federal Reserve Bank (the "Fed") has been successful in
laying the groundwork for a likely "soft landing," characterized by a moderately
slower economy and easing inflation pressures. Several key supports remain
intact for the economy to stay out of recession, including continued strength in
employment, softening oil prices and what appears to be a stabilizing housing
market. Growth also looks strong in the rest of the world, a necessary
development to address the twin budget and trade deficits in the U.S.
Within this environment, we anticipate keeping the portfolio's duration modestly
conservative, with a neutral to slightly short duration relative to the
benchmark. Should longer-term yields reach attractive levels (a development we
see as likely in the first quarter of 2007), we would take the opportunity both
to lengthen the portfolio's duration and to reposition the portfolio along the
yield curve. We believe that mortgage-backed securities should continue to do
well in such an environment and expect to maintain an overweight in MBS to
capture any outperformance.
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
RATING HOLDINGS
- -------------------------------------------------------------------
AAA 95.9%
- -------------------------------------------------------------------
AA 3.9
- -------------------------------------------------------------------
NR 0.2
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Mortgage Backed Securities 14.7%
- -------------------------------------------------------------------
Corporate Bonds -- Investment Grade 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 74.1
- -------------------------------------------------------------------
U.S. Government Securities 15.8
- -------------------------------------------------------------------
Short-Term Investments 14.5
- -------------------------------------------------------------------
Other Assets & Liabilities (19.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
53
Hartford Value HLS Fund inception 4/30/2001
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 4/30/01 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
VALUE IA RUSSELL 1000 VALUE INDEX
-------- ------------------------
4/01 10000 10000
10116 10225
10070 9998
10103 9977
9795 9577
9140 8903
9130 8826
9720 9339
12/01 10006 9559
9831 9486
9806 9501
10026 9950
9559 9609
9597 9657
9030 9103
8298 8256
8144 8319
7253 7394
7807 7942
8246 8442
12/02 7741 8076
7473 7881
7365 7670
7406 7683
8024 8359
8552 8899
8630 9010
8708 9144
8885 9286
8742 9196
9267 9759
9416 9891
12/03 9955 10501
10030 10685
10169 10914
10062 10819
9885 10554
10043 10662
10244 10914
9872 10760
9934 10913
10049 11082
10242 11267
10644 11836
12/04 11021 12233
10830 12016
11279 12414
11024 12243
10904 12024
11109 12314
11185 12448
11590 12809
11575 12753
11754 12932
11475 12603
11864 13018
12/05 11917 13096
12383 13604
12529 13687
12660 13873
12998 14225
12724 13866
12826 13954
13154 14294
13405 14533
13645 14823
13923 15308
14166 15657
12/06 14518 16009
</Table>
<Table>
--- VALUE IA --- RUSSELL 1000 VALUE INDEX
$10,000 starting value $10,000 starting value
$14,518 ending value $16,009 ending value
</Table>
RUSSELL 1000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 1000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- ----------------------------------------------------------
Value IA 21.82% 7.73% 6.79%
- ----------------------------------------------------------
Value IB 21.52% 7.47% 6.54%
- ----------------------------------------------------------
Russell 1000 Value Index 22.25% 10.86% 8.65%
- ----------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
JOHN R. RYAN, CFA
Senior Vice President, Managing Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ending December 31, 2006, Hartford Value HLS Fund Class
IA shares returned 21.82%, slightly underperforming the Russell 1000 Value Index
return of 22.25%, but outperforming the Lipper Large Cap Value VA-UF peer group
average return of 19.00%, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) return for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's Russell
1000 Value benchmark posted positive double-digit returns, with
Telecommunication Services and Energy leading the way. In addition, small cap
stocks continued to dominate large and mid cap stocks in each of the last seven
years. The Russell 2000 Small Cap Index returned 18.37%, compared to the S&P 500
Index return of 15.78% and the S&P 400 Mid Cap Index return of 10.32%.
Stock selection within Financials, Industrials, Telecommunication Services, and
Energy was the primary driver of the Fund's benchmark relative (i.e. performance
of the Fund as measured against the benchmark) performance. The top three
contributors on a relative basis were Caterpillar (Industrials), BellSouth
(Telecommunication Services) and Goldman Sachs (Diversified Financials). In
addition, Exxon Mobil (Energy) and AT&T (Telecommunication Services) were also
large absolute (total return) contributors to performance. We eliminated our
position in Caterpillar by taking profits given concerns that future earnings
growth would be below expectations. BellSouth and AT&T benefited from the
strongly anticipated merger of the two companies. Strong capital markets along
with robust investment banking prospects resulted in rising earning expectations
and strong stock performance for Goldman Sachs. Exxon Mobil's shares were
supported by the continued supply/demand imbalance in energy. We held our
position in Goldman Sachs and Exxon Mobil at the end of the period.
Key detractors on both a relative and an absolute basis were Wellpoint Health
(Health Care), whose shares traded on volatility within the managed care
industry despite strong results; PepsiCo (Consumer Staples), whose shares lagged
over concerns that input cost pressures will weigh on earnings; Nike (Consumer
Discretionary), whose shares struggled due to weakness in the marquee athletic
footwear; and Sprint Nextel (Telecommunication Services) whose stock declined as
the company continued to find difficulty in combining two different networks
following their merger and migrating its customer base onto its new CDMA
platform. At the end of the period, we had eliminated Nike and significantly
reduced our position in Wellpoint Health.
54
- --------------------------------------------------------------------------------
WHAT IS YOUR OUTLOOK?
We expect the global economy to transition from slower activity in the first
half of 2007 to stronger activity in the second half and beyond. Weakness in the
U.S. and Continental Europe should be partially offset by more robust growth in
the United Kingdom and Japan, as well as ongoing strength in the emerging
economies. The temporary global growth pause will likely reduce inflationary
pressures and allow central banks to maintain a steady hand, setting the stage
for a resumed expansion in 2008. Moderate inflation, stable monetary policies
and the outlook for stronger global growth next year should provide a favorable
backdrop for financial markets.
In this environment, we have reduced further the cyclicality of our portfolios,
which has been ongoing for several consecutive quarters. We methodically
decreased our exposure to the Consumer, Energy, and mortgage-related Financial
Institutions and increased our exposure to less cyclical areas, including
Telecommunications, Consumer Non-Durables, and non-credit sensitive Financial
Institutions.
At the end of the period, relative to the Russell 1000 Value Index, the Fund was
overweight (i.e. the Fund's sector position was more than the benchmark
position) Consumer Staples, Industrials, Information Technology, Health Care and
Telecommunication Services and underweight Financials, Consumer Discretionary,
Energy, Utilities and Materials.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 4.6%
- -------------------------------------------------------------------
Capital Goods 6.7
- -------------------------------------------------------------------
Consumer Cyclical 6.1
- -------------------------------------------------------------------
Consumer Staples 5.7
- -------------------------------------------------------------------
Energy 9.6
- -------------------------------------------------------------------
Finance 30.4
- -------------------------------------------------------------------
Health Care 7.4
- -------------------------------------------------------------------
Services 2.7
- -------------------------------------------------------------------
Technology 16.0
- -------------------------------------------------------------------
Transportation 3.1
- -------------------------------------------------------------------
Utilities 4.8
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (3.7)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
55
Hartford Value Opportunities HLS Fund inception 5/1/1996
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
VALUE OPPORTUNITIES IA RUSSELL 3000 VALUE INDEX
---------------------- ------------------------
12/96 10000 10000
10344 10450
10478 10598
10105 10227
10461 10628
11063 11247
11350 11738
11960 12583
11552 12196
12102 12941
11770 12580
12282 13095
12/97 12523 13483
12613 13287
13355 14172
13889 15011
13943 15109
13645 14855
13820 15020
13329 14673
11367 12480
11837 13195
12580 14165
13304 14802
12/98 13731 15303
13933 15388
13572 15108
13950 15388
14943 16823
14589 16688
15175 17181
14713 16684
14260 16066
13651 15522
14217 16329
14266 16215
12/99 14961 16321
14360 15796
13512 14766
15612 16437
15722 16265
15945 16407
14959 15740
15313 15959
16465 16836
16064 16973
17268 17359
16700 16733
12/00 17728 17633
18539 17728
18049 17267
17165 16680
18449 17495
18459 17892
18327 17573
17835 17510
16898 16853
15017 15619
15232 15521
16382 16438
12/01 17277 16869
16822 16765
16673 16797
17232 17626
16128 17115
15747 17148
14319 16211
13083 14637
13293 14735
11695 13138
12744 14055
13777 14956
12/02 12966 14307
12671 13956
12270 13578
12286 13609
13716 14813
14798 15808
14995 16011
15194 16290
15849 16571
15833 16407
16842 17436
17402 17706
12/03 18395 18761
18991 19116
19293 19522
19082 19386
18612 18870
18795 19065
19345 19556
18663 19228
18743 19494
19106 19835
19655 20162
20765 21247
12/04 21867 21940
21219 21511
21964 22200
21629 21882
20864 21428
21771 22008
22225 22311
22895 23012
22853 22873
22606 23162
21930 22575
23185 23332
12/05 23687 23443
24636 24444
24709 24579
25001 24989
25769 25571
24985 24888
24824 25060
24615 25580
25137 26038
25730 26533
26847 27446
27801 28086
12/06 28193 28681
</Table>
<Table>
--- VALUE OPPORTUNITIES IA --- RUSSELL 3000 VALUE INDEX
$10,000 starting value $10,000 starting value
$28,193 ending value $28,681 ending value
</Table>
RUSSELL 3000 VALUE INDEX is an unmanaged index measuring the performance of
those Russell 3000 Index companies with lower price-to-book ratios and lower
forecasted growth values.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------
Value Opportunities IA 19.02% 10.29% 10.92%
- --------------------------------------------------------
Value Opportunities
IB(2) 18.73% 10.02% 10.65%
- --------------------------------------------------------
Russell 3000 Value Index 22.34% 11.20% 11.11%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
JAMES H. AVERILL DAVID R. FASSNACHT, CFA JAMES N. MORDY DAVID W. PALMER, CFA
Senior Vice President, Senior Vice President, Senior Vice President, Vice President
Partner Partner Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
For the 12-month period ended December 31, 2006, the Class IA shares of the
Hartford Value Opportunities HLS Fund returned 19.02%, underperforming the
Russell 3000 Value Index return of 22.34% but outperforming the Lipper Multi Cap
Value VA-UF average return of 17.30%, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
The U.S. equity markets posted strong double-digit returns for the year. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 3000 Value Index (22.34%) versus the Russell
3000 Growth Index (9.46%). All ten broad industry sectors of the Fund's Russell
3000 Value benchmark posted positive double-digit returns, with
Telecommunication Services and Energy leading the way. In addition, small cap
stocks also continued to dominate large and mid cap stocks in each of the last
seven years. In 2006, the Russell 2000 Small Cap Index returned 18.37%, compared
to the S&P 500 Index return of 15.78% and the S&P 400 MidCap Index return of
10.32%.
The Fund's underperformance relative to the benchmark was due to poor stock
selection within six of the ten broad industry sectors of the market. The Fund's
holdings within Financials, Consumer Discretionary, and Health Care were among
the weakest contributors. Key detractors from relative (i.e. performance of the
Fund as measured against the benchmark) performance included Foot Locker
(Retailing), Cinram (Media) and Capital One Financial (Diversified Financials).
Foot Locker's shares declined following management's indication that they have
no interest in selling to a private equity buyer as has been rumored for some
time. In addition, sales within the U.S. and Europe continued to be weak.
Cinram's shares declined on concerns that their largest shareholder, a failed
hedge fund, would be forced into a disorderly liquidation of their position. In
addition, Cinram's largest DVD customer, Time Warner (Consumer Discretionary),
had a weak year in DVD sales which hurt volumes and profits. Capital One
Financial's shares struggled due to their merger with North Fork Bancorp earlier
in the year. In addition, on an absolute (i.e. total return) basis, YRC
Worldwide (Industrials), which suffered from merger-related indigestion and
Boston Scientific (Health Care), whose stock struggled with softer sales of
implantable cardiac defibrillators, also detracted from performance. We did not
own either of these stocks at the end of the period. The Fund's underweight
(i.e. the Fund's sector position was less than the benchmark position) position
in Telecommunication Services, the top performing sector during the period, and
an overweight in Information Technology, a relative underperformer, also
detracted from performance.
Key contributors to relative and absolute performance were Cisco Systems
(Information Technology), Comcast (Consumer Discretionary) and UAL Corp.
(Transportation). Cisco benefited from
56
- --------------------------------------------------------------------------------
the strong secular (i.e. long term) move of enterprise and service provider
networks toward all-Internet Protocol networks, which plays into the company's
strength. Comcast's shares rose due to its continued success in offering
customers with the "triple play" -- cable, internet and wireline services. UAL's
shares rose due to the normalization of travel following the London bombing
threat in August and lower jet fuel cost. We held all three stocks at the end of
the period.
WHAT IS THE OUTLOOK?
We expect to see continued moderation of U.S. economic growth in the early part
of 2007 as inventory corrections continue throughout a number of industries,
including those tied to the weak residential housing market. As a result, we
believe earnings growth will moderate in 2007, though there is room for stock
valuation multiples to expand given the continued low level of interest rates.
Given this environment and as a result of our bottom-up stock picking, our most
significant overweight positions relative to the Russell 3000 Value Index are:
Information Technology, Consumer Discretionary, Materials, Industrials and
Health Care. Despite the likelihood of a softening economy next year, we think
our stocks are undervalued and have solid catalysts for appreciation. By far our
largest benchmark relative underweight remains Financials due to expectations
for continued earnings pressure from the flat yield curve, probable worsening of
credit conditions, and valuations that are not compensatory. Utilities, Consumer
Staples, Telecommunications Services and Energy are also notably underweight,
given their high valuations relative to earnings growth potential.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 9.0%
- -------------------------------------------------------------------
Capital Goods 5.3
- -------------------------------------------------------------------
Consumer Cyclical 8.3
- -------------------------------------------------------------------
Consumer Staples 2.1
- -------------------------------------------------------------------
Energy 9.2
- -------------------------------------------------------------------
Finance 29.0
- -------------------------------------------------------------------
Health Care 7.2
- -------------------------------------------------------------------
Services 7.3
- -------------------------------------------------------------------
Technology 17.4
- -------------------------------------------------------------------
Transportation 4.4
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (9.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
57
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- 67.8%
BASIC MATERIALS -- 3.5%
3,205 Alcoa, Inc. ...................................... $ 96,194
834 Cameco Corp. ..................................... 33,719
1,588 Companhia Vale do Rio Doce ADR.................... 47,233
929 Dow Chemical Co. ................................. 37,092
609 E.I. DuPont de Nemours & Co. ..................... 29,645
1,148 Mittal Steel Co. ................................. 48,402
-----------
292,285
-----------
CAPITAL GOODS -- 1.8%
1,046 American Standard Cos., Inc. ..................... 47,977
644 Boeing Co. ....................................... 57,177
513 Deere & Co. ...................................... 48,799
-----------
153,953
-----------
CONSUMER CYCLICAL -- 6.0%
1,335 Altria Group, Inc. ............................... 114,604
3,128 Circuit City Stores, Inc. ........................ 59,373
2,198 D.R. Horton, Inc. ................................ 58,212
1,434 eBay, Inc. (D).................................... 43,105
1,390 Gap, Inc. ........................................ 27,113
1,289 Home Depot, Inc. ................................. 51,758
1,177 Lowe's Cos., Inc. ................................ 36,657
443 Toyota Motor Corp. (A)............................ 29,669
1,898 Wal-Mart Stores, Inc. ............................ 87,640
-----------
508,131
-----------
CONSUMER STAPLES -- 4.3%
441 Bunge Ltd. ....................................... 31,984
520 Clorox Co. ....................................... 33,384
6 Japan Tobacco, Inc. (A)........................... 30,968
1,457 PepsiCo, Inc. .................................... 91,154
1,488 Procter & Gamble Co. ............................. 95,653
1,345 Tyson Foods, Inc. Class A......................... 22,119
2,133 Unilever N.V. NY Shares........................... 58,113
-----------
363,375
-----------
ENERGY -- 4.2%
342 CNOOC Ltd. ADR.................................... 32,392
1,321 EnCana Corp. ..................................... 60,714
1,227 ExxonMobil Corp. ................................. 94,040
2,911 Halliburton Co. .................................. 90,380
997 Occidental Petroleum Corp. ....................... 48,659
73 Ultra Petroleum Corp (D).......................... 3,476
611 XTO Energy, Inc. ................................. 28,752
-----------
358,413
-----------
FINANCE -- 15.1%
3,126 Aegon N.V. (A).................................... 59,323
5,032 Akbank T.A.S. (A)................................. 30,194
1,929 American International Group, Inc. ............... 138,246
2,435 Bank of America Corp. ............................ 130,020
1,268 Bank of New York Co., Inc. ....................... 49,929
709 Capital One Financial Corp. ...................... 54,450
2,984 Citigroup, Inc. .................................. 166,234
1,789 Countrywide Financial Corp. ...................... 75,960
2,341 E*Trade Financial Corp. (D)....................... 52,474
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
667 Federal Home Loan Mortgage Corp. ................. $ 45,316
571 ING Groep N.V. ................................... 25,239
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 62,500
361 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 61,955
960 State Street Corp. ............................... 64,709
1,850 UBS AG............................................ 111,582
2,221 UnitedHealth Group, Inc. ......................... 119,318
1,522 Western Union Co.................................. 34,123
-----------
1,281,572
-----------
HEALTH CARE -- 7.0%
1,732 Abbott Laboratories............................... 84,366
4,278 Boston Scientific Corp. (D)....................... 73,498
3,088 Bristol-Myers Squibb Co. ......................... 81,274
344 Cardinal Health, Inc. ............................ 22,183
3,808 Elan Corp. plc ADR (D)............................ 56,161
1,735 Eli Lilly & Co. .................................. 90,399
1,897 Sanofi-Aventis S.A. ADR........................... 87,589
2,542 Schering-Plough Corp. ............................ 60,088
1,790 Shionogi & Co. Ltd. (A)........................... 35,154
-----------
590,712
-----------
SERVICES -- 6.2%
1,511 Accenture Ltd. Class A............................ 55,783
503 Fluor Corp. ...................................... 41,062
699 Monster Worldwide, Inc. (D)....................... 32,601
5,542 Sun Microsystems, Inc. (D)(G)..................... 30,039
2,357 Time Warner, Inc. ................................ 51,327
1,800 United Parcel Service, Inc. Class B............... 134,957
1,715 Viacom, Inc. Class B (D).......................... 70,375
1,235 Walt Disney Co. .................................. 42,337
4,415 XM Satellite Radio Holdings, Inc. Class A (D)..... 63,803
-----------
522,284
-----------
TECHNOLOGY -- 19.0%
1,287 Adobe Systems, Inc. (D)........................... 52,901
3,852 AT&T, Inc. ....................................... 137,716
1,659 Broadcom Corp. Class A (D)........................ 53,615
5,343 Cisco Systems, Inc. (D)........................... 146,030
2,914 Corning, Inc. (D)................................. 54,519
8,432 EMC Corp. (D)..................................... 111,297
4,433 First Data Corp. ................................. 113,125
4,793 Flextronics International Ltd. (D)................ 55,025
7,219 General Electric Co. ............................. 268,630
194 Google, Inc. (D).................................. 89,517
2,525 Maxim Integrated Products, Inc. .................. 77,309
2,512 Medtronic, Inc. .................................. 134,390
2,697 Microsoft Corp. .................................. 80,523
1,121 Motorola, Inc. ................................... 23,046
1,140 Sharp Corp. (A)................................... 19,601
4,347 Sprint Nextel Corp. .............................. 82,113
1,677 Texas Instruments, Inc. .......................... 48,303
2,368 Yahoo!, Inc. (D).................................. 60,476
-----------
1,608,136
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
58
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 0.7%
2,588 British Energy Group plc (D)(A)................... $ 27,432
221 E.On AG (A)....................................... 29,802
-----------
57,234
-----------
Total common stock
(cost $5,293,269)............................... $ 5,736,095
-----------
PRINCIPAL
AMOUNT
- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 10,000 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 9,080
10,000 State of Illinois, Taxable Pension,
5.10%, 06/01/2033............................... 9,584
-----------
Total municipal bonds
(cost $19,888).................................. $ 18,664
-----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 2.9%
FINANCE -- 2.9%
17,200 Asset Securitization Corp.,
6.93%, 02/14/2043............................... $ 18,513
7,301 Asset Securitization Corp.,
7.49%, 04/14/2029............................... 7,314
4,590 Banc of America Commercial Mortgage, Inc.,
5.35%, 09/10/2047 (L)........................... 4,561
9,575 Bear Stearns Commercial Mortgage Securities, Inc.,
5.30%, 10/12/2042 (L)........................... 9,511
676 Capital Auto Receivables Asset Trust,
2.00%, 11/15/2007............................... 676
3,255 Centex Home Equity,
4.72%, 10/25/2031............................... 3,227
16,000 Citibank Credit Card Issuance Trust,
2.55%, 01/20/2009............................... 15,980
15,000 Citigroup/Deutsche Bank Commercial Mortgage Trust,
5.40%, 07/15/2044 (L)........................... 14,966
15,000 Commercial Mortgage Pass Through Certificates,
5.12%, 06/10/2044............................... 14,789
5,322 Connecticut RRB Special Purpose Trust CL&P,
5.73%, 03/30/2009............................... 5,323
3,952 Countrywide Home Loans,
5.29%, 11/25/2035 (L)........................... 3,931
7,365 Credit Suisse Mortgage Capital Certificates,
5.47%, 09/15/2039............................... 7,422
6,945 Credit Suisse Mortgage Capital Certificates,
5.61%, 02/15/2039 (L)........................... 7,057
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 10,385 Greenwich Capital Commercial Funding Corp.,
5.22%, 04/10/2037 (L)........................... $ 10,311
9,327 Harley-Davidson Motorcycle Trust,
2.53%, 11/15/2011............................... 9,100
9,125 Household Automotive Trust,
5.28%, 09/17/2011............................... 9,152
6,305 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.34%, 12/15/2044 (L)........................... 6,282
7,755 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.48%, 12/12/2044............................... 7,829
2,894 Marriott Vacation Club Owner Trust,
5.36%, 10/20/2028 (I)........................... 2,888
3,963 Merrill Lynch Mortgage Investors Trust,
5.89%, 03/25/2036 (L)........................... 3,996
15,000 Merrill Lynch Mortgage Trust,
5.05%, 07/12/2038............................... 14,711
9,580 Morgan Stanley Capital I,
5.23%, 09/15/2042............................... 9,505
10,853 Residential Accredit Loans, Inc.,
5.27%, 02/25/2035 (L)........................... 10,778
12,910 Susquehanna Auto Lease Trust,
5.21%, 03/16/2009 (I)........................... 12,891
182 USAA Auto Owner Trust,
2.06%, 04/15/2008............................... 181
10,000 Wachovia Bank Commercial Mortgage Trust,
5.12%, 07/15/2042............................... 9,839
9,918 Wells Fargo Mortgage Backed Securities Trust,
4.55%, 03/25/2035 (L)........................... 9,774
14,130 Wells Fargo Mortgage Backed Securities Trust,
5.54%, 04/25/2036 (L)........................... 14,091
-----------
Total asset & commercial
mortgage backed securities
(cost $243,470)................................. $ 244,598
-----------
CORPORATE BONDS: INVESTMENT GRADE -- 10.5%
BASIC MATERIALS -- 0.1%
10,000 Alcan, Inc.,
7.25%, 11/01/2028............................... $ 11,181
-----------
CONSUMER CYCLICAL -- 0.8%
9,400 DaimlerChrysler N.A. Holdings Corp.,
5.88%, 03/15/2011............................... 9,435
9,550 DaimlerChrysler N.A. Holdings Corp.,
6.50%, 11/15/2013............................... 9,805
3,084 Federated Retail Holdings, Inc.,
5.90%, 12/01/2016............................... 3,079
12,946 SCL Term Aereo Santiago S.A.,
6.95%, 07/01/2012 (I)........................... 13,158
</Table>
The accompanying notes are an integral part of these financial statements.
59
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
$ 14,200 Target Corp.,
5.88%, 11/01/2008............................... $ 14,369
15,000 Wal-Mart Stores, Inc.,
6.88%, 08/10/2009............................... 15,627
-----------
65,473
-----------
CONSUMER STAPLES -- 1.0%
6,500 Coca-Cola Enterprises, Inc.,
6.75%, 09/15/2028............................... 7,137
500 Coca-Cola Enterprises, Inc.,
8.50%, 02/01/2022............................... 634
13,140 Colgate-Palmolive Co.,
5.58%, 11/06/2008............................... 13,245
13,037 ConAgra Foods, Inc.,
7.88%, 09/15/2010............................... 14,108
9,825 Diageo Capital plc,
4.38%, 05/03/2010............................... 9,557
13,400 PepsiAmericas, Inc.,
6.38%, 05/01/2009............................... 13,633
20,775 Procter & Gamble Co.,
9.36%, 01/01/2021............................... 26,021
2,975 Weyerhaeuser Co.,
7.38%, 03/15/2032............................... 3,105
-----------
87,440
-----------
FINANCE -- 5.5%
16,800 Ace INA Holdings, Inc.,
5.88%, 06/15/2014............................... 17,123
10,500 AMBAC Financial Group, Inc.,
5.95%, 12/05/2035............................... 10,456
500 American General Finance Corp.,
6.63%, 02/15/2029............................... 552
20,000 AXA Financial, Inc.,
7.00%, 04/01/2028............................... 22,511
20,000 Bank of America Corp.,
5.88%, 02/15/2009............................... 20,281
4,830 BB&T Corp.,
4.90%, 06/30/2017............................... 4,568
17,000 Berkshire Hathaway Finance Corp.,
4.85%, 01/15/2015............................... 16,472
12,585 Brandywine Operating Partnership,
6.00%, 04/01/2016............................... 12,804
3,750 Capital One Bank,
6.50%, 06/13/2013............................... 3,953
3,900 Capital One Financial Corp.,
5.70%, 09/15/2011............................... 3,958
10,000 Cincinnati Financial Corp.,
6.92%, 05/15/2028............................... 11,068
6,500 Citigroup, Inc.,
3.63%, 02/09/2009............................... 6,308
8,800 Citigroup, Inc.,
6.00%, 10/31/2033............................... 9,013
1,000 Citigroup, Inc.,
6.50%, 01/18/2011............................... 1,046
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 8,920 Credit Suisse First Boston USA, Inc.,
4.88%, 01/15/2015............................... $ 8,650
7,900 Developers Diversified Realty Corp.,
5.38%, 10/15/2012............................... 7,824
13,500 EOP Operating L.P.,
4.75%, 03/15/2014............................... 13,374
16,355 ERAC USA Finance Co.,
7.35%, 06/15/2008 (I)........................... 16,764
4,525 Everest Reinsurance Holdings, Inc.,
5.40%, 10/15/2014............................... 4,431
8,000 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 7,989
11,550 HSBC Bank USA,
3.88%, 09/15/2009............................... 11,199
10,500 International Lease Finance Corp.,
5.00%, 09/15/2012............................... 10,287
12,650 Jackson National Life Insurance Co.,
8.15%, 03/15/2027 (I)........................... 15,679
8,320 John Deere Capital Corp.,
4.88%, 10/15/2010............................... 8,175
14,375 JP Morgan Chase & Co.,
5.13%, 09/15/2014............................... 14,135
750 KeyCorp Capital II,
6.88%, 03/17/2029............................... 788
7,880 Kimco Realty Corp.,
5.78%, 03/15/2016............................... 7,980
8,750 Liberty Mutual Group, Inc.,
5.75%, 03/15/2014 (I)........................... 8,718
20,000 Liberty Property L.P.,
7.25%, 08/15/2007............................... 20,109
6,875 National City Corp.,
6.88%, 05/15/2019............................... 7,571
30,000 New England Mutual Life Insurance Co.,
7.88%, 02/15/2024 (I)........................... 36,308
6,500 Prologis Trust,
5.63%, 11/15/2016............................... 6,451
11,000 Prudential Financial, Inc.,
5.50%, 03/15/2016............................... 10,997
500 Republic New York Capital I,
7.75%, 11/15/2006............................... 519
1,250 Santander Central Hispano Issuances Ltd.,
7.63%, 11/03/2009............................... 1,325
15,100 Simon Property Group L.P.,
6.10%, 05/01/2016............................... 15,652
7,250 Sovereign Capital Trust IV,
7.91%, 06/13/2036............................... 8,155
14,600 Torchmark Corp.,
8.25%, 08/15/2009............................... 15,586
9,000 Toyota Motor Credit Corp.,
5.50%, 12/15/2008............................... 9,026
21,400 U.S. Bank NA,
4.95%, 10/30/2014............................... 20,839
5,500 UnitedHealth Group, Inc.,
4.75%, 02/10/2014............................... 5,278
5,345 Wachovia Capital Trust III,
5.80%, 08/29/2049............................... 5,389
</Table>
The accompanying notes are an integral part of these financial statements.
60
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 10,000 Wachovia Corp.,
5.25%, 08/01/2014............................... $ 9,878
2,725 Wellpoint, Inc.,
5.00%, 01/15/2011............................... 2,692
1,000 Wells Fargo Bank NA,
6.45%, 02/01/2011............................... 1,044
2,760 Willis North America, Inc.,
5.63%, 07/15/2015............................... 2,642
-----------
455,567
-----------
HEALTH CARE -- 0.4%
9,000 Becton, Dickinson & Co.,
6.70%, 08/01/2028............................... 9,872
7,725 CVS Corp.,
6.13%, 08/15/2016............................... 7,971
8,575 Pharmacia Corp.,
6.60%, 12/01/2028............................... 9,708
8,000 Wyeth,
7.25%, 03/01/2023............................... 9,069
-----------
36,620
-----------
SERVICES -- 0.9%
13,500 COX Communications, Inc.,
5.45%, 12/15/2014............................... 13,152
15,000 FedEx Corp.,
3.50%, 04/01/2009............................... 14,407
7,850 Harrah's Operating Co., Inc.,
6.50%, 06/01/2016............................... 7,028
10,900 Harvard University,
8.13%, 04/15/2007............................... 10,983
10,800 News America, Inc.,
6.40%, 12/15/2035............................... 10,729
5,530 Time Warner, Inc.,
5.50%, 11/15/2011............................... 5,516
15,020 Viacom, Inc.,
6.88%, 04/30/2036............................... 14,850
-----------
76,665
-----------
TECHNOLOGY -- 1.2%
10,000 BellSouth Telecommunications,
6.38%, 06/01/2028............................... 10,011
15,000 Comcast Cable Communications, Inc.,
6.88%, 06/15/2009............................... 15,517
1,000 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027............................... 1,228
8,500 Deutsche Telekom International Finance B.V.,
8.25%, 06/15/2030............................... 10,449
3,400 Embarq Corp.,
7.08%, 06/01/2016............................... 3,461
19,425 General Electric Co.,
5.00%, 02/01/2013............................... 19,209
14,325 Siemens Finance,
5.75%, 10/17/2016 (I)........................... 14,518
15,000 Telecom Italia Capital,
5.25%, 10/01/2015............................... 14,012
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
TECHNOLOGY -- (CONTINUED)
$ 5,000 Verizon Communications, Inc.,
5.35%, 02/15/2011............................... $ 5,008
4,400 Verizon Communications, Inc.,
5.55%, 02/15/2016............................... 4,385
500 Verizon Global Funding Corp.,
7.25%, 12/01/2010............................... 533
500 Verizon Global Funding Corp.,
7.75%, 12/01/2030............................... 586
-----------
98,917
-----------
TRANSPORTATION -- 0.1%
8,700 Southwest Airlines Co.,
5.75%, 12/15/2016............................... 8,526
-----------
UTILITIES -- 0.5%
1,000 Alabama Power Co.,
7.13%, 10/01/2007............................... 1,012
4,605 Consolidated Edison,
5.30%, 12/01/2016............................... 4,525
7,800 Midamerican Energy Holdings Co.,
6.13%, 04/01/2036............................... 7,863
17,285 Northern Border Pipeline Co.,
7.75%, 09/01/2009............................... 18,280
8,000 Southern Cal Edison Co.,
5.55%, 01/15/2037............................... 7,646
3,335 Taqa Abu Dhabi National,
5.88%, 10/27/2016 (I)........................... 3,359
750 TransCanada Pipelines Ltd.,
6.49%, 01/21/2009............................... 766
-----------
43,451
-----------
Total corporate bonds: investment grade
(cost $866,744)................................. $ 883,840
-----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.1%
SERVICES -- 0.1%
10,400 Times Mirror Co.,
7.50%, 07/01/2023............................... $ 9,222
3,100 Wyndham Worldwide,
6.00%, 12/01/2016 (I)........................... 3,045
-----------
Total corporate bonds: non-investment grade
(cost $14,233).................................. $ 12,267
-----------
U.S. GOVERNMENT SECURITIES -- 12.3%
OTHER DIRECT FEDERAL OBLIGATIONS -- 2.2%
FEDERAL HOME LOAN BANK
61,000 4.875% 2011....................................... $ 60,758
-----------
FINANCING CORPORATION
17,617 Zero Coupon Strip,
4.44% 2013 (M).................................. 12,502
-----------
TENNESSEE VALLEY AUTHORITY
64,300 4.375% 2015....................................... 61,652
50,000 6.00% 2013........................................ 52,675
-----------
114,327
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
61
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
U.S. GOVERNMENT SECURITIES -- (CONTINUED)
U.S. TREASURY SECURITIES -- 10.1%
$ 63,075 2.00% 2016 (O).................................... $ 61,921
64,600 2.375% 2025 (O)................................... 68,854
171,300 3.50% 2010........................................ 165,278
201,225 3.875% 2010....................................... 195,896
100,175 4.375% 2010....................................... 99,021
171,875 4.875% 2011....................................... 172,989
44,700 5.375% 2031....................................... 47,881
38,650 6.25% 2023........................................ 44,487
-----------
856,327
-----------
Total U.S. government securities
(cost $1,048,030)............................... $ 1,043,914
-----------
U.S. GOVERNMENT AGENCIES -- 2.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
9,345 2.50% 2013........................................ $ 9,125
59,656 6.50% 2035 -- 2036................................ 60,761
-----------
69,886
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.0%
131 6.50% 2036........................................ 134
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.7%
26,622 5.50% 2036........................................ 26,487
10,393 6.00% 2024 -- 2035................................ 10,558
3,764 6.50% 2026 -- 2035................................ 3,869
14,146 7.00% 2031 -- 2033................................ 14,618
132 7.50% 2035........................................ 137
2,474 8.00% 2026 -- 2031................................ 2,620
191 9.00% 2016 -- 2023................................ 205
-----------
58,494
-----------
OTHER GOVERNMENT AGENCIES -- 0.5%
35,028 Postal Square L.P.,
8.95% 2022...................................... 43,239
-----------
Total U.S. government agencies
(cost $168,333)................................. $ 171,753
-----------
Total long-term investments
(cost $7,653,967)............................... $ 8,111,131
-----------
SHORT-TERM INVESTMENTS -- 24.3%
FINANCE -- 2.2%
90,000 FHLB Discount Note,
5.26%, 01/12/2007 (M)........................... $ 89,845
100,000 FNMA Discount Note,
5.17%, 01/30/2007 (M)........................... 99,571
-----------
189,416
-----------
REPURCHASE AGREEMENTS -- 1.0%
19,171 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... 19,171
26,436 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 26,436
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
REPURCHASE AGREEMENTS -- (CONTINUED)
$ 287 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... $ 287
16,548 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 16,548
5,651 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,651
16,548 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 16,548
-----------
84,641
-----------
<Caption>
SHARES
- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.1%
1,781,676 BNY Institutional Cash Reserve Fund............... $ 1,781,676
-----------
Total short-term investments
(cost $2,055,733)............................... $ 2,055,733
-----------
Total investments in securities
(cost $9,709,700) (C)........................... $10,166,864
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 12.52% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $386,598, which represents 4.57% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $9,740,353 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 598,962
Unrealized depreciation....................... (172,451)
---------
Net unrealized appreciation................... $ 426,511
=========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $127,328, which represents 1.51% of total net
assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
The accompanying notes are an integral part of these financial statements.
62
- --------------------------------------------------------------------------------
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(O)U.S. Treasury inflation-protection securities (TIPS) are securities
in which the principal amount is adjusted for inflation and the semiannual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Japanese Yen Sell $793 $794 1/05/2007 $1
==
</Table>
The accompanying notes are an integral part of these financial statements.
63
HARTFORD BLUE CHIP STOCK HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.1%
BASIC MATERIALS -- 0.6%
8 Carpenter Technology Corp. ....................... $ 820
--------
CAPITAL GOODS -- 5.2%
19 Boeing Co. ....................................... 1,670
15 Caterpillar, Inc. ................................ 902
12 Cummins, Inc. (G)................................. 1,359
22 Lam Research Corp. (D)(G)......................... 1,129
75 Teradyne, Inc. (D)................................ 1,123
18 United Technologies Corp. ........................ 1,113
--------
7,296
--------
CONSUMER CYCLICAL -- 15.4%
17 Altria Group, Inc. (G)............................ 1,433
79 American Eagle Outfitters, Inc. .................. 2,449
56 AnnTaylor Stores Corp. (D)(G)..................... 1,849
6 AutoZone, Inc. (D)................................ 740
22 Coach, Inc. (D)................................... 924
28 Family Dollar Stores, Inc. ....................... 823
25 Federated Department Stores, Inc. (G)............. 946
15 J. C. Penney Co., Inc. (G)........................ 1,168
26 Kohl's Corp. (D).................................. 1,786
16 Lennar Corp. (G).................................. 850
35 Nordstrom, Inc. (G)............................... 1,747
11 Nutri/System, Inc. (D)(G)......................... 672
1 NVR, Inc. (D)(G).................................. 800
36 Office Depot, Inc. (D)............................ 1,366
12 Sherwin-Williams Co. ............................. 757
58 TJX Cos., Inc. (G)................................ 1,643
18 Wal-Mart Stores, Inc. ............................ 831
11 WESCO International, Inc. (D)..................... 653
--------
21,437
--------
CONSUMER STAPLES -- 4.7%
19 Anheuser-Busch Cos., Inc. ........................ 940
32 Campbell Soup Co. (G)............................. 1,225
15 General Mills, Inc. .............................. 876
20 H.J. Heinz Co. ................................... 918
13 PepsiCo, Inc. .................................... 783
15 Procter & Gamble Co. ............................. 963
14 UST, Inc. (G)..................................... 809
--------
6,514
--------
ENERGY -- 2.4%
18 ExxonMobil Corp. ................................. 1,356
29 Frontier Oil Corp. (G)............................ 828
36 Halliburton Co. .................................. 1,115
--------
3,299
--------
FINANCE -- 13.9%
33 Aetna, Inc. ...................................... 1,434
10 Affiliated Managers Group, Inc. (D)(G)............ 1,030
15 American Express Co. ............................. 892
63 Charles Schwab Corp. ............................. 1,225
2 Chicago Mercantile Exchange Holdings, Inc. ....... 846
16 Federal Home Loan Mortgage Corp. ................. 1,059
19 First Marblehead Corp. (G)........................ 1,025
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
5 Goldman Sachs Group, Inc. ........................ $ 1,057
37 Humana, Inc. (D).................................. 2,052
12 IntercontinentalExchange, Inc. (D)(G)............. 1,262
15 Nuveen Investments, Inc. Class A.................. 799
27 Philadelphia Consolidated Holding Corp. (D)....... 1,221
19 T. Rowe Price Group, Inc. ........................ 845
29 UnitedHealth Group, Inc. ......................... 1,552
25 W.R. Berkley Corp. ............................... 877
19 Wellcare Health Plans, Inc. (D)(G)................ 1,316
10 Wellpoint, Inc. (D)............................... 795
--------
19,287
--------
HEALTH CARE -- 15.3%
28 Abbott Laboratories............................... 1,358
21 Amgen, Inc. (D)................................... 1,414
19 Barr Pharmaceuticals, Inc. (D).................... 932
15 Caremark Rx, Inc. (G)............................. 857
33 Coventry Health Care, Inc. (D).................... 1,667
65 Endo Pharmaceuticals Holdings, Inc. (D)........... 1,784
21 Forest Laboratories, Inc. (D)..................... 1,068
40 ImClone Systems, Inc. (D)(G)...................... 1,078
29 Johnson & Johnson................................. 1,928
16 Laboratory Corp. of America Holdings (D)(G)....... 1,183
28 McKesson Corp. ................................... 1,435
32 Merck & Co., Inc. ................................ 1,400
16 Monsanto Co. ..................................... 856
45 Mylan Laboratories, Inc. (G)...................... 890
32 Schering-Plough Corp. (G)......................... 752
25 Sierra Health Services, Inc. (D).................. 887
15 Techne Corp. (D).................................. 843
19 Wyeth............................................. 978
--------
21,310
--------
SERVICES -- 10.1%
14 Alliance Data Systems Corp. (D)................... 862
28 Autodesk, Inc. (D)................................ 1,113
22 Choice Hotels International, Inc. ................ 922
32 Comcast Corp. Class A (D)......................... 1,350
8 Corporate Executive Board Co. (G)................. 728
43 DirecTV Group, Inc. (D)(G)........................ 1,077
13 McGraw-Hill Cos., Inc. ........................... 911
16 Moody's Corp. .................................... 1,112
60 News Corp. Class A................................ 1,280
10 Omnicom Group, Inc. .............................. 1,014
15 SEI Investments Co. (G)........................... 917
32 Walt Disney Co. .................................. 1,093
29 Warner Music Group Corp. (G)...................... 670
26 Waste Management, Inc. ........................... 960
--------
14,009
--------
TECHNOLOGY -- 27.7%
57 Altera Corp. (D).................................. 1,122
15 Amphenol Corp. Class A (G)........................ 937
112 BEA Systems, Inc. (D)............................. 1,414
34 BMC Software, Inc. (D)(G)......................... 1,092
114 Cisco Systems, Inc. (D)........................... 3,113
69 Citizens Communications Co. (G)................... 993
</Table>
The accompanying notes are an integral part of these financial statements.
64
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
12 Danaher Corp. (G)................................. $ 877
24 Dolby Laboratories, Inc. Class A (D).............. 729
21 Emerson Electric Co. ............................. 908
36 General Electric Co. ............................. 1,336
3 Google, Inc. (D).................................. 1,179
57 Hewlett-Packard Co. .............................. 2,364
44 Intel Corp. ...................................... 895
21 International Business Machines Corp. ............ 2,069
35 Intuit, Inc. (D).................................. 1,080
18 Lexmark International, Inc. ADR (D)............... 1,340
14 Lockheed Martin Corp. ............................ 1,271
44 McAfee, Inc. (D).................................. 1,243
35 MEMC Electronic Materials, Inc. (D)(G)............ 1,386
28 Microchip Technology, Inc. (G).................... 922
69 Microsoft Corp. .................................. 2,069
56 Motorola, Inc. ................................... 1,149
31 Network Appliance, Inc. (D)....................... 1,206
20 NVIDIA Corp. (D).................................. 755
130 Oracle Corp. (D).................................. 2,226
29 Qualcomm, Inc. ................................... 1,100
18 Raytheon Co. (G).................................. 961
47 Red Hat, Inc. (D)(G).............................. 1,076
35 VeriSign, Inc. (D)................................ 849
35 Xilinx, Inc. ..................................... 821
--------
38,482
--------
TRANSPORTATION -- 3.1%
28 AMR Corp. (D)(G).................................. 843
35 Continental Airlines, Inc. (D)(G)................. 1,427
15 Harley-Davidson, Inc. (G)......................... 1,057
20 US Airways Group, Inc. (D)(G)..................... 1,050
--------
4,377
--------
UTILITIES -- 0.7%
46 AES Corp. (D)..................................... 1,003
--------
Total common stock
(cost $130,542)................................. $137,834
--------
EXCHANGE-TRADED FUNDS -- 0.5%
INVESTMENT POOLS AND FUNDS -- 0.5%
13 iShares Russell 1000 Growth Index Fund............ $ 721
--------
Total exchange traded funds
(cost $725)..................................... $ 721
--------
Total long-term investments
(cost $131,267)................................. $138,555
--------
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- 22.3%
REPURCHASE AGREEMENTS -- 0.6%
$ 298 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 298
236 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 236
298 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 298
--------
832
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.7%
30,218 Navigator Prime Portfolio......................... $ 30,218
--------
Total short-term investments
(cost $31,050).................................. $ 31,050
--------
Total investments in securities
(cost $162,317) (C)............................. $169,605
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $162,736 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 9,485
Unrealized depreciation......................... (2,616)
-------
Net unrealized appreciation..................... $ 6,869
=======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
65
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- 94.3%
BASIC MATERIALS -- 12.7%
2,008 Aracruz Celulose S.A. ADR......................... $ 122,987
2,013 Arch Coal, Inc. .................................. 60,438
1,819 BHP Billiton Ltd. ADR (G)......................... 72,285
5,787 Cameco Corp. ..................................... 234,100
7,247 Companhia Vale do Rio Doce ADR.................... 215,530
5,506 Dow Chemical Co. ................................. 219,902
1,198 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 66,759
501 Peabody Energy Corp. ............................. 20,241
832 Phelps Dodge Corp. ............................... 99,547
586 Potash Corp. of Saskatchewan...................... 84,022
2,695 Rio Tinto plc (A)................................. 142,816
2,221 Teck Cominco Ltd. Class B......................... 167,433
5,306 Vedanta Resources plc (A)......................... 126,374
4,263 Xstrata plc (A)................................... 212,122
-----------
1,844,556
-----------
CAPITAL GOODS -- 9.2%
2,200 3M Co. ........................................... 171,462
10,810 ABB Ltd. ADR...................................... 194,362
1,887 Boeing Co. ....................................... 167,641
1,500 Caterpillar, Inc. ................................ 91,995
1,655 Deere & Co. ...................................... 157,369
4,959 Ingersoll-Rand Co. Class A........................ 194,050
1,752 ITT Corp. ........................................ 99,520
1,509 Joy Global, Inc. ................................. 72,950
500 National Oilwell Varco, Inc. (D).................. 30,590
9,411 Xerox Corp. (G)(D)................................ 159,511
-----------
1,339,450
-----------
CONSUMER CYCLICAL -- 6.5%
7,237 Federated Department Stores, Inc. ................ 275,962
7,438 Gap, Inc. ........................................ 145,033
795 Lotte Shopping Co. GDR (G)(D)..................... 16,134
5,972 Toyota Motor Corp. (A)............................ 399,688
2,375 Wal-Mart Stores, Inc. ............................ 109,678
-----------
946,495
-----------
CONSUMER STAPLES -- 3.7%
3,049 Bunge Ltd. ....................................... 221,068
3,383 Constellation Brands, Inc. Class A (D)............ 98,167
2,373 Cosan S.A. Industria E Comercio (D)............... 49,652
-- Japan Tobacco, Inc. (A)........................... 711
2,012 Procter & Gamble Co. ............................. 129,336
2,208 Tyson Foods, Inc. Class A......................... 36,320
-----------
535,254
-----------
ENERGY -- 6.8%
6,900 Halliburton Co. .................................. 214,245
1,247 Occidental Petroleum Corp. ....................... 60,911
2,312 RAO Gazprom Class S ADR (K)....................... 106,353
2,985 Sasol Ltd. ADR.................................... 110,139
1,000 Valero Energy Corp. .............................. 51,160
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
ENERGY -- (CONTINUED)
4,960 Weatherford International Ltd. (D)................ $ 207,258
5,000 XTO Energy, Inc. (G).............................. 235,250
-----------
985,316
-----------
FINANCE -- 14.2%
4,720 ACE Ltd. ......................................... 285,896
20,590 Akbank T.A.S. (A)................................. 123,547
1,400 American International Group, Inc. ............... 100,324
926 Assurant, Inc. ................................... 51,150
209 Augsburg Re AG (H)(A)(D).......................... --
1,750 Capital One Financial Corp. ...................... 134,435
4,778 Citigroup, Inc. (G)............................... 266,118
975 Eurocastle Investment Ltd. ....................... 49,696
4,400 European Capital Ltd. (D)(H)(A)PFIC............... 57,304
382 ICICI Bank Ltd. (D) (I)........................... 7,729
646 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 110,819
391 ORIX Corp. (A)PFIC................................ 113,242
259 Raiffeisen International Bank-Holding AG (A)...... 39,453
3,515 Reliance Zero (D) (I)............................. 100,940
1,401 UBS AG............................................ 84,522
2,885 Uniao de Bancos Brasileiros S.A. GDR (G).......... 268,208
3,614 Wellpoint, Inc. (D)............................... 284,401
-----------
2,077,784
-----------
HEALTH CARE -- 4.1%
2,440 Eli Lilly & Co. .................................. 127,114
1,151 Sanofi-Aventis S.A. (A)........................... 106,080
817 Sierra Health Services, Inc. (G)(D)............... 29,445
4,394 Teva Pharmaceutical Industries Ltd. ADR........... 136,562
3,980 Wyeth............................................. 202,667
-----------
601,868
-----------
SERVICES -- 5.5%
527 Fluor Corp. (G)................................... 43,046
30 Harvey Weinstein Master L.P. (D)(H)(A)............ 37,543
313 Melco PBL Entertainment Limited ADR (D)........... 6,661
5,900 News Corp. Class A................................ 126,732
1,610 Starwood Hotels & Resorts......................... 100,650
9,448 Sun Microsystems, Inc. (D)........................ 51,208
2,899 Viacom, Inc. Class B (D).......................... 118,942
9,066 Walt Disney Co. .................................. 310,692
-----------
795,474
-----------
TECHNOLOGY -- 27.3%
3,323 Adobe Systems, Inc. (D)........................... 136,649
2,332 Amdocs Ltd. (D)................................... 90,357
4,106 AT&T, Inc. (G).................................... 146,779
5,579 Broadcom Corp. Class A (G)(D)..................... 180,264
9,032 Cisco Systems, Inc. (D)........................... 246,855
5,133 Citigroup Global Certificate -- Bharti
Televentures (D)................................ 73,197
2,473 Cognex Corp. (G).................................. 58,912
4,787 Corning, Inc. (D)................................. 89,556
22,643 EMC Corp. (D)(G).................................. 298,888
10,939 General Electric Co. ............................. 407,029
541 Google, Inc. (D).................................. 249,304
</Table>
The accompanying notes are an integral part of these financial statements.
66
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
v5,133 Hewlett-Packard Co. .............................. $ 211,420
13,953 Hon Hai Precision Industry Co., Ltd. (A).......... 99,274
1,558 Intel Corp. ...................................... 31,554
1,462 International Business Machines Corp. ............ 142,033
1,352 L-3 Communications Holdings, Inc. (G)............. 110,575
3,200 Lockheed Martin Corp. ............................ 294,661
7,003 Medtronic, Inc. (G)............................... 374,747
10,631 Motorola, Inc. ................................... 218,565
6,483 Oracle Corp. (D).................................. 111,110
106 Rakuten, Inc. (D)(A).............................. 49,400
2,244 Raytheon Co. ..................................... 118,483
254 S.O.I. Tec, S.A. (D)(A)........................... 8,987
200 Samsung Electronics Co., Ltd. (A)................. 131,202
5,502 Turkcell Iletisim Hizmetleri ADR.................. 73,614
6,757 Turkcell Iletisim Hizmetleri AS (A)............... 33,119
-----------
3,986,534
-----------
TRANSPORTATION -- 0.6%
57,507 Air China Ltd. (A)................................ 30,992
993 Royal Caribbean Cruises Ltd. ..................... 41,078
245 US Airways Group, Inc. (D)(J)..................... 13,182
-----------
85,252
-----------
UTILITIES -- 3.7%
3,017 American Electric Power Co., Inc. ................ 128,468
15,945 British Energy Group plc (D)(A)................... 169,012
1,872 Suntech Power Holdings Co. Ltd. ADR (G)(D)........ 63,671
2,016 TXU Corp. ........................................ 109,266
835 Veolia Environment S.A. (A)....................... 63,702
-----------
534,119
-----------
Total common stock
(cost $11,241,252).............................. $13,732,102
-----------
EXCHANGE-TRADED FUNDS -- 3.2%
INVESTMENT POOLS AND FUNDS -- 3.2%
1,280 Ishares MSCI EAFE Index Fund (G).................. $ 93,765
4,259 Nasdaq 100 Shares (G)............................. 183,831
1,309 S&P 500 Depositary Receipt (G).................... 185,540
-----------
Total exchange-traded funds
(cost $465,380)................................. $ 463,136
-----------
PRINCIPAL MARKET
AMOUNT VALUE (W)
- -------- -----------
v
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
$ 26,500 UBS Luxembourg S.A.,
6.23%, 02/11/2015............................... $ 26,962
-----------
Total corporate bonds: investment grade
(cost $26,909).................................. $ 26,962
-----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.0%
FINANCE -- 0.0%
412 Augsburg Re AG,
0.00%, 12/31/2049 (H)(A) +...................... $ 226
-----------
Total corporate bonds: non-investment grade
(cost $767)..................................... $ 226
-----------
$ 226
-----------
Total long-term investments
(cost $11,734,308).............................. $14,222,426
-----------
SHORT-TERM INVESTMENTS -- 6.6%
REPURCHASE AGREEMENTS -- 2.5%
$ 83,702 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 83,702
115,419 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 115,419
1,254 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 1,254
72,248 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 72,248
24,670 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 24,670
72,248 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 72,248
-----------
369,541
-----------
SHARES
- --------
V
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.1%
596,978 Mellon GSL DBTII Collateral Fund.................. $ 596,978
-----------
Total short-term investments
(cost $966,519)................................. $ 966,519
-----------
Total investments in securities
(cost $12,700,827) (C).......................... $15,188,945
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 29.66% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $2,055,613, which represents 14.12% of total net assets.
The accompanying notes are an integral part of these financial statements.
67
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $12,726,354 and the aggregate gross unrealized appreciation
and depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $2,592,857
Unrealized depreciation....................... (130,266)
----------
Net unrealized appreciation................... $2,462,591
==========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
June, 2006 209 Augsburg Re AG -- 144A $ 67
June, 2006 $ 412 Augsburg Re AG -- 144A,
0.00%, 12/31/2049 766
October,
2005 --
December,
2006 4,400 European Capital Ltd. --
Reg D 55,431
October, 2005 30 Harvey Weinstein Master
L.P. -- Reg D 27,951
</Table>
The aggregate value of these securities at December 31, 2006 was
$95,073, which represents 0.65% of total net assets.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $106.353 or 0.73% of net assets.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $108,669, which represents 0.75% of total net
assets.
(J) Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $13,182, which
represents 0.09% of total net assets.
+ Convertible debt security.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ---------------------------------------------------------------
Australia 0.5%
- ---------------------------------------------------------------
Austria 0.3
- ---------------------------------------------------------------
Brazil 4.5
- ---------------------------------------------------------------
Canada 3.3
- ---------------------------------------------------------------
China 0.7
- ---------------------------------------------------------------
France 1.2
- ---------------------------------------------------------------
Germany 1.2
- ---------------------------------------------------------------
India 0.7
- ---------------------------------------------------------------
Israel 0.9
- ---------------------------------------------------------------
Japan 3.9
- ---------------------------------------------------------------
Liberia 0.3
- ---------------------------------------------------------------
Luxembourg 0.7
- ---------------------------------------------------------------
Netherlands 0.3
- ---------------------------------------------------------------
Russia 0.7
- ---------------------------------------------------------------
South Africa 0.8
- ---------------------------------------------------------------
South Korea 1.0
- ---------------------------------------------------------------
Switzerland 1.9
- ---------------------------------------------------------------
Taiwan 0.7
- ---------------------------------------------------------------
Turkey 1.6
- ---------------------------------------------------------------
United Kingdom 4.5
- ---------------------------------------------------------------
United States 68.0
- ---------------------------------------------------------------
Short-Term Investments 6.6
- ---------------------------------------------------------------
Other Assets & Liabilities (4.3)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
68
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- ---------- --------------
British Pound Buy $ 413 $ 413 1/2/2007 $ --
British Pound Buy 688 690 1/2/2007 (2)
Euro Buy 7,995 7,951 1/2/2007 44
Euro Buy 1,210 1,207 1/3/2007 3
Euro Sell 668,286 661,948 12/20/2007 (6,338)
New Turkish Lira Buy 1,023 1,023 1/4/2007 --
New Turkish Lira Buy 1,138 1,139 1/5/2007 (1)
-------
$(6,294)
=======
</Table>
The accompanying notes are an integral part of these financial statements.
69
HARTFORD CAPITAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.9%
CAPITAL GOODS -- 1.0%
2 Manitowoc Company, Inc. .......................... $ 110
-------
CONSUMER CYCLICAL -- 7.8%
3 CDW Corp. ........................................ 228
5 Cheesecake Factory, Inc. (D)...................... 133
4 Copart, Inc. (D).................................. 120
3 Kohl's Corp. (D).................................. 202
4 Wal-Mart Stores, Inc. ............................ 180
-------
863
-------
CONSUMER STAPLES -- 3.0%
5 PepsiCo, Inc. .................................... 332
-------
ENERGY -- 10.2%
3 BJ Services Co. .................................. 97
1 Chevron Corp. .................................... 73
4 Exxon Mobil Corp. ................................ 272
4 Halliburton Co. .................................. 129
2 Noble Corp. ...................................... 116
3 Occidental Petroleum Corp. ....................... 127
7 XTO Energy, Inc. ................................. 325
-------
1,139
-------
FINANCE -- 16.5%
7 American International Group, Inc. ............... 523
2 Bank of America Corp. ............................ 112
4 Citigroup, Inc. .................................. 203
4 Commerce Bancorp, Inc. ........................... 152
3 Countrywide Financial Corp. ...................... 121
3 Federal National Mortgage Association............. 181
4 First Marblehead Corp. ........................... 201
3 SLM Corp. ........................................ 144
6 TD Ameritrade Holding Corp. ...................... 92
6 UCBH Holdings, Inc. .............................. 101
-------
1,830
-------
HEALTH CARE -- 16.9%
3 Baxter International, Inc. ....................... 125
5 Boston Scientific Corp. (D)....................... 88
3 CVS Corp. ........................................ 91
4 Eli Lilly & Co. .................................. 189
3 Genzyme Corp. (D)................................. 162
2 Invitrogen Corp. (D).............................. 93
2 Johnson & Johnson................................. 155
3 Lincare Holdings, Inc. (D)........................ 124
2 Novartis AG ADR................................... 124
13 Schering-Plough Corp. ............................ 310
5 Teva Pharmaceutical Industries Ltd. ADR........... 157
6 Walgreen Co. ..................................... 257
-------
1,875
-------
SERVICES -- 12.8%
2 Automatic Data Processing, Inc. .................. 116
2 Cintas Corp. ..................................... 79
1 FedEx Corp. ...................................... 128
3 H & R Block, Inc. ................................ 71
6 IMS Health, Inc. ................................. 157
2 Jackson Hewitt Tax Service, Inc. ................. 82
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SERVICES -- (CONTINUED)
2 Jacobs Engineering Group, Inc. (D)................ $ 179
2 Omnicom Group, Inc. .............................. 183
8 Time Warner, Inc. ................................ 184
3 Viacom, Inc. Class B (D).......................... 113
3 Weight Watchers International, Inc. .............. 131
-------
1,423
-------
TECHNOLOGY -- 29.1%
6 Adobe Systems, Inc. (D)........................... 263
4 Affiliated Computer Services, Inc. Class A (D).... 173
2 Apple Computer, Inc. (D).......................... 170
9 Citrix Systems, Inc. (D).......................... 254
3 Cognos, Inc. (D).................................. 146
10 General Electric Co. ............................. 355
12 Intel Corp. ...................................... 244
3 International Business Machines Corp. ............ 287
7 Linear Technology Corp. .......................... 217
2 Medtronic, Inc. .................................. 88
16 Microsoft Corp. .................................. 487
10 Motorola, Inc. ................................... 208
13 Symantec Corp. (D)................................ 261
2 Zebra Technologies Corp. Class A (D).............. 83
-------
3,236
-------
TRANSPORTATION -- 1.6%
2 Carnival Corp. ................................... 86
6 Gentex Corp. ..................................... 95
-------
181
-------
UTILITIES -- 1.0%
1 Questar Corp. .................................... 114
-------
Total common stock
(cost $9,564)................................... $11,103
-------
SHORT-TERM INVESTMENTS -- 0.4%
INVESTMENT POOLS AND FUNDS -- 0.4%
47 State Street Bank Money Market Fund............... $ 47
-------
Total short-term investments
(cost $47)...................................... $ 47
-------
Total investments in securities
(cost $9,611) (C)............................... $11,150
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 4.62% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $9,709 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation.......................... $1,879
Unrealized depreciation.......................... (438)
------
Net unrealized appreciation...................... $1,441
======
</Table>
(D)Currently non-income producing.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
70
HARTFORD DISCIPLINED EQUITY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.5%
BASIC MATERIALS -- 4.7%
844 Alcoa, Inc. (U)................................... $ 25,322
152 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 8,460
256 Goodyear Tire & Rubber Co. (D)(G)................. 5,380
568 Kimberly-Clark Corp. ............................. 38,582
200 Lyondell Chemical Co. (G)......................... 5,124
----------
82,868
----------
CAPITAL GOODS -- 5.1%
128 3M Co. ........................................... 10,006
111 Black & Decker Corp. (G).......................... 8,869
218 Hasbro, Inc. ..................................... 5,949
771 Lam Research Corp. (D)#........................... 39,048
280 Parker-Hannifin Corp. ............................ 21,496
72 Terex Corp. (D)(U)................................ 4,643
----------
90,011
----------
CONSUMER CYCLICAL -- 7.6%
695 Altria Group, Inc. #.............................. 59,643
272 Dillard's, Inc. (G)............................... 9,515
449 Gap, Inc. ........................................ 8,750
531 Kohl's Corp. (D).................................. 36,302
473 Office Depot, Inc. (D)(G)......................... 18,047
----------
132,257
----------
CONSUMER STAPLES -- 1.6%
202 General Mills, Inc. .............................. 11,630
36 Kraft Foods, Inc. ................................ 1,285
239 Reynolds American, Inc. (G)....................... 15,634
----------
28,549
----------
ENERGY -- 10.1%
562 Chevron Corp. .................................... 41,346
761 ConocoPhillips (U)................................ 54,740
348 ExxonMobil Corp. ................................. 26,667
198 Hess Corp. (U).................................... 9,795
33 Marathon Oil Corp. ............................... 3,089
841 Occidental Petroleum Corp. ....................... 41,056
----------
176,693
----------
FINANCE -- 23.2%
556 ACE Ltd. ......................................... 33,677
617 Assurant, Inc. ................................... 34,084
239 Axis Capital Holdings Ltd. ....................... 7,962
1,208 Bank of America Corp. ............................ 64,500
1,335 Citigroup, Inc. .................................. 74,340
73 Comerica, Inc. ................................... 4,284
480 Countrywide Financial Corp. (G)................... 20,380
43 Everest Re Group Ltd. ............................ 4,248
209 Goldman Sachs Group, Inc. ........................ 41,604
426 Lehman Brothers Holdings, Inc. #.................. 33,240
94 MBIA, Inc. (G).................................... 6,875
103 PNC Financial Services Group, Inc. (G)............ 7,634
85 Ryder System, Inc. ............................... 4,330
289 St. Paul Travelers Cos., Inc. .................... 15,538
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
419 TD Ameritrade Holding Corp. ...................... $ 6,771
387 UnitedHealth Group, Inc. ......................... 20,810
394 US Bancorp........................................ 14,262
593 Western Union Co. ................................ 13,299
----------
407,838
----------
HEALTH CARE -- 12.6%
850 Abbott Laboratories............................... 41,413
322 Amgen, Inc. (D)#.................................. 21,975
394 Amylin Pharmaceuticals, Inc. (D)(G)............... 14,227
1,458 Bristol-Myers Squibb Co. ......................... 38,377
208 Cephalon, Inc. (D)(G)............................. 14,673
401 Forest Laboratories, Inc. (D)..................... 20,306
86 Gilead Sciences, Inc. (D)......................... 5,610
746 McKesson Corp. ................................... 37,843
562 Schering-Plough Corp. ............................ 13,295
260 Wyeth #........................................... 13,219
----------
220,938
----------
SERVICES -- 7.3%
520 Accenture Ltd. Class A #.......................... 19,215
208 Comcast Corp. Class A (D)(U)#(G).................. 8,824
420 EchoStar Communications Corp. Class A (D)......... 15,965
60 Manpower, Inc. ................................... 4,526
234 McGraw-Hill Cos., Inc. ........................... 15,883
108 Omnicom Group, Inc. (G)........................... 11,243
440 United Parcel Service, Inc. Class B............... 33,014
171 Walt Disney Co. .................................. 5,870
357 Waste Management, Inc. ........................... 13,138
----------
127,678
----------
TECHNOLOGY -- 21.7%
1,166 AT&T, Inc. (G).................................... 41,681
366 BellSouth Corp. .................................. 17,242
154 CenturyTel, Inc. ................................. 6,706
268 Cisco Systems, Inc. (D)........................... 7,334
543 Dover Corp. ...................................... 26,638
593 First Data Corp. ................................. 15,138
422 General Electric Co. ............................. 15,703
802 Hewlett-Packard Co. .............................. 33,026
304 International Business Machines Corp. ............ 29,563
436 Lockheed Martin Corp. ............................ 40,133
385 MEMC Electronic Materials, Inc. (D)............... 15,057
1,475 Microsoft Corp. .................................. 44,044
1,722 Motorola, Inc. ................................... 35,411
305 Oracle Corp. (D).................................. 5,226
690 Qwest Communications International, Inc. (D)(G)... 5,774
365 Sprint Nextel Corp. .............................. 6,885
620 Symantec Corp. (D)(G)............................. 12,925
281 Whirlpool Corp. .................................. 23,304
----------
381,790
----------
TRANSPORTATION -- 0.2%
52 General Dynamics Corp. ........................... 3,829
----------
</Table>
The accompanying notes are an integral part of these financial statements.
71
HARTFORD DISCIPLINED EQUITY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
v UTILITIES -- 2.4%
156 FirstEnergy Corp. ................................ $ 9,387
180 NRG Energy, Inc. (D)(G)........................... 10,065
432 TXU Corp. ........................................ 23,440
----------
42,892
----------
Total common stock
(cost $1,466,049)............................... $1,695,343
----------
PRINCIPAL
AMOUNT
-------
V
SHORT-TERM INVESTMENTS -- 4.8%
REPURCHASE AGREEMENTS -- 3.1%
$12,340 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 12,340
17,016 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 17,016
185 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 185
10,651 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 10,651
3,637 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 3,637
10,651 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 10,651
----------
54,480
----------
SHARES
-------
V
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.7%
30,653 BNY Institutional Cash Reserve Fund............... $ 30,653
----------
Total short-term investments
(cost $85,133).................................. $ 85,133
----------
Total investments in securities
(cost $1,551,182) (C)........................... $1,780,476
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,552,490 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $245,144
Unrealized depreciation........................ (17,158)
--------
Net unrealized appreciation.................... $227,986
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(U)At December 31, 2006, securities valued at $103,324 were
designated to cover open call options written as follows (see Note 2 to
accompanying Notes to Financial Statements):
<Table>
<Caption>
NUMBER OF EXERCISE EXPIRATION MARKET PREMIUMS
ISSUER CONTRACTS* PRICE DATE VALUE (W) RECEIVED
------ ---------- -------- ---------- --------- --------
Alcoa, Inc. 860 $32.50 Jan-07 $ 13 $ 38
Comcast Corp. 487 45.00 Feb-07 33 31
ConocoPhillips 604 80.00 Feb-07 30 60
Hess Corp. 409 55.00 Jan-07 6 41
Terex Corp. 162 70.00 Feb-07 29 38
---- ----
Total $111 $208
==== ====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
S&P 500 Mini 600 Long Mar-07 $618
====
</Table>
Cash of $2,498 was pledged as initial margin deposit for open
futures contracts at December 31, 2006.
The accompanying notes are an integral part of these financial statements.
72
HARTFORD DIVIDEND AND GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- 99.1%
BASIC MATERIALS -- 7.1%
3,440 Alcoa, Inc. ...................................... $ 103,240
454 Bowater, Inc. (G)................................. 10,208
1,330 Companhia Vale do Rio Doce ADR (G)................ 39,564
2,602 E.I. DuPont de Nemours & Co. (G).................. 126,740
1,726 International Paper Co. (G)....................... 58,846
1,263 Kimberly-Clark Corp. ............................. 85,848
755 Newmont Mining Corp. (G).......................... 34,084
114 Rio Tinto plc ADR................................. 24,288
653 Rohm & Haas Co. .................................. 33,387
----------
516,205
----------
CAPITAL GOODS -- 5.1%
1,151 American Standard Cos., Inc. ..................... 52,783
1,200 Deere & Co. ...................................... 114,036
779 KLA-Tencor Corp. (G).............................. 38,775
571 Parker-Hannifin Corp. ............................ 43,929
1,276 Pitney Bowes, Inc. ............................... 58,920
3,578 Xerox Corp. (D)................................... 60,654
----------
369,097
----------
CONSUMER CYCLICAL -- 8.2%
1,491 Altria Group, Inc. ............................... 127,966
888 Avery Dennison Corp. ............................. 60,294
153 Genuine Parts Co. ................................ 7,271
593 Home Depot, Inc. (G).............................. 23,819
1,012 Limited Brands, Inc. (G).......................... 29,273
2,120 McDonald's Corp. ................................. 93,993
359 NIKE, Inc. Class B (G)............................ 35,562
1,854 Sysco Corp. (G)................................... 68,146
3,219 Wal-Mart Stores, Inc. (G)......................... 148,649
----------
594,973
----------
CONSUMER STAPLES -- 5.4%
732 Bunge Ltd. (G).................................... 53,063
1,630 Coca-Cola Co. .................................... 78,628
789 Nestle S.A. ADR................................... 69,923
750 Procter & Gamble Co. (G).......................... 48,190
2,526 Tyson Foods, Inc. Class A (G)..................... 41,556
884 Unilever N.V. NY Shares........................... 24,084
1,145 Weyerhaeuser Co. (G).............................. 80,887
----------
396,331
----------
ENERGY -- 15.7%
677 BP plc ADR........................................ 45,400
3,282 Chevron Corp. .................................... 241,318
1,649 ConocoPhillips.................................... 118,638
1,832 EnCana Corp. ..................................... 84,165
3,482 ExxonMobil Corp. ................................. 266,815
1,168 Royal Dutch Shell plc............................. 82,669
833 Schlumberger Ltd. (G)............................. 52,587
2,514 Total S.A. ADR.................................... 180,814
1,475 XTO Energy, Inc. ................................. 69,380
----------
1,141,786
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
FINANCE -- 17.9%
1,081 ACE Ltd. ......................................... $ 65,482
1,186 Allstate Corp. ................................... 77,188
1,352 American International Group, Inc. ............... 96,891
4,116 Bank of America Corp. ............................ 219,731
3,942 Citigroup, Inc. .................................. 219,556
1,000 Federal Home Loan Mortgage Corp. ................. 67,927
466 JP Morgan Chase & Co. ............................ 22,515
977 MBIA, Inc. (G).................................... 71,409
980 Merrill Lynch & Co., Inc. ........................ 91,247
758 Metlife, Inc. (G)................................. 44,700
370 PNC Financial Services Group, Inc. ............... 27,380
530 Prudential Financial, Inc. (G).................... 45,463
1,292 State Street Corp. (G)............................ 87,133
1,471 Synovus Financial Corp. .......................... 45,357
1,766 UBS AG............................................ 106,519
463 Western Union Co. (G)............................. 10,372
----------
1,298,870
----------
HEALTH CARE -- 9.3%
2,879 Abbott Laboratories............................... 140,231
1,004 AstraZeneca plc ADR............................... 53,764
3,694 Bristol-Myers Squibb Co. ......................... 97,223
2,855 Eli Lilly & Co. (G)............................... 148,761
967 Sanofi-Aventis S.A. ADR........................... 44,665
5,267 Schering-Plough Corp. ............................ 124,510
806 Teva Pharmaceutical Industries Ltd. ADR........... 25,047
889 Wyeth............................................. 45,248
----------
679,449
----------
SERVICES -- 7.0%
1,634 Accenture Ltd. Class A............................ 60,355
726 Automatic Data Processing, Inc. .................. 35,755
1,647 CBS Corp. Class B................................. 51,343
1,386 Comcast Corp. Class A (D)(G)...................... 58,680
946 Comcast Corp. Special Class A (D)(G).............. 39,602
1,234 New York Times Co. Class A (G).................... 30,055
2,026 Time Warner, Inc. (G)............................. 44,128
765 United Parcel Service, Inc. Class B (G)........... 57,390
1,109 Viacom, Inc. Class B (D).......................... 45,492
705 Warner Music Group Corp. ......................... 16,175
1,873 Waste Management, Inc. ........................... 68,852
----------
507,827
----------
TECHNOLOGY -- 17.9%
6,465 AT&T, Inc. (G).................................... 231,124
851 BellSouth Corp. .................................. 40,105
3,922 EMC Corp. (D)..................................... 51,772
1,695 First Data Corp. (G).............................. 43,259
5,738 General Electric Co. ............................. 213,525
1,531 International Business Machines Corp. ............ 148,727
678 Lockheed Martin Corp. ............................ 62,460
1,536 Maxim Integrated Products, Inc. .................. 47,027
1,745 Medtronic, Inc. .................................. 93,364
3,178 Microsoft Corp. .................................. 94,898
3,750 Motorola, Inc. ................................... 77,098
846 SanDisk Corp. (D)(G).............................. 36,386
2,795 Sprint Nextel Corp. (G)........................... 52,788
</Table>
The accompanying notes are an integral part of these financial statements.
73
HARTFORD DIVIDEND AND GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
2,021 Verizon Communications, Inc. ..................... $ 75,271
388 Whirlpool Corp. (G)............................... 32,220
----------
1,300,024
----------
TRANSPORTATION -- 0.5%
2,595 Southwest Airlines Co. (G)........................ 39,762
----------
UTILITIES -- 5.0%
1,136 Dominion Resources, Inc. ......................... 95,217
2,047 Exelon Corp. (G).................................. 126,659
1,615 FPL Group, Inc. (G)............................... 87,872
618 Progress Energy, Inc. (G)......................... 30,307
324 Veolia Environment ADR (G)........................ 24,384
----------
364,439
----------
Total common stock
(cost $5,686,706)............................... $7,208,763
----------
PRINCIPAL
AMOUNT
- ----------
SHORT-TERM INVESTMENTS -- 16.9%
REPURCHASE AGREEMENTS -- 1.0%
$ 17,123 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 17,123
23,612 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 23,612
256 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 256
14,780 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 14,780
5,047 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,047
14,780 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 14,780
----------
75,598
----------
MARKET
SHARES VALUE U
- ---------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 15.9%
1,155,920 BNY Institutional Cash Reserve Fund............... $1,155,920
----------
Total short-term investments
(cost $1,231,518)............................... $1,231,518
----------
Total investments in securities
(cost $6,918,224) (C)........................... $8,440,281
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.79% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $6,923,219 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $1,578,478
Unrealized depreciation....................... (61,416)
----------
Net unrealized appreciation................... $1,517,062
==========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
74
HARTFORD EQUITY INCOME HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 98.4%
BASIC MATERIALS -- 8.8%
86 Air Products and Chemicals, Inc. ................. $ 6,016
229 Alcoa, Inc. ...................................... 6,866
233 Dow Chemical Co. ................................. 9,304
128 E.I. DuPont de Nemours & Co. ..................... 6,244
56 International Paper Co. (G)....................... 1,901
90 Kimberly-Clark Corp. ............................. 6,096
70 PPG Industries, Inc. ............................. 4,495
--------
40,922
--------
CAPITAL GOODS -- 6.2%
56 3M Co. ........................................... 4,380
120 American Standard Cos., Inc. ..................... 5,520
61 Deere & Co. ...................................... 5,790
96 Goodrich Corp. ................................... 4,391
192 Pitney Bowes, Inc. ............................... 8,854
--------
28,935
--------
CONSUMER CYCLICAL -- 3.3%
182 Altria Group, Inc. ............................... 15,631
--------
CONSUMER STAPLES -- 6.6%
100 Campbell Soup Co. (G)............................. 3,905
71 Colgate-Palmolive Co. ............................ 4,645
51 Diageo plc ADR.................................... 4,068
112 General Mills, Inc. .............................. 6,425
131 Kellogg Co. ...................................... 6,545
83 PepsiCo, Inc. .................................... 5,167
--------
30,755
--------
ENERGY -- 10.6%
188 Chevron Corp. .................................... 13,846
74 ConocoPhillips.................................... 5,347
291 ExxonMobil Corp. ................................. 22,298
142 Halliburton Co. .................................. 4,418
53 Royal Dutch Shell plc ADR......................... 3,774
--------
49,683
--------
FINANCE -- 31.5%
107 ACE Ltd. ......................................... 6,505
102 Allstate Corp. ................................... 6,635
410 Bank of America Corp. ............................ 21,912
129 Bank of New York Co., Inc. ....................... 5,075
155 Chubb Corp. ...................................... 8,211
384 Citigroup, Inc. .................................. 21,394
268 Host Hotels & Resorts, Inc. ...................... 6,582
236 JP Morgan Chase & Co. ............................ 11,404
89 Merrill Lynch & Co., Inc. ........................ 8,295
145 PNC Financial Services Group, Inc. ............... 10,771
65 SunTrust Banks, Inc. ............................. 5,476
213 UBS AG............................................ 12,850
379 US Bancorp........................................ 13,702
69 Wachovia Corp. ................................... 3,955
129 Wells Fargo & Co. ................................ 4,586
--------
147,353
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
HEALTH CARE -- 6.4%
131 Abbott Laboratories............................... $ 6,361
156 Baxter International, Inc. ....................... 7,216
167 Bristol-Myers Squibb Co. ......................... 4,406
230 Wyeth............................................. 11,708
--------
29,691
--------
SERVICES -- 2.2%
52 Gannett Co., Inc. ................................ 3,164
62 R.R. Donnelley & Sons Co. ........................ 2,203
129 Waste Management, Inc. ........................... 4,740
--------
10,107
--------
TECHNOLOGY -- 11.7%
401 AT&T, Inc. (G).................................... 14,345
121 BellSouth Corp. .................................. 5,684
106 Chunghwa Telecom Co., Ltd. ADR.................... 2,094
532 General Electric Co. ............................. 19,807
145 Sprint Nextel Corp. .............................. 2,739
273 Verizon Communications, Inc. ..................... 10,172
--------
54,841
--------
UTILITIES -- 11.1%
116 American Electric Power Co., Inc. ................ 4,952
104 Consolidated Edison, Inc. ........................ 4,995
125 Dominion Resources, Inc. ......................... 10,442
24 Entergy Corp. .................................... 2,244
103 Exelon Corp. ..................................... 6,357
225 FPL Group, Inc. .................................. 12,252
81 PPL Corp. ........................................ 2,885
90 SCANA Corp. ...................................... 3,640
105 Southern Co. ..................................... 3,858
--------
51,625
--------
Total common stock
(cost $398,191)................................. $459,543
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 3.1%
REPURCHASE AGREEMENTS -- 1.6%
$1,683 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,683
2,321 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,321
25 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 25
1,453 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,453
</Table>
The accompanying notes are an integral part of these financial statements.
75
HARTFORD EQUITY INCOME HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
REPURCHASE AGREEMENTS -- (CONTINUED)
$ 496 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... $ 496
1,453 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,453
--------
7,431
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 1.5%
7,211 BNY Institutional Cash Reserve Fund............... $ 7,211
--------
Total short-term investments
(cost $14,642).................................. $ 14,642
--------
Total investments in securities
(cost $412,833) (C)............................. $474,185
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 4.88% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $412,940 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation $63,759
Unrealized depreciation......................... (2,514)
-------
Net unrealized appreciation..................... $61,245
=======
</Table>
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
76
HARTFORD FOCUS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 4.5%
56 Alcoa, Inc. ...................................... $ 1,678
28 Cameco Corp. ..................................... 1,133
33 Companhia Vale do Rio Doce ADR.................... 972
-------
3,783
-------
CAPITAL GOODS -- 3.9%
15 Boeing Co. ....................................... 1,341
20 Deere & Co. ...................................... 1,854
-------
3,195
-------
CONSUMER CYCLICAL -- 6.8%
72 Circuit City Stores, Inc. ........................ 1,374
69 D.R. Horton, Inc. ................................ 1,836
14 Home Depot, Inc. ................................. 566
40 Wal-Mart Stores, Inc. ............................ 1,829
-------
5,605
-------
CONSUMER STAPLES -- 4.2%
26 Clorox Co. ....................................... 1,681
67 Unilever N.V. NY Shares........................... 1,834
-------
3,515
-------
ENERGY -- 4.3%
43 EnCana Corp. ..................................... 1,985
50 Halliburton Co. .................................. 1,553
-------
3,538
-------
FINANCE -- 20.3%
79 Citigroup, Inc. .................................. 4,411
57 Countrywide Financial Corp. ...................... 2,415
70 E*Trade Financial Corp. (D)....................... 1,578
16 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 2,691
57 UBS AG............................................ 3,445
43 UnitedHealth Group, Inc. ......................... 2,316
-------
16,856
-------
HEALTH CARE -- 11.5%
75 Boston Scientific Corp. (D)....................... 1,289
52 Bristol-Myers Squibb Co. ......................... 1,379
109 Elan Corp. plc ADR (D)............................ 1,612
51 Eli Lilly & Co. .................................. 2,647
57 Sanofi-Aventis S.A. ADR........................... 2,641
-------
9,568
-------
SERVICES -- 10.4%
27 Accenture Ltd. Class A............................ 1,004
42 United Parcel Service, Inc. Class B............... 3,119
56 Viacom, Inc. Class B (D).......................... 2,310
150 XM Satellite Radio Holdings, Inc. Class A (D)..... 2,173
-------
8,606
-------
TECHNOLOGY -- 33.3%
31 Adobe Systems, Inc. (D)........................... 1,262
64 AT&T, Inc. ....................................... 2,288
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
TECHNOLOGY -- (CONTINUED)
37 Broadcom Corp. Class A (D)........................ $ 1,186
106 Cisco Systems, Inc. (D)........................... 2,902
221 EMC Corp. (D)..................................... 2,913
86 First Data Corp. ................................. 2,197
108 General Electric Co. ............................. 4,001
67 Maxim Integrated Products, Inc. .................. 2,055
76 Medtronic, Inc. .................................. 4,056
113 Sprint Nextel Corp. .............................. 2,138
29 Texas Instruments, Inc. .......................... 821
70 Yahoo!, Inc. (D).................................. 1,788
-------
27,607
-------
Total common stock
(cost $78,005).................................. $82,273
-------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 0.8%
REPURCHASE AGREEMENTS -- 0.8%
$141 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 141
194 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 194
2 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 2
122 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 122
42 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 42
122 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 122
-------
Total short-term investments
(cost $623)..................................... $ 623
-------
Total investments in securities
(cost $78,628) (C).............................. $82,896
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 19.68% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $2,691, which represents 3.25% of total net assets.
The accompanying notes are an integral part of these financial statements.
77
HARTFORD FOCUS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $78,722 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 7,236
Unrealized depreciation......................... (3,062)
-------
Net unrealized appreciation..................... $ 4,174
=======
</Table>
(D)Currently non-income producing.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
78
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
COMMON STOCK -- 59.1%
BASIC MATERIALS -- 3.4%
56 Cameco Corp. ..................................... $ 2,277
88 Companhia Vale do Rio Doce ADR.................... 2,614
37 Freeport-McMoRan Copper & Gold, Inc. Class B...... 2,062
12 Vallourec (A)..................................... 3,603
40 Xstrata plc (A)................................... 2,008
--------
12,564
--------
CAPITAL GOODS -- 1.0%
41 Boeing Co. # ..................................... 3,642
--------
CONSUMER CYCLICAL -- 5.2%
55 Best Buy Co., Inc. # ............................. 2,698
586 Carphone Warehouse Group plc (A)#................. 3,592
81 eBay, Inc. (D).................................... 2,433
18 Nintendo Co. Ltd. (A)............................. 4,608
767 Tesco plc (A)..................................... 6,064
--------
19,395
--------
CONSUMER STAPLES -- 3.9%
21 Fomento Economico Mexicano S.A. de C.V. ADR #..... 2,431
1 Japan Tobacco, Inc. (A)........................... 3,127
8 Nestle S.A. (A)................................... 2,698
74 Reckitt Benckiser plc (A)......................... 3,382
55 Royal Numico N.V. (A)............................. 2,937
--------
14,575
--------
ENERGY -- 2.3%
23 Noble Corp. ...................................... 1,744
50 RAO Gazprom Class S ADR (K)....................... 2,291
70 Schlumberger Ltd. # .............................. 4,440
--------
8,475
--------
FINANCE -- 9.3%
26 Deutsche Boerse AG (A)#........................... 4,828
148 E*Trade Financial Corp. (D)#...................... 3,307
34 Erste Bank Der Oesterreichischen Sparkassen AG
(A)#............................................ 2,621
20 Goldman Sachs Group, Inc. # ...................... 4,007
14 KBC Groep N.V. (A)................................ 1,758
397 Man Group plc (A)................................. 4,053
11 ORIX Corp. (A)PFIC................................ 3,190
53 Standard Chartered plc (A)#....................... 1,552
-- Sumitomo Mitsui Financial Group, Inc. (A)(Q) ..... 1,710
116 Sumitomo Realty & Development Co., Ltd. (A) ...... 3,719
62 UBS AG (A)........................................ 3,730
--------
34,475
--------
HEALTH CARE -- 6.1%
24 Celgene Corp. (D)#................................ 1,352
72 Eisai Co., Ltd. (A)............................... 3,950
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
HEALTH CARE -- (CONTINUED)
165 Elan Corp. plc ADR (D)............................ $ 2,437
71 Monsanto Co. # ................................... 3,709
199 Schering-Plough Corp. # .......................... 4,695
90 St. Jude Medical, Inc. (D)........................ 3,294
64 Wyeth #........................................... 3,269
--------
22,706
--------
SERVICES -- 6.1%
118 Comcast Corp. Class A (D)#........................ 4,986
1,148 EMI Group plc (A)#................................ 5,952
78 Las Vegas Sands Corp. (D)#........................ 6,988
29 United Parcel Service, Inc. Class B............... 2,152
116 Warner Music Group Corp. # ....................... 2,651
--------
22,729
--------
TECHNOLOGY -- 21.0%
162 ABB Ltd. (A)...................................... 2,903
130 Activision, Inc. (D).............................. 2,241
111 Adobe Systems, Inc. (D)#.......................... 4,568
98 America Movil S.A. de C.V. ADR #.................. 4,432
132 American Tower Corp. Class A (D)#................. 4,932
112 ASML Holding N.V. (A)(D).......................... 2,755
117 Brambles Ltd. (A)(D).............................. 1,179
82 Broadcom Corp. Class A (D)........................ 2,659
155 Cisco Systems, Inc. (D)#.......................... 4,236
163 Corning, Inc. (D)#................................ 3,052
39 Danaher Corp. #................................... 2,805
210 EMC Corp. (D)#.................................... 2,769
14 Google, Inc. (D)#................................. 6,447
93 Hewlett-Packard Co. # ............................ 3,818
431 Hon Hai Precision Industry Co., Ltd. (A).......... 3,067
120 Intel Corp. # .................................... 2,424
79 Motorola, Inc. # ................................. 1,632
84 Network Appliance, Inc. (D)#...................... 3,315
132 Oracle Corp. (D)#................................. 2,269
6 Rakuten, Inc. (A)(D).............................. 2,902
26 Research In Motion Ltd. (D)....................... 3,335
4 Samsung Electronics Co., Ltd. (A)................. 2,837
64 SanDisk Corp. (D)#................................ 2,732
162 Sharp Corp. (A)................................... 2,785
67 Telenor ASA (A)................................... 1,246
--------
77,340
--------
TRANSPORTATION -- 0.5%
25 Ryanair Holdings plc ADR (D)(G)................... 2,029
--------
UTILITIES -- 0.3%
12 Veolia Environment S.A. (A)....................... 941
--------
Total common stock
(cost $184,054)................................. $218,871
--------
</Table>
The accompanying notes are an integral part of these financial statements.
79
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ----------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 10.3%
FINANCE -- 10.3%
$ 445 Advanta Business Card Master Trust,
5.15%, 10/20/2010............................... $ 444
900 Advanta Business Card Master Trust,
5.42%, 04/20/2011 (L)#.......................... 901
521 American Express Credit Account Master Trust,
5.35%, 01/18/2011 (L)#.......................... 520
1,130 American Honda Finance Corp.,
5.40%, 07/23/2007 (I)(L)#....................... 1,130
127 ARMS II,
5.58%, 09/10/2034 (L)........................... 127
1,415 Arran Residential Mortgages Funding,
5.34%, 04/12/2036 (I)(L)........................ 1,415
916 Asset Backed Securities Corp. Home Equity Loan
Trust,
5.41%, 07/25/2036 (L)#.......................... 916
660 Banc of America Commercial Mortgage, Inc.,
5.35%, 09/10/2047 (L)........................... 656
500 Bank One Issuance Trust,
5.46%, 06/15/2011 (L)........................... 501
595 Bear Stearns Commercial Mortgage Securities, Inc.,
4.68%, 08/13/2039 #............................. 576
1,025 Bear Stearns Commercial Mortgage Securities, Inc.,
5.48%, 10/12/2041 (L)#.......................... 1,034
450 Bear Stearns Commercial Mortgage Securities, Inc.,
5.61%, 11/15/2033 #............................. 456
540 Capital Auto Receivables Asset Trust,
5.23%, 02/15/2009 #............................. 539
1,507 Capital One Auto Finance Trust,
5.31%, 05/15/2009 #............................. 1,507
620 Capital One Prime Auto Receivables Trust,
5.37%, 04/15/2011 (L)#.......................... 620
1,195 Caterpillar Financial Asset Trust,
5.59%, 02/25/2009 #............................. 1,196
265 Chase Issuance Trust,
5.37%, 07/15/2010 (L)........................... 265
270 Chase Manhattan Auto Owner Trust,
5.37%, 01/15/2009............................... 270
446 Collegiate Funding Services Education Loan Trust
I,
5.37%, 09/28/2017 (L)........................... 446
149 Collegiate Funding Services Education Loan Trust
I,
5.38%, 09/29/2014 (L)........................... 149
124 Credit-Based Asset Servicing and Securitization,
5.47%, 08/25/2035 (L)........................... 125
219 Crusade Global Trust,
5.42%, 06/17/2037 (L)#.......................... 219
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
FINANCE -- (CONTINUED)
$ 65 Crusade Global Trust,
5.52%, 01/16/2035 (L)........................... $ 65
147 Crusade Global Trust,
5.55%, 09/18/2034 (L)#.......................... 147
83 Crusade Global Trust,
5.57%, 01/17/2034 (L)........................... 83
450 CS First Boston Mortgage Securities Corp.,
3.94%, 05/15/2038 #............................. 418
802 DaimlerChrysler Auto Trust,
2.58%, 04/08/2009 #............................. 792
670 DaimlerChrysler Master Owner Trust,
5.36%, 08/17/2009 (L)#.......................... 670
400 Discover Card Master Trust I,
5.37%, 05/15/2010 (L)#.......................... 400
285 Discover Card Master Trust I,
5.38%, 04/16/2010 (L)#.......................... 285
645 Discover Card Master Trust I,
5.49%, 04/16/2010 (L)#.......................... 646
GBP 116 European Loan Conduit,
5.42%, 11/01/2029 (I)(L)........................ 228
931 First Union-Chase Commercial Mortgage,
6.65%, 06/15/2031 #............................. 951
700 Ford Credit Floorplan Master Owner Trust,
5.50%, 05/15/2010 (L)#.......................... 700
500 GE Capital Credit Card Master Note Trust,
5.39%, 09/15/2010 (L)#.......................... 500
1,135 GE Capital Credit Card Master Note Trust,
5.40%, 06/15/2010 (L)#.......................... 1,135
1,099 GE Commercial Loan Trust,
5.43%, 04/19/2015 (I)(L)........................ 1,099
1,267 GE Commercial Loan Trust,
5.96%, 07/19/2015 (I)(L)#....................... 1,267
208 GE Corporate Aircraft Financing LLC,
5.52%, 09/25/2013 (I)(L)........................ 208
114 Granite Master Issuer plc,
5.38%, 06/20/2030 (L)........................... 114
75 Granite Mortgages plc,
5.66%, 07/20/2019 (L)........................... 75
835 Greenwich Capital Commercial Funding Corp.,
5.22%, 04/10/2037 (L)........................... 829
516 Harley-Davidson Motorcycle Trust,
5.06%, 06/15/2010 (I)........................... 515
1,340 Household Affinity Credit Card Master Note Trust
I,
5.47%, 02/15/2010 (L)#.......................... 1,342
16 Household Automotive Trust,
4.16%, 09/17/2008............................... 16
453 Household Automotive Trust,
5.40%, 06/17/2009............................... 453
835 Household Automotive Trust,
5.61%, 06/17/2009............................... 836
730 Hyundai Auto Receivables Trust,
5.25%, 09/15/2009............................... 730
1,130 John Deere Owner Trust,
5.41%, 11/17/2008 #............................. 1,130
</Table>
The accompanying notes are an integral part of these financial statements.
80
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 143 Medallion Trust,
5.50%, 05/25/2035 (L)........................... $ 143
154 Medallion Trust,
5.56%, 12/21/2033 (L)........................... 154
375 Morgan Stanley Capital I,
5.23%, 09/15/2042 #............................. 372
590 Morgan Stanley Capital I,
5.91%, 08/12/2041 (L)#.......................... 603
196 Morgan Stanley Dean Witter Capital I,
6.20%, 07/15/2033............................... 197
1,025 Morgan Stanley Dean Witter Capital I,
6.51%, 04/15/2034 #............................. 1,076
478 National RMBS Trust,
5.47%, 03/20/2034 (L)........................... 478
101 New Century Home Equity Loan Trust,
5.64%, 03/25/2035 (L)........................... 101
455 Nissan Auto Receivables Owner Trust,
5.18%, 08/15/2008 #............................. 455
496 Nomura Asset Securities Corp.,
6.59%, 03/15/2030 #............................. 502
226 Option One Mortgage Loan Trust,
5.51%, 08/25/2035 (L)........................... 226
383 Permanent Financing plc,
5.50%, 06/10/2011 (L)#.......................... 383
570 Prudential Commercial Mortgage Trust,
4.49%, 02/11/2036 #............................. 548
59 Residential Asset Securities Corp.,
5.45%, 08/25/2035 (L)........................... 59
530 SLM Student Loan Trust,
5.54%, 07/25/2012 (L)........................... 530
895 Volkswagen Credit Auto Master Trust,
5.37%, 07/20/2010 (L)#.......................... 895
830 Wachovia Auto Owners Trust,
5.41%, 04/20/2009 #............................. 830
500 Wachovia Bank Commercial Mortgage Trust,
5.12%, 07/15/2042 #............................. 494
343 Westpac Securitisation Trust,
5.46%, 03/23/2036 (L)........................... 345
--------
Total asset & commercial
mortgage backed securities
(cost $38,020).................................. $ 38,037
--------
CORPORATE BONDS: INVESTMENT GRADE -- 18.0%
BASIC MATERIALS -- 0.1%
490 Vale Overseas Ltd.,
6.25%, 01/23/2017 #............................. $ 492
--------
CAPITAL GOODS -- 0.3%
EUR 500 Rolls-Royce plc,
6.38%, 06/14/2007 #............................. 667
595 United Technologies Corp.,
5.47%, 06/01/2009 (L)#.......................... 596
--------
1,263
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CONSUMER CYCLICAL -- 1.4%
$ 670 Altria Group, Inc.,
7.20%, 02/01/2007 #............................. $ 671
485 DaimlerChrysler N.A. Holdings Corp.,
4.88%, 06/15/2010 #............................. 473
EUR 580 Marks and Spencer plc,
4.19%, 01/16/2007 (L)#.......................... 766
750 Staples, Inc.,
7.13%, 08/15/2007 #............................. 756
EUR 1,300 Volkswagen Group Services AG,
3.74%, 09/27/2007 (L)#.......................... 1,714
730 Wal-Mart Stores, Inc.,
5.25%, 09/01/2035 #............................. 670
--------
5,050
--------
CONSUMER STAPLES -- 0.3%
300 Cia Brasileira de Bebidas,
10.50%, 12/15/2011 #............................ 363
EUR 520 Imperial Tobacco Finance,
6.25%, 06/06/2007 #............................. 692
--------
1,055
--------
ENERGY -- 1.0%
1,020 Anadarko Petroleum Corp.,
5.76%, 09/15/2009 (L)#.......................... 1,024
320 Citigroup Global Markets,
9.13%, 04/25/2007 #............................. 323
900 ConocoPhillips,
5.37%, 04/11/2007 (L)#.......................... 900
900 ConocoPhillips Australia Funding Co.,
5.47%, 04/09/2009 (L)........................... 901
415 Nakilat Inc.,
6.07%, 12/31/2033 (I)........................... 412
--------
3,560
--------
FINANCE -- 7.4%
660 Abbey National Treasury Service,
5.37%, 06/29/2007 (L)#.......................... 660
660 Avalon Properties, Inc.,
6.88%, 12/15/2007............................... 667
EUR 785 Bank of America Corp.,
3.72%, 11/20/2008 (L)#.......................... 1,037
1,300 Bank of America Corp.,
5.53%, 03/06/2007 (L)........................... 1,300
EUR 500 Banque PSA Finance,
3.40%, 06/21/2007 (L)........................... 660
500 Berkshire Hathaway Finance Corp.,
5.42%, 01/11/2008 (L)#.......................... 501
450 Boeing Capital Corp.,
4.75%, 08/25/2008............................... 447
1,300 Caterpillar Financial Services Corp.,
5.39%, 02/12/2007 (L)#.......................... 1,300
400 Countrywide Home Loans,
6.94%, 07/16/2007 #............................. 403
EUR 1,000 Credit Agricole,
3.48%, 10/17/2007 (L)........................... 1,320
EUR 880 Credit Agricole,
3.57%, 07/11/2007 (L)#.......................... 1,162
</Table>
The accompanying notes are an integral part of these financial statements.
81
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 810 EOP Operating L.P.,
6.76%, 06/15/2007 #............................. $ 815
425 ERAC USA Finance Co.,
5.63%, 04/30/2009 (I)(L)#....................... 426
1,150 HBOS Treasury Services plc,
4.00%, 09/15/2009 (I)#.......................... 1,115
395 HSBC Finance Corp.,
5.41%, 02/28/2007 (L)#.......................... 395
920 International Lease Finance Corp.,
5.40%, 02/15/2012 (G)........................... 921
430 Korea Development Bank,
4.63%, 09/16/2010 #............................. 420
EUR 800 Lloyds TSB Bank plc,
5.25%, 07/14/2008 #............................. 1,072
904 MBNA Credit Card Master Note Trust,
5.35%, 12/15/2010 (L)#.......................... 904
GBP 360 Metlife Global Funding,
5.25%, 01/09/2014 #............................. 693
525 Mizuho Financial Group, Inc.,
5.79%, 04/15/2014 (I)#.......................... 528
EUR 570 Morgan Stanley,
4.03%, 05/29/2008 (L)#.......................... 756
665 Morgan Stanley,
5.41%, 04/25/2008 (L)#.......................... 665
700 Nationwide Building Society,
2.63%, 01/30/2007 (I)#.......................... 699
EUR 225 Nordea Bank Finland plc,
5.75%, 03/26/2014 (L)........................... 307
GBP 350 Northern Trust Co.,
5.38%, 03/11/2015............................... 672
215 Prudential Financial, Inc.,
5.10%, 12/14/2011............................... 213
EUR 500 RCI Banque,
3.58%, 03/05/2007 (L)........................... 660
EUR 1,000 Royal Bank of Canada,
3.62%, 02/27/2008 (L)#(Q)....................... 1,319
EUR 500 Royal Bank of Canada,
3.72%, 09/28/2007 (L)#.......................... 660
680 Simon Property Group L.P.,
6.38%, 11/15/2007 #............................. 685
121 Southern Capital Corp.,
5.70%, 06/30/2022 (I)........................... 120
1,330 St. Paul Travelers Cos., Inc.,
5.75%, 03/15/2007 #............................. 1,331
1,145 Temasek Financial I Ltd.,
4.50%, 09/21/2015 (I)#.......................... 1,086
EUR 300 Unicredito Italiano Bank of Ireland,
3.55%, 01/25/2008 (L)........................... 396
795 VTB Capital (Vneshtorgbank),
5.97%, 08/01/2008 (I)(L)#....................... 795
670 VTB Capital (Vneshtorgbank),
6.11%, 09/21/2007 (I)(L)#....................... 672
--------
27,782
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
FOREIGN GOVERNMENTS -- 4.0%
AUD 410 Australian Government,
5.25%, 03/15/2019............................... $ 306
EUR 2,155 Belgium Treasury Bill,
3.46%, 02/15/2007 (M)........................... 2,833
EUR 1,585 Belgium Treasury Bill,
3.59%, 03/15/2007 (M)........................... 2,078
CAD 740 Canadian Government,
5.50%, 06/01/2010 #............................. 665
CAD 825 Canadian Government,
5.75%, 06/01/2033 #............................. 889
470 Chile (Republic of),
5.78%, 01/28/2008 (L)........................... 471
EUR 400 French Government,
4.00%, 04/25/2013 #............................. 529
EUR 685 French Government,
5.00%, 10/25/2016 #............................. 976
JPY 34,540 Japanese Government,
1.00%, 06/10/2016............................... 285
JPY 178,700 Japanese Government,
1.40%, 09/20/2011............................... 1,515
DKK 3,676 Kingdom of Denmark,
6.00%, 11/15/2009............................... 687
PLN 580 Poland Government,
6.25%, 10/24/2015............................... 214
1,270 Russian Federation,
10.00%, 06/26/2007 (I)#......................... 1,300
SGD 1,350 Singapore Government,
4.38%, 01/15/2009 #............................. 904
SEK 2,545 Swedish Government,
4.50%, 08/12/2015............................... 390
1,000 United Mexican States,
6.07%, 01/13/2009 (L)#.......................... 1,010
--------
15,052
--------
HEALTH CARE -- 0.2%
EUR 520 Alliance Boots plc,
3.85%, 10/19/2007 (L)........................... 687
--------
SERVICES -- 1.2%
530 Comcast Corp.,
5.45%, 11/15/2010 #............................. $ 532
800 Comcast Corp.,
5.67%, 07/14/2009 (L)#.......................... 802
GBP 165 ITV plc,
7.63%, 06/06/2007 #............................. 325
495 News America, Inc.,
6.40%, 12/15/2035 #............................. 492
490 Time Warner, Inc.,
5.88%, 11/15/2016 #............................. 489
355 Time Warner, Inc.,
6.50%, 11/15/2036 #............................. 353
1,320 Time Warner, Inc.,
8.18%, 08/15/2007 #............................. 1,342
--------
4,335
--------
</Table>
The accompanying notes are an integral part of these financial statements.
82
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ----------- ---------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- 1.5%
$ 1,080 AT&T, Inc.,
5.10%, 09/15/2014 #............................. $ 1,049
475 Cingular Wireless Services, Inc.,
7.88%, 03/01/2011 #............................. 518
630 General Electric Co.,
5.00%, 02/01/2013............................... 623
1,330 Siemens Finance,
5.42%, 08/14/2009 (I)(L)#....................... 1,330
890 Sprint Nextel Corp,
6.00%, 12/01/2016 #............................. 867
EUR 445 Telecom Italia Finance S.A.
6.58%, 07/30/2009 #............................. 616
375 Verizon New England, Inc.,
6.50%, 09/15/2011 #............................. 386
--------
5,389
--------
UTILITIES -- 0.6%
350 FPL Group Capital, Inc.,
6.13%, 05/15/2007 #............................. 351
810 Midamerican Energy Holdings Co.,
6.13%, 04/01/2036 #............................. 817
300 Nstar,
8.00%, 02/15/2010 #............................. 322
EUR 310 Veolia Environment,
4.00%, 02/12/2016............................... 387
195 Virginia Electric & Power Co.,
5.38%, 02/01/2007 #............................. 196
--------
2,073
--------
Total corporate bonds: investment grade
(cost $65,844).................................. $ 66,738
--------
U.S. GOVERNMENT SECURITIES -- 0.3%
OTHER DIRECT FEDERAL OBLIGATIONS -- 0.3%
1,200 Federal Home Loan Bank
5.75%, 2012....................................... $ 1,245
--------
Total U.S. government securities
(cost $1,202)................................... $ 1,245
--------
U.S. GOVERNMENT AGENCIES -- 6.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.7%
437 5.50% 2019 -- 2020 #.............................. $ 437
1,861 5.70% 2036 (L)#................................... 1,865
424 6.66% 2029 (L)#................................... 438
--------
2,740
--------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 5.0%
1,392 4.78% 2014 #...................................... 1,362
1,600 4.98% 2013 (L)#................................... 1,582
5,342 5.00% 2019 -- 2036 #.............................. 5,219
7,443 5.50% 2034 -- 2036 #.............................. 7,354
455 5.75% 2036 (L).................................... 456
2,131 6.50% 2013 -- 2036 #.............................. 2,172
7 7.00% 2029........................................ 8
--------
18,153
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ----------- ---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.6%
$ 1,329 5.00% 2035 #...................................... $ 1,292
435 6.00% 2028 -- 2035................................ 440
80 6.50% 2028........................................ 83
485 7.50% 2035........................................ 505
51 8.00% 2029 -- 2030................................ 54
--------
2,374
--------
Total U.S. government agencies
(cost $23,245).................................. $ 23,267
--------
Total long-term investments
(cost $312,365)................................. $348,158
--------
SHORT-TERM INVESTMENTS -- 6.9%
FINANCE -- 1.2%
1,345 Abbey National Treasury Service,
5.17%, 04/03/2007 #............................. $ 1,344
1,360 ANZ Delaware, Inc.,
4.81%, 01/29/2007 #............................. 1,360
1,345 Barclays Bank plc NY,
5.20%, 04/03/2007 #............................. 1,345
540 Societe Generale,
4.77%, 01/17/2007 #............................. 540
--------
4,589
--------
REPURCHASE AGREEMENTS -- 4.5%
3,776 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... 3,776
5,206 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 5,206
57 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 57
3,259 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 3,259
1,113 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,113
3,259 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 3,259
--------
16,670
--------
U.S. GOVERNMENT SECURITIES -- 0.4%
1,375 U.S. Treasury Bill,
4.84%, 03/15/2007 (M)(S)........................ 1,362
--------
</Table>
The accompanying notes are an integral part of these financial statements.
83
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ----------- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 0.8%
2,994 Mellon GSL DBTII Collateral Fund.................. $ 2,991
--------
Total short-term investments
(cost $25,612).................................. $ 25,612
--------
Total investments in securities
(cost $337,977) (C)............................. $373,770
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 41.83%% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $89,697, which represents 24.20% of total net assets.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
AUD -- Australian Dollar
CAD -- Canadian Dollar
DKK -- Danish Krone
EUR -- EURO
GBP -- British Pound
JPY -- Japanese Yen
PLN -- Polish Zloty
SEK -- Swedish Krona
SGD -- Singapore Dollar
PFIC -- Passive Foreign Investment Company
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $340,404 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $36,881
Unrealized depreciation......................... (3,445)
-------
Net unrealized appreciation..................... $33,366
=======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulations S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $2,291 or 0.62% of net assets.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $14,345, which represents 3.87% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $1,896.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
5 Year U.S. Treasury Note 86 Short March 2007 $ 35
10 Year Australian Bond 78 Long March 2007 (47)
10 Year Canadian Bond 36 Short March 2007 23
10 Year Japanese Bond 6 Short March 2007 5
10 Year U.S. Treasury Note 27 Short March 2007 14
DJ EURO 46 Short March 2007 (22)
Eurex EURO-BOBL 13 Short March 2007 3
Eurex EURO-BUND 28 Short March 2007 14
Eurex EURO-BUXL 2 Long March 2007 (7)
Eurex EURO-SCHATZ 21 Long March 2007 (16)
FTSE 100 Index 15 Short March 2007 3
Long Gilt 24 Short March 2007 5
S&P 500 Index 123 Short March 2007 (8)
SPE SPI 200 Index 8 Short March 2007 (11)
Topix Index 11 Short March 2007 (66)
U.S. Long Bond 14 Short March 2007 17
----
$(58)
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
84
- --------------------------------------------------------------------------------
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Australia 0.9%
- ------------------------------------------------------------------
Austria 0.7
- ------------------------------------------------------------------
Belgium 2.3
- ------------------------------------------------------------------
Brazil 0.7
- ------------------------------------------------------------------
Canada 2.1
- ------------------------------------------------------------------
Chile 0.1
- ------------------------------------------------------------------
Denmark 0.2
- ------------------------------------------------------------------
Dutch Antilles 1.2
- ------------------------------------------------------------------
Finland 0.1
- ------------------------------------------------------------------
France 2.8
- ------------------------------------------------------------------
Germany 1.4
- ------------------------------------------------------------------
Ireland 1.3
- ------------------------------------------------------------------
Japan 7.5
- ------------------------------------------------------------------
Luxembourg 0.6
- ------------------------------------------------------------------
Mexico 2.1
- ------------------------------------------------------------------
Netherlands 1.9
- ------------------------------------------------------------------
Norway 0.3
- ------------------------------------------------------------------
Poland 0.1
- ------------------------------------------------------------------
Qatar 0.1
- ------------------------------------------------------------------
Russia 1.0
- ------------------------------------------------------------------
Singapore 0.3
- ------------------------------------------------------------------
South Korea 0.9
- ------------------------------------------------------------------
Sweden 0.1
- ------------------------------------------------------------------
Switzerland 2.5
- ------------------------------------------------------------------
Taiwan 0.8
- ------------------------------------------------------------------
United Kingdom 9.8
- ------------------------------------------------------------------
United States 52.2
- ------------------------------------------------------------------
Short-Term Investments 6.9
- ------------------------------------------------------------------
Other Assets & Liabilities (0.9)
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
85
HARTFORD GLOBAL ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD BOND CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
MARKET CONTRACT DELIVERY MATURITY
DESCRIPTION TRANSACTION VALUE AMOUNT DATE DATE
- ----------- ----------- ------- -------- --------- ----------
Australian Government,
6.00% Buy $ 597 $ 606 1/30/2007 2/15/2017
Bundesobligation, 3.25% Sell 716 720 1/15/2007 4/17/2009
Canadian Government, 3.75% Sell 6,617 6,772 2/15/2007 9/1/2011
Canadian Government, 4.00% Sell 3,880 3,947 2/15/2007 6/1/2016
Deutscheland
Bundesrepublic, 3.75% Buy 9,892 9,936 2/28/2007 1/4/2015
Deutscheland
Bundesrepublic, 4.00% Buy 5,057 5,077 2/28/2007 7/4/2016
Deutscheland
Bundesrepublic, 4.00% Buy 4,346 4,414 1/29/2007 1/4/2037
Deutscheland
Bundesrepublic, 5.00% Buy 10,978 10,979 2/28/2007 1/4/2012
Deutscheland
Bundesrepublic, 5.50% Buy 367 376 1/29/2007 1/4/2031
French Treasury Note, 3.50% Buy 7,424 7,263 1/8/2007 7/12/2011
Japanese Government, 1.00% Buy 1,899 1,970 1/10/2007 6/10/2016
Japanese Government, 1.20% Buy 2,803 2,819 1/31/2007 9/20/2011
Japanese Government, 1.40% Buy 6,443 6,490 1/31/2007 6/22/2009
Japanese Government, 1.40% Buy 3,372 3,408 1/31/2007 12/20/2015
Japanese Government, 1.50% Sell 510 513 1/31/2007 9/20/2013
Japanese Government, 1.60% Buy 2,929 2,949 1/31/2007 6/20/2008
Japanese Government, 1.70% Sell 1,217 1,226 1/31/2007 9/20/2016
Japanese Government, 1.90% Sell 2,253 2,271 1/31/2007 6/20/2016
Japanese Government, 2.10% Buy 2,789 2,811 1/31/2007 9/20/2025
Singapore Government, 3.63% Buy 1,452 1,431 1/22/2007 7/1/2014
Swedish Government, 5.25% Sell 7,462 7,498 2/27/2007 3/15/2011
U.S. Treasury Notes, 3.50% Sell 3,621 3,644 1/31/2007 1/15/2011
U.S. Treasury Notes, 4.38% Sell 5,853 5,897 1/26/2007 8/15/2012
U.S. Treasury Notes, 4.50% Buy 5,214 5,256 1/26/2007 11/15/2015
U.S. Treasury Notes, 4.88% Buy 8,405 8,434 1/26/2007 8/15/2009
U.S. Treasury Notes, 4.88% Sell 947 960 1/10/2007 8/15/2016
U.S. Treasury Notes, 5.00% Buy 3,670 3,692 1/31/2007 2/15/2011
U.S. Treasury Notes, 5.38% Buy 964 976 1/26/2007 2/15/2031
UK Gilt Forward, 4.00% Buy 2,123 2,175 1/9/2007 9/7/2016
UK Gilt Forward, 4.25% Buy 2,445 2,465 2/28/2007 3/7/2036
United Kingdom Treasury,
5.00% Buy 1,206 1,211 2/28/2007 3/7/2012
<Caption>
UNREALIZED
APPRECIATION
DESCRIPTION (DEPRECIATION)
- ----------- --------------
Australian Government,
6.00% $ (9)
Bundesobligation, 3.25% 4
Canadian Government, 3.75% 155
Canadian Government, 4.00% 67
Deutscheland
Bundesrepublic, 3.75% (44)
Deutscheland
Bundesrepublic, 4.00% (20)
Deutscheland
Bundesrepublic, 4.00% (68)
Deutscheland
Bundesrepublic, 5.00% (1)
Deutscheland
Bundesrepublic, 5.50% (9)
French Treasury Note, 3.50% 161
Japanese Government, 1.00% (71)
Japanese Government, 1.20% (16)
Japanese Government, 1.40% (47)
Japanese Government, 1.40% (36)
Japanese Government, 1.50% 3
Japanese Government, 1.60% (20)
Japanese Government, 1.70% 9
Japanese Government, 1.90% 18
Japanese Government, 2.10% (22)
Singapore Government, 3.63% 21
Swedish Government, 5.25% 36
U.S. Treasury Notes, 3.50% 23
U.S. Treasury Notes, 4.38% 44
U.S. Treasury Notes, 4.50% (42)
U.S. Treasury Notes, 4.88% (29)
U.S. Treasury Notes, 4.88% 13
U.S. Treasury Notes, 5.00% (22)
U.S. Treasury Notes, 5.38% (12)
UK Gilt Forward, 4.00% (52)
UK Gilt Forward, 4.25% (20)
United Kingdom Treasury,
5.00% (5)
----
$ 9
====
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------- -------- --------- --------------
Australian Dollar Buy $ 1,869 $ 1,867 3/20/2007 $ 2
Australian Dollar Buy 4,433 4,438 3/20/2007 (5)
Australian Dollar Sell 884 876 3/15/2007 (8)
Australian Dollar Sell 1,671 1,672 3/20/2007 1
Australian Dollar Sell 2,632 2,613 3/20/2007 (19)
British Pound Buy 3,295 3,322 3/20/2007 (27)
British Pound Buy 333 332 3/20/2007 1
British Pound Sell 477 477 1/2/2007 --
British Pound Sell 628 629 1/3/2007 1
British Pound Sell 495 494 1/4/2007 (1)
</Table>
The accompanying notes are an integral part of these financial statements.
86
- --------------------------------------------------------------------------------
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------- -------- --------- --------------
British Pound Sell $ 490 $ 489 3/16/2007 $ (1)
British Pound Sell 7,418 7,465 3/20/2007 47
Canadian Dollar Buy 4,544 4,624 3/20/2007 (80)
Canadian Dollar Sell 4,869 4,973 3/20/2007 104
Chilian Peso Buy 826 835 3/20/2007 (9)
Chilian Peso Sell 826 836 3/20/2007 10
Chinese Yuan Renminbi Buy 183 183 3/21/2007 --
Chinese Yuan Renminbi Buy 1,054 1,036 6/20/2007 18
Chinese Yuan Renminbi Sell 183 182 3/21/2007 (1)
Chinese Yuan Renminbi Sell 1,054 1,052 6/20/2007 (2)
Danish Krone Sell 754 760 3/20/2007 6
Euro Buy 57 57 1/4/2007 --
Euro Buy 1,325 1,316 1/4/2007 9
Euro Buy 5,182 5,164 3/20/2007 18
Euro Buy 44,583 44,934 3/20/2007 (351)
Euro Sell 586 582 1/2/2007 (4)
Euro Sell 300 299 1/3/2007 (1)
Euro Sell 220 219 3/16/2007 (1)
Euro Sell 64,102 64,618 3/20/2007 516
Euro Sell 7,903 7,870 3/20/2007 (33)
Hong Kong Dollars Sell 64 64 1/2/2007 --
Hungarian Forint Buy 174 171 3/20/2007 3
Iceland Krona Sell 171 171 3/20/2007 --
Israeli Shekel Buy 1,763 1,752 3/20/2007 11
Israeli Shekel Buy 677 679 3/20/2007 (2)
Israeli Shekel Sell 1,414 1,417 3/20/2007 3
Israeli Shekel Sell 718 717 3/20/2007 (1)
Japanese Yen Buy 497 498 1/5/2007 (1)
Japanese Yen Buy 7,881 8,149 3/20/2007 (268)
Japanese Yen Sell 1,363 1,419 3/8/2007 56
Japanese Yen Sell 142 142 3/8/2007 --
Japanese Yen Sell 9,642 9,982 3/20/2007 340
Japanese Yen Sell 557 556 3/20/2007 (1)
Malaysian Ringgit Buy 3,579 3,571 3/20/2007 8
Malaysian Ringgit Sell 1,486 1,476 3/20/2007 (10)
Mexican Peso Buy 71 69 3/20/2007 2
Mexican Peso Sell 258 256 3/20/2007 (2)
New Zealand Dollar Buy 3,079 3,009 3/20/2007 70
New Zealand Dollar Buy 316 316 3/20/2007 --
New Zealand Dollar Sell 3,670 3,588 3/20/2007 (82)
Norwegian Krone Buy 1,398 1,426 3/20/2007 (28)
Norwegian Krone Sell 1,398 1,421 3/20/2007 23
Polish Zloty Sell 216 219 3/20/2007 3
Polish Zloty Sell 173 172 3/20/2007 (1)
Singapore Dollar Buy 3,981 3,969 3/20/2007 12
Singapore Dollar Sell 5,759 5,736 3/20/2007 (23)
South Korean Won Buy 1,032 1,042 3/20/2007 (10)
South Korean Won Sell 3,302 3,333 3/20/2007 31
Swedish Krona Buy 3,518 3,548 3/20/2007 (30)
Swedish Krona Sell 3,917 3,964 3/20/2007 47
Swiss Franc Buy 7,754 7,894 3/20/2007 (140)
Swiss Franc Sell 4,069 4,129 3/20/2007 60
Swiss Franc Sell 1,855 1,849 3/20/2007 (6)
Taiwan Dollar Sell 665 672 3/20/2007 7
-----
$ 261
=====
</Table>
The accompanying notes are an integral part of these financial statements.
87
HARTFORD GLOBAL LEADERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BASIC MATERIALS -- 5.7%
341 Cameco Corp. ..................................... $ 13,793
472 Companhia Vale do Rio Doce ADR.................... 14,040
197 Freeport-McMoRan Copper & Gold, Inc. Class B...... 10,990
69 Vallourec (A)..................................... 20,050
218 Xstrata plc (A)................................... 10,854
----------
69,727
----------
CAPITAL GOODS -- 1.8%
248 Boeing Co. ....................................... 21,997
----------
CONSUMER CYCLICAL -- 8.8%
331 Best Buy Co., Inc. ............................... 16,289
3,121 Carphone Warehouse Group plc (A).................. 19,128
464 eBay, Inc. (D).................................... 13,943
98 Nintendo Co. Ltd. (A)............................. 25,319
4,230 Tesco plc (A)..................................... 33,426
----------
108,105
----------
CONSUMER STAPLES -- 6.6%
120 Fomento Economico Mexicano S.A. de C.V. ADR....... 13,891
4 Japan Tobacco, Inc. (A)........................... 17,869
40 Nestle S.A. (A)................................... 14,316
412 Reckitt Benckiser plc (A)......................... 18,780
294 Royal Numico N.V. (A)............................. 15,812
----------
80,668
----------
ENERGY -- 3.7%
123 Noble Corp. ...................................... 9,336
269 RAO Gazprom Class S ADR (K)....................... 12,363
378 Schlumberger Ltd. ................................ 23,862
----------
45,561
----------
FINANCE -- 15.8%
144 Deutsche Boerse AG (A)............................ 26,476
798 E*Trade Financial Corp. (D)....................... 17,889
208 Erste Bank Der Oesterreichischen Sparkassen AG
(A)............................................. 15,939
121 Goldman Sachs Group, Inc. ........................ 24,181
88 KBC Groep N.V. (A)(G)............................. 10,751
2,138 Man Group plc (A)................................. 21,822
59 ORIX Corp. (A)(G)PFIC............................. 17,052
297 Standard Chartered plc (A)........................ 8,649
1 Sumitomo Mitsui Financial Group, Inc. (A)......... 9,245
616 Sumitomo Realty & Development Co., Ltd. (A)(G).... 19,749
352 UBS AG (A)........................................ 21,295
----------
193,048
----------
HEALTH CARE -- 10.2%
132 Celgene Corp. (D)(G).............................. 7,577
401 Eisai Co., Ltd. (A)(G)............................ 22,007
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
877 Elan Corp. plc ADR (D)............................ $ 12,931
387 Monsanto Co. ..................................... 20,334
1,091 Schering-Plough Corp. ............................ 25,791
486 St. Jude Medical, Inc. (D)........................ 17,757
367 Wyeth............................................. 18,688
----------
125,085
----------
SERVICES -- 9.7%
639 Comcast Corp. Class A (D)(G)...................... 27,062
5,391 EMI Group plc (A)................................. 27,952
418 Las Vegas Sands Corp. (D)......................... 37,358
153 United Parcel Service, Inc. Class B............... 11,494
629 Warner Music Group Corp. ......................... 14,440
----------
118,306
----------
TECHNOLOGY -- 34.8%
873 ABB Ltd. (A)...................................... 15,630
703 Activision, Inc. (D).............................. 12,115
611 Adobe Systems, Inc. (D)........................... 25,133
549 America Movil S.A. de C.V. ADR.................... 24,844
757 American Tower Corp. Class A (D).................. 28,206
597 ASML Holding N.V. (D)(A).......................... 14,726
627 Brambles Ltd. (D)(A).............................. 6,329
437 Broadcom Corp. Class A (D)........................ 14,116
852 Cisco Systems, Inc. (D)........................... 23,285
883 Corning, Inc. (D)................................. 16,523
212 Danaher Corp. .................................... 15,365
1,133 EMC Corp. (D)..................................... 14,950
78 Google, Inc. (D).................................. 35,917
524 Hewlett-Packard Co. .............................. 21,579
2,370 Hon Hai Precision Industry Co., Ltd. (A).......... 16,866
683 Intel Corp. ...................................... 13,839
447 Motorola, Inc. ................................... 9,196
455 Network Appliance, Inc. (D)....................... 17,888
717 Oracle Corp. (D).................................. 12,295
33 Rakuten, Inc. (D)(A)(G)........................... 15,604
150 Research In Motion Ltd. (D)....................... 19,103
23 Samsung Electronics Co., Ltd. (A)................. 15,361
349 SanDisk Corp. (D)................................. 15,009
874 Sharp Corp. (A)(G)................................ 15,028
356 Telenor ASA (A)................................... 6,669
----------
425,576
----------
TRANSPORTATION -- 1.0%
143 Ryanair Holdings plc ADR (D)(G)................... 11,687
----------
UTILITIES -- 0.4%
67 Veolia Environment S.A. (A)....................... 5,097
----------
Total common stock
(cost $1,002,968)............................... $1,204,857
----------
</Table>
The accompanying notes are an integral part of these financial statements.
88
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- 9.7%
REPURCHASE AGREEMENTS -- 0.7%
$ 1,801 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,801
2,483 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,483
27 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 27
1,554 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,554
531 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 531
1,554 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,554
----------
7,950
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 9.0%
110,395 Navigator Prime Portfolio......................... $ 110,395
----------
Total short-term investments
(cost $118,345)................................. $ 118,345
----------
Total investments in securities
(cost $1,121,313) (C)........................... $1,323,202
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 51.88% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value by,
or under the direction of, the Funds' Board of Directors at December 31,
2006, was $487,801, which represents 39.90% of total net assets.
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,133,658 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation................................ $200,569
Unrealized depreciation................................ (11,025)
--------
Net unrealized appreciation............................ $189,544
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $12,363 or 1.01% of net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Australia 0.5%
- ------------------------------------------------------------------
Austria 1.3
- ------------------------------------------------------------------
Belgium 0.9
- ------------------------------------------------------------------
Brazil 1.1
- ------------------------------------------------------------------
Canada 2.7
- ------------------------------------------------------------------
Dutch Antilles 1.9
- ------------------------------------------------------------------
France 2.1
- ------------------------------------------------------------------
Germany 2.2
- ------------------------------------------------------------------
Ireland 2.0
- ------------------------------------------------------------------
Japan 11.6
- ------------------------------------------------------------------
Mexico 3.2
- ------------------------------------------------------------------
Netherlands 2.5
- ------------------------------------------------------------------
Norway 0.5
- ------------------------------------------------------------------
Russia 1.0
- ------------------------------------------------------------------
South Korea 1.3
- ------------------------------------------------------------------
Switzerland 4.2
- ------------------------------------------------------------------
Taiwan 1.4
- ------------------------------------------------------------------
United Kingdom 11.5
- ------------------------------------------------------------------
United States 46.6
- ------------------------------------------------------------------
Short-Term Investments 9.7
- ------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- -------- --------------
British Pound Sell $2,660 $2,658 1/2/2007 $ (2)
British Pound Sell 3,497 3,508 1/3/2007 11
British Pound Sell 2,756 2,755 1/4/2007 (1)
Euro Sell 3,133 3,116 1/2/2007 (17)
Euro Sell 1,584 1,579 1/3/2007 (5)
Euro Buy 306 306 1/4/2007 --
Hong Kong Dollar Sell 367 367 1/2/2007 --
Japanese Yen Buy 815 817 1/5/2007 (2)
----
$(16)
====
</Table>
The accompanying notes are an integral part of these financial statements.
89
HARTFORD GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.3%
BASIC MATERIALS -- 4.2%
320 Cameco Corp. ..................................... $ 12,929
121 Companhia Vale do Rio Doce ADR.................... 3,589
57 Freeport-McMoRan Copper & Gold, Inc. Class B...... 3,173
29 Potash Corp. of Saskatchewan...................... 4,190
--------
23,881
--------
CAPITAL GOODS -- 4.9%
119 ABB Ltd. ADR...................................... 2,146
205 Boeing Co. ....................................... 18,241
69 International Game Technology..................... 3,165
96 Joy Global, Inc. ................................. 4,628
--------
28,180
--------
CONSUMER CYCLICAL -- 1.8%
68 Coach, Inc. (D)................................... 2,910
213 eBay, Inc. (D).................................... 6,393
20 Whole Foods Market, Inc. (G)...................... 936
--------
10,239
--------
CONSUMER STAPLES -- 1.1%
1 Japan Tobacco, Inc. (A)........................... 2,997
51 PepsiCo, Inc. .................................... 3,195
--------
6,192
--------
ENERGY -- 2.8%
288 Halliburton Co. .................................. 8,955
58 Murphy Oil Corp. ................................. 2,960
36 Occidental Petroleum Corp. ....................... 1,736
62 Sasol Ltd. ADR.................................... 2,280
--------
15,931
--------
FINANCE -- 19.4%
98 AMVESCAP plc ADR.................................. 2,418
14 Chicago Mercantile Exchange Holdings, Inc. ....... 6,938
54 Citigroup, Inc. .................................. 3,023
313 Commerce Bancorp, Inc. (G)........................ 11,024
127 Countrywide Financial Corp. ...................... 5,375
56 First Marblehead Corp. ........................... 3,080
115 Franklin Resources, Inc. ......................... 12,655
16 Goldman Sachs Group, Inc. ........................ 3,132
281 Nasdaq Stock Market, Inc. (D)(G).................. 8,657
105 State Street Corp. ............................... 7,108
311 UBS AG............................................ 18,777
372 UnitedHealth Group, Inc. ......................... 20,006
34 Wellpoint, Inc. (D)............................... 2,650
263 Western Union Co.................................. 5,905
--------
110,748
--------
HEALTH CARE -- 10.2%
136 AstraZeneca plc ADR............................... 7,267
57 Eisai Co., Ltd. (A)............................... 3,108
223 Elan Corp. plc ADR (D)............................ 3,287
43 Gilead Sciences, Inc. (D)......................... 2,820
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
HEALTH CARE -- (CONTINUED)
79 Monsanto Co. ..................................... $ 4,172
303 Sanofi-Aventis S.A. ADR........................... 14,010
719 Schering-Plough Corp. ............................ 16,993
161 Shionogi & Co., Ltd. (A).......................... 3,156
82 Vertex Pharmaceuticals, Inc. (D).................. 3,074
--------
57,887
--------
SERVICES -- 18.0%
186 Accenture Ltd. Class A............................ 6,879
72 Alliance Data Systems Corp. (D)................... 4,503
332 Autodesk, Inc. (D)................................ 13,424
99 Automatic Data Processing, Inc. .................. 4,891
40 Corporate Executive Board Co. .................... 3,538
167 Equifax, Inc. (D)................................. 6,777
130 Fluor Corp. ...................................... 10,640
49 Manpower, Inc. ................................... 3,692
184 Monster Worldwide, Inc. (D)....................... 8,590
87 Moody's Corp. .................................... 6,023
49 Starwood Hotels & Resorts......................... 3,071
150 United Parcel Service, Inc. Class B............... 11,228
79 Viacom, Inc. Class B (D).......................... 3,242
262 Walt Disney Co. .................................. 8,981
125 Waste Management, Inc. ........................... 4,582
162 XM Satellite Radio Holdings, Inc. Class A (D)(G).. 2,343
--------
102,404
--------
TECHNOLOGY -- 31.8%
330 Adobe Systems, Inc. (D)........................... 13,562
142 Altera Corp. (D).................................. 2,789
72 America Movil S.A. de C.V. ADR.................... 3,235
153 American Tower Corp. Class A (D).................. 5,709
118 AT&T, Inc. ....................................... 4,224
725 Cisco Systems, Inc. (D)........................... 19,805
173 Danaher Corp. (G)................................. 12,547
434 EMC Corp. (D)..................................... 5,722
342 General Electric Co. ............................. 12,726
34 Google, Inc. (D).................................. 15,854
164 Hewlett-Packard Co. .............................. 6,741
253 Linear Technology Corp. .......................... 7,684
466 Medtronic, Inc. .................................. 24,941
360 Motorola, Inc. ................................... 7,401
432 Network Appliance, Inc. (D)....................... 16,984
672 Oracle Corp. (D).................................. 11,518
12 Roper Industries, Inc. ........................... 582
111 SanDisk Corp. (D)................................. 4,786
187 Symantec Corp. (D)(G)............................. 3,899
--------
180,709
--------
TRANSPORTATION -- 3.7%
171 General Dynamics Corp. ........................... 12,743
116 GOL Linhas Aereas Inteligentes S.A. ADR........... 3,315
74 Harley-Davidson, Inc. ............................ 5,248
--------
21,306
--------
</Table>
The accompanying notes are an integral part of these financial statements.
90
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
v UTILITIES -- 1.4%
149 TXU Corp. ........................................ $ 8,074
--------
Total common stock
(cost $520,827)................................. $565,551
--------
PRINCIPAL
AMOUNT
-------
V
SHORT-TERM INVESTMENTS -- 4.8%
REPURCHASE AGREEMENTS -- 0.3%
$ 435 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 435
601 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 601
7 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 7
376 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 376
128 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 128
376 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 376
--------
1,923
--------
MARKET
SHARES VALUE (W)
------- --------
v
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.5%
25,747 Mellon GSL DBTII Collateral Fund.................. $ 25,747
--------
Total short-term investments
(cost $27,670).................................. $ 27,670
--------
Total investments in securities
(cost $548,497) (C)............................. $593,221
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.22% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $9,261, which represents 1.63% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $548,792 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 57,415
Unrealized depreciation........................ (12,986)
--------
Net unrealized appreciation.................... $ 44,429
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
91
HARTFORD GROWTH OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.3%
BASIC MATERIALS -- 7.6%
459 Cameco Corp. ..................................... $ 18,558
666 Companhia Vale do Rio Doce ADR.................... 19,810
213 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 11,865
517 Jarden Corp. (D).................................. 17,991
133 Potash Corp. of Saskatchewan...................... 19,083
55 Rio Tinto plc ADR................................. 11,772
----------
99,079
----------
CAPITAL GOODS -- 2.7%
217 Boeing Co. (G).................................... 19,314
314 Joy Global, Inc. ................................. 15,193
----------
34,507
----------
CONSUMER CYCLICAL -- 8.9%
153 Altria Group, Inc. ............................... 13,166
398 California Pizza Kitchen, Inc. (D)................ 13,264
190 Children's Place Retail Stores, Inc. (D).......... 12,062
295 Foster Wheeler Ltd. (D)........................... 16,261
383 Hot Topic, Inc. (D)............................... 5,113
364 Kohl's Corp. (D).................................. 24,888
611 Mosaic Co. (D).................................... 13,053
451 Tiffany & Co. (G)................................. 17,685
----------
115,492
----------
CONSUMER STAPLES -- 2.2%
59 Avon Products, Inc. .............................. 1,936
223 Bunge Ltd. ....................................... 16,191
625 Tyson Foods, Inc. Class A......................... 10,281
----------
28,408
----------
ENERGY -- 1.9%
408 Chesapeake Energy Corp. .......................... 11,852
426 Halliburton Co. .................................. 13,238
----------
25,090
----------
FINANCE -- 8.5%
188 Covanta Holding Corp. (D)......................... 4,148
336 Dade Behring Holdings, Inc. ...................... 13,380
717 E*Trade Financial Corp. (D)....................... 16,080
512 Nasdaq Stock Market, Inc. (D)..................... 15,768
333 Nuveen Investments, Inc. Class A.................. 17,256
243 State Street Corp. ............................... 16,374
200 UBS AG............................................ 12,090
684 Western Union Co.................................. 15,338
----------
110,434
----------
HEALTH CARE -- 18.2%
410 Alkermes, Inc. (D)................................ 5,480
339 Amylin Pharmaceuticals, Inc. (D).................. 12,231
251 Astellas Pharma, Inc. (A)......................... 11,391
270 AtheroGenics, Inc. (D)(G)......................... 2,673
458 Auxilium Pharmaceuticals, Inc. (D)(G)............. 6,729
265 Cephalon, Inc. (D)(G)............................. 18,623
228 Charles River Laboratories International, Inc.
(D)............................................. 9,852
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
106 Covance, Inc. (D)................................. $ 6,256
322 Digene Corp. (D).................................. 15,413
234 Eisai Co., Ltd. (A)............................... 12,838
591 Elan Corp. plc ADR (D)(G)......................... 8,714
243 Eli Lilly & Co. .................................. 12,660
147 Encysive Pharmaceuticals, Inc. (D)(G)............. 619
252 Forest Laboratories, Inc. (D)..................... 12,756
239 Kyphon, Inc. (D)(G)............................... 9,664
209 Medicines Co. (D)................................. 6,617
290 Merck & Co., Inc. ................................ 12,649
279 Pharmaceutical Product Development, Inc. ......... 8,986
1,232 Schering-Plough Corp. ............................ 29,128
793 Shionogi & Co., Ltd. (A).......................... 15,578
366 St. Jude Medical, Inc. (D)........................ 13,377
127 Vertex Pharmaceuticals, Inc. (D).................. 4,752
----------
236,986
----------
SERVICES -- 12.3%
509 Allied Waste Industries, Inc. (D)................. 6,256
182 Corporate Executive Board Co. .................... 15,996
559 DreamWorks Animation SKG, Inc. (D)................ 16,473
352 Equifax, Inc. (D)................................. 14,303
182 Fluor Corp. ...................................... 14,819
269 Focus Media Holding Ltd. ADR (D).................. 17,839
193 Manpower, Inc. ................................... 14,491
426 MoneyGram International, Inc. .................... 13,351
184 Stericycle, Inc. (D).............................. 13,922
915 Tetra Technologies, Inc. (D)...................... 16,554
478 Walt Disney Co. .................................. 16,364
----------
160,368
----------
TECHNOLOGY -- 30.4%
1,475 Activision, Inc. (D).............................. 25,429
566 Adobe Systems, Inc. (D)........................... 23,257
296 Amdocs Ltd. (D)................................... 11,482
336 American Tower Corp. Class A (D).................. 12,534
147 Baidu.com ADR (D)(G).............................. 16,536
392 Broadcom Corp. Class A (D)........................ 12,678
1,076 Corning, Inc. (D)................................. 20,126
593 General Electric Co. ............................. 22,054
34 Google, Inc. (D).................................. 15,656
490 Hewlett-Packard Co. .............................. 20,200
295 Leap Wireless International, Inc. (D)............. 17,526
452 Medtronic, Inc. .................................. 24,198
679 Microsoft Corp. .................................. 20,276
1,880 Move, Inc. (D).................................... 10,359
968 Network Appliance, Inc. (D)....................... 38,003
262 NVIDIA Corp. (D).................................. 9,711
1,362 O2Micro International Ltd. ADR (D)................ 11,649
942 Oracle Corp. (D).................................. 16,142
372 Red Hat, Inc. (D)................................. 8,563
21 Samsung Electronics Co., Ltd. (A)................. 13,591
2,920 Tencent Holdings Ltd. (A)......................... 10,367
720 VeriFone Holdings, Inc. (D)(G).................... 25,495
289 Verint Systems, Inc. (D).......................... 9,907
----------
395,739
----------
</Table>
The accompanying notes are an integral part of these financial statements.
92
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
v TRANSPORTATION -- 1.0%
446 GOL Linhas Aereas Inteligentes S.A. ADR (G)....... $ 12,778
----------
UTILITIES -- 2.6%
510 Suntech Power Holdings Co. Ltd. ADR (D)(G)........ 17,342
216 Veolia Environnment S.A. (A)(G)................... 16,460
----------
33,802
----------
Total common stock
(cost $1,065,520)............................... $1,252,683
----------
PRINCIPAL
AMOUNT
- --------
V
SHORT-TERM INVESTMENTS -- 11.9%
REPURCHASE AGREEMENTS -- 3.1%
$ 9,245 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 9,245
12,748 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 12,748
138 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 138
7,980 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 7,980
2,725 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 2,725
7,980 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 7,980
----------
40,816
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
114,640 BNY Institutional Cash Reserve Fund............... $ 114,640
----------
Total short-term investments
(cost $155,456)................................. $ 155,456
----------
Total investments in securities
(cost $1,220,976) (C)........................... $1,408,139
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.97% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $80,225, which represents 6.16% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,224,698 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $199,387
Unrealized depreciation........................ (15,946)
--------
Net unrealized appreciation.................... $183,441
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
93
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 1.4%
FINANCE -- 0.3%
$ 24,319 CBA Commercial Small Balance Commercial Mortgage,
2.16%, 01/25/2039 (I)(L)(P)..................... $ 2,189
--------
TRANSPORTATION -- 1.1%
1,620 American Airlines, Inc.,
7.38%, 05/23/2019............................... 1,583
1,420 Continental Airlines, Inc.,
6.80%, 08/02/2018............................... 1,413
2,886 Continental Airlines, Inc.,
7.37%, 12/15/2015............................... 2,929
2,239 Continental Airlines, Inc.,
8.39%, 11/01/2020............................... 2,328
--------
8,253
--------
Total asset & commercial
mortgage backed securities
(cost $10,239).................................. $ 10,442
--------
CORPORATE BONDS: INVESTMENT GRADE -- 0.6%
SERVICES -- 0.6%
4,800 Harrah's Operating Co., Inc.,
5.63%, 06/01/2015............................... $ 4,117
--------
Total corporate bonds: investment grade
(cost $4,097)................................... $ 4,117
--------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 95.7%
BASIC MATERIALS -- 12.1%
2,750 AK Steel Corp.,
7.75%, 06/15/2012 #............................. $ 2,771
2,320 Aleris International, Inc.,
9.00%, 12/15/2014 (I)........................... 2,332
3,617 Boise Cascade LLC,
7.13%, 10/15/2014 (G)........................... 3,499
3,205 Bowater, Inc.,
8.36%, 03/15/2010 (L)(G)........................ 3,237
1,000 Bowater, Inc.,
9.50%, 10/15/2012 (G)........................... 1,035
2,875 Chaparral Steel Co.,
10.00%, 07/15/2013.............................. 3,209
3,165 Crown Americas, Inc.,
7.75%, 11/15/2015............................... 3,284
1,650 Crown Cork & Seal Co., Inc.,
8.00%, 04/15/2023............................... 1,609
3,880 Equistar Chemicals L.P.,
8.75%, 02/15/2009 (G)........................... 4,064
2,285 Georgia Gulf Corp.,
10.75%, 10/15/2016 (I)(G)....................... 2,194
4,325 Georgia-Pacific Corp.,
7.00%, 01/15/2015 (I)........................... 4,314
3,900 Goodyear Tire & Rubber Co.,
8.63%, 12/01/2011 (I)........................... 4,027
2,710 Graham Packaging Co., Inc.,
9.88%, 10/15/2014 (G)........................... 2,737
2,800 Huntsman International LLC,
7.88%, 11/15/2014 (I)........................... 2,821
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
BASIC MATERIALS -- (CONTINUED)
$ 2,923 Koppers, Inc.,
9.88%, 10/15/2013............................... $ 3,179
2,800 Lyondell Chemical Co.,
8.25%, 09/15/2016............................... 2,940
1,970 Mobile Services Group, Inc.,
9.75%, 08/01/2014 (I)........................... 2,059
5,440 Norske Skog Canada Ltd.,
8.63%, 06/15/2011 (G)........................... 5,508
2,650 Nova Chemicals Corp.,
8.50%, 11/15/2013 (L)........................... 2,650
2,415 Owens-Brockway Glass Container, Inc.,
8.88%, 02/15/2009............................... 2,469
2,560 Owens-Illinois, Inc.,
7.80%, 05/15/2018............................... 2,550
3,500 Peabody Energy Corp.,
6.88%, 03/15/2013............................... 3,588
3,450 PolyOne Corp.,
8.88%, 05/01/2012 (G)........................... 3,441
1,350 Potlatch Corp.,
13.00%, 12/01/2009 (L).......................... 1,557
2,835 Rockwood Specialties Group, Inc.,
7.50%, 11/15/2014............................... 2,856
1,052 Rockwood Specialties Group, Inc.,
10.63%, 05/15/2011.............................. 1,120
3,600 Smurfit Kappa Funding plc,
9.63%, 10/01/2012............................... 3,815
3,800 Smurfit-Stone Container Enterprises, Inc.,
8.38%, 07/01/2012............................... 3,724
2,080 Titan International, Inc.,
8.00%, 01/15/2012 (I)(G)........................ 2,080
4,105 Verso Paper Holdings LLC,
11.38%, 08/01/2016 (I)(G)....................... 4,310
--------
88,979
--------
CAPITAL GOODS -- 1.7%
2,845 Bombardier, Inc.,
6.30%, 05/01/2014 (I)........................... 2,673
2,000 Bombardier, Inc.,
6.75%, 05/01/2012 (I)(G)........................ 1,960
2,800 Case Corp.,
7.25%, 01/15/2016............................... 2,835
2,645 ESCO Corp.,
8.63%, 12/15/2013 (I)........................... 2,718
2,052 K2, Inc.,
7.38%, 07/01/2014 (G)........................... 2,073
412 L-3 Communications Corp.,
3.00%, 08/01/2035 (G)........................... 433
--------
12,692
--------
CONSUMER CYCLICAL -- 13.4%
5,600 Albertson's, Inc.,
7.25%, 05/01/2013 (G)........................... 5,696
2,155 Amerigas Partners L.P.,
7.25%, 05/20/2015............................... 2,182
5,680 ArvinMeritor, Inc.,
8.75%, 03/01/2012 (G)........................... 5,836
</Table>
The accompanying notes are an integral part of these financial statements.
94
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
$ 2,840 Beazer Homes USA, Inc.,
8.63%, 05/15/2011 (G)........................... $ 2,925
2,645 Buffalo Thunder,
9.38%, 12/15/2014 (I)........................... 2,685
2,100 Builders FirstSource, Inc.,
9.62%, 02/15/2012 (L)(G)........................ 2,066
4,000 Ford Capital B.V.,
9.50%, 06/01/2010 #............................. 3,980
6,450 General Motors Corp.,
6.38%, 05/01/2008 (G)........................... 6,418
5,640 General Motors Corp.,
7.13%, 07/15/2013 (G)........................... 5,316
2,295 GSC Holdings Corp.,
8.00%, 10/01/2012 (G)........................... 2,398
2,430 Hanesbrands, Inc.,
8.74%, 12/15/2014 (I)(L)........................ 2,473
1,750 Interline Brands, Inc.,
8.13%, 06/15/2014............................... 1,798
935 K. Hovnanian Enterprises, Inc.,
6.00%, 01/15/2010............................... 895
1,875 K. Hovnanian Enterprises, Inc.,
6.25%, 01/15/2015............................... 1,781
2,750 K. Hovnanian Enterprises, Inc.,
8.88%, 04/01/2012............................... 2,791
2,900 KB Home & Broad Home Corp.,
6.38%, 08/15/2011 (G)........................... 2,853
3,400 Lear Corp.,
5.75%, 08/01/2014............................... 2,856
2,300 Levi Strauss & Co.,
9.75%, 01/15/2015 (G)........................... 2,478
3,240 Michaels Stores, Inc.,
11.38%, 11/01/2016 (I)(G)....................... 3,378
2,485 Mosaic Co.,
7.38%, 12/01/2014 (I)........................... 2,550
1,150 Mosaic Co.,
7.63%, 12/01/2016 (I)........................... 1,192
4,065 Neiman Marcus Group, Inc.,
10.38%, 10/15/2015 (G).......................... 4,522
3,120 NPC International, Inc.,
9.50%, 05/01/2014 (G)........................... 3,198
2,160 Perry Ellis International, Inc.,
8.88%, 09/15/2013............................... 2,160
3,695 Phillips Van-Heusen Corp.,
7.75%, 11/15/2023............................... 3,861
2,145 Ply Gem Industries, Inc.,
9.00%, 02/15/2012 (G)........................... 1,823
3,640 SGS International, Inc.,
12.00%, 12/15/2013.............................. 3,786
2,435 Stater Brothers Holdings, Inc.,
8.13%, 06/15/2012 (G)........................... 2,472
3,175 Technical Olympic USA, Inc.,
9.00%, 07/01/2010 (G)........................... 3,127
1,740 Technical Olympic USA, Inc.,
10.38%, 07/01/2012 (G).......................... 1,566
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CONSUMER CYCLICAL -- (CONTINUED)
$ 4,490 Tenneco, Inc.,
8.63%, 11/15/2014 (G)........................... $ 4,580
2,795 United Auto Group, Inc.,
9.63%, 03/15/2012............................... 2,938
--------
98,580
--------
CONSUMER STAPLES -- 2.5%
2,545 Appleton Papers Inc.,
9.75%, 06/15/2014 (G)........................... 2,620
1,755 Constellation Brands, Inc.,
7.25%, 09/01/2016............................... 1,803
1,750 Dean Foods Co.,
7.00%, 06/01/2016............................... 1,768
2,100 Del Laboratories, Inc.,
10.37%, 11/01/2011 (L).......................... 2,179
4,505 Dole Food Co., Inc.,
8.63%, 05/01/2009............................... 4,477
3,520 Nutro Products, Inc.,
10.75%, 04/15/2014 (I).......................... 3,846
1,915 Pierre Foods, Inc.,
9.88%, 07/15/2012 (G)........................... 1,972
--------
18,665
--------
ENERGY -- 3.7%
1,339 Chesapeake Energy Corp.,
2.75%, 11/15/2035 +............................. 1,353
1,735 Chesapeake Energy Corp.,
7.63%, 07/15/2013............................... 1,828
2,720 Comstock Resources, Inc.,
6.88%, 03/01/2012............................... 2,638
3,570 Encore Acquisition Co.,
7.25%, 12/01/2017............................... 3,454
1,897 Ferrell Gas Partners L.P.,
8.75%, 06/15/2012............................... 1,944
2,600 Inergy L.P.,
8.25%, 03/01/2016............................... 2,730
1,537 Magnum Hunter Resources, Inc.,
9.60%, 03/15/2012............................... 1,616
2,675 OPTI Canada, Inc.,
8.25%, 12/15/2014 (I)........................... 2,749
2,825 Petrohawk Energy Corp.,
9.13%, 07/15/2013............................... 2,966
3,500 Pogo Producing Co.,
7.88%, 05/01/2013............................... 3,553
2,675 Range Resources Corp.,
7.50%, 05/15/2016............................... 2,742
--------
27,573
--------
FINANCE -- 13.1%
5,400 American Real Estate Partners L.P.,
7.13%, 02/15/2013 #............................. 5,426
3,430 Atlantic Broadband Finance LLC,
9.38%, 01/15/2014 #............................. 3,469
2,790 Avis Budget Car Rental,
7.87%, 05/15/2014 (I)(L)........................ 2,692
3,857 BCP Crystal Holdings Corp.,
9.63%, 06/15/2014............................... 4,262
</Table>
The accompanying notes are an integral part of these financial statements.
95
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ---------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 1,635 Crescent Real Estate Equities L.P.,
9.25%, 04/15/2009............................... $ 1,678
2,900 E*Trade Financial Corp,
8.00%, 06/15/2011............................... 3,031
3,440 El Paso Performance-Linked Trust,
7.75%, 07/15/2011 (I)........................... 3,638
1,000 Felcor Lodging L.P.,
8.50%, 06/01/2011............................... 1,065
4,175 Ford Motor Credit Co.,
5.80%, 01/12/2009............................... 4,099
3,680 Ford Motor Credit Co.,
6.75%, 08/15/2008............................... 3,641
9,480 Ford Motor Credit Co.,
6.94%, 01/15/2010 (L)........................... 9,271
4,600 Ford Motor Credit Co.,
7.38%, 02/01/2011............................... 4,554
3,900 General Motors Acceptance Corp.,
6.88%, 08/28/2012............................... 4,005
10,260 General Motors Acceptance Corp.,
6.88%, 09/15/2011#.............................. 10,524
3,300 General Motors Acceptance Corp.,
8.00%, 11/01/2031 (G)........................... 3,789
3,235 Hertz Corp.,
10.50%, 01/01/2016 (I)(G)....................... 3,559
2,800 Host Marriott L.P.,
6.75%, 06/01/2016............................... 2,804
2,020 LPL Holdings, Inc.,
10.75%, 12/15/2015 (I).......................... 2,111
3,125 Multiplan Corp.,
10.38%, 04/15/2016 (I).......................... 3,109
1,300 Nell Af Sarl,
8.38%, 08/15/2015 (I)(G)........................ 1,336
EUR 1,500 Nell Af Sarl,
8.38%, 08/15/2015 (I)........................... 2,124
3,500 Rainbow National Services LLC,
10.38%, 09/01/2014 (I).......................... 3,889
1,750 Rental Service Corp.,
9.50%, 12/01/2014 (I)........................... 1,807
3,465 United Rentals NA, Inc.,
6.50%, 02/15/2012#.............................. 3,422
3,290 Universal City Florida,
10.12%, 05/01/2010 (L).......................... 3,397
3,315 Universal Hospital Services,
10.13%, 11/01/2011.............................. 3,539
--------
96,241
--------
HEALTH CARE -- 5.6%
2,690 Accellent, Inc.,
10.50%, 12/01/2013#............................. 2,790
3,505 Biovail Corp.,
7.88%, 04/01/2010#.............................. 3,579
2,655 CDRV Investors, Inc.,
9.86%, 12/01/2011 (I)(L)........................ 2,589
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
HEALTH CARE -- (CONTINUED)
$ 2,900 Encore Medical Finance,
11.75%, 11/15/2014 (I).......................... $ 2,878
2,450 GNC Parent Corp.,
12.13%, 12/01/2011 (I)(L)....................... 2,450
5,695 HCA, Inc.,
7.88%, 02/01/2011............................... 5,709
6,997 HCA, Inc.,
9.25%, 11/15/2016 (I)........................... 7,496
3,420 Healthsouth Corp.,
11.35%, 06/15/2014 (I)(L)(G).................... 3,642
2,835 IASIS Healthcare Capital Corp.,
8.75%, 06/15/2014............................... 2,870
3,660 National Mentor Holdings, Inc.,
11.25%, 07/01/2014 (I).......................... 3,889
3,450 Tenet Healthcare Corp.,
6.50%, 06/01/2012............................... 3,122
--------
41,014
--------
SERVICES -- 18.3%
1,655 Allied Waste North America, Inc.,
5.75%, 02/15/2011 (G)........................... 1,600
1,100 Allied Waste North America, Inc.,
7.88%, 04/15/2013............................... 1,134
233 Allied Waste North America, Inc.,
9.25%, 09/01/2012............................... 248
2,500 AMC Entertainment, Inc.,
11.00%, 02/01/2016#............................. 2,806
3,395 Ameripath, Inc.,
10.50%, 04/01/2013#............................. 3,675
2,370 Cablevision Systems Corp.,
9.87%, 04/01/2009 (L)........................... 2,500
400 Century Communications Corp.,
8.88%, 01/15/2007............................... 417
3,570 Clarke American Corp.,
11.75%, 12/15/2013.............................. 3,820
3,055 Compucom Systems, Inc.,
12.00%, 11/01/2014 (I).......................... 3,147
7,090 Dex Media West LLC, Inc.,
8.00%, 11/15/2013............................... 7,303
5,277 Dex Media West LLC, Inc.,
9.88%, 08/15/2013............................... 5,752
3,650 DirecTV Holdings LLC,
6.38%, 06/15/2015............................... 3,499
34,000 Dow Jones CDX HY,
8.38%, 12/29/2011 (I)(G)........................ 34,741
1,700 Education Management LLC,
8.75%, 06/01/2014 (I)........................... 1,760
1,800 Education Management LLC,
10.25%, 06/01/2016 (I)(G)....................... 1,904
3,475 Knowledge Learning Center, Inc.,
7.75%, 02/01/2015 (I)........................... 3,327
2,900 Liberty Media Corp.,
8.25%, 02/01/2030............................... 2,843
3,465 Lodgenet Entertainment Corp.,
9.50%, 06/15/2013............................... 3,734
</Table>
The accompanying notes are an integral part of these financial statements.
96
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
SERVICES -- (CONTINUED)
$ 1,770 MGM Mirage, Inc.,
6.75%, 04/01/2013............................... $ 1,730
4,655 MGM Mirage, Inc.,
6.75%, 09/01/2012............................... 4,585
1,860 MTR Gaming Group, Inc.,
9.00%, 06/01/2012............................... 1,907
2,185 NCO Group, Inc.,
11.88%, 11/15/2014 (I).......................... 2,212
2,925 Penn National Gaming, Inc.,
6.75%, 03/01/2015 (G)........................... 2,867
1,700 Pokagon Gaming Authority,
10.38%, 06/15/2014 (I).......................... 1,862
3,000 Quebecor World Capital Corp.,
6.13%, 11/15/2013............................... 2,588
2,570 Quebecor World Capital Corp.,
8.75%, 03/15/2016 (I)(G)........................ 2,461
2,330 Quebecor World, Inc.,
9.75%, 01/15/2015 (I)........................... 2,345
3,755 Sheridan Group, Inc.,
10.25%, 08/15/2011.............................. 3,905
3,500 Sirius Satellite Radio, Inc.,
9.63%, 08/01/2013 (G)........................... 3,443
6,030 SunGard Data Systems, Inc.,
10.25%, 08/15/2015 (G).......................... 6,437
2,050 Town Sports International, Inc.,
9.63%, 04/15/2011 (G)........................... 2,165
1,910 Tropicana Entertainment,
9.63%, 12/15/2014 (I)........................... 1,891
3,500 Unisys Corp.,
7.88%, 04/01/2008 (G)........................... 3,491
3,050 West Corp.,
9.50%, 10/15/2014 (I)........................... 3,050
3,665 Wynn Las Vegas LLC,
6.63%, 12/01/2014............................... 3,642
--------
134,791
--------
TECHNOLOGY -- 19.0%
2,985 Advanced Micro Devices, Inc.,
7.75%, 11/01/2012 (G)........................... 3,096
1,710 Amkor Technologies, Inc.,
10.50%, 05/01/2009.............................. 1,667
3,445 Broadview Networks Holdings, Inc.,
11.38%, 09/01/2012 (I).......................... 3,591
7,200 Charter Communications Operating LLC,
8.00%, 04/30/2012 (I)........................... 7,479
8,645 Charter Communications Holdings LLC,
9.92%, 04/01/2011 (G)........................... 7,997
2,800 Cincinnati Bell, Inc.,
7.25%, 07/15/2013 (G)........................... 2,898
3,650 Citizens Communications Co.,
7.88%, 01/15/2027 (I)........................... 3,687
3,500 Dobson Cellular Systems,
8.38%, 11/01/2011 (I)........................... 3,688
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
TECHNOLOGY -- (CONTINUED)
$ 1,355 Dobson Communications Corp.,
9.62%, 10/15/2012 (L)........................... $ 1,382
2,800 Flextronics International Ltd.,
6.50%, 05/15/2013............................... 2,765
7,200 Freescale Semiconductor, Inc.,
10.13%, 12/15/2016 (I).......................... 7,209
2,570 Hawaiian Telcom Communications, Inc.,
10.89%, 05/01/2013 (L)(G)....................... 2,570
3,530 Idearc, Inc.,
8.00%, 11/15/2016 (I)........................... 3,583
2,805 Inmarsat Finance plc,
7.63%, 06/30/2012............................... 2,896
7,305 Intelsat Bermuda Ltd.,
11.25%, 06/15/2016 (I).......................... 8,017
3,615 Itron, Inc.,
7.75%, 05/15/2012............................... 3,696
3,500 Leap Wireless International, Inc.,
9.38%, 11/01/2014 (I)(G)........................ 3,693
1,825 Level 3 Communications,
11.50%, 03/01/2010 (G).......................... 1,935
6,430 Level 3 Financing, Inc.,
12.25%, 03/15/2013.............................. 7,282
2,594 Lucent Technologies, Inc.,
6.45%, 03/15/2029............................... 2,393
3,500 MagnaChip Semiconductor,
6.88%, 12/15/2011............................... 2,958
3,500 Mediacom LLC,
9.50%, 01/15/2013............................... 3,605
3,435 Metro Pcs Wireless, Inc.,
9.25%, 11/01/2014 (I)........................... 3,590
1,280 Momentive Performance,
9.75%, 12/01/2014 (I)........................... 1,280
800 Momentive Performance,
11.50%, 12/01/2016 (I).......................... 784
6,500 Nortel Networks Ltd.,
10.75%, 07/15/2016 (I).......................... 7,109
4,800 NXP B.V.,
8.12%, 10/15/2013 (I)(L)........................ 4,872
6,670 Qwest Communications International, Inc.,
7.50%, 02/15/2014 (G)........................... 6,870
3,500 Rural Cellular Corp.,
8.25%, 03/15/2012............................... 3,644
2,650 Sanmina-SCI Corp.,
8.13%, 03/01/2016 (G)........................... 2,564
3,015 Seagate Technology Holdings,
6.80%, 10/01/2016............................... 3,030
3,135 Solectron Global Finance Ltd.,
8.00%, 03/15/2016 (G)........................... 3,174
3,425 STATS ChipPAC Ltd.,
7.50%, 07/19/2010 (G)........................... 3,451
3,300 UGS Corp.,
10.00%, 06/01/2012.............................. 3,597
</Table>
The accompanying notes are an integral part of these financial statements.
97
HARTFORD HIGH YIELD HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ---------- ---------
CORPORATE BONDS: NON-INVESTMENT
GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
EUR 1,600 Wind Acquisition,
9.75%, 12/01/2015 (I)........................... $ 2,429
$ 4,715 Windstream Corp.,
8.63%, 08/01/2016............................... 5,163
--------
139,644
--------
TRANSPORTATION -- 0.2%
1,625 PHI, Inc.,
7.13%, 04/15/2013............................... 1,572
--------
UTILITIES -- 6.1%
3,110 Atlas Pipeline Partners L.P.,
8.13%, 12/15/2015#.............................. 3,196
4,000 Chivor S.S. E.S.P.,
9.75%, 12/30/2014 (K)........................... 4,560
3,625 Colorado Interstate Gas Co.,
6.80%, 11/15/2015............................... 3,769
2,750 Copano Energy LLC,
8.13%, 03/01/2016............................... 2,846
3,515 Edison Mission Energy,
7.50%, 06/15/2013............................... 3,673
1,643 Elwood Energy LLC,
8.16%, 07/05/2026............................... 1,716
3,440 Markwest Energy Partners L.P.,
8.50%, 07/15/2016 (I)........................... 3,578
2,400 Mirant Americas Generation LLC,
8.30%, 05/01/2011............................... 2,460
2,545 NGC Corp.,
7.13%, 05/15/2018 (G)........................... 2,481
2,075 NRG Energy, Inc.,
7.25%, 02/01/2014............................... 2,091
3,620 NRG Energy, Inc.,
7.38%, 02/01/2016............................... 3,638
1,665 NRG Engery, Inc.,
7.38%, 01/15/2017............................... 1,669
1,700 PSEG Energy Holdings LLC,
8.50%, 06/15/2011............................... 1,828
2,325 Regency Energy Partners,
8.38%, 12/15/2013 (I)........................... 2,331
2,900 Reliant Energy, Inc.,
6.75%, 12/15/2014............................... 2,835
1,775 Williams Partners LP,
7.25%, 02/01/2017 (I)........................... 1,811
--------
44,482
--------
Total corporate bonds: non-investment grade
(cost $689,603)................................. $704,233
--------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE (V) -- 1.4%
CONSUMER CYCLICAL -- 0.5%
$ 3,500 Ford Motor Co.,
8.36%, 12/12/2013 (Q)(N)#....................... $ 3,506
--------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
FINANCE -- 0.4%
$ 2,900 Rental Service Corp.,
8.86%, 11/21/2013 (N)........................... $ 2,923
--------
TECHNOLOGY -- 0.5%
3,650 Wind Acquisitions Holdings Finance S.A.,
12.61%, 12/12/2011 (Q)(AA)...................... 3,698
--------
Total senior floating rate interests:
non-investment grade
(cost $10,055).................................. $ 10,127
--------
<Caption>
SHARES
- ---------
COMMON STOCK -- 0.0%
CONSUMER CYCLICAL -- 0.0%
-- Hosiery Corp. of America, Inc. Class A (D)(H)(A).. $ --
--------
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. (D)(H)(G)....................... --
--------
Total common stock
(cost $4)....................................... $ --
--------
WARRANTS -- 0.0%
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. ................................ $ --
--------
Total warrants
(cost $--)...................................... $ --
--------
PREFERRED STOCK -- 0.0%
TECHNOLOGY -- 0.0%
21 Adelphia Communications Corp. (D) +............... $ --
--------
Total preferred stock
(cost $513)..................................... $ --
--------
Total long-term investments
(cost $714,512)................................. $728,919
--------
SHORT-TERM INVESTMENTS -- 21.8%
INVESTMENT POOLS AND FUNDS -- 0.0%
-- State Street Bank Money Market Fund............... $ --
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
U.S. TREASURY SECURITIES -- 0.1%
$ 400 U.S. Treasury Bill,
4.83%, 03/15/2007 (S)........................... 396
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.7%
159,967 Navigator Prime Portfolio......................... $159,967
--------
Total short-term investments
(cost $160,363)................................. $160,363
--------
Total investments in securities
(cost $874,874) (C)............................. $889,282
========
</Table>
The accompanying notes are an integral part of these financial statements.
98
- --------------------------------------------------------------------------------
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 8.48% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value by,
or under the direction of, the Funds' Board of Directors rounds to zero.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
EUR -- EURO
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $875,457 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $17,634
Unrealized depreciation......................... (3,809)
-------
Net unrealized appreciation..................... $13,825
=======
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
October, 1994 -- Hosiery Corp. of America,
Inc. Class A-144A $ 4
May, 2006 -- XO Holdings, Inc. --
</Table>
The aggregate value of these securities at December 31, 2006
rounds to zero.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $227,190, which represents 30.87% of total net
assets.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $4,560 or 0.62% of net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(N) The interest rate disclosed for these securities represents the
average coupon as of December 31, 2006.
(P) The interest rate disclosed for interest only strips represents
effective yield based upon estimated future cash flows at December 31, 2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $4,820.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006.
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S.
Treasury Note 600 long March 2007 $ (433)
======
</Table>
* The number of contracts does not omit 000's.
(V) Senior loans in which the Fund invests generally pay interest rates
which are periodically adjusted by reference to a base short-term, floating
lending rate plus a premium. These base lending rates are generally (i) the
lending rate offered by one or more major European banks, such as the
London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one
or more major United States Banks, or (iii) the bank's certificate of
deposit rate. Senior floating rate interests often require prepayments from
excess cash flows or permit the borrower to repay at its election. The rate
at which the borrower repays cannot be predicted with accuracy. As a
result, the actual remaining maturity may be substantially less than the
stated maturities shown. The average coupon indicated is the rate in effect
at December 31, 2006.
+ Convertible debt security.
(AA)The interest rate disclosed for these securities represents an
estimated average coupon as of December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
----------- ----------- ------ -------- -------- --------------
Euro Sell $4,568 $4,571 2/1/2007 $3
==
</Table>
The accompanying notes are an integral part of these financial statements.
99
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 3.1%
32 Air Products and Chemicals, Inc. ................. $ 2,264
127 Alcoa, Inc. (G)................................... 3,804
15 Allegheny Technologies, Inc. ..................... 1,333
8 Ashland, Inc. .................................... 581
15 Ball Corp. ....................................... 663
15 Bemis Co., Inc. .................................. 520
27 Consol Energy, Inc. .............................. 858
140 Dow Chemical Co. ................................. 5,577
134 E.I. DuPont de Nemours & Co. (G).................. 6,549
12 Eastman Chemical Co. (G).......................... 712
42 Eastman Kodak Co. ................................ 1,086
22 Fortune Brands, Inc. ............................. 1,891
29 Freeport-McMoRan Copper & Gold, Inc. Class B...... 1,605
26 Goodyear Tire & Rubber Co. (D).................... 544
17 Hercules, Inc. (D)(G)............................. 322
11 International Flavors & Fragrances, Inc. (G)...... 560
67 International Paper Co. .......................... 2,269
67 Kimberly-Clark Corp. ............................. 4,554
27 MeadWestvaco Corp. ............................... 800
66 Newmont Mining Corp. ............................. 2,972
44 Nucor Corp. ...................................... 2,415
11 OfficeMax, Inc. (G)............................... 541
19 Pactiv Corp. (D).................................. 692
39 Peabody Energy Corp. ............................. 1,560
30 Phelps Dodge Corp. ............................... 3,570
24 PPG Industries, Inc. ............................. 1,554
47 Praxair, Inc. .................................... 2,799
21 Rohm & Haas Co. .................................. 1,063
12 Sealed Air Corp. ................................. 766
9 Snap-On, Inc. .................................... 405
12 Stanley Works (G)................................. 598
16 Temple-Inland, Inc. .............................. 718
17 United States Steel Corp. ........................ 1,265
14 Vulcan Materials Co. ............................. 1,240
----------
58,650
----------
CAPITAL GOODS -- 4.4%
108 3M Co. ........................................... 8,386
25 American Standard Cos., Inc. ..................... 1,165
203 Applied Materials, Inc. .......................... 3,745
47 Baker Hughes, Inc. (G)............................ 3,499
10 Black & Decker Corp. ............................. 792
116 Boeing Co. ....................................... 10,269
95 Caterpillar, Inc. ................................ 5,829
8 Cummins, Inc. .................................... 910
34 Deere & Co. ...................................... 3,214
22 Eaton Corp. ...................................... 1,638
18 Goodrich Corp. ................................... 829
23 Hasbro, Inc. ..................................... 635
119 Honeywell International, Inc. .................... 5,401
61 Illinois Tool Works, Inc. ........................ 2,833
45 Ingersoll-Rand Co. Class A........................ 1,752
50 International Game Technology..................... 2,290
27 ITT Corp. ........................................ 1,534
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CAPITAL GOODS -- (CONTINUED)
29 KLA-Tencor Corp. ................................. $ 1,448
26 National Oilwell Varco, Inc. (D).................. 1,572
50 Northrop Grumman Corp. ........................... 3,417
18 Novellus Systems, Inc. (D)(G)..................... 623
18 Pall Corp. ....................................... 618
17 Parker-Hannifin Corp. ............................ 1,322
32 Pitney Bowes, Inc. ............................... 1,497
25 Rockwell Automation, Inc. ........................ 1,521
29 Smith International, Inc. ........................ 1,195
28 Teradyne, Inc. (D)(G)............................. 416
15 Terex Corp. (D)................................... 962
18 Textron, Inc. .................................... 1,716
147 United Technologies Corp. ........................ 9,172
141 Xerox Corp. (D)................................... 2,392
----------
82,592
----------
CONSUMER CYCLICAL -- 9.0%
306 Altria Group, Inc. ............................... 26,294
45 Amazon.com, Inc. (D).............................. 1,784
22 AutoNation, Inc. (D).............................. 467
7 AutoZone, Inc. (D)................................ 855
14 Avery Dennison Corp. ............................. 937
41 Bed Bath & Beyond, Inc. (D)....................... 1,574
59 Best Buy Co., Inc. ............................... 2,899
16 Big Lots, Inc. (D)................................ 369
12 Brown-Forman Corp. ............................... 762
14 Brunswick Corp. .................................. 431
17 Centex Corp. ..................................... 973
21 Circuit City Stores, Inc. (G)..................... 395
54 Coach, Inc. (D)................................... 2,309
67 Costco Wholesale Corp. ........................... 3,543
40 D.R. Horton, Inc. (G)............................. 1,068
22 Darden Restaurants, Inc. ......................... 864
9 Dillard's, Inc. .................................. 311
46 Dollar General Corp. ............................. 732
169 eBay, Inc. (D)#................................... 5,086
22 Family Dollar Stores, Inc. ....................... 651
77 Federated Department Stores, Inc. ................ 2,928
276 Ford Motor Co. ................................... 2,073
77 Gap, Inc. ........................................ 1,502
83 General Motors Corp. (G).......................... 2,540
25 Genuine Parts Co. ................................ 1,181
298 Home Depot, Inc. (G).............................. 11,980
33 J. C. Penney Co., Inc. (G)........................ 2,546
29 Johnson Controls, Inc. (G)........................ 2,459
16 Jones Apparel Group, Inc. ........................ 538
12 KB Home (G)....................................... 590
48 Kohl's Corp. (D).................................. 3,269
105 Kroger Co. ....................................... 2,418
26 Leggett & Platt, Inc. (G)......................... 629
20 Lennar Corp. (G).................................. 1,060
15 Liz Claiborne, Inc. .............................. 652
223 Lowe's Cos., Inc. ................................ 6,934
50 Ltd. Brands, Inc. ................................ 1,447
58 Masco Corp. (G)................................... 1,721
56 Mattel, Inc. ..................................... 1,264
</Table>
The accompanying notes are an integral part of these financial statements.
100
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
181 McDonald's Corp. ................................. $ 8,011
41 Newell Rubbermaid, Inc. .......................... 1,172
28 NIKE, Inc. Class B (G)............................ 2,726
33 Nordstrom, Inc. (G)............................... 1,648
41 Office Depot, Inc. (D)(G)......................... 1,554
36 PACCAR, Inc. ..................................... 2,353
20 Patterson Cos., Inc. (D).......................... 721
31 Pulte Homes, Inc. ................................ 1,027
20 RadioShack Corp. ................................. 336
65 Safeway, Inc. .................................... 2,240
12 Sears Holdings Corp. (D).......................... 2,043
16 Sherwin-Williams Co. (G).......................... 1,043
106 Staples, Inc. .................................... 2,820
111 Starbucks Corp. (D)............................... 3,914
30 Supervalu, Inc. .................................. 1,076
90 Sysco Corp. (G)................................... 3,322
126 Target Corp. ..................................... 7,164
20 Tiffany & Co. .................................... 777
67 TJX Cos., Inc. #.................................. 1,895
13 V.F. Corp. ....................................... 1,075
11 W.W. Grainger, Inc. .............................. 748
359 Wal-Mart Stores, Inc. ............................ 16,599
14 Wendy's International, Inc. ...................... 463
21 Whole Foods Market, Inc. (G)...................... 981
39 Yum! Brands, Inc. ................................ 2,281
----------
168,024
----------
CONSUMER STAPLES -- 5.5%
112 Anheuser-Busch Cos., Inc. #....................... 5,530
96 Archer Daniels Midland Co. ....................... 3,070
65 Avon Products, Inc. .............................. 2,148
32 Campbell Soup Co. (G)............................. 1,237
22 Clorox Co. ....................................... 1,424
298 Coca-Cola Co. .................................... 14,379
41 Coca-Cola Enterprises, Inc. ...................... 827
75 Colgate-Palmolive Co. ............................ 4,906
75 ConAgra Foods, Inc. .............................. 2,012
31 Constellation Brands, Inc. Class A (D)............ 894
20 Dean Foods Co. (D)................................ 824
19 Estee Lauder Cos., Inc. .......................... 759
50 General Mills, Inc. .............................. 2,889
48 H.J. Heinz Co. ................................... 2,168
25 Hershey Co. ...................................... 1,265
37 Kellogg Co. (G)................................... 1,837
19 McCormick & Co., Inc. ............................ 740
7 Molson Coors Brewing Co. ......................... 512
20 Pepsi Bottling Group, Inc. ....................... 621
240 PepsiCo, Inc. .................................... 15,016
463 Procter & Gamble Co. ............................. 29,767
25 Reynolds American, Inc. (G)....................... 1,643
109 Sara Lee Corp. ................................... 1,860
37 Tyson Foods, Inc. Class A......................... 605
24 UST, Inc. (G)..................................... 1,368
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CONSUMER STAPLES -- (CONTINUED)
35 Weyerhaeuser Co. ................................. $ 2,445
32 Wm. Wrigley Jr. Co. (G)........................... 1,660
----------
102,406
----------
ENERGY -- 9.3%
67 Anadarko Petroleum Corp. ......................... 2,925
48 Apache Corp. ..................................... 3,204
43 BJ Services Co. .................................. 1,255
61 Chesapeake Energy Corp. .......................... 1,765
319 Chevron Corp. .................................... 23,430
241 ConocoPhillips.................................... 17,308
65 Devon Energy Corp. ............................... 4,335
36 EOG Resources, Inc. (G)........................... 2,224
852 ExxonMobil Corp. ................................. 65,326
147 Halliburton Co. .................................. 4,564
40 Hess Corp. (G).................................... 1,963
26 KeySpan Corp. .................................... 1,054
51 Marathon Oil Corp. ............................... 4,751
27 Murphy Oil Corp. ................................. 1,388
44 Nabors Industries Ltd. (D)........................ 1,307
7 Nicor, Inc. ...................................... 304
20 Noble Corp. ...................................... 1,508
126 Occidental Petroleum Corp. ....................... 6,151
6 Peoples Energy Corp. ............................. 250
16 Rowan Companies, Inc. ............................ 535
172 Schlumberger Ltd. ................................ 10,879
38 Sempra Energy..................................... 2,144
18 Sunoco, Inc. ..................................... 1,122
43 Transocean, Inc. (D)(G)........................... 3,461
88 Valero Energy Corp. .............................. 4,521
50 Weatherford International Ltd. (D)................ 2,076
87 Williams Cos., Inc. .............................. 2,277
53 XTO Energy, Inc. #................................ 2,515
----------
174,542
----------
FINANCE -- 23.6%
49 ACE Ltd. ......................................... 2,966
76 Aetna, Inc. ...................................... 3,294
79 Aflac, Inc. ...................................... 3,652
94 Allstate Corp. ................................... 6,123
16 AMBAC Financial Group, Inc. ...................... 1,425
176 American Express Co. ............................. 10,686
391 American International Group, Inc. #.............. 28,037
35 Ameriprise Financial, Inc. ....................... 1,930
45 AON Corp. ........................................ 1,601
14 Apartment Investment & Management Co. ............ 790
32 Archstone-Smith Trust (G)......................... 1,858
656 Bank of America Corp. ............................ 35,042
112 Bank of New York Co., Inc. ....................... 4,398
79 BB&T Corp. ....................................... 3,474
17 Bear Stearns & Co., Inc. ......................... 2,792
17 Boston Properties, Inc. .......................... 1,908
60 Capital One Financial Corp. ...................... 4,581
27 CB Richard Ellis Group, Inc. Class A (D).......... 900
149 Charles Schwab Corp. ............................. 2,891
5 Chicago Mercantile Exchange Holdings, Inc. ....... 2,593
</Table>
The accompanying notes are an integral part of these financial statements.
101
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
FINANCE -- (CONTINUED)
62 Chubb Corp. ...................................... $ 3,277
15 CIGNA Corp. ...................................... 1,968
26 Cincinnati Financial Corp. ....................... 1,183
29 CIT Group, Inc. .................................. 1,617
718 Citigroup, Inc. .................................. 40,002
23 Comerica, Inc. (G)................................ 1,361
27 Commerce Bancorp, Inc. (G)........................ 966
19 Compass Bancshares, Inc. (G)...................... 1,133
30 Comverse Technology, Inc. (D)(G).................. 623
91 Countrywide Financial Corp. ...................... 3,853
62 E*Trade Financial Corp. (D)....................... 1,399
51 Equity Office Properties Trust (G)................ 2,474
43 Equity Residential Properties Trust............... 2,166
101 Federal Home Loan Mortgage Corp. ................. 6,880
143 Federal National Mortgage Association............. 8,464
13 Federated Investors, Inc. ........................ 446
82 Fifth Third Bancorp (G)........................... 3,339
18 First Horizon National Corp. ..................... 760
24 Franklin Resources, Inc. ......................... 2,681
71 Genworth Financial, Inc. ......................... 2,433
62 Goldman Sachs Group, Inc. ........................ 12,406
24 Humana, Inc. (D).................................. 1,344
35 Huntington Bancshares, Inc. ...................... 824
29 Janus Capital Group, Inc. ........................ 628
507 JP Morgan Chase & Co. ............................ 24,490
59 Keycorp........................................... 2,234
33 Kimco Realty Corp. ............................... 1,483
19 Legg Mason, Inc. (G).............................. 1,830
77 Lehman Brothers Holdings, Inc. ................... 6,054
46 Lincoln National Corp. ........................... 3,060
69 Loews Corp. ...................................... 2,854
11 M&T Bank Corp. ................................... 1,380
81 Marsh & McLennan Cos., Inc. ...................... 2,471
37 Marshall & Ilsley Corp. .......................... 1,795
20 MBIA, Inc. (G).................................... 1,483
43 Medco Health Solutions, Inc. (D).................. 2,292
60 Mellon Financial Corp. ........................... 2,539
129 Merrill Lynch & Co., Inc. ........................ 12,024
122 Metlife, Inc. .................................... 7,204
13 MGIC Investment Corp. (G)......................... 782
155 Morgan Stanley.................................... 12,596
92 National City Corp. (G)........................... 3,373
27 Northern Trust Corp. (G).......................... 1,663
26 Plum Creek Timber Co., Inc. (G)................... 1,032
43 PNC Financial Services Group, Inc. ............... 3,183
43 Principal Financial Group, Inc. .................. 2,541
115 Progressive Corp. ................................ 2,775
36 ProLogis.......................................... 2,200
77 Prudential Financial, Inc. ....................... 6,577
18 Public Storage, Inc. ............................. 1,745
31 Realogy Corp. (D)................................. 949
107 Regions Financial Corp. .......................... 3,985
9 Ryder System, Inc. ............................... 454
16 SAFECO Corp. ..................................... 988
32 Simon Property Group, Inc. ....................... 3,273
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
60 SLM Corp. ........................................ $ 2,914
53 Sovereign Bancorp, Inc. #......................... 1,333
104 St. Paul Travelers Cos., Inc. .................... 5,574
49 State Street Corp. ............................... 3,276
52 SunTrust Banks, Inc. ............................. 4,371
48 Synovus Financial Corp. .......................... 1,464
39 T. Rowe Price Group, Inc. ........................ 1,685
16 Torchmark Corp. .................................. 1,001
197 UnitedHealth Group, Inc. ......................... 10,578
55 UnumProvident Corp. .............................. 1,139
257 US Bancorp (G).................................... 9,298
19 Vornado Realty Trust.............................. 2,291
279 Wachovia Corp. ................................... 15,864
138 Washington Mutual, Inc. .......................... 6,283
91 Wellpoint, Inc. (D)............................... 7,134
493 Wells Fargo & Co. (G)............................. 17,548
112 Western Union Co.................................. 2,511
27 XL Capital Ltd. Class A........................... 1,961
16 Zions Bancorporation #............................ 1,286
----------
441,988
----------
HEALTH CARE -- 10.4%
224 Abbott Laboratories............................... 10,926
22 Allergan, Inc. (G)................................ 2,687
28 Amerisource Bergen Corp. ......................... 1,263
171 Amgen, Inc. (D)................................... 11,650
15 Bard (C.R.), Inc. ................................ 1,253
16 Barr Pharmaceuticals, Inc. (D).................... 777
8 Bausch & Lomb, Inc. .............................. 411
96 Baxter International, Inc. ....................... 4,437
36 Becton, Dickinson & Co. .......................... 2,526
49 Biogen Idec, Inc. (D)#............................ 2,423
36 Biomet, Inc. ..................................... 1,477
172 Boston Scientific Corp. (D)....................... 2,961
287 Bristol-Myers Squibb Co. ......................... 7,565
59 Cardinal Health, Inc. ............................ 3,817
62 Caremark Rx, Inc. ................................ 3,560
54 Celgene Corp. (D)................................. 3,133
23 Coventry Health Care, Inc. (D).................... 1,166
120 CVS Corp. ........................................ 3,721
144 Eli Lilly & Co. .................................. 7,498
46 Forest Laboratories, Inc. (D)..................... 2,342
38 Genzyme Corp. (D)................................. 2,365
67 Gilead Sciences, Inc. (D)......................... 4,365
35 Health Management Associates, Inc. Class A........ 743
23 Hospira, Inc. (D)................................. 766
424 Johnson & Johnson................................. 27,977
36 King Pharmaceuticals, Inc. (D).................... 565
18 Laboratory Corp. of America Holdings (D).......... 1,345
11 Manor Care, Inc. ................................. 507
43 McKesson Corp. ................................... 2,194
35 MedImmune, Inc. (D)(G)............................ 1,136
317 Merck & Co., Inc. #............................... 13,837
79 Monsanto Co. ..................................... 4,170
31 Mylan Laboratories, Inc. (G)...................... 621
1,054 Pfizer, Inc. ..................................... 27,295
</Table>
The accompanying notes are an integral part of these financial statements.
102
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
23 Quest Diagnostics, Inc. .......................... $ 1,240
217 Schering-Plough Corp. ............................ 5,123
10 Sigma-Aldrich Corp. .............................. 746
52 St. Jude Medical, Inc. (D)........................ 1,889
43 Stryker Corp. (G)................................. 2,396
69 Tenet Healthcare Corp. (D)........................ 480
147 Walgreen Co. ..................................... 6,732
15 Watson Pharmaceuticals, Inc. (D).................. 393
197 Wyeth............................................. 10,025
35 Zimmer Holdings, Inc. (D)......................... 2,736
----------
195,239
----------
SERVICES -- 6.9%
37 Allied Waste Industries, Inc. (D)................. 456
21 Apollo Group, Inc. Class A (D)(G)................. 799
34 Autodesk, Inc. (D)................................ 1,372
80 Automatic Data Processing, Inc. #................. 3,964
67 Avaya, Inc. (D)................................... 931
114 CBS Corp. Class B................................. 3,561
20 Cintas Corp. ..................................... 790
72 Clear Channel Communications, Inc. ............... 2,566
21 Cognizant Technology Solutions Corp. (D).......... 1,597
304 Comcast Corp. Class A (D)(G)...................... 12,876
25 Computer Sciences Corp. (D)....................... 1,340
20 Convergys Corp. (D)............................... 480
113 DirecTV Group, Inc. (D)........................... 2,811
10 Dow Jones & Co., Inc. ............................ 361
12 E.W. Scripps Co. ................................. 609
26 Ecolab, Inc. ..................................... 1,180
76 Electronic Data Systems Corp. .................... 2,083
18 Equifax, Inc. (D)................................. 743
20 Express Scripts, Inc. (D)(G)...................... 1,418
45 FedEx Corp. ...................................... 4,864
13 Fluor Corp. ...................................... 1,053
34 Gannett Co., Inc. ................................ 2,068
47 H & R Block, Inc. ................................ 1,085
27 Harrah's Entertainment, Inc. ..................... 2,252
57 Hilton Hotels Corp. .............................. 1,974
29 IMS Health, Inc. ................................. 800
65 Interpublic Group of Cos., Inc. (D)(G)............ 789
49 Marriott International, Inc. Class A.............. 2,346
52 McGraw-Hill Cos., Inc. ........................... 3,521
6 Meredith Corp. (G)................................ 321
19 Monster Worldwide, Inc. (D)....................... 877
34 Moody's Corp. .................................... 2,369
21 New York Times Co. Class A (G).................... 512
342 News Corp. Class A................................ 7,348
50 Novell, Inc. (D).................................. 311
25 Omnicom Group, Inc. .............................. 2,606
49 Paychex, Inc. .................................... 1,956
32 R.R. Donnelley & Sons Co. ........................ 1,127
25 Robert Half International, Inc. .................. 909
19 Sabre Holdings Corp. ............................. 615
31 Starwood Hotels & Resorts......................... 1,938
514 Sun Microsystems, Inc. (D)........................ 2,788
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SERVICES -- (CONTINUED)
584 Time Warner, Inc. ................................ $ 12,709
28 Tribune Co. (G)................................... 862
51 Unisys Corp. (D).................................. 398
157 United Parcel Service, Inc. Class B............... 11,763
37 Univision Communications, Inc. Class A (D)(G)..... 1,307
102 Viacom, Inc. Class B (D).......................... 4,194
302 Walt Disney Co. .................................. 10,359
78 Waste Management, Inc. ........................... 2,875
29 Wyndham Worldwide Corp. (D)....................... 929
----------
129,762
----------
TECHNOLOGY -- 22.2%
17 ADC Telecommunications, Inc. (D).................. 251
85 Adobe Systems, Inc. (D)#.......................... 3,507
80 Advanced Micro Devices, Inc. (D)(G)............... 1,632
17 Affiliated Computer Services, Inc. Class A (D)#... 845
60 Agilent Technologies, Inc. (D).................... 2,082
55 Alltel Corp. ..................................... 3,305
53 Altera Corp. (D).................................. 1,041
25 American Power Conversion Corp. .................. 759
50 Analog Devices, Inc. ............................. 1,644
124 Apple Computer, Inc. (D)(G)....................... 10,543
27 Applera Corp. -- Applied Biosystems Group......... 983
562 AT&T, Inc. #...................................... 20,080
267 BellSouth Corp. .................................. 12,559
30 BMC Software, Inc. (D)............................ 966
69 Broadcom Corp. Class A (D)........................ 2,214
60 CA, Inc. ......................................... 1,359
17 CenturyTel, Inc. ................................. 733
12 Ciena Corp. (D)................................... 341
888 Cisco Systems, Inc. (D)........................... 24,259
47 Citizens Communications Co. ...................... 675
27 Citrix Systems, Inc. (D).......................... 717
52 Compuware Corp. (D)............................... 431
13 Cooper Industries Ltd. ........................... 1,203
229 Corning, Inc. (D)................................. 4,279
35 Danaher Corp. (G)................................. 2,507
332 Dell, Inc. (D)#................................... 8,330
30 Dover Corp. ...................................... 1,461
45 Electronic Arts, Inc. (D)......................... 2,270
22 Embarq Corp. ..................................... 1,146
322 EMC Corp. (D)#.................................... 4,249
117 Emerson Electric Co. ............................. 5,167
24 Fidelity National Information Services, Inc. ..... 950
112 First Data Corp. ................................. 2,856
25 Fiserv, Inc. (D).................................. 1,326
1,507 General Electric Co. ............................. 56,064
31 Google, Inc. (D).................................. 14,421
10 Harman International Industries, Inc. ............ 949
400 Hewlett-Packard Co. .............................. 16,490
33 IAC/Interactive Corp. (D)(G)...................... 1,211
843 Intel Corp. ...................................... 17,066
220 International Business Machines Corp. #........... 21,393
51 Intuit, Inc. (D).................................. 1,559
27 Jabil Circuit, Inc. .............................. 665
</Table>
The accompanying notes are an integral part of these financial statements.
103
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
31 JDS Uniphase Corp. (D)............................ $ 515
83 Juniper Networks, Inc. (D)........................ 1,566
18 L-3 Communications Holdings, Inc. ................ 1,497
14 Lexmark International, Inc. ADR (D)............... 1,047
44 Linear Technology Corp. .......................... 1,325
52 Lockheed Martin Corp. ............................ 4,793
59 LSI Logic Corp. (D)............................... 527
47 Maxim Integrated Products, Inc. .................. 1,439
168 Medtronic, Inc. .................................. 9,003
110 Micron Technology, Inc. (D)(G).................... 1,540
1,264 Microsoft Corp. .................................. 37,756
8 Millipore Corp. (D)............................... 519
21 Molex, Inc. ...................................... 655
353 Motorola, Inc. ................................... 7,265
42 National Semiconductor Corp. (G).................. 960
26 NCR Corp. (D)..................................... 1,112
55 Network Appliance, Inc. (D)....................... 2,147
52 NVIDIA Corp. (D).................................. 1,923
585 Oracle Corp. (D).................................. 10,022
18 PerkinElmer, Inc. ................................ 400
31 PMC-Sierra, Inc. (D)(G)........................... 207
23 QLogic Corp. (D).................................. 506
242 Qualcomm, Inc. ................................... 9,128
235 Qwest Communications International, Inc. (D)(G)... 1,967
65 Raytheon Co. ..................................... 3,433
24 Rockwell Collins, Inc. ........................... 1,544
33 SanDisk Corp. (D)................................. 1,416
79 Sanmina-SCI Corp. (D)............................. 272
134 Solectron Corp. (D)............................... 431
423 Sprint Nextel Corp. .............................. 7,993
137 Symantec Corp. (D)(G)............................. 2,859
37 Symbol Technologies, Inc. ........................ 556
12 Tektronix, Inc. (G)............................... 353
65 Tellabs, Inc. (D)................................. 665
217 Texas Instruments, Inc. .......................... 6,247
60 Thermo Fisher Scientific Inc. (D)................. 2,701
291 Tyco International Ltd. .......................... 8,838
36 VeriSign, Inc. (D)................................ 861
427 Verizon Communications, Inc. ..................... 15,893
15 Waters Corp. (D)#................................. 725
12 Whirlpool Corp. (G)............................... 955
70 Windstream Corp. ................................. 991
49 Xilinx, Inc. ..................................... 1,169
179 Yahoo!, Inc. (D).................................. 4,570
----------
416,779
----------
TRANSPORTATION -- 1.3%
52 Burlington Northern Santa Fe Corp. ............... 3,872
65 Carnival Corp. ................................... 3,190
64 CSX Corp. (G)..................................... 2,191
59 General Dynamics Corp. ........................... 4,397
38 Harley-Davidson, Inc. (G)......................... 2,671
58 Norfolk Southern Corp. ........................... 2,919
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TRANSPORTATION -- (CONTINUED)
116 Southwest Airlines Co. ........................... $ 1,772
39 Union Pacific Corp. .............................. 3,625
----------
24,637
----------
UTILITIES -- 3.5%
97 AES Corp. (D)..................................... 2,139
24 Allegheny Energy, Inc. (D)........................ 1,111
30 Ameren Corp. (G).................................. 1,617
58 American Electric Power Co., Inc. ................ 2,463
46 CenterPoint Energy, Inc. (G)...................... 758
33 CMS Energy Corp. (D).............................. 543
38 Consolidated Edison, Inc. (G)..................... 1,803
26 Constellation Energy Group, Inc. ................. 1,811
52 Dominion Resources, Inc. ......................... 4,331
26 DTE Energy Co. (G)................................ 1,259
184 Duke Energy Corp. ................................ 6,094
55 Dynegy, Inc. (D).................................. 400
48 Edison International.............................. 2,164
103 El Paso Corp. .................................... 1,575
30 Entergy Corp. .................................... 2,790
98 Exelon Corp. ..................................... 6,068
47 FirstEnergy Corp. ................................ 2,810
59 FPL Group, Inc. .................................. 3,213
16 Kinder Morgan, Inc. .............................. 1,660
40 NiSource, Inc. ................................... 964
51 PG&E Corp. (G).................................... 2,412
15 Pinnacle West Capital Corp. ...................... 739
56 PPL Corp. ........................................ 1,998
37 Progress Energy, Inc. ............................ 1,826
37 Public Service Enterprise Group, Inc. ............ 2,450
13 Questar Corp. .................................... 1,046
109 Southern Co. ..................................... 4,003
31 TECO Energy, Inc. ................................ 527
67 TXU Corp. ........................................ 3,639
60 Xcel Energy, Inc. ................................ 1,372
----------
65,585
----------
Total common stock
(cost $1,484,804)............................... $1,860,204
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 7.6%
REPURCHASE AGREEMENTS -- 0.7%
$ 4,919 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 4,919
3,889 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 3,889
4,919 UBS Securities LLC Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 4,919
----------
13,727
----------
</Table>
The accompanying notes are an integral part of these financial statements.
104
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 6.9%
128,688 Mellon GSL DBTII Collateral Fund.................. $ 128,688
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT SECURITIES -- 0.1%
$ 2,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ $ 1,981
----------
Total short-term investments
(cost $144,396)................................. $ 144,396
----------
Total investments in securities
(cost $1,629,200) (C)........................... $2,004,600
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.75% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,648,777 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 508,279
Unrealized depreciation....................... (153,746)
---------
Net unrealized appreciation................... $ 354,533
=========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Standard & Poor's
500.................. 51 Long March 2007 $(66)
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
105
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 96.1%
AUSTRALIA -- 1.5%
360 Aristocrat Leisure Ltd. (A)....................... $ 4,499
427 Brambles Ltd. (D)(A).............................. 4,312
325 Toll Holdings Ltd. (A)............................ 4,685
--------
13,496
--------
AUSTRIA -- 1.3%
151 Erste Bank Der Oesterreichischen Sparkassen AG
(A)............................................. 11,530
--------
BELGIUM -- 1.3%
60 KBC Groep N.V. (A)................................ 7,317
64 UCB S.A. (A)...................................... 4,364
--------
11,681
--------
BRAZIL -- 1.1%
323 Companhia Vale do Rio Doce ADR.................... 9,618
--------
CANADA -- 7.1%
214 Cameco Corp. ..................................... 8,656
59 Potash Corp. of Saskatchewan...................... 8,422
211 Research In Motion Ltd. (D)....................... 27,000
374 Rogers Communications, Inc. Class B............... 11,135
264 SNC-Lavalin Group, Inc. .......................... 7,126
--------
62,339
--------
CHINA -- 0.4%
30 Baidu.com ADR (D)................................. 3,370
--------
DENMARK -- 0.5%
103 Vestas Wind Systems A/S (D)(A).................... 4,322
--------
FINLAND -- 1.0%
424 Nokia Corp. (G)................................... 8,620
--------
FRANCE -- 9.6%
94 Alstom RGPT (D)(A)................................ 12,702
39 Cie Generale d'Optique Essilor International S.A.
(A)............................................. 4,188
79 Iliad S.A. (A).................................... 6,827
1 Safran S.A. ...................................... 32
48 Unibail (A)(G).................................... 11,745
81 Vallourec (A)..................................... 23,516
331 Veolia Environnment S.A. (A)...................... 25,247
--------
84,257
--------
GERMANY -- 6.7%
55 Allianz SE-REG (A)................................ 11,236
112 Deutsche Boerse AG (A)(G)......................... 20,614
112 Salzgitter AG (A)................................. 14,618
153 Symrise AG (D).................................... 3,981
64 Wacker Chemie AG (D)(A)........................... 8,294
--------
58,743
--------
HONG KONG -- 1.4%
8,056 Shun Tak Holdings Ltd. (A)........................ 12,288
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
IRELAND -- 2.5%
597 Elan Corp. plc ADR (D)............................ $ 8,803
165 Ryanair Holdings plc ADR (D)(G)................... 13,480
--------
22,283
--------
JAPAN -- 19.4%
148 Daiichi Sankyo Co., Ltd. (A)...................... 4,626
246 Eisai Co., Ltd. (A)............................... 13,514
249 Elpida Memory, Inc. (D)(A)........................ 13,697
4 Japan Tobacco, Inc. (A)........................... 20,499
248 JFE Holdings, Inc. (A)............................ 12,772
215 Komatsu Ltd. (A).................................. 4,343
1 Mitsubishi UFJ Financial Group, Inc. (A).......... 8,622
88 Nintendo Co., Ltd. (A)............................ 22,756
603 Nomura Holdings, Inc. ............................ 11,375
30 ORIX Corp. (A)PFIC................................ 8,642
23 Rakuten, Inc. (D)(A).............................. 10,717
256 Sharp Corp. (A)................................... 4,402
-- Sumitomo Mitsui Financial Group, Inc. (A)......... 4,321
403 Sumitomo Realty & Development Co., Ltd. (A)....... 12,920
374 Suzuki Motor Corp. (A)............................ 10,539
100 Toyota Motor Corp. (A)............................ 6,659
--------
170,404
--------
MEXICO -- 3.0%
367 America Movil S.A. de C.V. ADR.................... 16,605
82 Fomento Economico Mexicano S.A. de C.V. ADR....... 9,515
--------
26,120
--------
NETHERLANDS -- 5.5%
503 ASML Holding N.V. (D)(A).......................... 12,424
582 Koninklijke Philips Electronics N.V. (A).......... 21,867
255 Royal Numico N.V. (A)............................. 13,681
--------
47,972
--------
NORWAY -- 0.7%
307 Telenor ASA (A)................................... 5,751
--------
RUSSIA -- 1.0%
196 RAO Gazprom Class S ADR (K)....................... 9,037
--------
SOUTH KOREA -- 1.0%
13 Samsung Electronics Co., Ltd. (A)................. 8,665
--------
SWEDEN -- 1.5%
694 Swedish Match AB (A).............................. 12,959
--------
SWITZERLAND -- 9.8%
780 ABB Ltd. (A)...................................... 13,965
870 Logitech International S.A. (D)(A)................ 25,038
33 Nestle S.A. (A)................................... 11,767
42 Nobel Biocare Holding AG (A)...................... 12,336
209 Swatch Group AG (A)............................... 9,332
24 Syngenta AG (A)................................... 4,444
144 UBS AG (A)........................................ 8,735
--------
85,617
--------
</Table>
The accompanying notes are an integral part of these financial statements.
106
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TAIWAN -- 1.8%
2,250 Hon Hai Precision Industry Co., Ltd. (A).......... $ 16,009
--------
UNITED KINGDOM -- 18.0%
134 Admiral Group plc (A)............................. 2,877
958 Alliance Boots plc (A)............................ 15,678
3,787 Arm Holdings plc (A).............................. 9,288
283 British Land Co. plc (A).......................... 9,463
2,135 Carphone Warehouse Group plc (A)(G)............... 13,084
2,119 Debenhams plc (A)................................. 7,850
2,899 EMI Group plc (A)................................. 15,029
2,011 Kesa Electricals plc (A).......................... 13,325
1,522 Man Group plc (A)................................. 15,536
303 Reckitt Benckiser plc (A)......................... 13,809
202 Rolls-Royce Group plc (A)......................... 1,765
109 Standard Chartered plc (A)........................ 3,172
3,322 Tesco plc (A)..................................... 26,254
232 Xstrata plc (A)................................... 11,563
--------
158,693
--------
Total common stock
(cost $695,697)................................. $843,774
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 7.0%
REPURCHASE AGREEMENTS -- 2.9%
$ 5,729 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 5,729
7,901 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 7,901
86 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 86
4,945 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 4,945
1,689 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,689
4,945 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 4,945
--------
25,295
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.1%
35,970 BNY Institutional Cash Reserve Fund............... $ 35,970
--------
Total short-term investments
(cost $61,265).................................. $ 61,265
--------
Total investments in securities
(cost $756,962) (C)............................. $905,039
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 95.67% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $686,999, which represents 78.29% of total net assets.
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $762,088 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $145,051
Unrealized depreciation........................ (2,100)
--------
Net unrealized appreciation.................... $142,951
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $9,037 or 1.03% of net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 11.6%
- ---------------------------------------------------------------
Capital Goods 2.6
- ---------------------------------------------------------------
Consumer Cyclical 12.5
- ---------------------------------------------------------------
Consumer Staples 9.9
- ---------------------------------------------------------------
Energy 1.0
- ---------------------------------------------------------------
Finance 18.3
- ---------------------------------------------------------------
Health Care 7.2
- ---------------------------------------------------------------
Services 3.0
- ---------------------------------------------------------------
Technology 25.0
- ---------------------------------------------------------------
Transportation 2.1
- ---------------------------------------------------------------
Utilities 2.9
- ---------------------------------------------------------------
Short-Term Investments 7.0
- ---------------------------------------------------------------
Other Assets & Liabilities (3.1)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
107
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Sell $ 976 $ 975 1/02/2007 $ (1)
British Pound Sell 1,283 1,287 1/03/2007 4
British Pound Sell 1,011 1,010 1/04/2007 (1)
Euro Sell 2,298 2,286 1/02/2007 (12)
Euro Sell 2,375 2,368 1/03/2007 (7)
Euro Buy 32 32 1/04/2007 --
Hong Kong Dollars Sell 333 333 1/02/2007 --
----
$(17)
====
</Table>
The accompanying notes are an integral part of these financial statements.
108
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BELGIUM -- 0.9%
270 UCB S.A. (A)...................................... $ 18,536
----------
BRAZIL -- 4.0%
2,056 All America Latina Logistica S.A.................. 21,335
1,926 Companhia Vale do Rio Doce ADR.................... 57,279
----------
78,614
----------
CANADA -- 6.5%
376 Alcan, Inc. ...................................... 18,307
581 Cameco Corp. ..................................... 23,489
621 EnCana Corp. ..................................... 28,575
143 Research in Motion, Ltd. (D)...................... 18,258
1,367 Talisman Energy, Inc. ............................ 23,210
226 Teck Cominco Ltd. Class B......................... 17,005
----------
128,844
----------
EGYPT -- 1.5%
452 Orascom Telecom Holding SAE GDR #................. 29,806
----------
FRANCE -- 11.1%
201 Accor S.A. (A)(G)................................. 15,528
464 Axa S.A. (A)(G)................................... 18,706
222 BNP Paribas (A)(G)................................ 24,175
234 Cie Generale d'Optique Essilor International S.A.
(A)(G).......................................... 25,074
177 CNP Assurances (A)................................ 19,746
182 Lafarge S.A. (A)(G)............................... 27,087
165 LVMH Moet Hennessy Louis Vuitton S.A. (A)(G)...... 17,383
418 Peugeot S.A. (A)(G)............................... 27,664
297 S.O.I. Tec, S.A. (D)(A)(G)........................ 10,483
382 Sanofi-Aventis S.A. (A)(G)........................ 35,251
----------
221,097
----------
GERMANY -- 7.3%
117 Deutsche Boerse AG (A)............................ 21,559
1,346 Deutsche Telekom AG (A)........................... 24,472
208 Henkel KGaA Vorzug................................ 30,700
184 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 31,592
230 RWE AG (A)........................................ 25,204
199 SAP AG ADR (A).................................... 10,573
----------
144,100
----------
HONG KONG -- 3.1%
8,247 Cathay Pacific Airways Ltd. (A)(G)................ 20,285
1,064 Dah Sing Financial Group (A)...................... 9,652
2,804 Hong Kong Exchanges & Clearing Ltd. (A)........... 30,690
----------
60,627
----------
INDIA -- 1.6%
325 Infosys Technologies Ltd. (A)..................... 16,418
1,448 Satyam Computer Services Ltd. (A)................. 15,802
----------
32,220
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
IRELAND -- 1.9%
513 Ryanair Holdings plc (D)(A)....................... $ 7,011
379 Ryanair Holdings plc ADR (D)(G)................... 30,864
----------
37,875
----------
ITALY -- 5.4%
987 Bulgari S.p.A. (A)................................ 13,976
4,361 Intesa Sanpaolo (A)............................... 33,583
287 Tod's S.p.A. (A)(G)............................... 23,115
4,236 UniCredito Italiano S.p.A. (A).................... 37,033
----------
107,707
----------
JAPAN -- 17.2%
516 Aisin Seiki Co., Ltd. (A)(G)(Q)................... 17,297
446 Astellas Pharma, Inc. (A)(G)...................... 20,195
503 Canon, Inc. (G)................................... 28,341
899 Daihatsu Motor Co., Ltd. (A)...................... 9,061
276 Denso Corp. (A)................................... 10,956
485 Eisai Co., Ltd. (A)(G)............................ 26,649
6 Japan Tobacco, Inc. (A)........................... 29,035
223 JFE Holdings, Inc. (A)(G)......................... 11,487
80 Keyence Corp. (A)(G).............................. 19,698
2 Mitsubishi UFJ Financial Group, Inc. (A).......... 28,682
1,712 Nippon Oil Corp. (A).............................. 11,449
2 Nippon Telegraph & Telephone Corp. (A)............ 9,261
30 Rakuten, Inc. (D)(A).............................. 14,096
492 Sega Sammy Holdings, Inc. (A)..................... 13,226
922 Sompo Japan Insurance, Inc. (A)................... 11,231
609 Sony Corp. (A).................................... 26,098
1,445 Sumitomo Chemical Co., Ltd. (A)................... 11,182
1 Sumitomo Mitsui Financial Group, Inc. (A)(G)...... 6,727
163 TDK Corp. (A)..................................... 12,986
714 Tokyo Electric Power Co., Inc. (A)(G)............. 23,054
----------
340,711
----------
KOREA (REPUBLIC OF) -- 0.8%
365 Korea Electric Power Corp. ....................... 16,641
----------
LUXEMBOURG -- 0.2%
149 Ternium S.A. ADR (D).............................. 4,409
----------
MEXICO -- 2.0%
2,808 Empresas ICA SAB de CV (D)........................ 10,605
366 Grupo Aeroportuario del Centro Norte, S.A.B. de CV
ADR (D)......................................... 8,145
246 Grupo Aeroportuario del Pacifico S.A. de CV
ADR #........................................... 9,649
2,627 Wal-Mart de Mexico................................ 11,559
----------
39,958
----------
NETHERLANDS -- 4.1%
884 Aercap Holdings N.V. (D).......................... 20,491
821 Koninklijke Philips Electronics N.V. (A).......... 30,873
536 Royal Numico N.V. (A)............................. 28,768
----------
80,132
----------
NORWAY -- 1.0%
742 Statoil ASA (A)(G)................................ 19,540
----------
</Table>
The accompanying notes are an integral part of these financial statements.
109
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
PANAMA -- 0.7%
307 Copa Holdings S.A. Class A........................ $ 14,299
----------
RUSSIA -- 3.3%
215 Lukoil ADR........................................ 18,968
521 RAO Gazprom Class S ADR (K)....................... 23,987
653 TMK OAO GDR (D)(I)#............................... 22,869
----------
65,824
----------
SINGAPORE -- 0.9%
1,592 Singapore Airlines Ltd. (A)....................... 18,128
----------
SOUTH AFRICA -- 1.2%
900 Impala Platinum Holdings Ltd. (A)................. 23,528
----------
SPAIN -- 0.9%
746 Banco Bilbao Vizcaya Argentaria S.A. (A)#......... 17,917
----------
SWEDEN -- 2.0%
932 Assa Abloy AB (A)................................. 20,217
4,642 Telefonaktiebolaget LM Ericsson (A)............... 18,668
----------
38,885
----------
SWITZERLAND -- 5.1%
505 Credit Suisse Group (A)........................... 35,185
119 Nestle S.A. (A)................................... 42,335
86 Zurich Financial Services AG (A).................. 23,161
----------
100,681
----------
TAIWAN -- 1.5%
2,204 Chunghwa Telecom Co., Ltd. (A).................... 4,095
1,283 Chunghwa Telecom Co., Ltd. ADR.................... 25,312
----------
29,407
----------
UNITED KINGDOM -- 12.0%
1,488 Alliance Boots plc (A)............................ 24,350
2,164 Amvescap plc (A).................................. 25,244
396 AstraZeneca plc (A)............................... 21,213
4,258 Debenhams plc (A)................................. 15,772
8,219 Old Mutual plc (A)................................ 27,974
790 Reckitt Benckiser plc (A)......................... 36,023
5,113 Tesco plc (A)..................................... 40,404
914 Xstrata plc (A)................................... 45,474
----------
236,454
----------
UNITED STATES -- 2.3%
124 Ctrip.Com International Ltd. (G).................. 7,760
289 Freeport-McMoRan Copper & Gold, Inc. Class B #.... 16,117
7,304 Hopson Development Holdings Ltd. (A).............. 20,648
----------
44,525
----------
Total common stock
(cost $1,651,664)............................... $1,950,465
----------
PRINCIPAL MARKET
AMOUNT VALUE (W)
------ ----------
SHORT-TERM INVESTMENTS -- 10.0%
REPURCHASE AGREEMENTS -- 1.2%
$5,389 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 5,389
7,431 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 7,431
81 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 81
4,651 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 4,651
1,588 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,588
4,652 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 4,652
----------
23,792
----------
SHARES
------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
173,189 Navigator Prime Portfolio......................... $ 173,189
----------
Total short-term investments
(cost $196,981)................................. $ 196,981
----------
Total investments in securities
(cost $1,848,645) (C)........................... $2,147,446
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 96.24% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $1,412,485, which represents 71.39% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,850,081 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $312,363
Unrealized depreciation........................ (14,998)
--------
Net unrealized appreciation.................... $297,365
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $23,987 or 1.21% of net assets.
The accompanying notes are an integral part of these financial statements.
110
- --------------------------------------------------------------------------------
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $22,869, which represents 1.16% of total net assets.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $1,989.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 16.6%
- ---------------------------------------------------------------
Consumer Cyclical 11.2
- ---------------------------------------------------------------
Consumer Staples 6.9
- ---------------------------------------------------------------
Energy 7.6
- ---------------------------------------------------------------
Finance 21.3
- ---------------------------------------------------------------
Health Care 8.7
- ---------------------------------------------------------------
Services 1.3
- ---------------------------------------------------------------
Technology 15.8
- ---------------------------------------------------------------
Transportation 7.1
- ---------------------------------------------------------------
Utilities 2.0
- ---------------------------------------------------------------
Short-Term Investments 10.0
- ---------------------------------------------------------------
Other Assets & Liabilities (8.5)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Sell $10,022 $ 9,571 1/25/2007 $(451)
British Pound Buy 10,022 9,719 1/25/2007 303
Euro Buy 170 169 1/02/2007 1
Euro Buy 166 166 1/03/2007 --
Euro Buy 89 89 1/04/2007 --
Japanese Yen Buy 8,847 8,883 1/04/2007 (36)
Japanese Yen Buy 1,989 1,992 1/09/2007 (3)
Norwegian Krone Sell 11,551 11,459 1/02/2007 (92)
Swiss Francs Buy 1,964 1,954 1/03/2007 10
Swiss Francs Sell 9,661 9,390 1/25/2007 (271)
Swiss Francs Buy 9,661 9,424 1/25/2007 237
-----
$(302)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
111
HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.3%
AUSTRALIA -- 5.5%
1,080 Centennial Coal Co., Ltd. (A)(G).................. $ 2,401
585 Challenger Financial Services Group Limited
(A)(G).......................................... 1,896
1,095 Dyno Nobel Ltd. (D) (I)(A)........................ 2,054
169 Leighton Holdings Ltd. (A)(G)..................... 2,696
161 Programmed Maintenance Services, Ltd. (A)......... 633
1,795 Resource Pacific Holdings Limited (D)(A)(G)....... 1,895
693 Seek Ltd. (A)(G).................................. 3,211
1,158 Tower Australia Group Limited (D)(G).............. 2,788
611 Transurban Group (A)(G)........................... 3,669
96 Zinifex Ltd. (A).................................. 1,419
--------
22,662
--------
BELGIUM -- 1.6%
9 D'ieteren S.A. (A)................................ 3,160
20 Umicore (A)....................................... 3,435
--------
6,595
--------
BRAZIL -- 0.5%
164 Dufry South America LTDA (D) (I).................. 2,145
--------
CANADA -- 0.3%
31 Lundin Mining Corp. (D)(A)(G)..................... 1,147
--------
CHINA -- 1.2%
2,822 Beijing Capital International Airport Co., Ltd.
(A)(G).......................................... 2,206
4,225 China Oilfield Services Ltd. (A)(G)............... 2,928
--------
5,134
--------
DENMARK -- 4.2%
51 Carlsberg A/S Class B (A)......................... 5,075
36 Danisco A/S (A)................................... 3,068
41 Genmab A/S (D)(A)................................. 2,758
149 H. Lundbeck A/S (A)............................... 4,097
33 Trygvesta A/S (A)................................. 2,474
--------
17,472
--------
FINLAND -- 1.5%
128 Nokian Rendaat Oyj (A)(G)......................... 2,606
107 Tietoenator Oyj (A)(G)............................ 3,430
--------
6,036
--------
FRANCE -- 7.3%
60 Arkema (D)(A)(G).................................. 3,047
45 BioMerieux S.A. (A)............................... 3,089
27 Cegedim S.A. (A).................................. 2,339
85 Ipsen (A)......................................... 3,946
49 Korian (D)........................................ 2,412
190 S.O.I. Tec, S.A. (D)(A)(G)........................ 6,699
15 Seche Environment (A)............................. 2,655
88 Zodiac S.A. (A)(G)................................ 5,915
--------
30,102
--------
GERMANY -- 10.6%
58 AWD Holding AG (A)(G)............................. 2,436
25 Deutsche Euroshop AG (A).......................... 1,822
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
GERMANY -- (CONTINUED)
148 GEA Group AG (A).................................. $ 3,322
88 GFK AG (G)........................................ 3,821
40 Hochtief AG (A)................................... 2,900
30 Interhyp AG (D)(A)................................ 2,649
71 KarstadtQuelle AG (D)(A)(G)....................... 2,059
239 Kontron AG (A)(G)................................. 3,443
133 MTU Aero Engines Holdings AG (A).................. 6,189
66 Praktiker Bau-Und Heimwerkermaerkte Holding AG
(A)............................................. 2,352
40 Salzgitter AG (A)................................. 5,169
83 SGL Carbon AG (D)(A).............................. 2,047
135 Symrise AG (D).................................... 3,506
96 Thielert AG (D)(A)(G)............................. 2,244
--------
43,959
--------
GREECE -- 1.3%
483 Hellenic Technodomiki Tev S.A. (A)................ 5,376
--------
HONG KONG -- 3.8%
2,452 Chinese Estates Holdings Ltd. (A)PFIC............. 2,959
3,088 Far East Pharmaceutical Technology Co., Ltd.
(D)(H)(G)(A).................................... --
2,383 Shangri-La Asia Ltd. (A).......................... 6,131
2,070 Shun Tak Holdings Ltd. (A)(G)..................... 3,157
2,482 Techtronic Industries Co., Ltd. (A)(G)............ 3,209
--------
15,456
--------
IRELAND -- 0.6%
178 Elan Corp. plc (D)(A)............................. 2,571
--------
ITALY -- 5.8%
181 Antichi Pellettieri SpA (D)....................... 2,274
120 Banca Popolare di Milano S.c.r.l. (A)............. 2,070
86 Benetton Group S.p.A. (A)......................... 1,638
164 Brembo S.p.A. (A)................................. 2,005
656 Immobiliare Grande Distribuzione (A).............. 3,208
49 Pirelli & C. Real Estate S.p.A. (A)............... 3,332
520 Safilo Group S.p.A. (D)(A)........................ 3,086
1,486 Sorin S.p.A. (D)(A)(G)............................ 3,195
36 Tod's S.p.A. (A)(G)............................... 2,927
--------
23,735
--------
JAPAN -- 19.7%
470 77 Bank Ltd. (A).................................. 2,979
1 Bic Camera, Inc. (G).............................. 1,487
149 Daishi Bank LTD (A)............................... 587
61 Diamond City Co. LTD (A)(G)....................... 2,741
40 Disco Corp. (A)(G)................................ 2,806
87 FamilyMart Co., Ltd. (A).......................... 2,368
955 Fuji Fire & Marine Insurance Co., Ltd. (A)(G)..... 3,556
38 Hakuhodo DY Holdings, Inc. (A)(G)................. 2,495
50 Honeys Co., Ltd. (A)(G)........................... 1,868
38 Japan Petroleum Exploration Co., Ltd.
(A)(G)PFIC...................................... 2,274
6 Jupiter Telecommunications Co., Ltd. (D)(A)....... 4,930
80 Kobayashi Pharmaceutical Co., Ltd. (A)............ 2,983
122 MEC Co., Ltd. (A)(G).............................. 1,444
</Table>
The accompanying notes are an integral part of these financial statements.
112
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
JAPAN -- (CONTINUED)
64 Milbon Co., Ltd. (A).............................. $ 1,791
95 Nidec Copal Corp. (A)(G).......................... 1,118
56 OBIC Business Consultants Ltd. (A)(G)............. 3,867
22 OBIC Co., Ltd. (A)(G)............................. 4,659
50 Point, Inc. (A)(G)................................ 3,290
24 Ryohin Keikaku Co., Ltd. (A)(G)................... 1,837
287 Shionogi & Co., Ltd. (A)(G)....................... 5,633
1,987 Sumitomo Osaka Cement Co., Ltd. (A)(G)............ 6,495
58 Taiyo Ink Manufacturing Co., Ltd. (A)............. 3,199
52 Takamatsu Corp. (A)............................... 762
230 Tanabe Seiyaku Co., Ltd (A)(G).................... 3,008
383 The Keiyo Bank, Ltd. (A).......................... 2,103
41 Uni-Charm Corp. (A)(G)............................ 2,441
88 Union Tool Co. (A)(G)............................. 3,933
35 USS Co., Ltd. (A)................................. 2,294
201 Yamaguchi Financial Group, Inc. .................. 2,061
--------
81,009
--------
LIECHTENSTEIN -- 1.2%
19 Verwalt & Privat-Bank AG (A)...................... 4,965
--------
MALAYSIA -- 0.8%
782 Resorts World Berhad (A).......................... 3,239
--------
MEXICO -- 0.6%
620 Empresas ICA SAB de CV (D)........................ 2,342
--------
NETHERLANDS -- 4.6%
128 Koninklijke BAM Groep N.V. (G).................... 2,482
172 Ordina N.V. (A)(G)................................ 3,799
97 SBM Offshore N.V. (A)............................. 3,331
202 Spazio Investment NV (D).......................... 3,986
190 Wolters Kluwer N.V. (A)........................... 5,462
--------
19,060
--------
PORTUGAL -- 0.7%
410 Mota -- Engil S.A. (A)............................ 2,777
--------
SOUTH KOREA -- 1.9%
10 Cheil Communications, Inc. (D)(A)................. 2,393
38 GS Engineering & Construction Corp. (A)........... 3,350
25 Mirae Asset Securities Co. Ltd. (A)............... 2,041
--------
7,784
--------
SPAIN -- 1.6%
654 Iberia Lineas Aer De Espana (A)(G)................ 2,378
132 Prosegur Compania de Seguridad S.A. (A)#.......... 4,302
--------
6,680
--------
SWEDEN -- 3.8%
68 Alfa Laval AB (A)................................. 3,078
63 Boliden AB (A).................................... 1,594
46 Munters AB (A)(G)................................. 2,113
307 Swedish Match AB (A).............................. 5,740
130 Trelleborg AB (A)(G).............................. 3,095
--------
15,620
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SWITZERLAND -- 6.0%
36 Bachem Holding AG Class B......................... $ 2,747
29 Charles Voegele Holding AG (A).................... 2,267
53 Dufry Group (D)(A)................................ 4,421
128 EFG International (D)............................. 4,822
10 Ems-Chemie Holding AG (A)......................... 1,223
1 Geberit AG (A).................................... 2,205
166 Logitech International S.A. (D)(A)................ 4,774
2 Sulzer AG (A)..................................... 2,195
--------
24,654
--------
UNITED KINGDOM -- 10.3%
289 Cattles plc (A)................................... 2,477
172 Close Brothers Group plc (A)...................... 3,412
586 Fenner plc (A).................................... 2,479
183 FirstGroup plc (A)................................ 2,052
890 GCAP Media plc (A)(G)............................. 3,547
1,695 Guinness Peat Group plc (A)....................... 2,910
65 Homeserve plc (A)................................. 2,391
186 ICAP plc (A)...................................... 1,735
298 Mears Group plc (A)............................... 2,114
364 Morgan Crucible Co. plc (A)....................... 1,814
166 Speedy Hire plc (A)#.............................. 3,915
384 SSL International plc (A)......................... 2,776
365 Star Energy Group plc (D)(A)...................... 2,021
131 Ultra Electronics Holdings plc (A)................ 2,782
101 Vedanta Resources plc (A)......................... 2,411
632 Wolfson Microelectronics plc (D)(A)............... 3,441
--------
42,277
--------
UNITED STATES -- 3.9%
477 Benfield Group plc (A)#........................... 3,328
2,307 Goodpack Ltd. (A)(G).............................. 2,315
412 Lancashire Holdings Ltd. (D)(A)................... 2,705
39 Mapeley Ltd. (A).................................. 3,046
3,664 Midland Holdings Ltd. (A)(G)...................... 1,861
390 Petrofac Ltd. (A)................................. 3,063
--------
16,318
--------
Total common stock
(cost $356,540)................................. $409,115
--------
</Table>
<Table>
PRINCIPAL
AMOUNT
-------
<Caption>
SHORT-TERM INVESTMENTS -- 23.9%
REPURCHASE AGREEMENT -- 0.7%
$ 692 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 692
955 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 955
10 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 10
</Table>
The accompanying notes are an integral part of these financial statements.
113
HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
PRINCIPAL MARKET
AMOUNT VALUE (W)
------- --------
<Caption>
SHORT-TERM INVESTMENTS -- (CONTINUED)
REPURCHASE AGREEMENT -- (CONTINUED)
$ 598 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... $ 598
204 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 204
598 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 598
--------
3,057
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 23.2%
95,465 Navigator Prime Portfolio......................... 95,465
--------
Total short-term investments
(cost $98,522).................................. $ 98,522
--------
Total investments in securities
(cost $455,062) (C)............................. $507,637
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 95.36% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $372,242, which represents 90.37% of total net assets.
PFIC -- Passive Foreign Investment Company
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $456,009 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $60,900
Unrealized depreciation......................... (9,272)
-------
Net unrealized appreciation..................... $51,628
=======
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES SECURITY COST BASIS
-------- ------ -------- ----------
03/2004-05/2004 3,088 Far East
Pharmaceutical
Technology Co., Ltd. $445
</Table>
The aggregate value of this security at December 31, 2006 was $--.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $4,199, which represents 1.02% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 11.6%
- ---------------------------------------------------------------
Capital Goods 7.4
- ---------------------------------------------------------------
Consumer Cyclical 16.6
- ---------------------------------------------------------------
Consumer Staples 3.4
- ---------------------------------------------------------------
Energy 3.1
- ---------------------------------------------------------------
Finance 21.3
- ---------------------------------------------------------------
Health Care 11.3
- ---------------------------------------------------------------
Services 10.0
- ---------------------------------------------------------------
Technology 10.2
- ---------------------------------------------------------------
Transportation 3.6
- ---------------------------------------------------------------
Utilities 0.8
- ---------------------------------------------------------------
Short-Term Investments 23.9
- ---------------------------------------------------------------
Other Assets & Liabilities (23.2)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
114
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Australian Dollar Buy $ 47 $ 46 1/02/2007 $ 1
Australian Dollar Buy 194 194 1/03/2007 --
Australian Dollar Buy 178 178 1/04/2007 --
British Pound Buy 89 89 1/02/2007 --
British Pound Buy 277 278 1/03/2007 (1)
Euro Sell 1,616 1,607 1/02/2007 (9)
Euro Buy 259 259 1/03/2007 --
Euro Buy 724 724 1/04/2007 --
Hong Kong Dollars Buy 206 206 1/03/2007 --
Japanese Yen Sell 34 34 1/04/2007 --
Japanese Yen Sell 152 153 1/05/2007 1
Japanese Yen Buy 75 75 1/09/2007 --
Swedish Krona Buy 406 405 1/03/2007 1
---
$(7)
===
</Table>
The accompanying notes are an integral part of these financial statements.
115
HARTFORD INTERNATIONAL STOCK HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 98.1%
BELGIUM -- 1.8%
28 InBev N.V. (A).................................... $ 1,844
--------
BRAZIL -- 1.5%
6 Petroleo Brasileiro S.A. ADR...................... 597
62 Tele Norte Leste Participacoes S.A. ADR (G)....... 930
--------
1,527
--------
EGYPT -- 0.7%
10 Orascom Telecom Holding SAE GDR................... 673
--------
FINLAND -- 0.9%
34 Fortum Corp. (A).................................. 954
--------
FRANCE -- 13.9%
25 AXA S.A. (A)(G)................................... 991
20 BNP Paribas (A)(G)................................ 2,195
74 France Telecom S.A. (A)(G)........................ 2,054
7 Lafarge S.A. (A).................................. 1,058
26 Sanofi-Aventis S.A. (A)(G)........................ 2,372
43 Total S.A. (A)(G)................................. 3,124
61 Vivendi S.A. (A)(G)............................... 2,369
--------
14,163
--------
GERMANY -- 4.2%
19 Adidas-Salomon AG (A)(G).......................... 941
5 Allianz SE-REG (A)................................ 1,013
24 DaimlerChrysler AG (A)............................ 1,466
28 KarstadtQuelle AG (D)(A)(G)....................... 819
--------
4,239
--------
IRELAND -- 2.2%
46 Bank of Ireland (A)............................... 1,068
29 CRH plc (A)....................................... 1,203
--------
2,271
--------
ITALY -- 7.5%
39 Banco Popolare di Verona e Novara S.c.r.l.
(A)(G).......................................... 1,123
109 Capitalia S.p.A. (A).............................. 1,025
178 Enel S.p.A. (A)(G)................................ 1,835
50 Ente Nazionale Idrocarburi S.p.A. (A)............. 1,693
223 UniCredito Italiano S.p.A. (A).................... 1,951
--------
7,627
--------
JAPAN -- 18.2%
17 Daito Trust Construction Co., Ltd. (A)............ 794
-- East Japan Railway Co. (A)........................ 740
29 Hoya Corp. (A).................................... 1,119
4 Keyence Corp. (A)(G).............................. 1,037
-- Mitsubishi UFJ Financial Group, Inc. (A).......... 1,278
20 Nidec Corp. (A)(G)................................ 1,540
155 Nissan Motor Co., Ltd. (A)(G)..................... 1,872
80 Nomura Holdings, Inc. ............................ 1,515
38 Sega Sammy Holdings, Inc. (A)(Q).................. 1,008
-- Sumitomo Mitsui Financial Group, Inc. (A)(G)...... 2,109
156 Sumitomo Trust & Banking Co., Ltd. (A)............ 1,633
15 Takeda Pharmaceutical Co., Ltd. (A)............... 1,001
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
JAPAN -- (CONTINUED)
27 THK Co., Ltd. (A)(G).............................. $ 682
264 Tokyo Gas Co., Ltd. (A)........................... 1,402
10 Yamada Denki Co., Ltd. (A)(G)..................... 840
--------
18,570
--------
NETHERLANDS -- 1.8%
43 TNT N.V. (A)...................................... 1,831
--------
NEW ZEALAND -- 1.0%
311 Telecom Corp. of New Zealand Ltd. (A)(G).......... 1,053
--------
NORWAY -- 0.9%
36 Statoil ASA (A)(G)................................ 956
--------
RUSSIA -- 0.5%
11 Mobile Telesystems OJSC ADR (G)................... 557
--------
SINGAPORE -- 1.3%
611 Singapore Telecommunications Ltd. (A)............. 1,303
--------
SOUTH KOREA -- 1.3%
17 Hyundai Motor Co., Ltd. GDR....................... 337
12 Kookmin Bank ADR.................................. 976
--------
1,313
--------
SPAIN -- 2.0%
87 Banco Bilbao Vizcaya Argentaria S.A. (A).......... 2,078
--------
SWEDEN -- 1.0%
242 Telefonaktiebolaget LM Ericsson (A)............... 972
--------
SWITZERLAND -- 9.8%
23 Compagnie Financiere Richemont AG (A)(G).......... 1,341
36 Credit Suisse Group (A)........................... 2,515
7 Nestle S.A. (A)................................... 2,388
50 Novartis AG (A)................................... 2,885
3 Zurich Financial Services AG (A).................. 895
--------
10,024
--------
TURKEY -- 0.9%
72 Turkcell Iletisim Hizmet ADR (G).................. 969
--------
UNITED KINGDOM -- 26.7%
244 BAE Systems plc (A)............................... 2,028
166 BP plc (A)........................................ 1,855
107 Diageo plc (A).................................... 2,095
235 Friends Provident plc (A)......................... 995
65 Gallaher Group plc (A)............................ 1,463
85 GlaxoSmithKline plc (A)........................... 2,224
51 Imperial Tobacco Group plc (A).................... 1,991
390 ITV plc (A)....................................... 812
149 Kingfisher plc (A)................................ 695
92 Lloyds TSB Group plc (A).......................... 1,030
79 Marks & Spencer Group plc (A)..................... 1,103
165 National Grid plc (A)............................. 2,391
42 Northern Rock plc (A)............................. 963
435 Old Mutual plc (A)................................ 1,481
35 Reckitt Benckiser plc (A)......................... 1,602
</Table>
The accompanying notes are an integral part of these financial statements.
116
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
220 Tesco plc (A)..................................... $ 1,735
992 Vodafone Group plc (A)#........................... 2,740
--------
27,203
--------
Total common stock
(cost $79,991).................................. $100,127
--------
SHORT-TERM INVESTMENTS -- 26.0%
INVESTMENT POOLS AND FUNDS -- 1.6%
1,617 State Street Bank Money Market Fund............... $ 1,617
--------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 24.4%
24,894 Navigator Prime Portfolio......................... 24,894
--------
Total short-term investments
(cost $26,511).................................. $ 26,511
--------
Total investments in securities
(cost $106,502) (C)............................. $126,638
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 98.10% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $93,573, which represents 91.68% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $106,554 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $21,058
Unrealized depreciation......................... (974)
-------
Net unrealized appreciation..................... $20,084
=======
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $75.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 2.2%
- ---------------------------------------------------------------
Capital Goods 4.2
- ---------------------------------------------------------------
Consumer Cyclical 11.4
- ---------------------------------------------------------------
Consumer Staples 11.2
- ---------------------------------------------------------------
Energy 9.4
- ---------------------------------------------------------------
Finance 27.6
- ---------------------------------------------------------------
Health Care 9.4
- ---------------------------------------------------------------
Services 4.9
- ---------------------------------------------------------------
Technology 12.0
- ---------------------------------------------------------------
Transportation 0.7
- ---------------------------------------------------------------
Utilities 5.1
- ---------------------------------------------------------------
Short-Term Investments 26.0
- ---------------------------------------------------------------
Other Assets & Liabilities (24.1)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
117
HARTFORD LARGECAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 98.1%
CONSUMER CYCLICAL -- 5.8%
15 CDW Corp. ........................................ $ 1,027
18 Cheesecake Factory, Inc. (D)...................... 439
16 Kohl's Corp. (D).................................. 1,071
20 Wal-Mart Stores, Inc. ............................ 914
-------
3,451
-------
CONSUMER STAPLES -- 3.3%
31 PepsiCo, Inc. .................................... 1,967
-------
ENERGY -- 10.3%
18 BJ Services Co. .................................. 515
7 Chevron Corp. .................................... 496
18 ExxonMobil Corp. ................................. 1,387
21 Halliburton Co. .................................. 646
9 Noble Corp. ...................................... 712
13 Occidental Petroleum Corp. ....................... 649
36 XTO Energy, Inc. ................................. 1,703
-------
6,108
-------
FINANCE -- 15.0%
16 Aflac, Inc. ...................................... 736
40 American International Group, Inc. ............... 2,863
11 Bank of America Corp. ............................ 596
19 Citigroup, Inc. .................................. 1,075
23 Countrywide Financial Corp. ...................... 987
18 Federal National Mortgage Association............. 1,042
18 SLM Corp. ........................................ 873
48 TD Ameritrade Holding Corp. ...................... 773
-------
8,945
-------
HEALTH CARE -- 19.6%
14 Baxter International, Inc. ....................... 652
38 Boston Scientific Corp. (D)....................... 660
20 CVS Corp. ........................................ 623
22 Eli Lilly & Co. .................................. 1,125
14 Genzyme Corp. (D)................................. 844
10 Invitrogen Corp. (D).............................. 580
18 Johnson & Johnson................................. 1,182
9 Laboratory Corp. of America Holdings (D).......... 669
18 Novartis AG ADR................................... 1,022
76 Schering-Plough Corp. ............................ 1,799
27 Teva Pharmaceutical Industries Ltd. ADR........... 839
37 Walgreen Co. ..................................... 1,677
-------
11,672
-------
SERVICES -- 11.7%
17 Automatic Data Processing, Inc. .................. 818
23 Comcast Corp. Class A (D)......................... 955
8 FedEx Corp. ...................................... 912
22 H & R Block, Inc. ................................ 498
37 IMS Health, Inc. ................................. 1,003
11 Omnicom Group, Inc. .............................. 1,139
47 Time Warner, Inc. ................................ 1,032
14 Viacom, Inc. Class B (D).......................... 575
-------
6,932
-------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
TECHNOLOGY -- 30.3%
33 Adobe Systems, Inc. (D)........................... $ 1,340
11 Affiliated Computer Services, Inc. Class A (D).... 513
15 Apple Computer, Inc. (D).......................... 1,294
53 Citrix Systems, Inc. (D).......................... 1,435
18 Cognos, Inc. (D).................................. 747
13 Electronic Arts, Inc. (D)......................... 635
50 General Electric Co. ............................. 1,877
76 Intel Corp. ...................................... 1,541
11 International Business Machines Corp. ............ 1,069
37 Linear Technology Corp. .......................... 1,114
12 Medtronic, Inc. .................................. 621
87 Microsoft Corp. .................................. 2,596
58 Motorola, Inc. ................................... 1,196
38 Sprint Nextel Corp. .............................. 711
63 Symantec Corp. (D)................................ 1,318
-------
18,007
-------
TRANSPORTATION -- 1.1%
14 Carnival Corp. ................................... 662
-------
UTILITIES -- 1.0%
7 Questar Corp. .................................... 590
-------
Total common stock
(cost $51,278).................................. $58,334
-------
SHORT-TERM INVESTMENTS -- 1.9%
INVESTMENT POOLS AND FUNDS -- 1.9%
1,163 State Street Bank Money Market Fund............... $ 1,163
-------
Total short-term investments
(cost $1,163)................................... $ 1,163
-------
Total investments in securities
(cost $52,441) (C).............................. $59,497
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 5.50% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $52,734 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 8,962
Unrealized depreciation......................... (2,199)
-------
Net unrealized appreciation..................... $ 6,763
=======
</Table>
(D)Currently non-income producing.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
118
HARTFORD MIDCAP GROWTH HLS FUND*
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SHARES MARKET
- --------- VALUE (W)
-------
COMMON STOCK -- 97.2%
BASIC MATERIALS -- 6.9%
13 Airgas, Inc. ..................................... $ 507
20 Cameco Corp. ..................................... 805
15 Consol Energy, Inc. .............................. 472
10 Posco ADR (G)..................................... 818
15 Teck Cominco Ltd. ................................ 1,108
-------
3,710
-------
CAPITAL GOODS -- 2.9%
10 Cameron International Corp. (D)(G)................ 546
12 National Oilwell Varco, Inc. (D).................. 740
5 Rockwell Automation, Inc. (G)..................... 287
-------
1,573
-------
CONSUMER CYCLICAL -- 6.6%
19 Abercrombie & Fitch Co. Class A (G)............... 1,321
14 Advance Auto Parts, Inc. ......................... 491
11 Gildan Activewear, Inc. (D)....................... 522
20 Newell Rubbermaid, Inc. (G)....................... 565
27 Urban Outfitters, Inc. (D)(G)..................... 617
-------
3,516
-------
CONSUMER STAPLES -- 5.2%
10 Bunge Ltd. ....................................... 689
19 Constellation Brands, Inc. Class A (D)(G)......... 563
21 Corn Products International, Inc. (G)............. 732
43 Physicians Formula Holdings (D)(G)................ 807
-------
2,791
-------
ENERGY -- 4.4%
7 Diamond Offshore Drilling, Inc. (G)............... 552
10 GlobalSantaFe Corp. (G)........................... 582
14 Newfield Exploration Co. (D)...................... 652
8 Noble Corp. (G)................................... 586
-------
2,372
-------
FINANCE -- 10.8%
4 Affiliated Managers Group, Inc. (D)(G)............ 407
6 AMBAC Financial Group, Inc. ...................... 499
16 CB Richard Ellis Group, Inc. Class A (D)(G)....... 515
65 Covanta Holding Corp. (D)......................... 1,422
16 Eaton Vance Corp. ................................ 528
30 Host Hotels & Resorts, Inc. ...................... 732
14 Nasdaq Stock Market, Inc. (D)..................... 425
13 Protective Life Corp. ............................ 613
9 State Street Corp. ............................... 607
-------
5,748
-------
HEALTH CARE -- 14.6%
36 CVS Corp. (G)..................................... 1,110
10 Forest Laboratories, Inc. (D)..................... 481
7 Herbalife Ltd. (D)................................ 277
52 Human Genome Sciences, Inc. (D)(G)................ 651
29 Inverness Medical Innovation (D)(G)............... 1,103
13 McKesson Corp. ................................... 679
13 Pharmaceutical Product Development, Inc. ......... 432
</Table>
<Table>
<Caption>
SHARES MARKET
- --------- VALUE (W)
-------
HEALTH CARE -- (CONTINUED)
23 Shire plc (G)..................................... $ 1,390
16 Sunrise Senior Living, Inc. (D)(G)................ 476
15 Ventana Medical Systems, Inc. (D)(G).............. 650
36 Warner Chilcott Ltd. (D).......................... 496
-------
7,745
-------
SERVICES -- 12.2%
18 Business Objects S.A. ADR (D)(G).................. 714
15 Corrections Corp. of America (D)(G)............... 674
14 Express Scripts, Inc. (D)......................... 1,017
7 Fluor Corp. ...................................... 563
87 iGate Corp. (D)................................... 596
10 Jacobs Engineering Group, Inc. (D)................ 807
25 Orient Express Hotels Ltd. Class A................ 1,188
23 Penn National Gaming, Inc. (D).................... 953
-------
6,512
-------
TECHNOLOGY -- 27.2%
6 Akamai Technologies, Inc. (D)(G).................. 297
17 Amdocs Ltd. (D)................................... 651
16 American Tower Corp. Class A (D).................. 578
34 Citizens Communications Co. (G)................... 484
19 Citrix Systems, Inc. (D).......................... 525
8 Equinix, Inc. (D)(G).............................. 620
12 F5 Networks, Inc. (D)(G).......................... 861
56 First Solar, Inc. (D)(G).......................... 1,675
12 Harris Corp. (G).................................. 532
42 Juniper Networks, Inc. (D)........................ 794
39 Marvell Technology Group Ltd. (D)................. 746
14 MEMC Electronic Materials, Inc. (D)............... 540
13 Microchip Technology, Inc. (G).................... 422
14 Neustar, Inc. (D)(G).............................. 448
48 Nuance Communications, Inc. (D)(G)................ 545
16 Rackable Systems, Inc. (D)(G)..................... 480
16 Rockwell Collins, Inc. (G)........................ 981
13 Roper Industries, Inc. ........................... 628
21 Thermo Fisher Scientific, Inc. (D)................ 938
15 Trimble Navigation Ltd. (D)(G).................... 746
22 Waters Corp. (D).................................. 1,058
-------
14,549
-------
TRANSPORTATION -- 1.9%
18 GOL Linhas Aereas Inteligentes S.A. ADR........... 519
16 Wabtec............................................ 498
-------
1,017
-------
UTILITIES -- 4.5%
8 Entergy Corp. .................................... 766
28 Northeast Utilities............................... 791
18 Wisconsin Energy Corp. ........................... 840
-------
2,397
-------
Total common stock
(cost $51,922).................................. $51,930
-------
</Table>
The accompanying notes are an integral part of these financial statements.
119
HARTFORD MIDCAP GROWTH HLS FUND*
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL
AMOUNT MARKET
- --------- VALUE (W)
-------
SHORT-TERM INVESTMENTS -- 30.6%
REPURCHASE AGREEMENTS -- 5.0%
$ 959 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 959
758 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 758
959 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 959
-------
2,676
-------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 25.6%
13,650 Navigator Prime Portfolio......................... $13,650
-------
Total short-term investments
(cost $16,326).................................. $16,326
-------
Total investments in securities
(cost $68,248) (C).............................. $68,256
=======
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.00% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $68,259 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................... $ 888
Unrealized depreciation........................... (891)
-----
Net unrealized depreciation....................... $ (3)
=====
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
* Previously known as Hartford MidCap Stock HLS Fund. Name
change effective December 11, 2006.
The accompanying notes are an integral part of these financial statements.
120
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- 1.3%
$25,345 Wal-Mart Stores, Inc. (L)......................... 5.26% 03/28/2007 $ 25,342
----------
CONSUMER STAPLES -- 3.7%
22,080 Alcoa, Inc. ...................................... 5.30% 01/24/2007 22,006
22,000 Alcoa, Inc. ...................................... 5.32% 02/15/2007 21,855
25,000 Stadshypotek...................................... 5.26% 01/22/2007 24,924
----------
68,785
----------
FINANCE -- 94.9%
25,000 Ab Spin Tab Swedmortgage.......................... 5.27% 01/29/2007 24,898
25,000 Ab Spin Tab Swedmortgage.......................... 5.28% 01/30/2007 24,894
25,000 Alliance & Leicester plc.......................... 5.29% 03/02/2007 24,785
21,000 Alliance & Leicester plc.......................... 5.36% 03/20/2007 20,761
25,000 American Express Credit Corp. (L)................. 5.35% 06/12/2007 25,002
24,500 American General Finance Corp. ................... 5.29% 01/10/2007 24,468
21,200 American General Finance Corp. (L)................ 5.40% 03/23/2007 21,203
22,900 American Honda Finance Corp. ..................... 5.27% 02/05/2007 22,783
26,500 American Honda Finance Corp. (I)(L)............... 5.35% 08/08/2007 26,500
30,920 Amsterdam Funding Corp. .......................... 5.27% 02/02/2007 30,776
27,210 Amsterdam Funding Corp. .......................... 5.28% 01/18/2007 27,142
21,700 Bank of America NA (L)............................ 5.32% 05/15/2007 21,851
26,500 Bank of America NA (L)............................ 5.36% 11/08/2007 26,500
32,750 Barton Capital Corp. ............................. 5.26% 01/12/2007 32,697
25,000 Barton Capital Corp. ............................. 5.27% 01/11/2007 24,963
8,600 Barton Capital Corp. ............................. 5.27% 01/17/2007 8,580
22,000 Bear Stearns & Co., Inc. (L)...................... 5.34% 01/14/2008 22,000
22,100 Bear Stearns & Co., Inc. (L)...................... 5.38% 06/29/2007 22,397
22,000 Bradford & Bingley plc............................ 5.30% 02/12/2007 21,865
21,900 Bradford & Bingley plc............................ 5.34% 02/20/2007 21,743
23,400 Britannia Building Society........................ 5.28% 01/31/2007 23,297
21,900 Britannia Building Society........................ 5.31% 02/27/2007 21,717
25,000 Cafco LLC......................................... 5.28% 01/25/2007 24,912
33,400 Cafco LLC......................................... 5.28% 01/30/2007 33,258
44,000 Caterpillar Financial Services Corp. (L).......... 5.39% 07/27/2007 44,006
25,620 Citibank NA (L)................................... 5.32% 02/14/2007 25,620
25,620 Citibank NA (L)................................... 5.32% 02/22/2007 25,620
19,200 Citigroup Funding, Inc. .......................... 5.27% 01/26/2007 19,130
21,120 Countrywide Financial Corp. ...................... 5.30% 01/16/2007 21,073
22,000 Countrywide Financial Corp. ...................... 5.31% 01/02/2007 21,997
20,000 General Electric Capital Corp. ................... 5.26% 01/26/2007 19,927
</Table>
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
FINANCE -- (CONTINUED)
$19,400 General Electric Capital Corp. (L)................ 5.31% 12/24/2007 $ 19,400
34,400 General Electric Capital Corp. (L)................ 5.45% 01/05/2007 34,400
49,580 Goldman Sachs Group, Inc. (L)..................... 5.46% 03/30/2007 49,599
24,300 HBOS Treasury Services plc........................ 5.28% 02/06/2007 24,172
26,440 HBOS Treasury Services plc (I)(L)................. 5.32% 01/09/2008 26,436
22,500 HSBC Finance Corp. (L)............................ 5.34% 01/04/2008 22,500
26,750 HSBC Finance Corp. ............................... 5.36% 03/16/2007 26,462
26,200 JP Morgan Chase & Co. (L)......................... 5.32% 01/02/2008 26,200
44,000 Lehman Brothers Holdings, Inc. (L)................ 5.40% 05/31/2007 44,015
22,000 Merrill Lynch & Co. (L)........................... 5.33% 12/24/2007 22,000
26,900 Merrill Lynch & Co. (L)........................... 5.36% 05/29/2007 26,899
25,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.43% 06/26/2007 25,011
23,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.48% 01/19/2007 23,001
25,000 Nationwide Building Society (I)................... 5.27% 01/25/2007 24,912
25,000 Nationwide Building Society (I)................... 5.28% 01/29/2007 24,898
21,700 Nordea Bank Ab (I)(L)............................. 5.33% 01/09/2008 21,700
25,000 Northern Rock plc................................. 5.28% 01/30/2007 24,894
25,000 Northern Rock plc................................. 5.30% 03/06/2007 24,766
32,500 Old Line Funding LLC.............................. 5.29% 02/08/2007 32,319
26,520 Old Line Funding LLC.............................. 5.33% 02/07/2007 26,376
33,500 Sheffield Receivables............................. 5.27% 01/18/2007 33,417
31,500 Sheffield Receivables............................. 5.30% 01/16/2007 31,431
22,030 Skandinaviska Enskilda Bank NY (I)(L)............. 5.31% 07/19/2007 22,029
21,600 Skandinaviska Enskilda Bank NY (I)(L)............. 5.34% 01/09/2008 21,600
21,700 SLM Corp. (I)(L).................................. 5.35% 01/11/2008 21,700
18,135 SLM Corp. (L)..................................... 5.50% 01/25/2007 18,137
24,600 Svenska Handelsbanken Ab.......................... 5.30% 03/19/2007 24,327
53,000 Toyota Motor Credit Corp. (L)..................... 5.21% 09/24/2007 53,000
22,000 Toyota Motor Credit Corp. ........................ 5.27% 02/07/2007 21,882
19,356 Triple A-1 Funding................................ 5.30% 01/09/2007 19,333
26,379 UBS Finance LLC................................... 5.27% 01/02/2007 26,375
23,700 UBS Finance LLC................................... 5.27% 01/05/2007 23,686
24,680 Washington Mutual Bank FA (L)..................... 5.35% 08/27/2007 24,680
21,135 Washington Mutual Bank FA (L)..................... 5.41% 02/28/2007 21,137
22,000 Wells Fargo & Co. (L)............................. 5.42% 03/23/2007 22,005
10,200 Westpac Banking Corp. ............................ 5.29% 02/06/2007 10,146
21,600 Westpac Banking Corp. (I)(L)...................... 5.32% 01/16/2008 21,600
20,700 Yorktown Capital.................................. 5.27% 01/09/2007 20,676
</Table>
The accompanying notes are an integral part of these financial statements.
121
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
FINANCE -- (CONTINUED)
$17,500 Yorktown Capital.................................. 5.31% 02/15/2007 $ 17,386
22,000 Yorktown Capital.................................. 5.33% 02/21/2007 21,836
----------
$1,782,708
----------
Total investments in securities
(cost $1,876,835) (C)........................... $1,876,835
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 6.04% of total net assets at December 31, 2006.
(C)Also represents cost for federal tax purposes.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $211,375, which represents 11.25% of total net
assets.
(L)Variable rate securities; the yield reported is the rate in effect at
December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
122
HARTFORD MORTGAGE SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 25.8%
FINANCE -- 25.8%
$ 2,802 Ameriquest Mortgage Securities, Inc.,
6.41%, 09/25/2032 (L)#.......................... $ 2,802
3,800 Ansonia CDO Ltd.,
5.62%, 07/28/2046 (I)(L)#....................... 3,800
5,000 Arbor Realty Mortgage Securities,
5.76%, 01/26/2042 (I)(L)........................ 5,000
15,000 Banc of America Commercial Mortgage, Inc.,
4.76%, 07/10/2045............................... 14,796
41,685 Banc of America Commercial Mortgage, Inc.,
4.83%, 07/11/2043 (I)(P)........................ 1,920
3,000 Banc of America Large Loan,
5.59%, 10/15/2019 (L)........................... 3,000
32,984 Bear Stearns Commercial Mortgage Securities, Inc.,
4.85%, 08/15/2038 (I)(P)........................ 2,137
2,500 Citigroup Commercial Mortgage Trust,
5.59%, 11/15/2036 (L)........................... 2,500
4,997 Commercial Mortgage Pass-Through Certificate,
5.64%, 12/15/2020 (I)(L)........................ 4,997
8,500 Countrywide Asset-Backed Certificates,
5.57%, 11/25/2035............................... 8,488
5,195 Countrywide Home Loan Mortgage Pass Through Trust,
5.00%, 01/25/2019............................... 5,081
2,000 Credit Suisse Mortgage Capital Certificates,
6.15%, 09/15/2021 (L)........................... 2,000
53,125 CS First Boston Mortgage Securities Corp.,
4.01%, 03/15/2035 (I)(P)........................ 1,838
4,000 Discover Card Master Trust I,
5.57%, 01/15/2008 (L)........................... 4,010
48 DLJ Mortgage Acceptance Corp. Class B1,
7.25%, 09/18/2011 (I)........................... 47
16 DLJ Mortgage Acceptance Corp. Class B2,
7.25%, 09/18/2011 (I)........................... 16
4,145 First Franklin Mortgage Loan Asset Backed
Certificates,
7.82%, 07/25/2033 (L)........................... 4,151
322 Green Tree Financial Corp.,
7.30%, 01/15/2026............................... 327
10,000 Greenwich Capital Commercial Funding Corp.,
4.53%, 01/05/2036............................... 9,741
6,000 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)........................... 5,979
4,000 Greenwich Capital Commercial Funding Corp.,
5.58%, 11/05/2021 (I)(L)........................ 4,000
3,940 Hasco NIM Trust,
6.17%, 08/26/2036 (I)........................... 3,922
47,160 LB-UBS Commercial Mortgage Trust,
4.25%, 12/15/2036 (I)(P)........................ 1,349
2,800 LNR CDO, Ltd.,
5.70%, 05/28/2043 (I)(L)........................ 2,800
35,603 Mach One Trust Commercial Mortgage-Backed,
6.09%, 05/28/2040 (I)(P)........................ 1,580
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
$ 2,619 Master Asset Backed Securities Trust,
6.10%, 05/25/2033 (L)........................... $ 2,626
2,000 Master Asset Backed Securities Trust,
7.15%, 05/25/2033 (L)........................... 2,015
4,323 Master Asset Securitization Trust,
5.00%, 12/25/2018............................... 4,229
4,800 MBNA Credit Card Master Note Trust,
5.49%, 02/16/2010 (L)........................... 4,806
4,250 Merrill Lynch Floating Trust,
5.55%, 06/15/2022 (I)(L)........................ 4,250
2,224 Merrill Lynch Mortgage Investors, Inc.,
7.00%, 05/25/2032 (L)........................... 2,227
5,000 Merrill Lynch Mortgage Trust,
5.24%, 11/12/2035............................... 4,978
4,628 Morgan Stanley ABS Capital I,
6.35%, 11/25/2032 (L)........................... 4,632
3,353 Residential Asset Mortgage Products, Inc.,
5.70%, 10/25/2031............................... 3,341
5,921 Spirit Master Funding LLC,
5.76%, 03/20/2024 (I)........................... 5,963
4,992 Structured Asset Securities Corp.,
6.35%, 02/25/2033 (L)........................... 5,051
--------
Total asset & commercial mortgage backed
securities
(cost $140,915)................................. $140,399
--------
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
1,500 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)........................ $ 1,290
--------
Total corporate bonds: investment grade
(cost $1,285)................................... $ 1,290
--------
U.S. GOVERNMENT SECURITIES -- 0.8%
U.S. TREASURY SECURITIES -- 0.8%
U.S. TREASURY NOTES
4,400 4.875% 2011....................................... $ 4,431
--------
Total U.S. government securities
(cost $4,423)................................... $ 4,431
--------
U.S. GOVERNMENT AGENCIES -- 86.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 36.5%
MORTGAGE BACKED SECURITIES:
1,729 4.50% 2018........................................ $ 1,671
3,076 4.94% 2035........................................ 3,043
92,406 5.50% 2022 -- 2034 (Q)#........................... 91,702
1,395 6.00% 2022 -- 2034................................ 1,411
2,214 6.50% 2014 -- 2017................................ 2,266
2,536 7.00% 2026 -- 2032................................ 2,609
42 7.50% 2024 -- 2025................................ 45
120 8.00% 2013 -- 2024................................ 126
50 8.50% 2009 -- 2024................................ 52
5 9.50% 2008........................................ 5
76 10.00% 2020....................................... 83
--------
103,013
--------
</Table>
The accompanying notes are an integral part of these financial statements.
123
HARTFORD MORTGAGE SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
U.S. GOVERNMENT AGENCIES -- (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION -- (CONTINUED)
REMIC -- IO & IO-ETTE:
$ 458 5.50% 2015 (P).................................... $ 8
REMIC -- PAC'S:
10,000 4.50% 2020........................................ 9,414
71,667 5.00% 2015 -- 2034#............................... 70,355
15,802 5.50% 2035........................................ 15,554
--------
95,323
--------
198,344
--------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 33.0%
MORTGAGE BACKED SECURITIES:
6,676 4.807% 2035 (L)................................... 6,622
8,826 4.924% 2035....................................... 8,777
60,317 5.00% 2018 -- 2037 (Q)............................ 58,849
28,574 5.50% 2019 -- 2037 (Q)............................ 28,310
24,801 6.00% 2023 -- 2035................................ 25,044
23,273 6.50% 2028 -- 2037 (Q)............................ 23,809
4,726 7.00% 2011 -- 2032................................ 4,858
320 8.00% 2029 -- 2031................................ 336
74 9.00% 2021........................................ 81
--------
156,686
--------
REMIC -- PAC'S:
11,000 4.50% 2018........................................ 10,478
10,371 5.50% 2035........................................ 10,192
2,121 6.50% 2031........................................ 2,173
--------
22,843
--------
ZERO COUPON STRIPS:
22 11.00% 2009....................................... 23
--------
179,552
--------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 9.6%
MORTGAGE BACKED SECURITIES:
41,661 6.00% 2033 -- 2037 (Q)............................ 42,245
5,771 6.50% 2028 -- 2032................................ 5,929
2,596 7.00% 2032........................................ 2,682
799 7.50% 2022 -- 2030................................ 830
153 8.50% 2017 -- 2030................................ 166
123 9.50% 2009........................................ 126
7 12.50% 2015....................................... 8
--------
51,986
--------
OTHER GOVERNMENT AGENCIES -- 7.1%
SMALL BUSINESS ADMINISTRATION PARTICIPATION
CERTIFICATES:
3,560 5.12% 2026........................................ 3,520
5,484 5.36% 2026........................................ 5,506
4,102 5.37% 2026........................................ 4,121
4,294 5.54% 2026........................................ 4,354
4,662 5.70% 2026........................................ 4,766
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
OTHER GOVERNMENT AGENCIES -- (CONTINUED)
$ 4,878 6.07% 2026........................................ $ 5,078
10,798 6.30% 2019........................................ 11,110
--------
38,455
--------
Total U.S. government agencies
(cost $470,549)................................. $468,337
--------
Total long-term investments
(cost $617,172)................................. $614,457
--------
SHORT-TERM INVESTMENTS -- 1.6%
REPURCHASE AGREEMENTS -- 1.6%
2,932 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 2,932
2,318 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 2,318
2,932 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 2,932
--------
8,182
--------
U.S. GOVERNMENT SECURITIES -- 0.0%
250 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 248
--------
Total short-term investments
(cost $8,430)................................... $ 8,430
--------
Total investments in securities
(cost $625,602) (C)............................. $622,887
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $625,969 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 2,497
Unrealized depreciation......................... (5,579)
-------
Net unrealized depreciation..................... $(3,082)
=======
</Table>
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $44,909, which represents 8.26% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents an
effective yield on the date of acquisition.
The accompanying notes are an integral part of these financial statements.
124
- --------------------------------------------------------------------------------
(P) The interest rate disclosed for interest only strips represents an
effective yield based on estimated future cash flows at December 31, 2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $81,705.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 273 Short March 2007 $261
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
125
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 100.0%
BASIC MATERIALS -- 7.7%
4 AEP Industries, Inc. (D).......................... $ 197
15 AK Steel Holding Corp. (D)........................ 253
9 Aventine Renewable Energy Holdings, Inc. (D)...... 205
6 Balchem Corp. .................................... 157
6 Cabot Microelectronics Corp. (D).................. 193
65 Carpenter Technology Corp. ....................... 6,623
63 Century Aluminum Co. (D)(G)....................... 2,831
81 Ceradyne, Inc. (D)................................ 4,560
18 Champion Enterprises, Inc. (D).................... 169
126 Chaparral Steel Co. .............................. 5,559
276 Cleveland-Cliffs, Inc. ........................... 13,365
4 Deltic Timber Corp. .............................. 208
141 Eagle Materials, Inc. ............................ 6,108
9 Georgia Gulf Corp. ............................... 179
22 Hercules, Inc. (D)................................ 421
174 Insteel Industries, Inc. ......................... 3,100
5 Kaydon Corp. ..................................... 186
107 Mueller Industries, Inc. ......................... 3,401
4 NCI Building Systems, Inc. (D).................... 214
5 Neenah Paper, Inc. ............................... 174
2 Newmarket Corp. .................................. 142
3 Oregon Steel Mills, Inc. (D)...................... 202
7 Pioneer Co. (D)................................... 186
10 Playtex Products, Inc. (D)........................ 144
190 PW Eagle, Inc. (G)................................ 6,562
7 Quanex Corp. ..................................... 229
533 Select Comfort Corp. (D)(G)....................... 9,273
161 Sun Hydraulics Corp. ............................. 3,294
249 Tempur-Pedic International, Inc. (D)(G)........... 5,101
157 Timken Co. ....................................... 4,575
18 Wausau Paper Corp. ............................... 274
21 Xerium Technologies, Inc. ........................ 201
----------
78,286
----------
CAPITAL GOODS -- 4.8%
53 Armor Holdings, Inc. (D).......................... 2,885
4 Clarcor, Inc. .................................... 145
8 Columbus McKinnon Corp. (D)....................... 164
4 Daktronics, Inc. ................................. 154
184 Graco, Inc. ...................................... 7,280
8 II VI, Inc. (D)................................... 223
101 Lennox International, Inc. ....................... 3,098
50 Lone Star Technologies, Inc. (D).................. 2,406
3 Lufkin Industries, Inc. .......................... 153
10 Marvel Entertainment, Inc. (D).................... 277
142 Nordson Corp. .................................... 7,051
6 Oil States International, Inc. (D)................ 202
14 Orbital Sciences Corp. (D)........................ 252
217 Steelcase, Inc. .................................. 3,932
203 Tennant Co. ...................................... 5,881
8 Tessera Technologies, Inc. (D).................... 322
103 Toro Co. ......................................... 4,789
210 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 9,549
----------
48,763
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- 13.2%
105 Aeropostale, Inc. (D)............................. $ 3,244
8 Albany International Corp. Class A................ 257
190 American Woodmark Corp. (G)....................... 7,968
1 AMREP Corp. (G)................................... 164
221 AnnTaylor Stores Corp. (D)........................ 7,254
137 Applied Industrial Technologies, Inc. ............ 3,593
-- Arden Group, Inc. ................................ 50
896 Arris Group, Inc. (D)............................. 11,211
7 Bebe Stores, Inc. ................................ 135
122 Bon-Ton Stores, Inc. (G).......................... 4,227
6 Charlotte Russe Holding, Inc. (D)................. 185
11 Charming Shoppes, Inc. (D)........................ 154
2 Children's Place Retail Stores, Inc. (D).......... 143
324 Christopher & Banks Corp. ........................ 6,050
5 Deckers Outdoor Corp. (D)......................... 326
102 Dress Barn, Inc (D)............................... 2,376
433 DSW, Inc. (D)(G).................................. 16,712
4 ESCO Technologies, Inc. (D)....................... 162
125 First Cash Financial Services, Inc. (D)........... 3,244
134 Genesco, Inc. (D)................................. 4,991
7 GenTek, Inc. (D).................................. 228
4 Granite Construction, Inc. ....................... 179
3 Guess?, Inc. (D).................................. 206
10 Gymboree Corp. (D)................................ 373
5 Herman Miller, Inc. .............................. 165
10 Iconix Brand Group, Inc. (D)...................... 200
151 J. Crew Group, Inc. (D)........................... 5,806
12 Kimball International, Inc. ...................... 302
5 K-Swiss, Inc. .................................... 144
17 Maidenform Brands, Inc. (D)....................... 300
68 McGrath RentCorp.................................. 2,092
6 Men's Wearhouse, Inc. ............................ 223
163 Noble International Ltd. ......................... 3,260
4 Pantry, Inc. (D).................................. 195
7 Payless ShoeSource, Inc. (D)...................... 215
130 Phillips-Van Heusen Corp. ........................ 6,524
290 PSS World Medical, Inc. (D)....................... 5,656
101 RARE Hospitality International, Inc. (D).......... 3,323
452 Skechers U.S.A., Inc. Class A (D)................. 15,053
5 Sotheby's......................................... 169
82 Stanley Furniture Co., Inc. ...................... 1,757
7 Steven Madden Ltd. ............................... 256
6 Synaptics, Inc. (D)............................... 168
331 Talbots, Inc. .................................... 7,972
4 The Buckle, Inc. ................................. 202
441 True Religion Apparel, Inc. (D)(G)................ 6,750
5 Tween Brands, Inc. (D)............................ 187
----------
134,351
----------
CONSUMER STAPLES -- 0.1%
6 Boston Beer Co., Inc. Class A (D)................. 228
5 Chattem, Inc. (D)................................. 235
5 Lancaster Colony Corp. ........................... 207
----------
670
----------
</Table>
The accompanying notes are an integral part of these financial statements.
126
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
ENERGY -- 4.6%
10 Alon USA Energy, Inc. ............................ $ 271
5 Berry Petroleum Co. .............................. 168
15 Bois d'Arc Energy, Inc. (D)....................... 217
201 Cabot Oil & Gas Corp. ............................ 12,163
14 Callon Petroleum Corp. (D)........................ 208
5 Clayton Williams Energy, Inc. (D)................. 169
10 Comstock Resources, Inc. (D)...................... 306
6 Crosstex Energy, Inc. ............................ 188
205 Delek US Holdings, Inc. .......................... 3,355
109 Encore Acquisition Co. (D)........................ 2,681
272 Frontier Oil Corp. ............................... 7,817
2 Giant Industries, Inc. (D)........................ 179
651 Grey Wolf, Inc. (D)............................... 4,464
9 Mariner Energy, Inc. (D).......................... 178
527 Meridian Resource Corp. (D)....................... 1,628
3 Penn Virginia Corp. .............................. 198
15 Petrohawk Energy Corp. (D)........................ 174
6 Petroleum Development Corp. (D)................... 243
197 Pioneer Drilling Co. (D).......................... 2,615
99 St. Mary Land & Exploration Co. .................. 3,643
66 Swift Energy Co. (D).............................. 2,940
64 Trico Marine Services, Inc. (D)................... 2,456
44 Vaalco Energy, Inc. (D)........................... 300
6 WD-40 Co. ........................................ 214
4 W-H Energy Services (D)........................... 194
----------
46,969
----------
FINANCE -- 11.2%
164 Advance America Cash Advance Centers, Inc. ....... 2,395
162 Advanta Corp. Class B............................. 7,081
1 Alexander's, Inc. ................................ 226
16 Amerigroup Corp. (D)#............................. 568
139 Arch Capital Group Ltd. (D)....................... 9,378
277 Aspen Insurance Holdings Ltd. .................... 7,302
5 Asta Funding, Inc. ............................... 164
10 Centene Corp. (D)................................. 237
37 City Holding Co. ................................. 1,492
142 CompuCredit Corp. (D)(G).......................... 5,641
144 Corus Bankshares, Inc. (G)........................ 3,324
89 Cousins Properties, Inc. ......................... 3,147
8 Credit Acceptance Corp. (D)....................... 251
129 Diamondrock Hospitality........................... 2,321
3 EastGroup Properties, Inc. ....................... 176
55 eHealth, Inc. (D)................................. 1,096
375 Encore Capital Group, Inc. (D).................... 4,725
23 Ezcorp, Inc. (D).................................. 382
104 First Community Bancorp, Inc. .................... 5,441
5 Getty Realty Corp. ............................... 167
4 Greenhill & Co., Inc. (G)......................... 272
301 Hersha Hospitality Trust.......................... 3,408
294 Highland Hospitality Corp. ....................... 4,182
712 Impac Mortgage Holdings, Inc. .................... 6,266
233 IndyMac Bancorp, Inc. ............................ 10,500
8 Inland Real Estate Corp. ......................... 149
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
4 International Securities Exchange Holdings,
Inc. ........................................... $ 173
9 KBW, Inc. (D)..................................... 270
136 Maguire Properties, Inc. ......................... 5,444
91 Molina Healthcare, Inc. (D)....................... 2,943
8 National Interstate Corp. ........................ 190
270 Net 1 UEPS Technologies, Inc. (D)................. 7,972
12 Omega Healthcare Investors........................ 209
8 optionsXpress Holdings, Inc. ..................... 181
3 PS Business Parks, Inc. .......................... 200
6 Saul Centers, Inc. ............................... 349
368 Strategic Hotels & Resorts, Inc. ................. 8,027
82 Sunstone Hotel Investors, Inc. ................... 2,200
5 Tower Group, Inc. ................................ 170
58 UTStarcom, Inc. (D)(G)............................ 510
71 Wellcare Health Plans, Inc. (D)................... 4,919
----------
114,048
----------
HEALTH CARE -- 15.7%
208 Acadia Pharmaceuticals, Inc. (D)(G)............... 1,827
643 Alkermes, Inc. (D)................................ 8,596
47 Alliance Imaging, Inc. (D)........................ 313
10 Alpharma, Inc. Class A............................ 237
7 AmSurg Corp. (D).................................. 152
132 Amylin Pharmaceuticals, Inc. (D).................. 4,758
504 Applera Corp. -- Celera Group (D)................. 7,044
14 Apria Healthcare Group, Inc. (D).................. 377
350 Ciphergen Biosystems, Inc. (D).................... 312
831 CV Therapeutics, Inc. (D)......................... 11,606
283 Cytokinetics, Inc. (D)............................ 2,120
4 Digene Corp. (D).................................. 171
814 Encysive Pharmaceuticals, Inc. (D)(G)............. 3,425
611 Exelixis, Inc. (D)................................ 5,503
6 Forrester Research, Inc. (D)...................... 168
7 Healthways, Inc. (D).............................. 326
267 Human Genome Sciences, Inc. (D)(G)................ 3,319
6 Illumina, Inc. (D)................................ 240
277 Immucor, Inc. (D)#................................ 8,093
301 Incyte Corp. (D).................................. 1,758
8 InterMune, Inc. (D)............................... 243
5 Kendle International, Inc. (D).................... 147
6 Kyphon, Inc. (D).................................. 237
10 Lifecell Corp. (D)................................ 248
479 LifePoint Hospitals, Inc. (D)..................... 16,129
69 Longs Drug Stores Corp. .......................... 2,912
209 Magellan Health Services, Inc. (D)................ 9,020
127 Mannatech, Inc. (G)............................... 1,870
6 MedCath Corp. (D)................................. 167
5 Medical Action Industries, Inc. (D)............... 155
8 Medicines Co. (D)................................. 243
9 Medicis Pharmaceutical Corp. Class A.............. 313
12 Mentor Corp.# .................................... 596
7 Meridian Bioscience, Inc. ........................ 163
8 MGI Pharma, Inc. (D).............................. 154
8 NBTY, Inc. (D).................................... 325
9 Nektar Therapeutics (D)........................... 140
</Table>
The accompanying notes are an integral part of these financial statements.
127
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
4 New River Pharmaceuticals, Inc. (D)(G)............ $ 194
1,392 NPS Pharmaceuticals, Inc. (D)..................... 6,305
367 Onyx Pharmaceuticals, Inc. (D).................... 3,884
118 OSI Pharmaceuticals, Inc. (D)..................... 4,119
8 PAREXEL International Corp. (D)................... 218
325 Perrigo Co. ...................................... 5,629
116 Pharmion Corp. (D)................................ 2,982
499 Regeneron Pharmaceuticals, Inc. (D)............... 10,015
518 Rigel Pharmaceuticals, Inc. (D)................... 6,149
155 Salix Pharmaceuticals Ltd. (D).................... 1,890
192 Sciele Pharma, Inc. (D)........................... 4,615
288 STERIS Corp. ..................................... 7,251
5 SurModics, Inc. (D)............................... 146
4 United Therapeutics Corp. (D)..................... 214
10 Valeant Pharmaceuticals International............. 166
16 ViroPharma, Inc. (D).............................. 238
6 West Pharmaceutical Services...................... 314
149 Wright Medical Group, Inc. (D).................... 3,464
86 Zoll Medical Corp. (D)............................ 5,016
231 Zymogenetics, Inc. (D)............................ 3,594
----------
159,810
----------
SERVICES -- 14.0%
104 Advisory Board Co. (D)............................ 5,557
107 Allscripts Healthcare Solutions, Inc. (D)......... 2,891
3 Anixter International, Inc. (D)................... 141
7 Atheros Communications, Inc. (D).................. 143
601 BISYS Group, Inc. (D)............................. 7,752
105 Central European Media Enterprises Ltd. (D)....... 7,350
119 Cerner Corp. (D).................................. 5,424
5 Coinstar, Inc. (D)................................ 153
4 Computer Programs and Systems, Inc. .............. 143
11 Corvel (D)........................................ 520
9 Digital River, Inc. (D)........................... 486
86 Factset Research Systems, Inc. ................... 4,846
17 First Consulting Group, Inc. (D).................. 233
19 Foundry Networks, Inc. (D)........................ 277
6 Geo Group, Inc. (D)............................... 221
263 Gevity HR, Inc. .................................. 6,221
510 Global Imaging Systems, Inc. (D).................. 11,203
151 Healthspring, Inc. (D)............................ 3,074
4 Heidrick & Struggles International, Inc. (D)...... 168
177 Hub Group, Inc. (D)............................... 4,865
243 Imergent, Inc. (D)(G)............................. 6,951
23 INVESTools, Inc. (D).............................. 312
226 ITT Educational Services, Inc. (D)................ 14,966
320 Jack Henry & Associates, Inc. .................... 6,852
43 John H. Harland Co. .............................. 2,174
9 Korn/Ferry International (D)...................... 207
163 Live Nation, Inc. (D)............................. 3,651
8 Lodgenet Entertainment Corp. (D).................. 193
14 Macrovision Corp. (D)............................. 398
10 Manhattan Associates, Inc. (D).................... 291
146 Martha Stewart Living Omnimedia, Inc. (G)......... 3,189
248 Mediacom Communications Corp. (D)................. 1,995
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SERVICES -- (CONTINUED)
4 Micros Systems (D)................................ $ 195
75 MoneyGram International, Inc. .................... 2,349
85 MTS Systems Corp. ................................ 3,267
181 Parametric Technology Corp. (D)................... 3,268
256 Perot Systems Corp. Class A (D)................... 4,189
130 Per-Se Technologies, Inc. (D)..................... 3,611
110 Plexus Corp. (D).................................. 2,617
174 Priceline.com, Inc. (D)(G)........................ 7,572
7 Quality Systems................................... 257
121 Resources Connection, Inc. (D).................... 3,865
5 Standard Parking Corp. (D)........................ 208
13 Time Warner Telecom, Inc. Class A (D)............. 253
5 Veritas DGC, Inc. (D)............................. 385
8 Waste Industries USA, Inc. ....................... 231
92 Watson Wyatt Worldwide, Inc. ..................... 4,158
100 Wright Express Corp. (D).......................... 3,129
----------
142,401
----------
TECHNOLOGY -- 24.4%
261 Acuity Brands, Inc. .............................. 13,583
174 Acxiom Corp. ..................................... 4,453
12 ADTRAN, Inc. ..................................... 261
605 Advanced Energy Industries, Inc. (D).............. 11,413
12 American Medical Systems Holdings (D)............. 219
3 American Science & Engineering, Inc. (D).......... 167
868 Amkor Technology, Inc. (D)........................ 8,106
17 Ansoft Corp. (D).................................. 484
99 Ansys, Inc. (D)................................... 4,307
178 Benchmark Electronics, Inc. (D)................... 4,341
5 Biosite Diagnostics, Inc. (D)..................... 221
214 Blackbaud, Inc. .................................. 5,552
904 Brocade Communications Systems, Inc. (D).......... 7,424
28 Bruker BioSciences Corp. (D)...................... 210
173 Candela Corp. (D)................................. 2,136
47 Carrier Access Corp. (D).......................... 306
27 C-COR.net Corp. (D)............................... 301
57 Chordiant Software, Inc. (D)...................... 188
614 Cirrus Logic, Inc. (D)............................ 4,227
6 Commonwealth Telephone Enterprise, Inc. .......... 248
332 CSG Systems International, Inc. (D)............... 8,863
184 Diodes, Inc. (D).................................. 6,532
3 Dionex Corp. (D).................................. 160
21 Dobson Communications Corp. (D)................... 182
343 Eagle Test Systems, Inc. (D)...................... 4,995
230 eFunds Corp. (D).................................. 6,325
19 Emulex Corp. (D).................................. 377
8 Exlservice Holdings, Inc. (D)..................... 177
10 FLIR Systems, Inc. (D)............................ 309
7 FormFactor, Inc. (D).............................. 244
2,135 Gemstar-TV Guide International, Inc. (D).......... 8,563
6 General Cable Corp. (D)........................... 254
13 General Communication, Inc. Class A (D)........... 202
223 Golden Telecom, Inc. ............................. 10,459
26 Harmonic, Inc. (D)................................ 191
8 Hittite Microwave Corp. (D)....................... 253
6 Hologic, Inc. (D)................................. 288
</Table>
The accompanying notes are an integral part of these financial statements.
128
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
9 Hyperion Solutions Corp. (D)...................... $ 313
5 IHS, Inc. (D)..................................... 213
12 Informatica Corp. (D)............................. 144
120 Interdigital Communications Corp. (D)............. 4,026
16 Internap Network Services Corp. (D)............... 317
12 Interwoven, Inc. (D).............................. 173
364 iPass, Inc. (D)(G)................................ 2,138
350 j2 Global Communications, Inc. (D)................ 9,531
218 Komag, Inc. (D)................................... 8,268
152 Lamson & Sessions Co. (D)(G)...................... 3,680
14 Lightbridge, Inc. (D)............................. 194
5 Littelfuse, Inc. (D).............................. 156
46 LTX Corp. (D)..................................... 256
21 Magma Design Automation, Inc. (D)................. 188
412 Micrel, Inc. (D).................................. 4,440
81 MicroStrategy, Inc. (D)#.......................... 9,276
98 Neustar, Inc. (D)................................. 3,166
213 Novatel, Inc. (D)................................. 8,487
226 OmniVision Technologies, Inc. (D)(G).............. 3,081
12 Packeteer, Inc. (D)............................... 158
196 Palomar Medical Technologies, Inc. (D)(G)......... 9,926
5 Park Electrochemical Corp. ....................... 118
14 Photon Dynamics, Inc. (D)......................... 165
8 Polycom, Inc. (D)................................. 242
49 RealNetworks, Inc. (D)#........................... 540
10 Redback Networks, Inc. (D)........................ 247
115 Regal-Beloit Corp. ............................... 6,028
23 RF Micro Devices, Inc. (D)........................ 158
15 Semtech Corp. (D)................................. 195
481 Silicon Image, Inc. (D)........................... 6,114
39 Silicon Storage Technology, Inc. (D).............. 175
5 SiRF Technology Holdings, Inc. (D)................ 138
820 Skyworks Solutions, Inc. (D)...................... 5,806
13 Smith Micro Software, Inc. (D).................... 177
23 Sonus Networks, Inc. (D).......................... 148
6 SRA International, Inc. (D)....................... 152
150 Sybase, Inc. (D).................................. 3,705
166 Syniverse Holdings, Inc. (D)...................... 2,483
41 Tibco Software, Inc. (D).......................... 388
101 Transaction Systems Architects, Inc. (D).......... 3,303
178 Travelzoo, Inc. (D)(G)............................ 5,337
135 Trident Microsystems, Inc. (D)#................... 2,462
523 Trizetto Group, Inc. (D).......................... 9,611
81 United Industrial Corp. .......................... 4,101
592 United Online, Inc. .............................. 7,868
4 Varian, Inc. (D).................................. 167
9 Vignette Corp. (D)................................ 150
282 Vishay Intertechnology, Inc. (D).................. 3,818
4 Vital Images, Inc. (D)............................ 146
14 Websense, Inc. (D)................................ 325
27 Wind River Systems, Inc. (D)...................... 276
29 Zoran Corp. (D)#.................................. 416
----------
249,611
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TRANSPORTATION -- 4.3%
179 American Commercial Lines, Inc. (D)............... $ 11,727
4 Atlas Air Worldwide Holdings, Inc. (D)............ 184
18 ExpressJet Holdings, Inc. (D)..................... 146
135 Freighter America, Inc. .......................... 7,502
144 General Maritime Corp. ........................... 5,055
10 Horizon Lines, Inc. Class A....................... 283
553 Knight Transportation, Inc. ...................... 9,422
166 Old Dominion Freight Line, Inc. (D)............... 3,986
14 Quality Distribution, Inc. (D).................... 186
46 Thor Industries, Inc. ............................ 2,032
209 Werner Enterprises, Inc. ......................... 3,652
6 Winnebago Industries, Inc. ....................... 192
----------
44,367
----------
Total common stock
(cost $930,491)................................. $1,019,276
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 8.5%
REPURCHASE AGREEMENTS -- 0.3%
$ 247 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 247
830 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 830
340 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 340
4 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 4
213 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 213
73 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 73
656 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 656
829 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 829
213 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 213
----------
3,405
----------
U.S. TREASURY BILL -- 0.0%
200 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 198
----------
</Table>
The accompanying notes are an integral part of these financial statements.
129
HARTFORD SMALLCAP GROWTH HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.2%
83,802 BNY Institutional Cash Reserve Fund............... $ 83,802
----------
Total short-term investments
(cost $87,405).................................. $ 87,405
----------
Total investments in securities
(cost $1,017,896) (C)........................... $1,106,681
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.83% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,020,789 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $142,219
Unrealized depreciation........................ (56,327)
--------
Net unrealized appreciation.................... $ 85,892
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Russell 2000 Mini 6 Long March 2007 $(3)
===
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
130
HARTFORD SMALLCAP VALUE HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 95.8%
BASIC MATERIALS -- 8.7%
3 AptarGroup, Inc. ................................. $ 195
29 Balchem Corp. #................................... 740
1 Banta George...................................... 25
5 Buckeye Technologies, Inc. (D).................... 58
1 CIRCOR International, Inc. ....................... 26
2 Cleveland-Cliffs, Inc. (G)........................ 97
-- Ferro Corp. (G)................................... 6
1 Georgia Gulf Corp. (G)............................ 10
3 Gibralter Industries, Inc. (G).................... 80
2 Greif, Inc. ...................................... 225
9 H.B. Fuller Co. .................................. 219
10 Hercules, Inc. (D)(G)............................. 201
4 Innospec, Inc. ................................... 177
29 Landec Corp. (D).................................. 316
43 Matthews International Corp. Class A (G).......... 1,688
15 Neenah Paper, Inc. (G)............................ 537
1 NN, Inc. ......................................... 6
4 OM Group, Inc. (D)................................ 190
2 Playtex Products, Inc. (D)........................ 35
7 Rock Tenn Co. Class A............................. 190
2 Rockwood Holdings, Inc. (D)....................... 51
23 RPM International, Inc. (G)....................... 480
9 Sensient Technologies Corp. ...................... 209
4 Silgan Holdings, Inc. ............................ 154
3 Spartech Corp. (G)................................ 84
85 Tempur-Pedic International, Inc. (D).............. 1,739
23 Tredegar Corp. ................................... 527
2 Tupperware Brands Corp. .......................... 50
11 USEC, Inc. (G).................................... 139
1 Valmont Industries, Inc. ......................... 78
11 Watts Water Technologies, Inc. ................... 452
--------
8,984
--------
CAPITAL GOODS -- 6.0%
5 ACCO Brands Corp. (D)(G).......................... 130
10 Asyst Technologies, Inc. (D)...................... 73
8 Axcelis Technologies, Inc. (D)(G)................. 48
-- Blyth, Inc. (G)................................... 6
1 Cascade Corp. .................................... 37
49 Clarcor, Inc. (G)................................. 1,650
29 Hexcel Corp. (D)(G)............................... 500
1 Imation Corp. .................................... 37
-- Jakks Pacific, Inc. (D)........................... 9
2 K & F Industries Holdings, Inc. (D)(G)............ 36
31 K2, Inc. (D)(G)................................... 409
2 Kadant, Inc. (D)(G)............................... 56
1 Kaman Corp. ...................................... 18
-- Leapfrog Enterprises, Inc. (D)(G)................. 4
26 Lincoln Electric Holdings, Inc. .................. 1,565
8 MKS Instruments, Inc. (D)(G)...................... 190
3 Modine Manufacturing Co. ......................... 63
-- Nacco Industries, Inc. Class A.................... 41
3 Nordson Corp. .................................... 149
3 Orbital Sciences Corp. (D)........................ 46
11 RC2 Corp. (D)..................................... 484
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
CAPITAL GOODS -- (CONTINUED)
2 SauerDanfoss, Inc. ............................... $ 52
4 Steinway Musical Instruments (D).................. 115
-- Tennant Co. ...................................... 6
4 Universal Compression Holdings, Inc. (D)(G)....... 236
1 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 36
3 Woodward Governor Co. ............................ 115
--------
6,111
--------
CONSUMER CYCLICAL -- 11.9%
6 99 Cents Only Stores (D)(G)....................... 78
1 A.M. Castle & Co. (G)............................. 20
10 Adaptec, Inc. (D)................................. 46
21 Adesa, Inc. ...................................... 583
2 AFC Enterprises, Inc. (D)(G)...................... 41
25 Aftermarket Technology Corp. (D).................. 541
2 Agilysys, Inc. ................................... 33
20 Alliance One International, Inc. #................ 143
1 AMREP Corp. (G)................................... 61
-- Ariba, Inc. (D)................................... 3
5 Arvinmeritor, Inc. (G)............................ 93
-- Asbury Automotive Group........................... 7
12 Big Lots, Inc. (D)#............................... 264
3 Blockbuster, Inc. Class A......................... 17
1 BlueLinx Holdings, Inc. (G)....................... 7
5 BorgWarner, Inc. ................................. 319
3 Brown Shoe Co., Inc. ............................. 141
-- Building Material Holding Corp. (G)............... 5
1 CEC Entertainment, Inc. (D)....................... 56
4 Charming Shoppes, Inc. (D)........................ 55
35 Cherokee, Inc. ................................... 1,515
7 Chiquita Brands International, Inc. (G)........... 117
1 Columbia Sportswear Co. (D)(G).................... 56
1 Commercial Vehicles Group, Inc. (D)............... 11
1 Compx International, Inc. ........................ 10
3 CSK Auto Corp. (D)(G)............................. 43
3 Domino's Pizza, Inc. ............................. 76
4 Dycom Industries, Inc. (D)(G)..................... 87
3 EMCOR Group, Inc. (D)............................. 193
19 Fred's, Inc. (G).................................. 229
14 Fresh Del Monte Produce, Inc. .................... 209
9 FTD Group, Inc. (D)............................... 163
4 Granite Construction, Inc. ....................... 176
3 Group 1 Automotive, Inc. (G)...................... 155
34 Huttig Building Products, Inc. (D)................ 180
6 Insight Enterprises, Inc. (D)(G).................. 121
2 Jack in the Box, Inc. (D)......................... 134
1 Jo-Ann Stores, Inc. (D)........................... 15
3 Kellwood Co. (G).................................. 88
7 Kimball International, Inc. ...................... 163
3 Lear Corp. ....................................... 83
7 Maidenform Brands, Inc. (D)....................... 132
51 McGrath RentCorp.................................. 1,553
1 Meritage Homes Corp. (D)(G)....................... 38
3 Navistar International Corp. (D)(G)............... 84
4 Papa John's International, Inc. (D)(G)............ 128
</Table>
The accompanying notes are an integral part of these financial statements.
131
HARTFORD SMALLCAP VALUE HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
7 Payless ShoeSource, Inc. (D)...................... $ 243
13 Performance Food Group Co. (D)(G)................. 346
1 Perini Corp. (D).................................. 31
1 Phillips-Van Heusen Corp. ........................ 70
-- Scansource, Inc. (D)(G)........................... 6
14 School Specialty, Inc. (D)(G)..................... 540
3 Smart & Final, Inc. (D)........................... 49
1 Stride Rite Corp. (G)............................. 15
4 Syms Corp. (D).................................... 70
2 Systemax, Inc. (D)(G)............................. 26
1 The Buckle, Inc. (G).............................. 66
11 United Stationers, Inc. (D)(G).................... 518
6 Visteon Corp. (D)(G).............................. 53
5 Warnaco Group, Inc. (D)(G)........................ 135
6 Wolverine World Wide, Inc. (G).................... 168
36 World Fuel Services Corp. (G)..................... 1,618
-- Zale Corp. (D)(G)................................. 6
--------
12,232
--------
CONSUMER STAPLES -- 2.2%
4 Boston Beer Co., Inc. Class A (D)................. 126
20 Chattem, Inc. (D)(G).............................. 1,002
5 Diamond Foods, Inc. .............................. 97
2 Gold Kist, Inc. (D)............................... 36
-- Hain Celestial Group, Inc. (D)(G)................. 9
14 J&J Snack Foods Corp. ............................ 559
4 M & F Worldwide Corp. (D)(G)...................... 104
2 Reddy Ice Holdings, Inc. ......................... 39
-- Seaboard Corp. (G)................................ 177
2 TreeHouse Foods, Inc. (D)......................... 56
--------
2,205
--------
ENERGY -- 4.0%
4 Bill Barrett Corp. (D)(G)......................... 114
2 Callon Petroleum Corp. (D)........................ 35
50 Crosstex Energy, Inc. ............................ 1,588
5 Exco Resources, Inc. (D)(G)....................... 83
4 Harvest Natural Resources, Inc. (D)(G)............ 39
-- Houston Exploration Co. (D)....................... 5
3 Laclede Group, Inc. (G)........................... 119
12 New Jersey Resources Corp. (G).................... 559
6 Newpark Resources, Inc. (D)....................... 40
1 Nicor, Inc. (G)................................... 37
5 Northwest Natural Gas Co. ........................ 204
-- Penn Virginia Corp. .............................. 28
15 Quicksilver Resources, Inc. (D)(G)................ 549
6 Rosetta Resources, Inc. (D)(G).................... 110
2 South Jersey Industries, Inc. .................... 63
6 Southwest Gas Corp. .............................. 230
1 Stone Energy Corp. (D)(G)......................... 32
2 Swift Energy Co. (D).............................. 94
4 WGL Holdings, Inc. (G)............................ 130
--------
4,059
--------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- 27.8%
2 21st Century Insurance Group (G).................. $ 28
1 Accredited Home Lenders (D)(G).................... 25
6 Affirmative Insurance Holdings.................... 93
4 Alfa Corp. (G).................................... 70
-- AMCORE Financial, Inc. (G)........................ 13
37 American Capital Strategies Ltd. ................. 1,698
1 American Equity Investment Life Holding Co. (G)... 7
12 American Financial Realty Trust................... 138
6 American Home Mortgage Investment Corp. .......... 193
2 American Physicians Capital, Inc. (D)............. 68
3 Amerigroup Corp. (D).............................. 93
14 Anthracite Capital, Inc. ......................... 173
1 Anworth Mortgage Asset Corp. ..................... 10
3 Apollo Investment Corp. (G)....................... 72
2 Arbor Realty Trust................................ 60
1 Argonaut Group, Inc. (D).......................... 17
2 Avatar Holdings, Inc. (D)(G)...................... 170
2 Bancfirst Corp. (G)............................... 108
4 Bank of Granite Corp. ............................ 83
1 Banner Corp. (G).................................. 22
19 Boston Private Financial Holdings, Inc. (G)....... 528
-- Camden National Corp. (G)......................... 5
2 Capital Lease Fund................................ 27
4 Capital Trust, Inc. .............................. 190
2 Capitol Bancorp Ltd. ............................. 102
59 Cathay General Bancorp (G)........................ 2,031
1 Chemical Financial Corp. ......................... 17
3 Chittenden Corp. (G).............................. 92
8 Citizens Banking Corp. (G)........................ 199
-- City Holding Co. ................................. 4
1 Clark, Inc. ...................................... 10
2 Community Banks, Inc. (G)......................... 44
1 Community Trust Bancorp, Inc. .................... 21
1 CompuCredit Corp. (D)(G).......................... 32
32 Corus Bankshares, Inc. (G)........................ 727
14 CVB Financial Corp. (G)........................... 199
12 Diamondrock Hospitality #......................... 213
3 Dime Community Bancshares......................... 35
6 Direct General Co. ............................... 118
5 Doral Financial Corp. ............................ 15
1 Education Realty Trust, Inc. ..................... 21
27 Entertainment Properties Trust (G)................ 1,572
5 Equity Inns, Inc. (G)............................. 75
5 FBL Financial Group Class A....................... 180
9 Felcor Lodging Trust, Inc. #...................... 199
16 Fieldstone Investment Corp. (G)................... 72
25 Financial Federal Corp. (G)....................... 735
11 First BanCorp Puerto Rico......................... 109
7 First Charter Corp. .............................. 177
-- First Commonwealth Financial Corp. (G)............ 3
3 First Indiana Corp. .............................. 71
5 First Industrial Realty Trust, Inc. (G)........... 249
3 First Merchants Corp. ............................ 82
3 First Midwest Bancorp, Inc. (G)................... 108
8 First Niagara Financial Group, Inc. .............. 114
</Table>
The accompanying notes are an integral part of these financial statements.
132
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
FINANCE -- (CONTINUED)
5 First Place Financial (G)......................... $ 108
15 First Republic Bank (G)........................... 574
5 First Source Corp. (G)............................ 173
-- FirstFed Financial Corp. (D)(G)................... 20
10 FNB Corp. (G)..................................... 188
4 Franklin Bank Corp. (D)........................... 86
6 Gramercy Capital Corp. ........................... 185
3 Great Southern Bancorp, Inc. (G).................. 89
2 Harleysville Group, Inc. ......................... 80
10 Highland Hospitality Corp. (G).................... 141
-- Highwoods Properties, Inc. ....................... 4
3 Horace Mann Educators Corp. ...................... 59
2 Horizon Financial Corp. .......................... 54
12 Impac Mortgage Holdings, Inc. (G)................. 101
5 Independent Bank Corp. (G)........................ 134
12 Infinity Property & Casualty Corp. ............... 600
4 Innkeepers USA Trust.............................. 68
6 Integra Bank Corp. ............................... 173
8 Irwin Financial Corp. (G)......................... 172
3 ITLA Capital Corp. ............................... 174
8 JER Investors Trust, Inc. (G)..................... 167
2 Kite Realty Group Trust........................... 39
1 Knight Capital Group, Inc. (D)(G)................. 25
9 LaBranche & Co., Inc. (D)(G)...................... 86
5 MAF Bancorp, Inc. ................................ 219
2 MainSource Financial Group, Inc. (G).............. 37
2 Marlin Business Services Corp. (D)................ 55
102 MCG Capital Corp. ................................ 2,069
12 Medical Properties Trust, Inc. ................... 185
5 MFA Mortgage Investments, Inc. ................... 39
1 Midland Co. ...................................... 59
37 National Financial Partners Corp. (G)............. 1,618
2 National Health Investors, Inc. .................. 66
2 Nationwide Health Properties, Inc. ............... 57
5 NetBank, Inc. (G)................................. 21
10 Newalliance Bancs (G)............................. 157
2 Newcastle Investment Corp. ....................... 50
7 NGP Capital Resources Co. (G)..................... 124
1 Novastar Financial, Inc. ......................... 19
3 NYMAGIC, Inc. .................................... 106
14 Oceaneering International, Inc. (D)............... 540
5 Odyssey Re Holdings Corp. (G)..................... 172
11 Old National Bankcorp (G)......................... 206
4 Omega Financial Corp. (G)......................... 112
-- Omega Healthcare Investors........................ 2
1 Pacific Capital Bancorp........................... 34
8 Partners Trust Financial Group, Inc. ............. 94
5 Penn Real Estate Investment Trust................. 197
2 Peoples Bancorp, Inc. ............................ 59
15 Phoenix Cos. ..................................... 237
1 Piper Jaffray Cos. (D)............................ 52
6 PMA Capital Corp. Class A (D)..................... 57
14 Prosperity Bancshares, Inc. (G)................... 493
3 Provident Bankshares Corp. ....................... 93
7 Provident Financial Services, Inc. ............... 131
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
10 R&G Financial Corp. Class B....................... $ 76
5 Ramco-Gershenson Properties Trust (G)............. 179
1 Renasant Corp. (G)................................ 40
2 Rent-A-Center, Inc. (D)........................... 71
5 Republic Bancorp, Inc. ........................... 66
9 Resource Capital Corp. (G)........................ 154
1 Sandy Spring Bancorp, Inc. ....................... 50
3 Santander BanCorp................................. 61
1 SCBT Financial Corp. (G).......................... 21
13 Selective Insurance Group......................... 768
10 Senior Housing Properties Trust................... 240
3 Simmons First National Corp. (G).................. 107
10 StanCorp Financial Group, Inc. ................... 437
1 State Auto Financial Corp. ....................... 28
4 Sterling Bancshares, Inc. (G)..................... 57
9 Stewart Information Services Corp. (G)............ 403
-- Sunstone Hotel Investors, Inc. ................... 3
33 Superior Bancorp (D)(G)........................... 369
5 Susquehanna Bancshares, Inc. (G).................. 124
1 SWS Group, Inc. .................................. 39
9 Symmetricom, Inc. (D)(G).......................... 80
-- TierOne Corp. .................................... 13
3 Triad Guaranty, Inc. (D)(G)....................... 143
7 Trustmark Corp. (G)............................... 222
4 Trustreet Properties, Inc. ....................... 71
1 Union Bankshares Corp. (G)........................ 18
4 United Bankshares, Inc. (G)....................... 139
12 United Community Financial (G).................... 152
2 United Fire & Casualty (G)........................ 74
3 Universal American Financial Corp. (D)(G)......... 50
16 UTStarcom, Inc. (D)(G)............................ 139
-- Virginia Financial Group, Inc. ................... 8
85 W Holding Co., Inc. .............................. 507
3 Waddell and Reed Financial, Inc. Class A (G)...... 68
37 Washington Federal, Inc. (G)...................... 871
1 WesBanco, Inc. (G)................................ 40
2 West Coast Bancorp................................ 52
12 Winston Hotels, Inc. (G).......................... 163
--------
28,480
--------
HEALTH CARE -- 5.3%
16 Advanced Medical Optics, Inc. (D)(G).............. 563
11 Albany Molecular Research, Inc. (D)#.............. 111
3 Alliance Imaging, Inc. (D)(G)..................... 21
3 Alpharma, Inc. Class A............................ 60
-- Applera Corp. -- Celera Group (D)................. 6
5 Apria Healthcare Group, Inc. (D)(G)............... 120
13 Cooper Companies, Inc. (G)........................ 579
7 Cross Country Healthcare, Inc. (D)................ 144
5 Forrester Research, Inc. (D)...................... 138
10 Healthtronics, Inc. (D)........................... 69
23 Landauer, Inc. ................................... 1,199
2 MedCath Corp. (D)................................. 57
1 Nabi Biopharmaceuticals (D)....................... 3
4 NBTY, Inc. (D).................................... 162
5 NPS Pharmaceuticals, Inc. (D)(G).................. 22
</Table>
The accompanying notes are an integral part of these financial statements.
133
HARTFORD SMALLCAP VALUE HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
5 Oakley, Inc. (G).................................. $ 94
24 Option Care, Inc. (G)............................. 335
10 Par Pharmaceutical Cos., Inc. (D)(G).............. 215
11 Perrigo Co. (G)................................... 187
1 PharmaNet Development Group, Inc. (D)(G).......... 26
9 Prestige Brands Holdings, Inc. (D)................ 121
-- Savient Pharmaceuticals, Inc. (D)(G).............. 1
18 United Surgical Partners International (D)(G)..... 516
1 ViroPharma, Inc. (D)(G)........................... 7
21 Young Innovations, Inc. .......................... 686
--------
5,442
--------
SERVICES -- 15.7%
85 ABM Industries, Inc. #(G)......................... 1,932
8 American Greetings Corp. Class A (G).............. 196
2 Ameristar Casinos, Inc. (G)....................... 65
15 Avid Technology, Inc. (D)(G)...................... 559
17 Business Objects S.A. ADR (D)(G).................. 682
11 Carmike Cinemas, Inc. (G)......................... 214
9 Central European Media Enterprises Ltd. (D)....... 651
4 CIBER, Inc. (D)................................... 29
11 Citadel Broadcasting Corp. (G).................... 107
29 Computer Services, Inc. .......................... 858
2 Consolidated Graphics, Inc. (D)................... 106
39 Corinthian Colleges, Inc. (D)(G).................. 532
2 Covansys Corp. (D)(G)............................. 44
12 Cox Radio, Inc. Class A (D)#...................... 189
1 Cumulus Media, Inc. Class A (D)(G)................ 7
6 Dendrite International, Inc. (D).................. 61
3 Dynamex, Inc. (D)................................. 72
4 Entercom Communications Corp. (G)................. 110
4 Entravision Communications Corp. Class A (D)(G)... 32
5 Foundry Networks, Inc. (D)........................ 73
6 FTI Consulting, Inc. (D)(G)....................... 173
5 G & K Services, Inc. Class A...................... 202
21 Gartner, Inc. Class A (D)......................... 416
4 Global Imaging Systems, Inc. (D).................. 83
1 Gray Television, Inc. ............................ 4
1 Great Wolf Resorts, Inc. (D)...................... 11
7 Harsco Corp. ..................................... 525
2 Healthspring, Inc. (D)............................ 35
1 Heidrick & Struggles International, Inc. (D)...... 25
66 Inter-Tel, Inc. (G)............................... 1,463
1 John H. Harland Co. .............................. 65
4 Journal Register Co. ............................. 30
3 Lakes Entertainment, Inc. (D)(G).................. 37
4 Lee Enterprises, Inc. (G)......................... 118
7 Lin TV Corp. (D).................................. 69
1 Lodgian, Inc. (D)(G).............................. 8
2 Macrovision Corp. (D)............................. 51
24 Manhattan Associates, Inc. (D).................... 725
5 McDATA Corp. Class A (D)(G)....................... 28
1 Mentor Graphics Corp. (D)(G)...................... 9
9 MPS Group, Inc. (D)............................... 125
29 Navigant Consulting, Inc. (D)(G).................. 573
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
SERVICES -- (CONTINUED)
8 Netscout Systems, Inc. (D)........................ $ 65
6 Opnet Technologies, Inc. (D)(G)................... 84
5 Perot Systems Corp. Class A (D)................... 80
2 ProQuest Co. (D)(G)............................... 23
27 Radio One, Inc. Class D (D)....................... 179
2 Reader's Digest Association, Inc. (G)............. 35
1 Regis Corp. (G)................................... 24
4 SafeNet, Inc. (D)(G).............................. 93
15 Saga Communications, Inc. Class A (D)............. 139
6 Scholastic Corp. (D)(G)........................... 201
12 Spherion Corp. (D)................................ 85
1 Standard Parking Corp. (D)(G)..................... 31
26 Stewart Enterprises, Inc. ........................ 163
64 Syntel, Inc. (G).................................. 1,721
8 Tetra Technologies, Inc. (D)...................... 136
7 Ulticom, Inc. (D)................................. 69
14 Unifirst Corp. ................................... 538
67 Unisys Corp. (D)(G)............................... 525
1 Vail Resorts, Inc. (D)(G)......................... 31
2 Veritas DGC, Inc. (D)(G).......................... 180
5 Viad Corp. ....................................... 203
1 Volt Information Sciences, Inc. (D)(G)............ 45
1 Watson Wyatt Worldwide, Inc. ..................... 50
2 Wright Express Corp. (D).......................... 72
--------
16,066
--------
TECHNOLOGY -- 8.3%
1 A.O. Smith Corp. ................................. 34
3 Actel Corp. (D)................................... 53
3 Advanced Energy Industries, Inc. (D).............. 49
12 AMETEK, Inc. ..................................... 373
10 AMIS Holdings, Inc. (D)(G)........................ 103
3 Aspen Technology, Inc. (D)(G)..................... 36
2 Avocent Corp. (D)................................. 58
5 Belden CDT, Inc. (G).............................. 211
19 Benchmark Electronics, Inc. (D)................... 451
2 Bio-Rad Laboratories, Inc. Class A (D)............ 157
14 Brocade Communications Systems, Inc. (D)#(G)...... 116
2 Checkpoint Systems, Inc. (D)(G)................... 34
35 Cincinnati Bell, Inc. (D)......................... 160
-- Cirrus Logic, Inc. (D)............................ 3
16 Coherent, Inc. (D)................................ 518
1 Commonwealth Telephone Enterprise, Inc. .......... 33
9 Consolidated Communications Holdings, Inc. ....... 180
3 CSG Systems International, Inc. (D)(G)............ 88
9 CTS Corp. (G)..................................... 143
6 Cubic Corp. (G)................................... 120
1 Deluxe Corp. ..................................... 35
7 Digi International, Inc. (D)...................... 90
2 Eagle Test Systems, Inc. (D)...................... 34
4 Electronics for Imaging, Inc. (D)(G).............. 114
5 Emulex Corp. (D).................................. 103
8 Extreme Networks, Inc. (D)........................ 32
1 FairPoint Communications, Inc. (G)................ 13
1 General Cable Corp. (D)(G)........................ 22
53 General Communication, Inc. Class A (D)........... 827
</Table>
The accompanying notes are an integral part of these financial statements.
134
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
3 Genesis Microchip, Inc. (D)....................... $ 27
-- Golden Telecom, Inc. (G).......................... 9
1 GrafTech International Ltd. (D)................... 8
12 Harris Interactive, Inc. (D)...................... 58
13 Hyperion Solutions Corp. (D)...................... 449
3 IHS, Inc. (D)..................................... 114
3 Infospace, Inc. (D)(G)............................ 64
1 Input/Output, Inc. (D)(G)......................... 7
3 Interactive Data Corp. (D)(G)..................... 82
-- Interwoven, Inc. (D).............................. 4
4 iPass, Inc. (D)(G)................................ 21
11 Kopin Corp. (D)(G)................................ 41
1 Lattice Semiconductor Corp. (D)(G)................ 8
2 Littelfuse, Inc. (D).............................. 64
21 LoJack Corp. (D)(G)............................... 359
10 Magma Design Automation, Inc. (D)(G).............. 93
36 Msc.Software Corp. (D)............................ 548
2 NetRatings, Inc. (D).............................. 28
3 Newport Corp. (D)(G).............................. 59
5 Palm, Inc. (D)(G)................................. 70
5 Pegasystems, Inc. (G)............................. 50
4 Pericom Semiconductor Corp. (D)................... 49
4 Polycom, Inc. (D)................................. 130
13 Quantum Corp. (D)................................. 30
2 Regal-Beloit Corp. (G)............................ 95
9 Roper Industries, Inc. ........................... 452
18 Schwak, Inc. (G).................................. 342
24 Silicon Storage Technology, Inc. (D).............. 107
9 SonicWALL, Inc. (D)............................... 76
6 Spectrum Brands, Inc. (D)(G)...................... 61
2 Staktek Holdings, Inc. (D)........................ 11
1 Standard Microsystems Corp. (D)(G)................ 14
9 Sybase, Inc. (D).................................. 212
13 Sycamore Networks, Inc. (D)....................... 47
1 Syniverse Holdings, Inc. (D)(G)................... 9
2 Technitrol, Inc. (G).............................. 36
1 Techwell, Inc. (D)................................ 14
10 TriQuint Semiconductor, Inc. (D)(G)............... 44
4 TTM Technologies, Inc. (D)........................ 40
4 USA Mobility, Inc. ............................... 83
4 Varian, Inc. (D)(G)............................... 184
2 Vignette Corp. (D)................................ 27
-- Volcano Corp. (D)................................. 7
4 Zoran Corp. (D)................................... 54
--------
8,477
--------
TRANSPORTATION -- 3.5%
4 ExpressJet Holdings, Inc. (D)(G).................. 33
4 Gulfmark Offshore, Inc. (D)....................... 165
5 Heartland Express, Inc. (G)....................... 77
6 Horizon Lines, Inc. Class A....................... 162
48 Landstar System, Inc. ............................ 1,825
1 Republic Airways Holdings, Inc. (D)............... 13
5 SIRVA, Inc. (D)(G)................................ 17
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
TRANSPORTATION -- (CONTINUED)
1 SkyWest, Inc. (G)................................. $ 20
8 Thor Industries, Inc. (G)......................... 334
9 Tsakos Energy Navigation Ltd. (G)................. 422
16 USA Truck, Inc. (D)............................... 249
9 Winnebago Industries, Inc. (G).................... 290
--------
3,607
--------
UTILITIES -- 2.4%
1 Black Hills Corp. ................................ 52
1 CH Energy Group (G)............................... 26
3 Duquesne Light Holdings, Inc. (G)................. 66
83 Dynegy, Inc. (D)(G)............................... 597
2 El Paso Electric Co. (D)(G)....................... 39
1 Empire District Electric Co. ..................... 17
4 IDACORP, Inc. .................................... 151
14 ITC Holdings Corp. ............................... 543
28 Pike Electric Corp. (D)........................... 457
8 PNM Resources, Inc. (G)........................... 258
10 Westar Energy, Inc. (G)........................... 260
--------
2,466
--------
Total common stock
(cost $89,321).................................. $ 98,129
--------
EXCHANGE-TRADED FUNDS -- 1.3%
INVESTMENT POOLS AND FUNDS -- 1.3%
17 iShares Russell 2000 Value Index Fund (G)......... $ 1,320
--------
Total exchange traded funds
(cost $1,322)................................... $ 1,320
--------
Total long-term investments
(cost $90,643).................................. $ 99,449
--------
SHORT-TERM INVESTMENTS -- 29.5%
INVESTMENT POOLS AND FUNDS -- 2.3%
798 Federated Investors Prime Obligations Fund........ $ 798
1,576 State Street Bank Money Market Fund............... 1,576
--------
2,374
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
FINANCE -- 1.4%
$ 1,450 UBS Securities, LLC,
5.27%, 01/02/2007............................... 1,450
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 25.8%
26,430 Navigator Prime Portfolio......................... $ 26,430
--------
Total short-term investments
(cost $30,254).................................. $ 30,254
--------
Total investments in securities
(cost $120,897) (C)............................. $129,703
========
</Table>
The accompanying notes are an integral part of these financial statements.
135
HARTFORD SMALLCAP VALUE HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.67% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $120,938 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation..................................... $11,837
Unrealized depreciation..................................... (3,072)
-------
Net unrealized appreciation................................. $ 8,765
=======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Russell 2000 Mini 10 Long March 2007 $10
===
</Table>
Cash of $30 was pledged as initial margin deposit for open futures
contracts at December 31, 2006.
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
136
HARTFORD STOCK HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.8%
BASIC MATERIALS -- 5.1%
2,932 Alcoa, Inc. ...................................... $ 87,995
744 Cameco Corp. ..................................... 30,075
1,460 Companhia Vale do Rio Doce ADR (G)................ 43,412
940 Dow Chemical Co. ................................. 37,532
537 E.I. DuPont de Nemours & Co. ..................... 26,152
993 Mittal Steel Co. (G).............................. 41,876
----------
267,042
----------
CAPITAL GOODS -- 2.6%
982 American Standard Cos., Inc. ..................... 45,039
597 Boeing Co. ....................................... 53,011
425 Deere & Co. (G)................................... 40,376
----------
138,426
----------
CONSUMER CYCLICAL -- 8.9%
1,212 Altria Group, Inc. ............................... 104,048
2,837 Circuit City Stores, Inc. ........................ 53,848
2,006 D.R. Horton, Inc. ................................ 53,136
1,317 eBay, Inc. (D).................................... 39,593
1,415 Gap, Inc. ........................................ 27,601
1,228 Home Depot, Inc. ................................. 49,297
1,065 Lowe's Cos, Inc. ................................. 33,181
407 Toyota Motor Corp. (A)............................ 27,266
1,740 Wal-Mart Stores, Inc. ............................ 80,353
----------
468,323
----------
CONSUMER STAPLES -- 6.2%
399 Bunge Ltd. ....................................... 28,961
429 Clorox Co. ....................................... 27,514
6 Japan Tobacco, Inc. (A)........................... 28,068
1,329 PepsiCo, Inc. .................................... 83,104
1,334 Procter & Gamble Co. (G).......................... 85,730
1,224 Tyson Foods, Inc. Class A......................... 20,128
1,969 Unilever N.V. NY Shares........................... 53,663
----------
327,168
----------
ENERGY -- 6.2%
310 CNOOC Ltd. ADR.................................... 29,297
1,215 EnCana Corp. ..................................... 55,829
1,130 ExxonMobil Corp. ................................. 86,592
2,651 Halliburton Co. .................................. 82,310
905 Occidental Petroleum Corp. ....................... 44,201
66 Ultra Petroleum Corp (D).......................... 3,161
520 XTO Energy, Inc. (G).............................. 24,476
----------
325,866
----------
FINANCE -- 22.4%
2,815 Aegon N.V. (A).................................... 53,425
4,575 Akbank T.A.S (A).................................. 27,452
1,850 American International Group, Inc. ............... 132,578
2,317 Bank of America Corp. ............................ 123,679
1,147 Bank of New York Co., Inc. ....................... 45,142
638 Capital One Financial Corp. ...................... 49,011
2,777 Citigroup, Inc. .................................. 154,706
1,641 Countrywide Financial Corp. (G)................... 69,673
2,055 E*Trade Financial Corp. (D)....................... 46,065
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
613 Federal Home Loan Mortgage Corp. ................. $ 41,589
532 ING Groep N.V.-Sponsored ADR (G).................. 23,507
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 56,620
325 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 55,672
898 State Street Corp. ............................... 60,534
1,708 UBS AG............................................ 103,069
1,976 UnitedHealth Group, Inc. ......................... 106,154
1,377 Western Union Co.................................. 30,875
----------
1,179,751
----------
HEALTH CARE -- 10.2%
1,479 Abbott Laboratories............................... 72,037
3,709 Boston Scientific Corp. (D)....................... 63,724
2,808 Bristol-Myers Squibb Co. (G)...................... 73,909
355 Cardinal Health, Inc. (G)......................... 22,873
3,387 Elan Corp. plc ADR (D)(G)......................... 49,954
1,642 Eli Lilly & Co. (G)............................... 85,522
1,726 Sanofi-Aventis S.A. ADR (G)....................... 79,699
2,309 Schering-Plough Corp. ............................ 54,573
1,668 Shionogi & Co., Ltd. (A).......................... 32,758
----------
535,049
----------
SERVICES -- 8.9%
1,394 Accenture Ltd. Class A............................ 51,473
450 Fluor Corp. ...................................... 36,710
624 Monster Worldwide, Inc. (D)....................... 29,117
5,308 Sun Microsystems, Inc. (D)........................ 28,769
2,226 Time Warner, Inc. ................................ 48,474
1,616 United Parcel Service, Inc. Class B............... 121,190
1,493 Viacom, Inc. Class B (D)(G)....................... 61,270
1,116 Walt Disney Co. .................................. 38,239
3,671 XM Satellite Radio Holdings, Inc. Class A
(D)(G).......................................... 53,046
----------
468,288
----------
TECHNOLOGY -- 28.3%
1,138 Adobe Systems, Inc. (D)........................... 46,774
3,664 AT&T, Inc. (G).................................... 130,988
1,499 Broadcom Corp. Class A (D)........................ 48,430
4,865 Cisco Systems, Inc. (D)........................... 132,961
2,635 Corning, Inc. (D)................................. 49,307
7,551 EMC Corp. (D)..................................... 99,677
4,016 First Data Corp. ................................. 102,496
4,115 Flextronics International Ltd. (D)................ 47,240
6,823 General Electric Co. ............................. 253,880
177 Google, Inc. (D).................................. 81,505
2,358 Maxim Integrated Products, Inc. (G)............... 72,211
2,290 Medtronic, Inc. .................................. 122,527
2,713 Microsoft Corp. (G)............................... 81,022
1,016 Motorola, Inc. ................................... 20,893
1,027 Sharp Corp. (A)(G)................................ 17,658
4,207 Sprint Nextel Corp. .............................. 79,474
1,523 Texas Instruments, Inc. .......................... 43,868
2,153 Yahoo!, Inc. (D).................................. 54,998
----------
1,485,909
----------
</Table>
The accompanying notes are an integral part of these financial statements.
137
HARTFORD STOCK HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 1.0%
2,374 British Energy Group PLC (D)(A)................... $ 25,163
195 E.On AG (A)....................................... 26,281
----------
51,444
----------
Total common stock
(cost $4,839,704)............................... $5,247,266
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 0.5%
REPURCHASE AGREEMENTS -- 0.2%
$ 2,020 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,020
2,785 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,785
30 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 30
1,743 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,743
595 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 595
1,744 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,744
----------
8,917
----------
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 0.3%
17,647 Navigator Prime Portfolio......................... $ 17,647
----------
Total short-term investments
(cost $26,564).................................. $ 26,564
----------
Total investments in securities
(cost $4,866,268) (C)........................... $5,273,830
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 16.43% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $350,363, which represents 6.66% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $4,908,556 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 509,490
Unrealized depreciation....................... (144,216)
---------
Net unrealized appreciation................... $ 365,274
=========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
138
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 7,325 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 6,651
----------
HOUSING (HFA'S, ETC.) -- 0.0%
275 Industry Urban DA,
6.10%, 05/01/2024............................... 282
----------
Total municipal bonds
(cost $7,606)................................... $ 6,933
----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 17.6%
FINANCE -- 17.3%
9,450 ACT Depositor Corp.,
5.47%, 09/22/2041 (I)(L)........................ $ 9,114
8,763 AmeriCredit Automobile Receivables Trust,
5.20%, 03/06/2011............................... 8,750
256,064 Banc of America Commercial Mortgage, Inc.,
4.08%, 12/10/2042 (P)#.......................... 4,946
2,695 Banc of America Commercial Mortgage, Inc.,
4.43%, 11/10/2039............................... 2,603
101,748 Banc of America Commercial Mortgage, Inc.,
4.52%, 09/11/2036 (I)(P)........................ 3,457
20,180 Banc of America Commercial Mortgage, Inc.,
5.31%, 10/10/2045............................... 20,226
15,160 Banc of America Commercial Mortgage, Inc.,
5.32%, 09/10/2047............................... 15,200
15,300 Banc of America Commercial Mortgage, Inc.,
5.52%, 07/10/2046 (L)........................... 15,467
19,220 Banc of America Commercial Mortgage, Inc.,
6.01%, 07/10/2044 (L)........................... 20,000
5,880 Banc of America Securities Auto Trust,
4.49%, 02/18/2013............................... 5,793
4,200 Bank One Issuance Trust,
4.77%, 02/16/2016............................... 4,038
1,243 Bear Stearns Commercial Mortgage Securities, Inc.,
2.96%, 08/13/2039............................... 1,212
75,139 Bear Stearns Commercial Mortgage Securities, Inc.,
4.07%, 07/11/2042 (P)#.......................... 2,493
58,968 Bear Stearns Commercial Mortgage Securities, Inc.,
4.12%, 11/11/2041 (P)#.......................... 1,663
132,676 Bear Stearns Commercial Mortgage Securities, Inc.,
5.50%, 02/11/2041 (I)(P)........................ 2,222
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 15,790 Bear Stearns Commercial Mortgage Securities, Inc.,
5.58%, 09/11/2041............................... $ 16,026
2,950 Capital Auto Receivables Asset Trust,
5.77%, 05/20/2010 (I)........................... 2,957
3,850 Capital Auto Receivables Asset Trust,
6.15%, 04/20/2011 (I)........................... 3,858
5,860 Capital One Auto Finance Trust,
4.32%, 05/15/2010#.............................. 5,799
66,452 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 07/25/2035 (I)(P)#....................... 3,260
49,297 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 06/25/2038 (I)(P)........................ 3,240
12,560 Citibank Credit Card Issuance Trust,
5.70%, 05/15/2013............................... 12,637
8,050 Citigroup Commercial Mortgage Trust,
5.25%, 04/15/2040............................... 8,048
19,950 Citigroup Commercial Mortgage Trust,
5.43%, 10/15/2049............................... 20,046
18,500 Citigroup Commercial Mortgage Trust,
5.91%, 03/15/2049 (L)........................... 19,076
3,350 Connecticut RRB Special Purpose Trust CL&P,
6.21%, 12/30/2011............................... 3,454
631 Conseco Finance Securitizations Corp.,
5.79%, 05/01/2033............................... 631
1,753 Countrywide Asset-Backed Certificates,
5.46%, 07/25/2035............................... 1,735
7,816 Credit Suisse Mortgage Capital Certificates,
6.02%, 06/15/2038 (L)........................... 8,120
1,934 CS First Boston Mortgage Securities Corp.,
2.08%, 05/15/2038............................... 1,885
240,946 CS First Boston Mortgage Securities Corp.,
4.39%, 07/15/2037 (I)(P)........................ 6,350
1,835 CS First Boston Mortgage Securities Corp.,
4.51%, 07/15/2037............................... 1,794
15,300 CS First Boston Mortgage Securities Corp.,
4.69%, 04/15/2037#.............................. 14,917
12,470 DB Master Finance LLC,
5.78%, 06/20/2031 (I)........................... 12,625
4,940 Ford Credit Auto Owner Trust,
5.30%, 06/15/2012............................... 4,940
344,101 GE Business Loan Trust,
6.14%, 05/15/2034 (I)(P)........................ 3,782
9,745 GE Business Loan Trust,
6.35%, 05/15/2034 (I)(L)........................ 9,745
67,318 GMAC Commercial Mortgage Securities, Inc.,
4.10%, 12/10/2041 (P)........................... 1,513
11,660 GMAC Commercial Mortgage Securities, Inc.,
5.24%, 11/10/2045 (L)........................... 11,577
12,580 GMAC Mortgage Corp. Loan Trust,
5.75%, 10/25/2036............................... 12,576
</Table>
The accompanying notes are an integral part of these financial statements.
139
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 172,686 Goldman Sachs Mortgage Securities Corp. II,
4.38%, 08/10/2038 (I)(P)........................ $ 1,795
1,718 Green Tree Financial Corp.,
7.24%, 06/15/2028............................... 1,798
19,075 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)........................... 19,007
9,725 Greenwich Capital Commercial Funding Corp.,
6.11%, 07/10/2038 (L)........................... 10,179
2,519 Home Equity Asset Trust,
4.75%, 06/27/2035 (I)........................... 2,453
11,405 Hyundai Auto Receivables Trust,
5.19%, 05/15/2013............................... 11,404
3,180 Hyundai Auto Receivables Trust,
5.29%, 11/15/2012............................... 3,182
95,977 JP Morgan Chase Commercial Mortgage Securities
Corp.,
3.68%, 01/15/2038 (I)(P)........................ 2,837
281,619 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.07%, 01/15/2042 (P)........................... 4,510
677,917 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.82%, 08/12/2037 (P)........................... 2,725
10,420 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.87%, 03/15/2046............................... 10,228
475,922 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.42%, 05/12/2045 (P)........................... 12,152
4,140 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 12/12/2044............................... 4,167
14,725 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 05/15/2045 (L)........................... 14,773
20,090 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.54%, 12/12/2043 (L)........................... 20,183
5,738 LB-UBS Commercial Mortgage Trust,
2.72%, 03/15/2027............................... 5,610
18,200 LB-UBS Commercial Mortgage Trust,
5.22%, 02/15/2031 (L)........................... 18,010
14,725 LB-UBS Commercial Mortgage Trust,
5.41%, 09/15/2039 (L)........................... 14,760
4,750 LB-UBS Commercial Mortgage Trust,
5.45%, 11/15/2038 (L)........................... 4,746
11,890 LB-UBS Commercial Mortgage Trust,
5.48%, 11/15/2038 (L)........................... 11,898
6,553 Lehman Brothers Small Balance Commercial,
5.52%, 09/25/2030............................... 6,531
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 5,180 Lehman Brothers Small Balance Commercial,
5.62%, 09/25/2036 (I)........................... $ 5,204
13,390 Marlin Leasing Receivables LLC,
5.33%, 09/16/2013............................... 13,402
8,110 MBNA Credit Card Master Note Trust,
4.10%, 10/15/2012............................... 7,882
5,250 MBNA Credit Card Master Note Trust,
4.30%, 02/15/2011............................... 5,181
13,950 MBNA Credit Card Master Note Trust,
4.50%, 01/15/2013 (G)........................... 13,712
66,175 Merrill Lynch Mortgage Trust,
3.96%, 09/12/2041 (I)(P)........................ 2,067
1,834 Merrill Lynch Mortgage Trust,
4.56%, 06/12/2043............................... 1,795
247,621 Merrill Lynch Mortgage Trust,
4.57%, 06/12/2043 (P)........................... 6,574
14,725 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
5.46%, 07/12/2046 (L)........................... 14,775
9,920 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
6.10%, 06/12/2046 (L)........................... 10,367
2,280 Morgan Stanley Auto Loan Trust,
5.00%, 03/15/2012 (I)........................... 2,274
2,751 Morgan Stanley Capital I,
7.49%, 04/30/2039 (I)(L)........................ 2,752
73,119 Morgan Stanley Dean Witter Capital I,
0.0001%, 08/25/2032 (D)(H)(A)................... --
31,501 Morgan Stanley Dean Witter Capital I,
8.05%, 08/25/2032 (H)(P)........................ 274
7,100 Navistar Financial Corp. Owner Trust,
3.53%, 10/15/2012............................... 6,895
3,775 Popular ABS Mortgage Pass-Through Trust,
4.75%, 12/25/2034............................... 3,629
3,180 Popular ABS Mortgage Pass-Through Trust,
5.42%, 04/25/2035............................... 3,121
6,625 Providian Gateway Master Trust,
3.35%, 09/15/2011 (I)........................... 6,530
7,360 Providian Gateway Master Trust,
5.90%, 03/15/2015 (L)........................... 7,360
4,670 Renaissance Home Equity Loan Trust,
5.36%, 05/25/2035............................... 4,594
6,480 Renaissance Home Equity Loan Trust,
5.75%, 05/25/2036 (L)........................... 6,549
3,250 Residential Asset Mortgage Products, Inc.,
4.98%, 08/25/2034............................... 3,202
9,700 Wachovia Auto Loan Owner Trust,
5.15%, 07/20/2012 (I)........................... 9,690
9,970 Wachovia Auto Loan Owner Trust,
5.29%, 06/20/2012 (I)........................... 10,003
59,751 Wachovia Bank Commercial Mortgage Trust,
3.65%, 02/15/2041 (I)(P)........................ 1,691
</Table>
The accompanying notes are an integral part of these financial statements.
140
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 247,163 Wachovia Bank Commercial Mortgage Trust,
4.48%, 05/15/2044 (I)(P)........................ $ 6,357
1,835 Wachovia Bank Commercial Mortgage Trust,
4.52%, 05/15/2044............................... 1,793
8,050 Wachovia Bank Commercial Mortgage Trust,
4.72%, 01/15/2041............................... 7,897
15,000 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045 (L)........................... 15,069
19,430 Wachovia Bank Commercial Mortgage Trust,
5.77%, 07/15/2045 (L)........................... 19,999
14,725 Wachovia Bank Commercial Mortgage Trust,
5.96%, 05/15/2043 (L)........................... 15,221
----------
706,582
----------
TRANSPORTATION -- 0.3%
4,915 Continental Airlines, Inc.,
6.70%, 06/15/2021 #............................. 5,063
4,750 Continental Airlines, Inc.,
8.05%, 11/01/2020 #............................. 5,284
----------
10,347
----------
Total asset & commercial
mortgage backed securities
(cost $719,434)................................. $ 716,929
----------
CORPORATE BONDS: INVESTMENT GRADE -- 23.6%
BASIC MATERIALS -- 1.0%
2,425 Fortune Brands, Inc.,
5.13%, 01/15/2011 (G)........................... $ 2,380
7,995 Teck Cominco Ltd.,
5.38%, 10/01/2015 #............................. 7,744
6,180 Teck Cominco Ltd.,
6.13%, 10/01/2035 #............................. 5,938
5,855 Vale Overseas Limited,
6.88%, 11/21/2036............................... 6,005
4,975 Westvaco Corp.,
7.95%, 02/15/2031 #............................. 5,447
11,394 Xstrata Finance Canada,
5.80%, 11/15/2016 (I)........................... 11,361
----------
38,875
----------
CAPITAL GOODS -- 0.3%
9,771 Xerox Corp.,
6.75%, 02/01/2017 #............................. 10,211
----------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- 1.0%
$ 11,371 D.R. Horton Inc.,
6.50%, 04/15/2016 (G)........................... $ 11,440
5,890 Energy Transfer Partners L.P.,
6.13%, 02/15/2017............................... 5,972
4,150 Foster's Finance Corp.,
4.88%, 10/01/2014 (I)#.......................... 3,891
19,060 Home Depot, Inc.,
5.25%, 12/16/2013............................... 18,918
----------
40,221
----------
CONSUMER STAPLES -- 0.5%
11,414 Diageo Finance B.V.,
5.50%, 04/01/2013 (G)........................... 11,392
9,025 SABMiller plc,
6.20%, 07/01/2011 (I)#.......................... 9,237
----------
20,629
----------
ENERGY -- 2.1%
9,085 Amerada Hess Corp.,
7.13%, 03/15/2033 #............................. 9,940
10,515 Anadarko Petroleum Corp.,
5.95%, 09/15/2016............................... 10,537
4,000 Consumers Energy Co.,
5.15%, 02/15/2017 #............................. 3,801
5,190 Consumers Energy Co.,
5.38%, 04/15/2013 #............................. 5,140
6,935 Enterprise Products Operating L.P.,
4.63%, 10/15/2009 #............................. 6,790
5,935 Gazprom Capital SA,
6.21%, 11/22/2016 (I)........................... 5,977
220 Husky Oil Co.,
8.90%, 08/15/2028 #............................. 230
5,795 Nexen, Inc.,
7.88%, 03/15/2032 #............................. 6,894
7,960 Petro-Canada,
5.95%, 05/15/2035 #............................. 7,548
2,725 Ras Laffan Liquefied Natural Gas Co., Ltd.,
3.44%, 09/15/2009 (I)#.......................... 2,655
16,410 Ras Laffan Liquefied Natural Gas Co., Ltd.,
5.30%, 09/30/2020 (I)#.......................... 15,722
3,435 Smepra Energy,
6.00%, 02/01/2013 #............................. 3,503
7,195 TNK-BP Finance S.A.,
7.50%, 07/18/2016 (I)#.......................... 7,654
----------
86,391
----------
FINANCE -- 11.7%
5,983 ABX Financing Co.,
6.35%, 10/15/2036 (I)#.......................... 5,954
6,930 Aegon Funding Corp.,
5.75%, 12/15/2020 #............................. 7,004
7,300 AES El Salvador Trust,
6.75%, 02/01/2016 (I)#.......................... 7,261
13,161 Aetna, Inc.,
5.75%, 06/15/2011 (G)........................... 13,361
8,785 Aetna, Inc.,
6.63%, 06/15/2036 #............................. 9,394
</Table>
The accompanying notes are an integral part of these financial statements.
141
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 28,464 American Express Credit Corp.,
6.80%, 09/01/2066 (G)........................... $ 30,352
75 Americo Life, Inc.,
7.88%, 05/01/2013 (I)#.......................... 75
18,030 Amvescap plc,
4.50%, 12/15/2009 #............................. 17,577
3,544 Amvescap plc,
5.38%, 02/27/2013 #............................. 3,507
5,370 Army Hawaii Family Housing Trust Certificates,
5.52%, 06/15/2050 (I)#.......................... 5,247
18,341 AXA S.A.,
6.46%, 12/14/2049 (I)(L)........................ 18,109
9,550 BAC Capital Trust XI,
6.63%, 05/23/2036 #............................. 10,306
9,535 BAE Systems Holdings, Inc.,
5.20%, 08/15/2015 (I)#.......................... 9,082
200 Bank of New York Institutional Capital Trust,
7.78%, 12/01/2026 (I)#.......................... 208
250 Centura Capital Trust I,
8.85%, 06/01/2027 (H)#.......................... 264
6,300 Credit Suisse First Boston USA, Inc.,
6.50%, 01/15/2012 #............................. 6,621
15,675 Duke Reality L.P.,
5.95%, 02/15/2017............................... 15,902
7,300 ERAC USA Finance Co.,
5.60%, 05/01/2015 (I)#.......................... 7,246
8,170 ERP Operating L.P.,
6.58%, 04/13/2015 #............................. 8,719
16,049 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 16,026
17,925 Goldman Sachs Group, Inc.,
5.95%, 01/15/2027............................... 17,712
9,530 HSBC Holding plc,
6.50%, 05/02/2036 #............................. 10,252
11,875 iStar Financial, Inc.,
5.95%, 10/15/2013 (I)........................... 11,935
16,135 JP Morgan Chase Capital XX,
6.55%, 09/29/2036 #............................. 16,661
3,785 Kazkommerts International B.V.,
8.00%, 11/03/2015 (I)(G)........................ 3,936
8,597 Lehman Brothers Holdings, Inc.,
5.50%, 04/04/2016 (G)........................... 8,596
9,160 Liberty Mutual Group,
7.50%, 08/15/2036 #............................. 10,022
12,600 Merrill Lynch & Co., Inc.,
6.05%, 05/16/2016 (G)........................... 13,042
6,575 Merrill Lynch & Co., Inc.,
6.22%, 09/15/2026............................... 6,775
28,674 Metlife, Inc.,
6.40%, 12/15/2036............................... 28,806
10,500 MUFG Capital Finance I Ltd.,
6.35%, 07/25/2049 (L)#.......................... 10,656
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 3,900 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)........................ $ 3,354
8,700 PNC Preferred Funding Trust,
6.52%, 12/29/2049 (I)(G)........................ 8,851
6,988 Principal Financial Group,
6.05%, 10/15/2036............................... 7,153
200 Prudential Holdings LLC,
7.25%, 12/18/2023 (I)#.......................... 231
96 Regional Diversified Funding,
9.25%, 03/15/2030 (I)#.......................... 110
10,700 Simon Property Group, Inc.,
7.88%, 03/15/2016 (I)#.......................... 12,438
16,392 SMFG Preferred Capital,
6.08%, 12/01/2049 (I)(L)........................ 16,217
6,800 St. Paul Travelers Cos., Inc.,
8.13%, 04/15/2010 #............................. 7,376
15,422 Standard Chartered plc,
6.41%, 01/30/2049 (I)(L)........................ 15,300
16,713 Suntrust Capital VIII,
6.10%, 12/01/2066............................... 16,257
3,740 Suntrust Preferred Capital,
5.85%, 12/29/2049 (L)........................... 3,769
2,882 Travelers Property Casualty Corp.,
5.00%, 03/15/2013 #............................. 2,813
6,260 TuranAlem Finance B.V.,
8.50%, 02/10/2015............................... 6,442
13,200 US Bank Realty Corp.,
6.09%, 12/22/2049 (I)(L)........................ 13,707
6,930 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045............................... 6,965
5,862 WellPoint, Inc.,
5.85%, 01/15/2036 (G)........................... 5,695
4,700 WellPoint, Inc.,
6.80%, 08/01/2012 #............................. 4,985
7,913 Wells Fargo Capital X,
5.95%, 12/15/2036............................... 7,755
9,076 Westfield Group,
5.70%, 10/01/2016 (I)........................... 9,110
----------
479,136
----------
FOREIGN GOVERNMENTS -- 0.2%
CAD 200 Canadian Government,
7.25%, 06/01/2007............................... 174
CAD 200 Canadian Government,
9.00%, 03/01/2011............................... 204
3,370 El Salvador (Republic of),
8.25%, 04/10/2032 (I)#.......................... 4,052
AUD 300 Italy,
5.88%, 08/14/2008............................... 234
3,614 United Mexican States,
5.63%, 01/15/2017 #............................. 3,618
----------
8,282
----------
</Table>
The accompanying notes are an integral part of these financial statements.
142
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
HEALTH CARE -- 0.8%
$ 4,120 Baxter International, Inc.,
5.90%, 09/01/2016 #............................. $ 4,232
9,475 Cardinal Health, Inc.,
5.85%, 12/15/2017 #............................. 9,422
8,124 CVS Lease Pass Through,
6.04%, 12/10/2028 (I)........................... 8,090
12,365 Teva Pharmaceuticals Finance LLC,
6.15%, 02/01/2036............................... 12,014
----------
33,758
----------
SERVICES -- 2.0%
100 Comcast Corp.,
10.63%, 07/15/2012.............................. 121
10,240 Cox Communications, Inc.,
5.45%, 12/15/2014 (G)........................... 9,976
7,758 Cox Communications, Inc.,
5.88%, 12/01/2016 (I)........................... 7,703
4,970 Cox Communications, Inc.,
6.45%, 12/01/2036 (I)(G)........................ 4,892
2,350 Electronic Data Systems Corp.,
3.88%, 07/15/2023 #............................. 2,494
3,800 FedEx Corp.,
3.50%, 04/01/2009 #............................. 3,650
9,625 Marriott International, Inc.,
6.20%, 06/15/2016 #............................. 9,707
4,709 Mashantucket Western Pequot Revenue Bond,
5.91%, 09/01/2021 (I)#.......................... 4,503
15,075 Time Warner Entertainment Co. L.P.,
8.38%, 07/15/2033 (G)........................... 18,219
5,120 Time Warner, Inc.,
6.50%, 11/15/2036............................... 5,096
15,640 Viacom, Inc.,
6.88%, 04/30/2036............................... 15,463
----------
81,824
----------
TECHNOLOGY -- 2.0%
7,672 AT&T Corp.,
8.00%, 11/15/2031 #............................. 9,518
12,600 Cingular Wireless Services, Inc.,
8.75%, 03/01/2031 #............................. 16,375
500 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027 #............................. 614
165 GTE Corp.,
8.75%, 11/01/2021 (G)........................... 201
10,222 Siemens Finance,
6.13%, 08/17/2026 (I)........................... 10,445
11,130 Sprint Capital Corp.,
8.75%, 03/15/2032............................... 13,396
4,025 TCI Communications, Inc.,
8.75%, 08/01/2015 #............................. 4,761
7,975 Tele-Communications, Inc.,
7.88%, 08/01/2013 #............................. 8,868
14,925 Telefonica Emisiones SAU,
6.42%, 06/20/2016 #............................. 15,397
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
TECHNOLOGY -- (CONTINUED)
$ 1,500 Verizon Maryland, Inc.,
8.30%, 08/01/2031 #............................. $ 1,758
125 Verizon Virginia, Inc.,
4.63%, 03/15/2013 (G)........................... 117
----------
81,450
----------
TRANSPORTATION -- 0.5%
5,696 American Airlines, Inc.,
7.86%, 10/01/2011 #............................. 6,223
10,875 CSX Corp.,
6.75%, 03/15/2011 #............................. 11,419
325 Roadway Corp.,
8.25%, 12/01/2008 #............................. 336
4,025 Royal Caribbean Cruises Ltd.,
7.50%, 10/15/2027 (G)........................... 3,944
----------
21,922
----------
UTILITIES -- 1.5%
6,550 Carolina Power & Light Co.,
5.25%, 12/15/2015 #............................. 6,441
7,475 Centerpoint Energy, Inc.,
6.85%, 06/01/2015 (G)........................... 7,910
3,875 Detroit Edison Co.,
6.13%, 10/01/2010 #............................. 3,961
9,251 Kinder Morgan Finance Co.,
5.70%, 01/05/2016 #............................. 8,488
5,735 Northern States Power Co.,
6.25%, 06/01/2036 #............................. 6,109
10,938 Oneok Partners L.P.,
6.65%, 10/01/2036............................... 11,188
6,130 Peco Energy Corp.,
5.95%, 10/01/2036............................... 6,228
3,190 Puget Sound Energy, Inc.,
7.96%, 02/22/2010 #............................. 3,416
4,150 Texas-New Mexico Power Co.,
6.13%, 06/01/2008 #............................. 4,162
1,400 Westar Energy, Inc.,
5.15%, 01/01/2017 #............................. 1,330
----------
59,233
----------
Total corporate bonds: investment grade
(cost $956,513)................................. $ 961,932
----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 10.4%
BASIC MATERIALS -- 1.5%
8,590 Boise Cascade LLC,
7.13%, 10/15/2014 #............................. $ 8,311
9,503 Equistar Chemicals L.P.,
8.75%, 02/15/2009 (G)........................... 9,954
3,770 Evraz Group S.A.,
8.25%, 11/10/2015 (I)........................... 3,878
3,865 Goodyear Tire & Rubber Co.,
9.14%, 12/01/2009 (I)(L)(G)..................... 3,879
8,275 Goodyear Tire & Rubber Co.,
11.25%, 03/01/2011 #............................ 9,144
12,100 Potlatch Corp.,
13.00%, 12/01/2009 (L)#......................... 13,952
</Table>
The accompanying notes are an integral part of these financial statements.
143
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
BASIC MATERIALS -- (CONTINUED)
$ 4,856 Vedanta Resources plc,
6.63%, 02/22/2010 (I)#.......................... $ 4,795
5,765 Verso Paper Holdings LLC,
11.38%, 08/01/2016 (I)#......................... 6,053
----------
59,966
----------
CAPITAL GOODS -- 0.6%
8,650 Bombardier, Inc.,
6.30%, 05/01/2014 (I)........................... 8,131
7,870 Case Corp.,
7.25%, 01/15/2016............................... 7,968
6,102 L-3 Communications Corp.,
3.00%, 08/01/2035 (G)........................... 6,407
----------
22,506
----------
CONSUMER CYCLICAL -- 1.7%
9,650 ArvinMeritor, Inc.,
8.75%, 03/01/2012 (G)........................... 9,915
10,345 General Motors Corp.,
6.38%, 05/01/2008 (G)........................... 10,293
5,765 K. Hovnanian Enterprises,
6.00%, 01/15/2010 #............................. 5,520
10,110 Mosaic Co.,
7.38%, 12/01/2014 (I)(G)........................ 10,375
4,891 Neiman Marcus Group, Inc.,
10.38%, 10/15/2015 (G).......................... 5,441
6,985 Supervalu, Inc.,
7.50%, 11/15/2014............................... 7,283
11,500 Technical Olympic USA, Inc.,
8.25%, 04/01/2011 (I)(G)........................ 11,213
9,695 Tenneco, Inc.,
8.63%, 11/15/2014 (G)........................... 9,889
----------
69,929
----------
CONSUMER STAPLES -- 0.2%
4,585 Dole Food Co., Inc.,
8.63%, 05/01/2009 #............................. 4,556
4,235 OJSC Myronivsky Hliboproduct,
10.25%, 11/30/2011 (I)(G)....................... 4,325
----------
8,881
----------
ENERGY -- 0.1%
3,876 Chesapeake Energy Corp.,
2.75%, 11/15/2035............................... 3,920
----------
FINANCE -- 1.6%
4,395 American Real Estate Partners L.P.,
7.13%, 02/15/2013 #............................. 4,417
8,070 Avis Budget Car Rental,
7.87%, 05/15/2014 (I)(L)........................ 7,788
2,680 Drummond Co., Inc.,
7.38%, 02/15/2016 (I)(G)........................ 2,626
12,040 Ford Motor Credit Co.,
7.38%, 02/01/2011 (G)........................... 11,919
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT (B) VALUE (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 12,715 Ford Motor Credit Co.,
9.82%, 04/15/2012 (L)#.......................... $ 13,475
23,935 General Motors Acceptance Corp.,
6.88%, 09/15/2011 #............................. 24,550
----------
64,775
----------
FOREIGN GOVERNMENTS -- 0.3%
4,235 Argentina (Republic of),
7.00%, 09/12/2013............................... 4,069
BRL 8,820 Brazil (Republic of),
12.50%, 01/05/2022.............................. 4,717
3,970 Turkey (Republic of),
7.00%, 09/26/2016............................... 4,035
----------
12,821
----------
HEALTH CARE -- 0.5%
2,825 Biovail Corp.,
7.88%, 04/01/2010............................... 2,885
10,210 HCA , Inc.,
7.88%, 02/01/2011............................... 10,236
5,565 HCA, Inc.,
9.25%, 11/15/2016 (I)........................... 5,962
----------
19,083
----------
SERVICES -- 0.9%
2,220 CSC Holdings, Inc.,
8.13%, 08/15/2009............................... 2,300
18,300 Dex Media West LLC,
9.88%, 08/15/2013 #............................. 19,947
7,910 Echostar DBS Corp.,
6.38%, 10/01/2011............................... 7,861
8,170 SunGard Data Systems, Inc.,
9.13%, 08/15/2013............................... 8,579
----------
38,687
----------
TECHNOLOGY -- 2.8%
6,480 Advanced Micro Devices, Inc.,
7.75%, 11/01/2012 #............................. 6,723
9,170 Citizens Communications Co.,
9.00%, 08/15/2031 #............................. 9,949
6,835 CSC Holdings, Inc.,
8.13%, 07/15/2009............................... 7,083
5,325 Dobson Cellular Systems,
8.38%, 11/01/2011 (I)#.......................... 5,611
8,325 Freescale Semiconductor, Inc.,
10.13%, 12/15/2016 (I)(G)....................... 8,335
8,670 Intelsat Bermuda Ltd.,
9.25%, 06/15/2016 (I)#.......................... 9,320
4,335 Level 3 Financing, Inc.,
9.25%, 11/01/2014 (I)........................... 4,422
9,695 Nortel Networks Ltd.,
9.62%, 07/15/2011 (I)(L)#....................... 10,216
5,150 NXP B.V.,
8.12%, 10/15/2013 (I)(L)........................ 5,227
10,305 Panamsat Corp.,
9.00%, 06/15/2016 (I)#.......................... 10,910
</Table>
The accompanying notes are an integral part of these financial statements.
144
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 9,440 Qwest Communications International, Inc.,
7.50%, 02/15/2014 #............................. $ 9,723
2,980 Qwest Corp.,
7.88%, 09/01/2011 #............................. 3,174
7,450 Seagate Technology Holdings,
6.80%, 10/01/2016............................... 7,487
3,815 Vimpel Communications,
8.25%, 05/23/2016 (I)........................... 4,006
9,220 Windstream Corp.,
8.63%, 08/01/2016 (I)#.......................... 10,096
----------
112,282
----------
UTILITIES -- 0.2%
9,645 NRG Energy, Inc.,
7.38%, 02/01/2016 #............................. 9,693
----------
Total corporate bonds: non-investment grade
(cost $410,740)................................. $ 422,543
----------
U.S. GOVERNMENT SECURITIES -- 5.6%
OTHER DIRECT FEDERAL OBLIGATIONS -- 0.3%
2,350 Federal Home Loan Bank,
6.05%, 02/20/2007 (L)........................... $ 2,345
46,200 Tennessee Valley Authority,
4.75%, 11/01/2025 (N)........................... 11,891
----------
14,236
----------
U.S. TREASURY SECURITIES -- 5.3%
104,841 4.50% 2011 -- 2036 (G)............................ 103,559
53,477 4.625% 2016 (G)................................... 53,126
5,935 4.875% 2009 (G)................................... 5,953
53,060 5.00% 2008 (G).................................... 53,147
----------
215,785
----------
Total U.S. government securities
(cost $232,195)................................. $ 230,021
----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- 5.2%
BASIC MATERIALS -- 0.6%
6,085 Compass Minerals Group, Inc.,
6.88%, 12/22/2012 #............................. $ 6,088
12,238 Georgia-Pacific Corp.,
7.35%, 02/14/2013 #............................. 12,290
7,082 Huntsman International, Inc.,
7.10%, 08/16/2012 #............................. 7,084
----------
25,462
----------
CONSUMER CYCLICAL -- 0.7%
19,965 Ford Motor Co.,
8.36%, 12/12/2013 (Q)#.......................... 19,999
3,282 Invista B.V.,
6.88%, 04/30/2010 #............................. 3,276
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
$ 4,923 Supervalu, Inc.,
7.10%, 05/30/2013 #............................. $ 4,933
2,167 William Carter Co.,
6.87%, 07/14/2012 #............................. 2,163
----------
30,371
----------
FINANCE -- 0.9%
11,607 Ameritrade Holding Corp.,
6.85%, 12/31/2011 #............................. 11,599
11,871 General Growth Properties,
6.60%, 02/24/2010............................... 11,802
11,413 Nasdaq Stock Market, Inc.,
7.10%, 05/22/2012 #............................. 11,408
----------
34,809
----------
HEALTH CARE -- 0.7%
7,281 Community Health Systems,
7.07%, 08/19/2011 #............................. 7,273
2,300 DJ Orthopedics LLC,
6.88%, 04/07/2013 (Q)#.......................... 2,294
11,878 Fresenius Medical Care AG,
6.74%, 03/23/2012 #............................. 11,797
8,742 Lifepoint Hospitals, Inc.,
6.98%, 04/15/2012 #............................. 8,709
----------
30,073
----------
SERVICES -- 1.4%
4,567 Allied Waste,
7.08%, 01/15/2012 #............................. 4,576
10,298 Allied Waste,
7.16%, 01/15/2012 #............................. 10,315
3,189 Gray Television, Inc.,
6.87%, 11/22/2012 #............................. 3,181
2,473 Gray Television, Inc.,
6.88%, 05/22/2013 #............................. 2,469
13,573 MGM Mirage, Inc.,
6.53%, 10/03/2011 #............................. 13,360
12,720 Regal Cinemas, Inc.,
7.12%, 11/10/2010 #............................. 12,684
4,319 UPC Financing Partnership,
7.64%, 03/31/2013 #............................. 4,323
4,319 UPC Financing Partnership,
7.64%, 12/31/2013 #............................. 4,322
----------
55,230
----------
TECHNOLOGY -- 0.7%
3,282 Cincinnati Bell, Inc.,
6.93%, 08/31/2012 #............................. 3,275
9,872 Idearc, Inc.,
7.35%, 11/17/2014 #............................. 9,923
3,496 Mediacom Broadband,
7.17%, 01/31/2015 #............................. 3,477
</Table>
The accompanying notes are an integral part of these financial statements.
145
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 10,237 Mediacom Broadband,
7.37%, 01/31/2015............................... $ 10,173
2,057 Mediacom LLC,
7.17%, 01/31/2015 #............................. 2,051
----------
28,899
----------
UTILITIES -- 0.2%
4,496 Mirant North America LLC,
7.10%, 01/03/2013 #............................. 4,486
2,912 NRG Energy, Inc.,
7.36%, 01/27/2013 #............................. 2,928
1,621 Pike Electric, Inc.,
6.88%, 07/01/2012 #............................. 1,618
----------
9,032
----------
Total senior floating rate interests:
non-investment grade
(cost $214,000)................................. $ 213,876
----------
U.S. GOVERNMENT AGENCIES -- 31.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 9.6%
21,000 4.10% 2014 #...................................... $ 20,462
69,128 4.50% 2018........................................ 66,785
47,165 5.00% 2034........................................ 44,921
16,826 5.04% 2035 (L)#................................... 16,671
9,057 5.33% 2036 #...................................... 9,041
4,704 5.45% 2036 (L)#................................... 4,706
72,230 5.49% 2036 (L)#................................... 71,813
19,583 5.50% 2018 -- 2034................................ 19,389
133,425 6.00% 2017 -- 2037 (Q)#........................... 134,501
7 6.50% 2031 -- 2032................................ 7
11 7.50% 2029 -- 2031................................ 11
----------
388,307
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 16.0%
250 3.20% 2009 (L).................................... 244
4,169 4.69% 2034 (L).................................... 4,097
10,245 4.72% 2035 (L).................................... 10,058
4,934 4.73% 2035 (L).................................... 4,855
12,842 4.79% 2035 (L).................................... 12,624
28,554 4.82% 2036 (L).................................... 28,375
30,400 4.875% 2008 (G)................................... 30,297
6,184 4.88% 2035 (L).................................... 6,121
4,420 4.91% 2035 (L).................................... 4,347
11,083 4.93% 2035 (L).................................... 10,909
206,694 5.00% 2018 -- 2037 (Q)............................ 201,893
7,179 5.09% 2035 (L).................................... 7,121
30,525 5.21% 2009........................................ 30,489
112,111 5.50% 2013 -- 2034 (Q)#........................... 111,320
11,546 5.51% 2036 (L).................................... 11,560
164,173 6.00% 2012 -- 2037 (Q)............................ 165,371
11,164 6.50% 2014 -- 2037 (Q)............................ 11,391
43 7.00% 2016 -- 2032................................ 43
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
$ 1,378 7.50% 2015 -- 2032................................ $ 1,435
2 8.00% 2032........................................ 2
----------
652,552
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 3.7%
30,870 5.50% 2033 -- 2034................................ 30,704
96,173 6.00% 2031 -- 2037 (Q)............................ 97,458
23,838 6.50% 2028 -- 2032................................ 24,498
81 7.00% 2030 -- 2031................................ 83
15 8.50% 2024........................................ 16
----------
152,759
----------
SMALL BUSINESS ADMINISTRATION -- 2.5%
6,197 5.12% 2026........................................ 6,128
12,839 5.36% 2026........................................ 12,890
9,604 5.37% 2026........................................ 9,649
8,948 5.54% 2026........................................ 9,073
9,938 5.57% 2026........................................ 10,094
9,782 5.64% 2026........................................ 9,993
10,627 5.70% 2026........................................ 10,865
8,532 5.82% 2026........................................ 8,776
8,670 5.87% 2026........................................ 8,938
7,722 6.07% 2026........................................ 8,039
8,861 6.14% 2022........................................ 9,139
----------
103,584
----------
Total U.S. government agencies
(cost $1,308,692)............................... $1,297,202
----------
<Caption>
SHARES
- ---------
COMMON STOCK -- 0.0%
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. (D)(H).......................... $ --
----------
Total common stock
(cost $--)...................................... $ --
----------
WARRANTS -- 0.0%
TECHNOLOGY -- 0.0%
-- Ntelos, Inc. (D)(H)(A)............................ $ --
----------
Total warrants
(cost $1)....................................... $ --
----------
Total long-term investments
(cost $3,849,180)............................... $3,849,436
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 20.8%
BASIC MATERIALS -- 0.4%
$ 15,000 Valspar Corp.,
5.38%, 01/16/2007............................... $ 14,964
----------
CONSUMER STAPLES -- 1.0%
40,000 Cargill, Inc.,
5.28%, 01/12/2007............................... 39,930
----------
</Table>
The accompanying notes are an integral part of these financial statements.
146
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
ENERGY -- 0.2%
$ 10,000 Weatherford International Ltd.,
5.33%, 01/11/2007............................... $ 9,984
----------
FINANCE -- 2.4%
20,000 Countrywide Financial Corp.,
5.43%, 01/02/2007............................... 19,994
40,000 Skandinav Enskilda Bank,
5.28%, 01/10/2007............................... 39,941
40,000 UBS Finance LLC,
5.27%, 01/11/2007............................... 39,935
----------
99,870
----------
HEALTH CARE -- 0.7%
30,000 Abbot Laboratories,
5.27%, 01/09/2007............................... 29,962
----------
INVESTMENT POOLS AND FUNDS -- 0.1%
3,035 State Street Bank Money Market Fund............... 3,035
----------
REPURCHASE AGREEMENTS -- 7.6%
111,004 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
87,766 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 87,766
111,004 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
----------
309,774
----------
TECHNOLOGY -- 0.5%
20,000 Verizon Communications,
5.29%, 01/11/2007............................... 19,968
----------
U.S. TREASURY SECURITIES -- 0.1%
4,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)#....................... 3,962
----------
UTILITIES -- 0.4%
15,000 Dominion Resources, Inc.,
5.36%, 01/12/2007............................... 14,973
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 7.4%
302,916 Navigator Prime Portfolio......................... $ 302,916
----------
Total short-term investments
(cost $849,337)................................. $ 849,338
----------
Total investments in securities
(cost $4,698,517) (C)........................... $4,698,774
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 7.51% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006 rounds to zero.
(B)All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
AUD -- Australian Dollar
BRL -- Brazilian Real
CAD -- Canadian Dollar
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $4,699,199 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 32,358
Unrealized depreciation........................ (32,783)
--------
Net unrealized depreciation.................... $ (425)
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(H)The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
5/2003 250 Centura Capital Trust I,
due 2027 -- 144A $ 272
4/2005 73,119 Morgan Stanley Dean
Witter Capital I, due
2032 --
10/2005 31,501 Morgan Stanley Dean
Witter Capital I, due
2032 329
7/2000 -- Ntelos, Inc. warrants 1
5/2006 -- XO Holdings, Inc. --
</Table>
The aggregate value of these securities at December 31, 2006 was
$538, which represents 0.01% of total net assets.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $495,984, which represents 12.15% of total net
assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(N) The interest rate disclosed for these securities represents the
effective yield as of December 31, 2006.
(P) The interest rate disclosed for interest only strips represents an
effective yield based upon estimated future cash flows at December 31,
2006.
The accompanying notes are an integral part of these financial statements.
147
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $370,173.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 3,767 Long March 2007 $(1,058)
CBT 2 Year U.S. Treasury
Note 879 Long March 2007 (497)
CBT U.S. Treasury Long
Bond 1,061 Short March 2007 2,302
-------
$ 747
=======
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Euro Buy $41,003 $41,050 1/04/2007 $ (47)
Euro Sell 41,003 40,705 1/04/2007 (298)
Japanese Yen Buy 19,874 20,618 1/23/2007 (744)
Japanese Yen Sell 19,873 20,421 1/23/2007 548
-----
$(541)
=====
</Table>
CREDIT DEFAULT SWAP AGREEMENTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
PAY/ UNREALIZED
REFERENCE BUY/SELL RECEIVE EXPIRATION NOTIONAL APPRECIATION
COUNTERPARTY ENTITY PROTECTION FIXED RATE DATE AMOUNT (DEPRECIATION)
- ------------ --------- ---------- ---------- ---------- -------- --------------
Lehman Brothers Special Financing, Inc. GMAC LLC Sell 0.55% 3/20/2007 $16,500 $ --
Lehman Brothers Special Financing, Inc. HCA, Inc. Buy 2.70% 12/20/2010 10,400 95
Lehman Brothers Special Financing, Inc. HCA, Inc. Sell 3.50% 12/20/2011 10,400 (138)
-----
$ (43)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
148
HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 14.7%
FINANCE -- 14.7%
$ 1,500 American Express Credit Account Master Trust,
5.35%, 03/15/2011 (L)#............................ $ 1,497
6,000 Ansonia CDO Ltd.,
5.62%, 07/28/2046 (I)(L)#......................... 6,000
8,000 Arbor Realty Mortgage Securities,
5.76%, 01/26/2042 (I)(L)#......................... 8,000
9,000 Banc of America Commercial Mortgage, Inc.,
4.50%, 07/10/2043................................. 8,790
9,433 Banc of America Commercial Mortgage, Inc.,
5.00%, 10/10/2045................................. 9,357
230,526 Bear Stearns Commercial Mortgage Securities, Inc.,
4.65%, 02/11/2041 (P)............................. 2,574
2,500 Citigroup Commercial Mortgage Trust,
5.59%, 11/15/2036 (L)............................. 2,500
9,000 Commercial Mortgage Pass-Through Certificate,
5.00%, 06/10/2044................................. 8,945
4,997 Commercial Mortgage Pass-Through Certificate,
5.64%, 12/15/2020 (I)(L).......................... 4,997
2,299 Countrywide Alternative Loan Trust,
5.50%, 10/25/2035 (L)............................. 2,292
9,000 Countrywide Asset-Backed Certificates,
5.76%, 06/25/2035................................. 9,015
9,000 Countrywide Asset-Backed Certificates,
5.80%, 07/25/2034................................. 8,951
11,000 Credit Suisse Mortgage Capital Certificates,
6.15%, 09/15/2021 (L)#............................ 11,000
9,000 CS First Boston Mortgage Securities Corp.,
4.51%, 07/15/2037................................. 8,797
5,000 Discover Card Master Trust I,
5.57%, 01/15/2008 (L)............................. 5,013
9,000 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)............................. 8,968
8,000 Greenwich Capital Commercial Funding Corp.,
5.58%, 11/05/2021 (I)(L).......................... 8,000
4,400 LNR CDO, Ltd.,
5.70%, 05/28/2043 (I)(L).......................... 4,400
2,400 MBNA Credit Card Master Note Trust,
5.49%, 02/16/2010 (L)............................. 2,403
6,750 Merrill Lynch Floating Trust,
5.55%, 06/15/2022 (I)(L)#......................... 6,750
141,111 Merrill Lynch Mortgage Trust,
4.57%, 06/12/2043 (P)#............................ 3,746
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 6,907 Spirit Master Funding LLC,
5.76%, 03/20/2024 (I)#............................ $ 6,957
9,000 Wachovia Bank Commercial Mortgage Trust,
4.52%, 05/15/2044 #............................... 8,795
----------
Total asset & commercial mortgage backed
securities
(cost $148,897)................................. $ 147,747
----------
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
2,750 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)#......................... $ 2,365
----------
Total corporate bonds: investment grade
(cost $2,355)................................... $ 2,365
----------
U.S. GOVERNMENT SECURITIES -- 15.8%
OTHER DIRECT FEDERAL OBLIGATIONS -- 9.7%
FEDERAL HOME LOAN BANK
29,800 3.375% 2008 #..................................... $ 29,049
22,000 4.43% 2008 #...................................... 21,806
19,000 4.875% 2011 #..................................... 18,924
15,000 5.50% 2009........................................ 15,009
----------
84,788
----------
TENNESSEE VALLEY AUTHORITY
11,750 5.375% 2008....................................... 11,824
----------
96,612
----------
U.S. TREASURY SECURITIES -- 6.1%
U.S. TREASURY NOTES
10,000 2.00% 2016 (O).................................... 9,817
12,000 4.00% 2010 (G)#................................... 11,742
11,000 4.625% 2009 (G)#.................................. 10,966
14,780 4.875% 2009 -- 2011 (G)#.......................... 14,863
13,680 5.125% 2016....................................... 14,091
----------
61,479
----------
Total U.S. government securities
(cost $158,875)................................. $ 158,091
----------
U.S. GOVERNMENT AGENCIES -- 74.1%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 16.6%
MORTGAGE BACKED SECURITIES:
7,578 5.45% 2036 (L)#................................... $ 7,581
11,627 5.49% 2036 (L)#................................... 11,694
22,818 5.60% 2036 (L)#................................... 22,885
58,971 6.00% 2021 -- 2037 (Q)#........................... 59,411
4,380 6.50% 2028 -- 2032................................ 4,479
26 7.00% 2029 -- 2031 #.............................. 27
----------
106,077
----------
NOTES:
23,000 4.625% 2008....................................... 22,843
16,000 4.75% 2009 #...................................... 15,913
----------
38,756
----------
</Table>
The accompanying notes are an integral part of these financial statements.
149
HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
U.S. GOVERNMENT AGENCIES -- (CONTINUED)
FEDERAL HOME LOAN MORTGAGE CORPORATION -- (CONTINUED)
REMIC -- PAC'S:
$ 11,234 5.50% 2016........................................ $ 11,249
6,783 6.00% 2031........................................ 6,808
3,511 6.50% 2028........................................ 3,582
----------
21,639
----------
166,472
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 43.2%
MORTGAGE BACKED SECURITIES:
2,059 4.79% 2035 (L)#................................... 2,024
14,833 4.81% 2035 (L)#................................... 14,715
10,684 4.84% 2034 (L).................................... 10,632
1,353 4.88% 2035 (L).................................... 1,339
18,118 4.92% 2035........................................ 18,019
2,424 4.93% 2035 (L)#................................... 2,385
7,880 5.02% 2035 (L).................................... 7,844
10,573 5.10% 2035 (L)#................................... 10,516
8,359 5.14% 2035 (L)#................................... 8,325
8,812 5.22% 2035 (L).................................... 8,783
13,025 5.47% 2036 (L).................................... 13,043
111,292 5.50% 2015 -- 2037 (Q)............................ 110,482
59,746 6.00% 2013 -- 2037 (Q)#........................... 60,165
894 6.01% 2009........................................ 900
3,268 6.50% 2013 -- 2032 #.............................. 3,342
2,287 6.52% 2008........................................ 2,291
97 7.50% 2023........................................ 101
11 8.50% 2017........................................ 12
7 9.00% 2020 -- 2021................................ 8
9 9.75% 2020........................................ 10
----------
274,936
----------
NOTES:
75,000 5.55% 2009........................................ 75,051
45,000 6.00% 2016........................................ 45,569
----------
120,620
----------
REMIC -- PAC'S:
4,397 4.50% 2016........................................ 4,338
28,709 5.50% 2014 -- 2035................................ 28,484
4,155 6.50% 2029........................................ 4,280
----------
37,102
----------
432,658
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 2.0%
MORTGAGE BACKED SECURITIES:
9,738 5.00% 2034........................................ 9,438
6,029 6.00% 2033 -- 2034................................ 6,103
3,250 6.50% 2031........................................ 3,350
1,762 7.00% 2030 -- 2032................................ 1,820
170 7.50% 2027........................................ 178
3 9.50% 2020........................................ 4
----------
20,893
----------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
OTHER GOVERNMENT AGENCIES -- 12.3%
SMALL BUSINESS ADMINISTRATION PARTICIPATION
CERTIFICATES:
$ 4,428 4.95% 2025........................................ $ 4,333
6,382 5.12% 2026........................................ 6,311
9,140 5.31% 2022........................................ 9,188
9,577 5.35% 2026........................................ 9,621
9,676 5.36% 2026........................................ 9,714
7,238 5.37% 2026........................................ 7,272
4,272 5.52% 2024........................................ 4,328
7,309 5.54% 2026........................................ 7,411
8,856 5.57% 2026........................................ 8,995
8,717 5.64% 2026........................................ 8,904
8,227 5.70% 2026........................................ 8,411
4,499 5.76% 2021........................................ 4,587
4,964 5.78% 2021........................................ 5,064
8,981 5.82% 2026........................................ 9,238
10,670 5.87% 2026........................................ 11,000
8,130 6.07% 2026........................................ 8,464
----------
122,841
----------
Total U.S. government agencies
(cost $743,905)................................. $ 742,864
----------
Total long-term investments
(cost $1,054,032)............................... $1,051,067
----------
SHORT-TERM INVESTMENTS -- 14.5%
REPURCHASE AGREEMENTS -- 10.6%
38,206 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007................................. $ 38,206
30,208 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007................................. 30,208
38,207 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007................................. 38,207
----------
106,621
----------
U.S. GOVERNMENT SECURITIES -- 0.0%
400 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)#......................... 396
----------
107,017
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 3.9%
38,767 Navigator Prime Portfolio......................... $ 38,767
----------
Total short-term investments
(cost $145,784)................................. $ 145,784
----------
Total investments in securities
(cost $1,199,816) (C)........................... $1,196,851
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets.
The accompanying notes are an integral part of these financial statements.
150
- --------------------------------------------------------------------------------
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,200,044 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $ 3,438
Unrealized depreciation......................... (6,631)
-------
Net unrealized depreciation..................... $(3,193)
=======
</Table>
(G) Security is partially on loan at December 31, 2006.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $47,469, which represents 4.73% of total net assets.
(L)Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(O)U.S. Treasury inflation-protection securities (TIPS) are securities
in which the principal amount is adjusted for inflation and the semiannual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
(P) The interest rate disclosed for interest only strips represent effective
yield based upon estimated future cash flows at December 31, 2006.
(Q)The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $163,522.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 749 Long March 2007 $(728)
=====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
151
HARTFORD VALUE HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 97.1%
BASIC MATERIALS -- 4.6%
85 Alcoa, Inc. ...................................... $ 2,536
117 Cameco Corp. ..................................... 4,737
91 Dow Chemical Co. ................................. 3,627
111 E.I. DuPont de Nemours & Co. ..................... 5,397
50 Kimberly-Clark Corp. ............................. 3,364
--------
19,661
--------
CAPITAL GOODS -- 6.7%
96 American Standard Cos., Inc. ..................... 4,392
159 Applied Materials, Inc. .......................... 2,935
54 Deere & Co. ...................................... 5,124
94 Goodrich Corp. ................................... 4,277
68 National Oilwell Varco, Inc. (D).................. 4,148
82 Pitney Bowes, Inc. ............................... 3,774
44 Textron, Inc. .................................... 4,107
--------
28,757
--------
CONSUMER CYCLICAL -- 6.1%
78 Altria Group, Inc. ............................... 6,703
52 D.R. Horton, Inc. ................................ 1,364
85 Federated Department Stores, Inc. ................ 3,226
205 Gap, Inc. ........................................ 3,988
98 McDonald's Corp. ................................. 4,362
169 Safeway, Inc. (G)................................. 5,827
15 Supervalu, Inc. .................................. 526
--------
25,996
--------
CONSUMER STAPLES -- 5.7%
94 Campbell Soup Co. (G)............................. 3,640
112 Kellogg Co. ...................................... 5,612
153 PepsiCo, Inc. .................................... 9,545
332 Tyson Foods, Inc. Class A......................... 5,461
--------
24,258
--------
ENERGY -- 9.6%
60 Chevron Corp. .................................... 4,441
247 ExxonMobil Corp. ................................. 18,905
72 GlobalSantaFe Corp. (G)........................... 4,220
130 Halliburton Co. .................................. 4,033
189 Occidental Petroleum Corp. ....................... 9,234
--------
40,833
--------
FINANCE -- 30.4%
65 ACE Ltd. ......................................... 3,937
90 Aetna, Inc. ...................................... 3,886
117 Allstate Corp. ................................... 7,605
90 American International Group, Inc. ............... 6,421
314 Bank of America Corp. ............................ 16,786
117 Bank of New York Co., Inc. ....................... 4,591
116 Chubb Corp. ...................................... 6,116
316 Citigroup, Inc. .................................. 17,584
48 Goldman Sachs Group, Inc. ........................ 9,649
302 Host Hotels & Resorts, Inc. ...................... 7,421
116 JP Morgan Chase & Co. ............................ 5,581
23 Merrill Lynch & Co., Inc. ........................ 2,104
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
52 PNC Financial Services Group, Inc. (G)............ $ 3,865
126 State Street Corp. ............................... 8,511
42 SunTrust Banks, Inc. ............................. 3,564
78 UBS AG............................................ 4,718
119 US Bancorp........................................ 4,317
89 Wachovia Corp. ................................... 5,040
48 Wellpoint, Inc. (D)............................... 3,746
118 Wells Fargo & Co. ................................ 4,203
--------
129,645
--------
HEALTH CARE -- 7.4%
81 Abbott Laboratories............................... 3,941
126 Baxter International, Inc. ....................... 5,850
204 Boston Scientific Corp. (D)....................... 3,499
66 Bristol-Myers Squibb Co. ......................... 1,729
279 CVS Corp. ........................................ 8,624
152 Wyeth............................................. 7,735
--------
31,378
--------
SERVICES -- 2.7%
69 Comcast Corp. Class A (D)......................... 2,929
766 Sun Microsystems, Inc. (D)........................ 4,154
212 Time Warner, Inc. ................................ 4,622
--------
11,705
--------
TECHNOLOGY -- 16.0%
221 AT&T, Inc. (G).................................... 7,901
60 Beckman Coulter, Inc. ............................ 3,576
198 BellSouth Corp. .................................. 9,309
168 Cisco Systems, Inc. (D)........................... 4,602
212 Corning, Inc. (D)................................. 3,972
446 EMC Corp. (D)..................................... 5,887
312 General Electric Co. ............................. 11,595
110 Hewlett-Packard Co. .............................. 4,531
191 Motorola, Inc. ................................... 3,933
145 Sprint Nextel Corp. .............................. 2,737
278 Verizon Communications, Inc. ..................... 10,345
--------
68,388
--------
TRANSPORTATION -- 3.1%
129 General Dynamics Corp. ........................... 9,561
227 Southwest Airlines Co. ........................... 3,472
--------
13,033
--------
UTILITIES -- 4.8%
65 Dominion Resources, Inc. ......................... 5,408
22 Entergy Corp. .................................... 1,985
90 Exelon Corp. ..................................... 5,595
72 FPL Group, Inc. .................................. 3,896
77 SCANA Corp. ...................................... 3,115
--------
19,999
--------
Total common stock
(cost $332,169)................................. $413,653
--------
</Table>
The accompanying notes are an integral part of these financial statements.
152
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ---------
SHORT-TERM INVESTMENTS -- 6.6%
REPURCHASE AGREEMENTS -- 2.6%
$ 2,589 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,589
3,569 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 3,569
39 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 39
2,234 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 2,234
763 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 763
2,234 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 2,234
--------
11,428
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.0%
16,869 BNY Institutional Cash Reserve Fund............... $ 16,869
--------
Total short-term investments
(cost $28,297).................................. $ 28,297
--------
Total investments in securities
(cost $360,466) (C)............................. $441,950
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 2.22% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $361,217 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation......................... $82,740
Unrealized depreciation......................... (2,007)
-------
Net unrealized appreciation..................... $80,733
=======
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
153
HARTFORD VALUE OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 9.0%
459 Alcoa, Inc. ...................................... $ 13,769
183 Arch Coal, Inc. (G)............................... 5,489
169 Celanese Corp. ................................... 4,361
45 Century Aluminum Co. (D)(G)....................... 2,016
427 Chemtura Corp. ................................... 4,109
104 Cytec Industries, Inc. (G)........................ 5,894
53 E.I. DuPont de Nemours & Co. ..................... 2,572
23 FMC Corp. ........................................ 1,784
55 Martin Marietta Materials, Inc. .................. 5,663
95 Mueller Water Products, Inc. Class B (D).......... 1,409
310 Owens-Illinois, Inc. (D).......................... 5,714
312 Smurfit-Stone Container Corp. (D)................. 3,290
104 Temple-Inland, Inc. .............................. 4,782
--------
60,852
--------
CAPITAL GOODS -- 5.3%
54 Alliant Techsystems, Inc. (D)..................... 4,214
72 Deere & Co. ...................................... 6,845
363 Goodrich Corp. ................................... 16,544
63 Kennametal, Inc. ................................. 3,708
88 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 4,019
--------
35,330
--------
CONSUMER CYCLICAL -- 8.3%
324 American Axle & Manufacturing Holdings, Inc. ..... 6,155
166 Circuit City Stores, Inc. ........................ 3,147
673 Foot Locker, Inc. ................................ 14,750
193 Home Depot, Inc. ................................. 7,767
155 Lear Corp. (G).................................... 4,577
415 Ruby Tuesday, Inc. (G)............................ 11,393
259 TRW Automotive Holdings Corp. (D)................. 6,687
57 Walter Industries................................. 1,545
--------
56,021
--------
CONSUMER STAPLES -- 2.1%
107 Avon Products, Inc. .............................. 3,525
4,218 Pan Fish ASA (D)(A)............................... 3,836
258 Unilever N.V. NY Shares (G)....................... 7,022
--------
14,383
--------
ENERGY -- 9.2%
641 Brasil EcoDiesel Industria........................ 3,542
139 ExxonMobil Corp. ................................. 10,667
74 GlobalSantaFe Corp. .............................. 4,326
84 Noble Corp. ...................................... 6,397
135 Noble Energy, Inc. ............................... 6,639
88 Petro-Canada...................................... 3,607
417 Talisman Energy, Inc. ............................ 7,087
213 Total S.A. ADR.................................... 15,290
170 UGI Corp. ........................................ 4,649
--------
62,204
--------
FINANCE -- 29.0%
337 ACE Ltd. ......................................... 20,436
149 Aetna, Inc. ...................................... 6,434
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
FINANCE -- (CONTINUED)
77 Allstate Corp. ................................... $ 5,033
66 AMBAC Financial Group, Inc. ...................... 5,879
117 American International Group, Inc. ............... 8,391
620 Apollo Investment Corp. .......................... 13,888
622 Bank of America Corp. ............................ 33,183
262 Capital One Financial Corp. ...................... 20,135
73 CIT Group, Inc. .................................. 4,077
439 E*Trade Financial Corp. (D)....................... 9,831
88 Everest Re Group Ltd. ............................ 8,585
360 Genesis Lease Ltd. (D)(G)......................... 8,460
280 KKR Financial Corp. .............................. 7,509
215 Platinum Underwriters Holdings Ltd. .............. 6,664
490 Royal Bank of Scotland Group plc (A).............. 19,066
191 UBS AG............................................ 11,493
276 UnumProvident Corp. .............................. 5,744
--------
194,808
--------
HEALTH CARE -- 7.2%
62 Astellas Pharma, Inc. (A)......................... 2,815
164 Bristol-Myers Squibb Co. ......................... 4,322
138 Cooper Companies, Inc. ........................... 6,123
698 Impax Laboratories, Inc. (A)(D)(H)................ 6,153
50 Sanofi-Aventis S.A. (A)........................... 4,598
276 Sanofi-Aventis S.A. ADR........................... 12,748
226 Wyeth............................................. 11,528
--------
48,287
--------
SERVICES -- 7.3%
59 Apollo Group, Inc. Class A (D).................... 2,284
93 Avid Technology, Inc. (D)(G)...................... 3,461
168 Avis Budget Group, Inc. .......................... 3,635
30 Comcast Corp. Class A (D)......................... 1,253
294 Comcast Corp. Special Class A (D)................. 12,296
184 Entercom Communications Corp. .................... 5,194
87 Liberty Global, Inc. (D).......................... 2,545
89 Liberty Global, Inc. Class C (D).................. 2,478
132 R.H. Donnelley Corp. (G).......................... 8,268
761 Unisys Corp. (D).................................. 5,969
40 Viacom, Inc. Class B (D).......................... 1,621
--------
49,004
--------
TECHNOLOGY -- 17.4%
226 Arrow Electronics, Inc. (D)....................... 7,124
815 Cinram International Income Fund.................. 16,029
832 Cisco Systems, Inc. (D)........................... 22,728
26 Embarq Corp. ..................................... 1,348
140 Fairchild Semiconductor International, Inc. (D)... 2,348
550 Flextronics International Ltd. (D)................ 6,312
358 Microsoft Corp. .................................. 10,693
167 NCR Corp. (D)..................................... 7,145
587 Powerwave Technologies, Inc. (D)(G)............... 3,787
128 QLogic Corp. (D).................................. 2,808
112 Seagate Technology................................ 2,968
343 Sprint Nextel Corp. (G)........................... 6,476
309 Symantec Corp. (D)................................ 6,443
135 Tektronix, Inc. .................................. 3,944
</Table>
The accompanying notes are an integral part of these financial statements.
154
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ---------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
263 Telefonaktiebolaget LM Ericsson ADR (G)........... $ 10,589
164 Verizon Communications, Inc. (G).................. 6,104
--------
116,846
--------
TRANSPORTATION -- 4.4%
405 UAL Corp. (D)(G).................................. 17,829
219 US Airways Group, Inc. (D) (J).................... 11,786
--------
29,615
--------
Total common stock
(cost $568,130)................................. $667,350
--------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 10.0%
REPURCHASE AGREEMENTS -- 1.3%
$ 1,933 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,933
2,666 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,666
29 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 29
1,669 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,669
570 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%,01/02/2007................................ 570
1,669 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,669
--------
8,536
--------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.7%
58,689 BNY Institutional Cash Reserve Fund............... $ 58,689
--------
Total short-term investments
(cost $67,225).................................. $ 67,225
--------
Total investments in securities
(cost $635,355) (C)............................. $734,575
========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 18.75% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $36,468, which represents 5.42% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $635,940 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $106,302
Unrealized depreciation........................ (7,667)
--------
Net unrealized appreciation.................... $ 98,635
========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(H)The following security is considered illiquid. Illiquid securities are
often purchased in private placement transactions, are not registered under
the Securities Act of 1933 and may have contractual restrictions on resale.
A security may also be considered illiquid if the security lacks a readily
available market or if its valuation has not changed for a certain period
of time.
<Table>
<Caption>
PERIOD ACQUIRED SHARES/PAR SECURITY COST BASIS
--------------- ---------- -------- ----------
12/2005 - 12/2006 698 Impax Laboratories, Inc. $5,885
</Table>
(J) Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $11,786, which
represents 1.75% of total net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
155
HARTFORD VALUE OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Buy $ 343 $ 342 1/02/2007 $ 1
Canadian Dollar Buy 1,111 1,116 1/02/2007 (5)
Euro Buy 88 88 1/02/2007 --
Japanese Yen Buy 54 54 1/04/2007 --
Norwegian Krone Buy 87 86 1/02/2007 1
---
$(3)
===
</Table>
The aggregate value of this security at December 31, 2006 was $6,153,which
represents 0.91% of total net assets.
The accompanying notes are an integral part of these financial statements.
156
(This page intentionally left blank)
157
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD BLUE CHIP
ADVISERS STOCK
HLS FUND HLS FUND
----------- ----------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $10,166,864 $ 169,605
Cash...................................................... 375 1
Foreign currency on deposit with custodian#............... -- --
Unrealized appreciation on forward foreign currency
contracts............................................... 1 --
Unrealized appreciation on forward bond contracts......... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. 54,997 406
Fund shares sold........................................ 231 14
Dividends and interest.................................. 34,763 124
Variation margin........................................ -- --
Other assets.............................................. 42 5
----------- ----------
Total assets................................................ 10,257,273 170,155
----------- ----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- --
Unrealized depreciation on forward bond contracts......... -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Payable upon return of securities loaned.................. 1,781,676 30,218
Payables:
Investment securities purchased......................... 5,583 725
Fund shares redeemed.................................... 8,213 33
Variation margin........................................ -- --
Investment management and advisory fees................. 467 12
Administrative services fee............................. 232 --
Distribution fees....................................... 43 --
Accrued expenses.......................................... 840 17
Written options........................................... -- --
----------- ----------
Total liabilities........................................... 1,797,054 31,005
----------- ----------
Net assets.................................................. $ 8,460,219 $ 139,150
=========== ==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 7,905,005 $ 119,043
Accumulated undistributed (distribution in excess of) net
investment income......................................... 7,195 47
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 90,854 12,772
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 457,165 7,288
----------- ----------
Net assets.................................................. $ 8,460,219 $ 139,150
=========== ==========
Shares authorized........................................... 9,500,000 700,000
----------- ----------
Par value................................................... $ 0.001 $ 0.001
----------- ----------
CLASS IA: Net asset value per share......................... $ 22.60 $ 20.18
----------- ----------
Shares outstanding................................ 318,941 6,897
----------- ----------
Net assets........................................ $ 7,207,926 $ 139,150
----------- ----------
CLASS IB: Net asset value per share......................... $ 22.78 $ --
----------- ----------
Shares outstanding................................ 54,968 --
----------- ----------
Net assets........................................ $ 1,252,293 $ --
----------- ----------
@ Cost of securities........................................ $ 9,709,700 $ 162,317
----------- ----------
@ Market value of securities on loan........................ $ 1,729,538 $ 29,548
----------- ----------
# Cost of foreign currency on deposit with custodian........ $ -- $ --
----------- ----------
* Cash of $2,498 was pledged as initial margin deposit for
open futures contracts.
</Table>
The accompanying notes are an integral part of these financial statements.
158
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
CAPITAL CAPITAL HARTFORD DIVIDEND AND HARTFORD HARTFORD HARTFORD HARTFORD
APPRECIATION OPPORTUNITIES DISCIPLINED EQUITY GROWTH EQUITY INCOME FOCUS GLOBAL ADVISERS GLOBAL LEADERS
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
------------ ------------- ------------------ ------------ ------------- ---------- --------------- --------------
$15,188,945 $ 11,150 $1,780,476 $8,440,281 $474,185 $ 82,896 $ 373,770 $1,323,202
2,806 -- 2,498* -- -- -- 13 --
47,898 -- -- -- -- -- 91 444
47 -- -- -- -- -- 1,409 11
-- -- -- -- -- -- 554 --
-- -- -- -- -- -- -- --
46,827 -- 425 11,993 930 -- 31,994 19,459
2,782 -- 2,416 2,847 543 29 50 414
21,958 11 2,465 7,783 1,078 78 1,247 273
-- -- -- -- -- -- 66 --
61 -- 13 26 10 -- 8 8
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
15,311,324 11,161 1,788,293 8,462,930 476,746 83,003 409,202 1,343,811
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
6,341 -- -- -- -- -- 1,148 27
-- -- -- -- -- -- 545 --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
596,978 -- 30,653 1,155,920 7,211 -- 2,991 110,395
131,870 -- -- 20,164 2,348 -- 33,208 9,743
15,972 34 881 10,083 146 79 631 826
-- -- 162 -- -- -- 15 --
861 1 114 437 39 7 28 83
400 -- 48 200 13 2 10 34
96 -- 12 55 4 1 2 10
1,388 12 134 567 42 21 50 152
-- -- 111 -- -- -- -- --
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
753,906 47 32,115 1,187,426 9,803 110 38,628 121,270
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$14,557,418 $ 11,114 $1,756,178 $7,275,504 $466,943 $ 82,893 $ 370,574 $1,222,541
=========== ========== ========== ========== ======== ======== ========== ==========
$11,580,524 $ 19,192 $1,545,062 $5,669,632 $387,876 $ 71,908 $ 329,743 $ 999,811
(2,872) 35 1,000 3,359 605 43 (812) (2,425)
498,316 (9,652) (19,894) 80,456 17,110 6,674 6,022 23,256
2,481,450 1,539 230,010 1,522,057 61,352 4,268 35,621 201,899
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$14,557,418 $ 11,114 $1,756,178 $7,275,504 $466,943 $ 82,893 $ 370,574 $1,222,541
=========== ========== ========== ========== ======== ======== ========== ==========
5,000,000 700,000 3,500,000 4,000,000 800,000 800,000 1,000,000 3,400,000
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 53.49 $ 7.59 $ 14.08 $ 22.79 $ 14.20 $ 10.56 $ 12.71 $ 20.09
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
219,618 1,465 99,523 248,854 25,362 4,625 24,108 46,902
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$11,746,831 $ 11,114 $1,401,619 $5,671,552 $360,210 $ 48,852 $ 306,498 $ 942,258
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 53.21 $ -- $ 14.01 $ 22.72 $ 14.19 $ 10.54 $ 12.67 $ 20.02
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
52,824 -- 25,315 70,589 7,521 3,231 5,058 14,003
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 2,810,587 $ -- $ 354,559 $1,603,952 $106,733 $ 34,041 $ 64,076 $ 280,283
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$12,700,827 $ 9,611 $1,551,182 $6,918,224 $412,833 $ 78,628 $ 337,977 $1,121,313
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 580,043 $ -- $ 29,724 $1,107,089 $ 7,037 $ -- $ 2,908 $ 106,045
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
$ 48,222 $ -- $ -- $ -- $ -- $ -- $ 91 $ 448
----------- ---------- ---------- ---------- -------- -------- ---------- ----------
</Table>
159
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD GROWTH
GROWTH OPPORTUNITIES
HLS FUND HLS FUND
---------- -------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $593,221 $1,408,139
Cash...................................................... 1 --
Foreign currency on deposit with custodian#............... -- --
Unrealized appreciation on forward foreign currency
contracts............................................... -- --
Unrealized appreciation on forward foreign bond
contracts............................................... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. 10,238 13,009
Fund shares sold........................................ 1,625 308
Dividends and interest.................................. 553 971
Variation margin........................................ -- --
Other assets.............................................. 9 6
-------- ----------
Total assets................................................ 605,647 1,422,433
-------- ----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- --
Unrealized depreciation on forward bond contracts......... -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- 605
Payable upon return of securities loaned.................. 25,747 114,640
Payables:
Investment securities purchased......................... 9,755 4,086
Fund shares redeemed.................................... 344 1,433
Variation margin........................................ -- --
Investment management and advisory fees................. 46 109
Administrative services fee............................. 16 --
Distribution fees....................................... 6 7
Accrued expenses.......................................... 69 166
Written options........................................... -- --
-------- ----------
Total liabilities........................................... 35,983 121,046
-------- ----------
Net assets.................................................. $569,664 $1,301,387
======== ==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $513,021 $1,088,607
Accumulated undistributed (distribution in excess of) net
investment income......................................... 75 389
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 11,844 25,228
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 44,724 187,163
-------- ----------
Net assets.................................................. $569,664 $1,301,387
======== ==========
Shares authorized........................................... 800,000 700,000
-------- ----------
Par value................................................... $ 0.001 $ 0.001
-------- ----------
CLASS IA: Net asset value per share......................... $ 12.32 $ 30.13
-------- ----------
Shares outstanding................................ 30,815 36,628
-------- ----------
Net assets........................................ $379,601 $1,103,590
-------- ----------
CLASS IB: Net asset value per share......................... $ 12.17 $ 29.90
-------- ----------
Shares outstanding................................ 15,620 6,616
-------- ----------
Net assets........................................ $190,063 $ 197,797
-------- ----------
@ Cost of securities........................................ $548,497 $1,220,976
-------- ----------
@ Market value of securities on loan........................ $ 25,093 $ 111,630
-------- ----------
# Cost of foreign currency on deposit with custodian........ $ -- $ --
-------- ----------
</Table>
* Previously known as Hartford MidCap Stock HLS Fund. Name change effective
December 11, 2006.
The accompanying notes are an integral part of these financial statements.
160
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL LARGECAP MIDCAP
HIGH YIELD INDEX CAPITAL APPRECIATION OPPORTUNITIES SMALL COMPANY STOCK GROWTH GROWTH
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND*
---------- ---------- -------------------- ------------- ------------- ------------- ---------- ----------
$ 889,282 $2,004,600 $905,039 $2,147,446 $507,637 $126,638 $ 59,497 $68,256
-- -- -- 9,429 1,268 -- -- --
434 -- 293 128 -- -- -- --
3 -- 4 551 3 -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
990 345 8,276 18,920 2,499 621 -- 15
639 415 396 1,422 294 11 14 1
13,185 2,557 275 742 385 186 64 29
-- -- -- -- -- -- -- --
16 7 7 9 6 1 1 1
---------- ---------- -------- ---------- -------- -------- -------- -------
904,549 2,007,924 914,290 2,178,647 512,092 127,457 59,576 68,302
---------- ---------- -------- ---------- -------- -------- -------- -------
-- -- 21 853 10 -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
162 28 -- -- -- -- -- --
159,967 128,688 35,970 173,189 95,465 24,894 -- 13,650
7,686 -- 32 24,297 4,421 373 -- 1,206
694 3,843 529 1,434 173 94 74 30
38 69 -- -- -- -- -- --
53 26 71 127 36 12 7 7
20 52 24 54 11 -- -- --
9 10 10 13 4 -- -- --
68 182 98 254 61 21 13 14
-- -- -- -- -- -- -- --
---------- ---------- -------- ---------- -------- -------- -------- -------
168,697 132,898 36,755 200,221 100,181 25,394 94 14,907
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 735,852 $1,875,026 $877,535 $1,978,426 $411,911 $102,063 $ 59,482 $53,395
========== ========== ======== ========== ======== ======== ======== =======
$ 754,087 $1,512,515 $705,211 $1,612,587 $347,111 $ 81,135 $ 90,673 $49,614
990 647 (285) 476 (166) 1,607 8 --
(33,202) (13,470) 24,521 66,754 12,382 (819) (38,255) 3,773
13,977 375,334 148,088 298,609 52,584 20,140 7,056 8
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 735,852 $1,875,026 $877,535 $1,978,426 $411,911 $102,063 $ 59,482 $53,395
========== ========== ======== ========== ======== ======== ======== =======
2,800,000 4,000,000 800,000 2,625,000 800,000 700,000 700,000 700,000
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 9.35 $ 32.36 $ 14.18 $ 15.23 $ 16.77 $ 18.06 $ 10.17 $ 10.88
---------- ---------- -------- ---------- -------- -------- -------- -------
50,402 49,382 40,525 104,794 17,568 5,652 5,851 4,906
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 471,327 $1,598,176 $574,806 $1,596,055 $294,660 $102,063 $ 59,482 $53,395
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 9.27 $ 32.22 $ 14.10 $ 15.36 $ 16.64 $ -- $ -- $ --
---------- ---------- -------- ---------- -------- -------- -------- -------
28,534 8,592 21,467 24,899 7,046 -- -- --
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 264,525 $ 276,850 $302,729 $ 382,371 $117,251 $ -- $ -- $ --
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 874,875 $1,629,200 $756,962 $1,848,645 $455,062 $106,502 $ 52,441 $68,248
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 156,721 $ 124,678 $ 34,492 $ 165,689 $ 90,427 $ 23,735 $ -- $13,337
---------- ---------- -------- ---------- -------- -------- -------- -------
$ 435 $ -- $ 295 $ 125 $ -- $ -- $ -- $ --
---------- ---------- -------- ---------- -------- -------- -------- -------
</Table>
161
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD MORTGAGE
MONEY MARKET SECURITIES
HLS FUND HLS FUND
------------ ----------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $1,876,835 $ 622,887
Cash...................................................... 114 3,637
Foreign currency on deposit with custodian#............... -- --
Unrealized appreciation on forward foreign currency
contracts............................................... -- --
Unrealized appreciation on forward foreign bond
contracts............................................... -- --
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. -- 413
Fund shares sold........................................ 11,129 129
Dividends and interest.................................. 3,499 2,892
Variation margin........................................ -- 17
Other assets.............................................. 8 2
---------- ----------
Total assets................................................ 1,891,585 629,977
---------- ----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- --
Unrealized depreciation on forward bonds.................. -- --
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Payable upon return of securities loaned.................. -- --
Payables:
Investment securities purchased......................... -- 85,705
Fund shares redeemed.................................... 12,922 665
Variation margin........................................ -- --
Investment management and advisory fees................. 64 19
Administrative services fee............................. 51 15
Distribution fees....................................... 11 5
Accrued expenses.......................................... 178 60
Written options........................................... -- --
---------- ----------
Total liabilities........................................... 13,226 86,469
---------- ----------
Net assets.................................................. $1,878,359 $ 543,508
========== ==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $1,878,359 $ 565,647
Accumulated undistributed (distribution in excess of) net
investment income......................................... -- 879
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. -- (20,564)
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... -- (2,454)
---------- ----------
Net assets.................................................. $1,878,359 $ 543,508
========== ==========
Shares authorized........................................... 7,000,000 1,200,000
---------- ----------
Par value................................................... $ 0.001 $ 0.001
---------- ----------
CLASS IA: Net asset value per share......................... $ 1.00 $ 10.82
---------- ----------
Shares outstanding................................ 1,558,433 37,618
---------- ----------
Net assets........................................ $1,558,433 $ 406,971
---------- ----------
CLASS IB: Net asset value per share......................... $ 1.00 $ 10.75
---------- ----------
Shares outstanding................................ 319,926 12,703
---------- ----------
Net assets........................................ $ 319,926 $ 136,537
---------- ----------
@ Cost of securities....................................... $1,876,835 $ 625,602
---------- ----------
@ Market value of securities on loan....................... $ -- $ --
---------- ----------
# Cost of foreign currency on deposit with custodian....... $ -- $ --
---------- ----------
* Cash of $30 was pledged as initial margin deposit for
open futures contracts.
** Investments in repurchase agreements were $106,621.
</Table>
The accompanying notes are an integral part of these financial statements.
162
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
SMALLCAP SMALLCAP HARTFORD TOTAL RETURN U.S. GOVERNMENT HARTFORD VALUE
GROWTH VALUE STOCK BOND SECURITIES VALUE OPPORTUNITIES
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
---------- ---------- ---------- ------------ --------------- ---------- -------------
$1,106,681 $129,703 $5,273,830 $4,698,774 $1,196,851** $441,950 $734,575
457 30* 19 260 8,013 1 120
-- -- -- 3,581 9 -- 26
-- -- -- 548 -- -- 2
-- -- -- -- -- -- --
-- -- -- 95 -- -- --
1,589 -- 3,458 18,512 440 2,919 7,797
754 -- 191 3,659 1,564 357 1,546
621 242 6,211 36,500 6,963 807 454
-- 1 -- 99 -- -- --
-- 4 20 16 -- 1 2
---------- -------- ---------- ---------- ---------- -------- --------
1,110,102 129,980 5,283,729 4,762,044 1,213,840 446,035 744,522
---------- -------- ---------- ---------- ---------- -------- --------
-- -- -- 1,089 -- -- 5
-- -- -- -- -- -- --
-- -- -- 138 -- -- --
-- 436 -- -- -- -- --
83,802 26,430 17,647 302,916 38,767 16,869 58,689
3,382 621 5,076 370,173 171,522 2,155 12,710
2,727 55 3,363 5,291 764 801 185
3 7 -- 83 47 -- --
86 12 186 146 62 35 57
-- -- 144 112 -- 12 --
9 -- 26 36 10 5 6
91 15 484 331 66 41 71
-- -- -- -- -- -- --
---------- -------- ---------- ---------- ---------- -------- --------
90,100 27,576 26,926 680,315 211,238 19,918 71,723
---------- -------- ---------- ---------- ---------- -------- --------
$1,020,002 $102,404 $5,256,803 $4,081,729 $1,002,602 $426,117 $672,799
========== ======== ========== ========== ========== ======== ========
$ 931,692 $ 91,663 $4,781,215 $4,118,692 $ 995,231 $308,386 $561,704
-- 30 4,252 4,639 42,556 332 345
(472) 1,895 63,774 (42,015) (31,492) 35,915 11,531
88,782 8,816 407,562 413 (3,693) 81,484 99,219
---------- -------- ---------- ---------- ---------- -------- --------
$1,020,002 $102,404 $5,256,803 $4,081,729 $1,002,602 $426,117 $672,799
========== ======== ========== ========== ========== ======== ========
700,000 700,000 4,000,000 5,000,000 700,000 800,000 700,000
---------- -------- ---------- ---------- ---------- -------- --------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
---------- -------- ---------- ---------- ---------- -------- --------
$ 20.79 $ 12.99 $ 52.57 $ 11.24 $ 11.13 $ 13.06 $ 19.74
---------- -------- ---------- ---------- ---------- -------- --------
35,894 7,870 85,559 270,560 63,943 21,288 25,772
---------- -------- ---------- ---------- ---------- -------- --------
$ 746,266 $102,233 $4,498,001 $3,041,321 $ 711,639 $277,982 $508,648
---------- -------- ---------- ---------- ---------- -------- --------
$ 20.74 $ 12.97 $ 52.45 $ 11.19 $ 11.07 $ 13.03 $ 19.64
---------- -------- ---------- ---------- ---------- -------- --------
13,200 13 14,468 92,981 26,274 11,366 8,359
---------- -------- ---------- ---------- ---------- -------- --------
$ 273,736 $ 171 $ 758,802 $1,040,408 $ 290,963 $148,135 $164,151
---------- -------- ---------- ---------- ---------- -------- --------
$1,017,896 $120,897 $4,866,268 $4,698,517 $1,199,816 $360,466 $635,355
---------- -------- ---------- ---------- ---------- -------- --------
$ 80,550 $ 25,781 $ 16,788 $ 296,791 $ 37,994 $ 16,402 $ 57,046
---------- -------- ---------- ---------- ---------- -------- --------
$ -- $ -- $ -- $ 3,590 $ 9 $ -- $ 26
---------- -------- ---------- ---------- ---------- -------- --------
</Table>
163
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD BLUE CHIP
ADVISERS STOCK
HLS FUND HLS FUND
---------- ---------
INVESTMENT INCOME:
Dividends................................................. $101,204 $ 1,540
Interest.................................................. 149,436 37
Securities lending........................................ 4,977 --
Less: foreign tax withheld................................ (2,981) (8)
-------- --------
Total investment income, net............................ 252,636 1,569
-------- --------
EXPENSES:
Investment management and advisory fees................... 35,509 1,234
Administrative services fees.............................. 17,669 --
Distribution fees -- Class IB............................. 3,212 --
Custodian fees............................................ 290 15
Accounting services....................................... 1,325 --
Board of Directors' fees.................................. 148 3
Other expenses............................................ 1,255 37
-------- --------
Total expenses (before waivers and fees paid
indirectly)............................................ 59,408 1,289
Expense waivers........................................... -- (165)
Commission recapture...................................... (1,015) --
Custodian fee offset...................................... (77) --
-------- --------
Total waivers and fees paid indirectly.................. (1,092) (165)
-------- --------
Total expenses, net..................................... 58,316 1,124
-------- --------
Net investment income (loss).............................. 194,320 445
-------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 731,054 31,927
Net realized gain (loss) on futures, options and swap
contracts............................................... 3,532 --
Net realized gain (loss) on foreign currency
transactions............................................ 109 (12)
-------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS..................................... 734,695 31,915
-------- --------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. (63,623) (21,442)
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. (457) --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... 47 1
-------- --------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS.......... (64,033) (21,441)
-------- --------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS.............................................. 670,662 10,474
-------- --------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ 6,804 --
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $871,786 $ 10,919
======== ========
</Table>
* Realized losses on written options were $12,413 for the Hartford Capital
Appreciation HLS Fund.
** Realized gains on written options were $186 for the Hartford Disciplined
Equity HLS Fund.
*** Realized losses on written options were $61 for the Hartford Global Advisers
HLS Fund.
The accompanying notes are an integral part of these financial statements.
164
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
CAPITAL CAPITAL HARTFORD DIVIDEND AND HARTFORD HARTFORD HARTFORD HARTFORD
APPRECIATION OPPORTUNITIES DISCIPLINED EQUITY GROWTH EQUITY INCOME FOCUS GLOBAL ADVISERS GLOBAL LEADERS
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
------------ ------------- ------------------ ------------ ------------- -------- --------------- --------------
$ 204,568 $144 $ 26,939 $ 161,694 $10,986 $1,407 $ 2,813 $ 14,656
11,133 3 2,239 3,745 393 38 6,670 1,001
1,978 -- 159 1,143 -- -- 83 440
(6,354) (1) (5) (2,177) (18) (54) (238) (1,287)
---------- ---- -------- ---------- ------- ------ ------- --------
211,325 146 29,332 164,405 11,361 1,391 9,328 14,810
---------- ---- -------- ---------- ------- ------ ------- --------
61,249 108 7,447 29,539 2,257 555 2,149 6,040
28,411 -- 3,093 13,489 742 171 771 2,431
6,937 -- 865 3,828 227 90 166 697
1,800 5 15 17 9 19 89 342
2,131 -- 232 1,012 56 13 58 182
230 -- 23 107 6 2 7 21
1,950 22 249 963 70 40 87 216
---------- ---- -------- ---------- ------- ------ ------- --------
102,708 135 11,924 48,955 3,367 890 3,327 9,929
-- (24) -- -- (371) (71) -- --
(1,360) -- (63) (340) (18) (15) (58) (260)
(52) -- (5) (4) -- (2) (10) (3)
---------- ---- -------- ---------- ------- ------ ------- --------
(1,412) (24) (68) (344) (389) (88) (68) (263)
---------- ---- -------- ---------- ------- ------ ------- --------
101,296 111 11,856 48,611 2,978 802 3,259 9,666
---------- ---- -------- ---------- ------- ------ ------- --------
110,029 35 17,476 115,794 8,383 589 6,069 5,144
---------- ---- -------- ---------- ------- ------ ------- --------
1,783,272 647 44,174 538,273 17,190 6,730 20,523 80,825
(12,413)* -- 2,199** -- -- -- (2,197)*** --
(282) -- -- -- -- (9) (651) (661)
---------- ---- -------- ---------- ------- ------ ------- --------
1,770,577 647 46,373 538,273 17,190 6,721 17,675 80,164
---------- ---- -------- ---------- ------- ------ ------- --------
293,335 207 119,931 599,277 46,269 25 7,851 70,983
-- -- 1,202 -- -- -- (285) --
(6,972) -- -- -- -- -- 339 6
---------- ---- -------- ---------- ------- ------ ------- --------
286,363 207 121,133 599,277 46,269 25 7,905 70,989
---------- ---- -------- ---------- ------- ------ ------- --------
2,056,940 854 167,506 1,137,550 63,459 6,746 25,580 151,153
---------- ---- -------- ---------- ------- ------ ------- --------
11,567 -- 605 4,254 -- 110 572 3,344
---------- ---- -------- ---------- ------- ------ ------- --------
$2,178,536 $889 $185,587 $1,257,598 $71,842 $7,445 $32,221 $159,641
========== ==== ======== ========== ======= ====== ======= ========
</Table>
165
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD GROWTH
GROWTH OPPORTUNITES
HLS FUND HLS FUND
-------- ------------
INVESTMENT INCOME:
Dividends................................................. $ 4,896 $ 14,732
Interest.................................................. 483 1,017
Securities lending........................................ 3 1,416
Less: foreign tax withheld................................ (153) (380)
-------- --------
Total investment income, net............................ 5,229 16,785
-------- --------
EXPENSES:
Investment management and advisory fees................... 3,349 7,629
Administrative services fees.............................. 1,133 --
Distribution fees -- Class IB............................. 492 474
Custodian fees............................................ 13 236
Accounting services....................................... 85 --
Board of Directors' fees.................................. 9 18
Other expenses............................................ 143 291
-------- --------
Total expenses (before waivers and fees paid
indirectly)............................................ 5,224 8,648
Expense waivers........................................... -- --
Commission recapture...................................... (92) (271)
Custodian fee offset...................................... (1) (11)
-------- --------
Total waivers and fees paid indirectly.................. (93) (282)
-------- --------
Total expenses, net..................................... 5,131 8,366
-------- --------
Net investment income (loss).............................. 98 8,419
-------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 44,228 124,772
Net realized gain (loss) on futures, options and swap
contracts............................................... -- --
Net realized gain (loss) on foreign currency
transactions............................................ (7) 22
-------- --------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS..................................... 44,221 124,794
-------- --------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. (19,797) 3,809
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. -- --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... -- (4)
-------- --------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS.......... (19,797) 3,805
-------- --------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS.............................................. 24,424 128,599
-------- --------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ 286 1,098
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $24,808 $138,116
======== ========
</Table>
* Previously known as Hartford MidCap Stock HLS Fund. Name change effective
December 11, 2006.
The accompanying notes are an integral part of these financial statements.
166
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
HARTFORD HARTFORD INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL LARGECAP MIDCAP
HIGH YIELD INDEX CAPITAL APPRECIATION OPPORTUNITIES SMALL COMPANY STOCK GROWTH GROWTH
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND*
---------- ---------- -------------------- ------------- ------------- ------------- -------- ---------
$ -- $ 35,810 $ 11,020 $ 39,111 $ 6,976 $ 2,823 $ 769 $ 305
57,262 535 1,181 2,607 333 72 32 74
495 198 503 1,761 423 99 -- 2
-- -- (1,260) (4,771) (852) (333) (5) (1)
------- -------- -------- -------- ------- ------- ------ -------
57,757 36,543 11,444 38,708 6,880 2,661 796 380
------- -------- -------- -------- ------- ------- ------ -------
3,757 3,456 4,408 8,327 2,216 842 558 487
1,424 3,770 1,467 3,507 697 -- -- --
659 661 676 864 260 -- -- --
24 80 300 822 200 45 5 8
107 283 110 263 52 -- -- --
11 31 11 27 5 1 1 1
193 266 129 282 86 34 29 37
------- -------- -------- -------- ------- ------- ------ -------
6,175 8,547 7,101 14,092 3,516 922 593 533
(356) (1,572) -- -- -- -- (62) (108)
-- -- (196) (385) (60) (18) -- --
(34) (5) (1) (3) -- -- -- --
------- -------- -------- -------- ------- ------- ------ -------
(390) (1,577) (197) (388) (60) (18) (62) (108)
------- -------- -------- -------- ------- ------- ------ -------
5,785 6,970 6,904 13,704 3,456 904 531 425
------- -------- -------- -------- ------- ------- ------ -------
51,972 29,573 4,540 25,004 3,424 1,757 265 (45)
------- -------- -------- -------- ------- ------- ------ -------
(250) 86,852 81,570 240,667 54,594 15,725 2,508 11,873
153 2,005 -- -- -- -- -- --
(118) -- (42) (1,828) 600 (132) -- --
------- -------- -------- -------- ------- ------- ------ -------
(215) 88,857 81,528 238,839 55,194 15,593 2,508 11,873
------- -------- -------- -------- ------- ------- ------ -------
23,383 149,275 73,299 122,554 29,577 2,733 1,018 (5,650)
(433) 94 -- -- -- -- -- --
388 -- 14 (180) (680) 5 -- --
------- -------- -------- -------- ------- ------- ------ -------
23,338 149,369 73,313 122,374 28,897 2,738 1,018 (5,650)
------- -------- -------- -------- ------- ------- ------ -------
23,123 238,226 154,841 361,213 84,091 18,331 3,526 6,223
------- -------- -------- -------- ------- ------- ------ -------
129 90 11 314 11 -- -- --
------- -------- -------- -------- ------- ------- ------ -------
$75,224 $267,889 $159,392 $386,531 $87,526 $20,088 $3,791 $ 6,178
======= ======== ======== ======== ======= ======= ====== =======
</Table>
167
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD MORTGAGE
MONEY MARKET SECURITIES
HLS FUND HLS FUND
------------ ----------
INVESTMENT INCOME:
Dividends................................................. $ -- $ --
Interest.................................................. 90,349 30,210
Securities lending........................................ -- --
Less: foreign tax withheld................................ -- --
------- -------
Total investment income, net............................ 90,349 30,210
------- -------
EXPENSES:
Investment management and advisory fees................... 4,419 1,441
Administrative services fees.............................. 3,535 1,153
Distribution fees -- Class IB............................. 747 369
Custodian fees............................................ 10 15
Accounting services....................................... 265 86
Board of Directors' fees.................................. 27 10
Other expenses............................................ 313 102
------- -------
Total expenses (before waivers and fees paid
indirectly)............................................ 9,316 3,176
Expense waivers........................................... -- --
Commission recapture...................................... -- --
Custodian fee offset...................................... (5) (9)
------- -------
Total waivers and fees paid indirectly.................. (5) (9)
------- -------
Total expenses, net..................................... 9,311 3,167
------- -------
Net investment income (loss).............................. 81,038 27,043
------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 1 (2,435)
Net realized gain (loss) on futures, options and swap
contracts............................................... -- (288)
Net realized gain (loss) on foreign currency
transactions............................................ -- --
------- -------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN
CURRENCY TRANSACTIONS..................................... 1 (2,723)
------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. -- 789
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. -- 261
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... -- --
------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND
SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS.......... -- 1,050
------- -------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS............... 1 (1,673)
------- -------
PAYMENTS FROM (TO) AFFILIATE (SEE NOTE 3G IN ACCOMPANYING
NOTES TO FINANCIAL STATEMENTS)............................ -- --
------- -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $81,039 $25,370
======= =======
</Table>
The accompanying notes are an integral part of these financial statements.
168
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD HARTFORD
SMALLCAP SMALLCAP HARTFORD TOTAL RETURN U.S. GOVERNMENT HARTFORD VALUE
GROWTH VALUE STOCK BOND SECURITIES VALUE OPPORTUNITIES
HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
-------- -------- -------- ------------ --------------- -------------- -------------
$ 8,056 $ 2,095 $92,268 $ 367 $ -- $ 7,667 $ 11,415
637 268 1,216 206,125 46,607 287 250
1,645 -- 1,695 1,117 282 4 219
(4) (1) (2,658) -- -- (2) (483)
-------- ------- -------- -------- ------- ------- --------
10,334 2,362 92,521 207,609 46,889 7,956 11,401
-------- ------- -------- -------- ------- ------- --------
6,041 889 13,697 10,202 4,286 2,199 3,620
-- -- 10,608 7,811 -- 721 --
658 -- 1,871 2,622 767 340 391
27 31 190 116 61 10 28
-- -- 796 586 -- 54 --
16 2 95 62 15 5 9
235 80 731 580 152 75 125
-------- ------- -------- -------- ------- ------- --------
6,977 1,002 27,988 21,979 5,281 3,404 4,173
-- -- -- -- -- -- --
(140) -- (987) -- -- (27) (43)
(10) (14) (17) (80) (7) (1) (4)
-------- ------- -------- -------- ------- ------- --------
(150) (14) (1,004) (80) (7) (28) (47)
-------- ------- -------- -------- ------- ------- --------
6,827 988 26,984 21,899 5,274 3,376 4,126
-------- ------- -------- -------- ------- ------- --------
3,507 1,374 65,537 185,710 41,615 4,580 7,275
-------- ------- -------- -------- ------- ------- --------
69,117 19,353 646,164 (19,320) (8,974) 36,922 46,712
247 59 (200) (1,138) (201) -- --
-- -- 106 (3,287) 179 -- (13)
-------- ------- -------- -------- ------- ------- --------
69,364 19,412 646,070 (23,745) (8,996) 36,922 46,699
-------- ------- -------- -------- ------- ------- --------
(13,939) (3,769) (4,482) 21,620 5,654 30,229 47,434
(3) 10 -- 705 (728) -- --
-- -- 41 (317) -- -- --
-------- ------- -------- -------- ------- ------- --------
(13,942) (3,759) (4,441) 22,008 4,926 30,229 47,434
-------- ------- -------- -------- ------- ------- --------
55,422 15,653 641,629 (1,737) (4,070) 67,151 94,133
-------- ------- -------- -------- ------- ------- --------
(229) -- 5,820 107 -- 33 280
-------- ------- -------- -------- ------- ------- --------
$58,700 $17,027 $712,986 $184,080 $37,545 $71,764 $101,688
======== ======= ======== ======== ======= ======= ========
</Table>
169
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD BLUE CHIP STOCK
ADVISERS HLS FUND HLS FUND
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 194,320 $ 196,156 $ 445 $ 515
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 734,695 906,755 31,915 5,402
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ (64,033) (420,729) (21,441) 2,519
Payments from (to) affiliate.............................. 6,804 -- -- --
----------- ----------- -------- --------
Net increase in net assets resulting from operations...... 871,786 682,182 10,919 8,436
----------- ----------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (166,222) (272,290) (458) (1,289)
Class IB................................................ (25,557) (39,286) -- --
From net realized gain on investments
Class IA................................................ (516,571) (351,514) -- --
Class IB................................................ (89,064) (58,538) -- --
From tax-return of capital
Class IA................................................ -- (118,875) -- --
Class IB................................................ -- (19,797) -- --
----------- ----------- -------- --------
Total distributions..................................... (797,414) (860,300) (458) (1,289)
----------- ----------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 173,052 187,216 2,497 2,729
Issued on reinvestment of distributions............... 682,793 742,679 458 1,289
Redeemed.............................................. (1,869,501) (2,318,933) (29,286) (29,847)
----------- ----------- -------- --------
Total capital share transactions........................ (1,013,656) (1,389,038) (26,331) (25,829)
----------- ----------- -------- --------
Class IB
Sold.................................................. 24,003 63,508 -- --
Issued on reinvestment of distributions............... 114,621 117,621 -- --
Redeemed.............................................. (262,691) (252,096) -- --
----------- ----------- -------- --------
Total capital share transactions........................ (124,067) (70,967) -- --
----------- ----------- -------- --------
Net increase (decrease) from capital share
transactions...................................... (1,137,723) (1,460,005) (26,331) (25,829)
----------- ----------- -------- --------
Net increase (decrease) in net assets............... (1,063,351) (1,638,123) (15,870) (18,682)
NET ASSETS:
Beginning of period....................................... 9,523,570 11,161,693 155,020 173,702
----------- ----------- -------- --------
End of period............................................. $ 8,460,219 $ 9,523,570 $139,150 $155,020
=========== =========== ======== ========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 7,195 $ -- $ 47 $ 73
=========== =========== ======== ========
SHARE ACTIVITY:
Class IA
Sold.................................................. 7,509 8,100 131 155
Issued on reinvestment of distributions............... 30,245 32,735 23 72
Redeemed.............................................. (80,891) (99,678) (1,531) (1,687)
----------- ----------- -------- --------
Total share activity.................................... (43,137) (58,843) (1,377) (1,460)
----------- ----------- -------- --------
Class IB
Sold.................................................. 1,030 2,719 -- --
Issued on reinvestment of distributions............... 5,036 5,150 -- --
Redeemed.............................................. (11,296) (10,778) -- --
----------- ----------- -------- --------
Total share activity.................................... (5,230) (2,909) -- --
----------- ----------- -------- --------
</Table>
The accompanying notes are an integral part of these financial statements.
170
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
CAPITAL APPRECIATION CAPITAL OPPORTUNITIES DISCIPLINED EQUITY DIVIDEND AND GROWTH
HLS FUND HLS FUND HLS FUND HLS FUND
--------------------------- --------------------------- --------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 110,029 $ 96,479 $ 35 $ 44 $ 17,476 $ 11,779 $ 115,794 $ 103,335
1,770,577 2,125,947 647 32 46,373 78,302 538,273 247,944
286,363 (294,622) 207 (147) 121,133 (12,263) 599,277 18,268
11,567 -- -- -- 605 -- 4,254 --
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
2,178,536 1,927,804 889 (71) 185,587 77,818 1,257,598 369,547
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
(151,317) (99,634) -- (42) (14,696) (11,182) (93,362) (91,433)
(29,396) (15,790) -- -- (2,529) (2,973) (22,067) (23,657)
(1,436,633) (1,510,221) -- -- -- -- (395,906) (211,926)
(347,480) (373,818) -- -- -- -- (113,682) (64,731)
-- -- -- (11) -- -- -- --
-- -- -- -- -- -- -- --
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
(1,964,826) (1,999,463) -- (53) (17,225) (14,155) (625,017) (391,747)
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
793,724 980,291 668 915 375,407 347,973 575,385 702,681
1,587,950 1,609,855 -- 53 14,697 11,182 489,268 303,359
(2,124,483) (1,962,162) (3,859) (2,808) (139,427) (156,297) (859,340) (729,202)
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
257,191 627,984 (3,191) (1,840) 250,677 202,858 205,313 276,838
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
106,901 325,619 -- -- 25,457 80,477 76,057 183,594
376,876 389,608 -- -- 2,528 2,973 135,749 88,388
(508,433) (418,122) -- -- (50,657) (31,269) (259,525) (154,365)
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
(24,656) 297,105 -- -- (22,672) 52,181 (47,719) 117,617
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
232,535 925,089 (3,191) (1,840) 228,005 255,039 157,594 394,455
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
446,245 853,430 (2,302) (1,964) 396,367 318,702 790,175 372,255
14,111,173 13,257,743 13,416 15,380 1,359,811 1,041,109 6,485,329 6,113,074
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
$14,557,418 $14,111,173 $11,114 $13,416 $1,756,178 $1,359,811 $7,275,504 $6,485,329
=========== =========== ======= ======= ========== ========== ========== ==========
$ (2,872) $ 2,079 $ 35 $ -- $ 1,000 $ 571 $ 3,359 $ 1,884
=========== =========== ======= ======= ========== ========== ========== ==========
14,540 17,986 94 133 28,473 28,356 26,036 33,702
30,179 30,675 -- 8 1,053 886 21,722 14,549
(38,693) (36,297) (536) (407) (10,549) (12,853) (38,955) (34,828)
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
6,026 12,364 (442) (266) 18,977 16,389 8,803 13,423
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
1,959 6,092 -- -- 1,951 6,744 3,433 8,897
7,203 7,457 -- -- 181 237 6,046 4,254
(9,300) (7,702) -- -- (3,860) (2,575) (11,758) (7,409)
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
(138) 5,847 -- -- (1,728) 4,406 (2,279) 5,742
----------- ----------- ------- ------- ---------- ---------- ---------- ----------
</Table>
171
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
EQUITY INCOME FOCUS
HLS FUND HLS FUND
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 8,383 $ 5,128 $ 589 $ 562
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 17,190 915 6,721 7,485
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ 46,269 6,664 25 (247)
Payments from (to) affiliate.............................. -- -- 110 --
-------- -------- -------- --------
Net increase in net assets resulting from operations...... 71,842 12,707 7,445 7,800
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (6,424) (3,760) (398) (860)
Class IB................................................ (1,572) (1,110) (168) (501)
From net realized gain on investments
Class IA................................................ (587) -- (3,809) (1,785)
Class IB................................................ (200) -- (2,777) (1,463)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
-------- -------- -------- --------
Total distributions..................................... (8,783) (4,870) (7,152) (4,609)
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 115,567 161,388 8,031 12,484
Issued on reinvestment of distributions............... 7,011 3,761 4,207 2,645
Redeemed.............................................. (40,987) (29,739) (16,262) (13,662)
-------- -------- -------- --------
Total capital share transactions........................ 81,591 135,410 (4,024) 1,467
-------- -------- -------- --------
Class IB
Sold.................................................. 29,567 59,757 3,065 6,808
Issued on reinvestment of distributions............... 1,772 1,110 2,945 1,964
Redeemed.............................................. (19,614) (8,618) (14,037) (9,886)
-------- -------- -------- --------
Total capital share transactions........................ 11,725 52,249 (8,027) (1,114)
-------- -------- -------- --------
Net increase (decrease) from capital share
transactions...................................... 93,316 187,659 (12,051) 353
-------- -------- -------- --------
Net increase (decrease) in net assets............... 156,375 195,496 (11,758) 3,544
NET ASSETS:
Beginning of period....................................... 310,568 115,072 94,651 91,107
-------- -------- -------- --------
End of period............................................. $466,943 $310,568 $ 82,893 $ 94,651
======== ======== ======== ========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 605 $ 239 $ 43 $ 13
======== ======== ======== ========
SHARE ACTIVITY:
Class IA
Sold.................................................. 8,780 13,691 777 1,217
Issued on reinvestment of distributions............... 505 310 446 267
Redeemed................................................ (3,177) (2,494) (1,585) (1,360)
-------- -------- -------- --------
Total share activity.................................... 6,108 11,507 (362) 124
-------- -------- -------- --------
Class IB
Sold.................................................. 2,249 5,122 301 666
Issued on reinvestment of distributions............... 128 92 315 200
Redeemed.............................................. (1,483) (727) (1,369) (987)
-------- -------- -------- --------
Total share activity.................................... 894 4,487 (753) (121)
-------- -------- -------- --------
</Table>
The accompanying notes are an integral part of these financial statements.
172
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
GLOBAL ADVISERS GLOBAL LEADERS GROWTH GROWTH OPPORTUNITIES
HLS FUND HLS FUND HLS FUND HLS FUND
--------------------------- --------------------------- --------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 6,069 $ 6,504 $ 5,144 $ 8,291 $ 98 $ (364) $ 8,419 $ 2,979
17,675 20,248 80,164 77,137 44,221 6,503 124,794 131,569
7,905 (14,739) 70,989 (57,471) (19,797) 21,713 3,805 28,121
572 -- 3,344 -- 286 440 1,098 1,140
-------- -------- ---------- ---------- -------- --------- ---------- ----------
32,221 12,013 159,641 27,957 24,808 28,292 138,116 163,809
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(9,020) (12,430) (7,210) (7,384) (186) -- (8,100) (1,991)
(1,561) (2,383) (1,211) (1,309) -- -- (884) --
(11,075) -- (50,448) -- (23,496) (12,015) (108,948) (62,345)
(2,317) -- (15,059) -- (11,791) (7,929) (19,575) (11,118)
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(23,973) (14,813) (73,928) (8,693) (35,473) (19,944) (137,507) (75,454)
-------- -------- ---------- ---------- -------- --------- ---------- ----------
17,818 30,360 75,692 75,573 104,413 212,798 188,777 320,008
20,095 12,430 57,658 7,384 23,682 12,015 117,049 64,336
(70,279) (71,319) (192,502) (165,723) (87,022) (134,784) (216,061) (295,764)
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(32,366) (28,529) (59,152) (82,766) 41,073 90,029 89,765 88,580
-------- -------- ---------- ---------- -------- --------- ---------- ----------
7,235 15,851 21,219 47,667 24,147 52,952 49,911 67,825
3,878 2,383 16,270 1,309 11,791 7,929 20,458 11,118
(19,936) (33,084) (57,098) (47,937) (48,345) (27,963) (51,438) (25,366)
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(8,823) (14,850) (19,609) 1,039 (12,407) 32,918 18,931 53,577
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(41,189) (43,379) (78,761) (81,727) 28,666 122,947 108,696 142,157
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(32,941) (46,179) 6,952 (62,463) 18,001 131,295 109,305 230,512
403,515 449,694 1,215,589 1,278,052 551,663 420,368 1,192,082 961,570
-------- -------- ---------- ---------- -------- --------- ---------- ----------
$370,574 $403,515 $1,222,541 $1,215,589 $569,664 $ 551,663 $1,301,387 $1,192,082
======== ======== ========== ========== ======== ========= ========== ==========
$ (812) $ 3,579 $ (2,425) $ 845 $ 75 $ -- $ 389 $ 717
======== ======== ========== ========== ======== ========= ========== ==========
1,386 2,493 3,866 4,330 8,271 17,662 6,073 11,178
1,590 1,014 2,895 404 1,924 992 3,934 2,155
(5,482) (5,848) (9,779) (9,391) (6,928) (11,119) (7,054) (10,378)
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(2,506) (2,341) (3,018) (4,657) 3,267 7,535 2,953 2,955
-------- -------- ---------- ---------- -------- --------- ---------- ----------
564 1,312 1,077 2,759 1,970 4,471 1,621 2,434
308 196 819 72 969 661 693 375
(1,564) (2,749) (2,902) (2,736) (3,908) (2,346) (1,706) (915)
-------- -------- ---------- ---------- -------- --------- ---------- ----------
(692) (1,241) (1,006) 95 (969) 2,786 608 1,894
-------- -------- ---------- ---------- -------- --------- ---------- ----------
</Table>
173
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HIGH YIELD HARTFORD
HLS FUND INDEX HLS FUND
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 51,972 $ 48,916 $ 29,573 $ 29,486
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... (215) 2,598 88,857 112,925
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ 23,338 (40,161) 149,369 (55,752)
Payments from (to) affiliate.............................. 129 4,027 90 --
--------- ----------- ---------- ----------
Net increase in net assets resulting from operations...... 75,224 15,380 267,889 86,659
--------- ----------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (66,340) (30,128) (26,105) (32,716)
Class IB................................................ (37,565) (18,501) (3,766) (4,176)
From net realized gain on investments
Class IA................................................ -- -- (174,313) (56,659)
Class IB................................................ -- -- (29,239) (8,074)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
--------- ----------- ---------- ----------
Total distributions..................................... (103,905) (48,629) (233,423) (101,625)
--------- ----------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 129,199 1,060,510 109,735 207,714
Issued on reinvestment of distributions............... 66,340 30,128 200,417 89,375
Redeemed.............................................. (149,734) (1,146,072) (443,564) (555,228)
--------- ----------- ---------- ----------
Total capital share transactions........................ 45,805 (55,434) (133,412) (258,139)
--------- ----------- ---------- ----------
Class IB
Sold.................................................. 42,493 59,094 52,154 57,766
Issued on reinvestment of distributions............... 37,565 18,501 33,006 12,250
Redeemed.............................................. (77,727) (101,068) (76,191) (58,337)
--------- ----------- ---------- ----------
Total capital share transactions........................ 2,331 (23,473) 8,969 11,679
--------- ----------- ---------- ----------
Net increase (decrease) from capital share
transactions...................................... 48,136 (78,907) (124,443) (246,460)
--------- ----------- ---------- ----------
Net increase (decrease) in net assets............... 19,455 (112,156) (89,977) (261,426)
NET ASSETS:
Beginning of period....................................... 716,397 828,553 1,965,003 2,226,429
--------- ----------- ---------- ----------
End of period............................................. $ 735,852 $ 716,397 $1,875,026 $1,965,003
========= =========== ========== ==========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 990 $ 52,961 $ 647 $ 1,153
========= =========== ========== ==========
SHARE ACTIVITY:
Class IA
Sold.................................................. 13,188 106,553 3,386 6,556
Issued on reinvestment of distributions............... 7,161 3,143 6,466 2,832
Redeemed.............................................. (15,232) (114,963) (13,684) (17,524)
--------- ----------- ---------- ----------
Total share activity.................................... 5,117 (5,267) (3,832) (8,136)
--------- ----------- ---------- ----------
Class IB
Sold.................................................. 4,356 5,980 1,605 1,840
Issued on reinvestment of distributions............... 4,092 1,947 1,069 390
Redeemed.............................................. (8,001) (10,289) (2,360) (1,852)
--------- ----------- ---------- ----------
Total share activity.................................... 447 (2,362) 314 378
--------- ----------- ---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
174
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
INTERNATIONAL CAPITAL INTERNATIONAL INTERNATIONAL SMALL INTERNATIONAL STOCK
APPRECIATION HLS FUND OPPORTUNITIES HLS FUND COMPANY HLS FUND HLS FUND
--------------------------- --------------------------- --------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 4,540 $ 4,629 $ 25,004 $ 16,314 $ 3,424 $ 2,324 $ 1,757 $ 1,617
81,528 14,958 238,839 196,600 55,194 23,748 15,593 8,911
73,313 27,783 122,374 (14,194) 28,897 12,694 2,738 (344)
11 -- 314 -- 11 -- -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
159,392 47,370 386,531 198,720 87,526 38,766 20,088 10,184
-------- -------- ---------- ---------- -------- -------- -------- --------
(4,215) (2,955) (38,195) -- (4,903) (4,436) (1,457) (1,248)
(1,218) (1,223) (4,186) -- (1,571) (1,943) -- --
(41,640) (15,233) (118,052) -- (30,974) (19,153) -- --
(22,639) (10,934) (28,152) -- (12,576) (9,955) -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
(69,712) (30,345) (188,585) -- (50,024) (35,487) (1,457) (1,248)
-------- -------- ---------- ---------- -------- -------- -------- --------
153,015 188,636 293,361 228,878 106,451 115,303 2,516 3,710
45,855 18,188 156,247 -- 35,877 23,589 1,457 1,248
(50,226) (54,517) (260,149) (191,381) (67,279) (30,886) (16,670) (14,347)
-------- -------- ---------- ---------- -------- -------- -------- --------
148,644 152,307 189,459 37,497 75,049 108,006 (12,697) (9,389)
-------- -------- ---------- ---------- -------- -------- -------- --------
55,914 114,389 56,023 94,277 30,387 38,303 -- --
23,857 12,157 32,338 -- 14,147 11,898 -- --
(55,687) (26,637) (68,392) (62,078) (31,043) (14,379) -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
24,084 99,909 19,969 32,199 13,491 35,822 -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
172,728 252,216 209,428 69,696 88,540 143,828 (12,697) (9,389)
-------- -------- ---------- ---------- -------- -------- -------- --------
262,408 269,241 407,374 268,416 126,042 147,107 5,934 (453)
615,127 345,886 1,571,052 1,302,636 285,869 138,762 96,129 96,582
-------- -------- ---------- ---------- -------- -------- -------- --------
$877,535 $615,127 $1,978,426 $1,571,052 $411,911 $285,869 $102,063 $ 96,129
======== ======== ========== ========== ======== ======== ======== ========
$ (285) $ 310 $ 476 $ 16,708 $ (166) $ 189 $ 1,607 $ 1,457
======== ======== ========== ========== ======== ======== ======== ========
11,231 15,991 19,972 18,714 6,405 7,743 155 273
3,322 1,562 10,497 -- 2,185 1,634 94 94
(3,730) (4,614) (17,758) (15,599) (4,079) (2,106) (1,017) (1,035)
-------- -------- ---------- ---------- -------- -------- -------- --------
10,823 12,939 12,711 3,115 4,511 7,271 (768) (668)
-------- -------- ---------- ---------- -------- -------- -------- --------
4,145 9,852 3,767 7,839 1,839 2,613 -- --
1,741 1,056 2,139 -- 868 833 -- --
(4,149) (2,272) (4,647) (5,150) (1,924) (980) -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
1,737 8,636 1,259 2,689 783 2,466 -- --
-------- -------- ---------- ---------- -------- -------- -------- --------
</Table>
175
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
LARGECAP GROWTH MIDCAP GROWTH
HLS FUND HLS FUND*
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 265 $ 228 $ (45) $ (216)
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 2,508 (38) 11,873 2,112
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ 1,018 474 (5,650) 491
Payments from (to) affiliate.............................. -- -- -- --
-------- -------- -------- -------
Net increase in net assets resulting from operations...... 3,791 664 6,178 2,387
-------- -------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (286) (595) -- (7)
Class IB................................................ -- -- -- --
From net realized gain on investments
Class IA................................................ -- -- (7,823) (8,156)
Class IB................................................ -- -- -- --
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
-------- -------- -------- -------
Total distributions..................................... (286) (595) (7,823) (8,163)
-------- -------- -------- -------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 4,135 25,291 2,468 2,896
Issued on reinvestment of distributions............... 286 595 7,823 8,163
Redeemed.............................................. (17,580) (16,585) (10,460) (9,804)
-------- -------- -------- -------
Total capital share transactions........................ (13,159) 9,301 (169) 1,255
-------- -------- -------- -------
Class IB
Sold.................................................. -- -- -- --
Issued on reinvestment of distributions............... -- -- -- --
Redeemed.............................................. -- -- -- --
-------- -------- -------- -------
Total capital share transactions........................ -- -- -- --
-------- -------- -------- -------
Net increase (decrease) from capital share
transactions........................................ (13,159) 9,301 (169) 1,255
-------- -------- -------- -------
Net increase (decrease) in net assets................. (9,654) 9,370 (1,814) (4,521)
NET ASSETS:
Beginning of period....................................... 69,136 59,766 55,209 59,730
-------- -------- -------- -------
End of period............................................. $ 59,482 $ 69,136 $ 53,395 $55,209
======== ======== ======== =======
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 8 $ 30 $ -- $ --
======== ======== ======== =======
SHARE ACTIVITY:
Class IA
Sold.................................................. 426 2,672 207 245
Issued on reinvestment of distributions............... 28 63 716 729
Redeemed.............................................. (1,810) (1,767) (883) (838)
-------- -------- -------- -------
Total share activity.................................... (1,356) 968 40 136
-------- -------- -------- -------
Class IB
Sold.................................................. -- -- -- --
Issued on reinvestment of distributions............... -- -- -- --
Redeemed.............................................. -- -- -- --
-------- -------- -------- -------
Total share activity.................................... -- -- -- --
-------- -------- -------- -------
</Table>
* Previously known as Hartford MidCap Stock HLS Fund. Name change effective
December 11, 2006.
The accompanying notes are an integral part of these financial statements.
176
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD HARTFORD
MONEY MARKET MORTGAGE SECURITIES SMALLCAP GROWTH SMALLCAP VALUE
HLS FUND HLS FUND HLS FUND HLS FUND
--------------------------- --------------------------- --------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 81,038 $ 44,998 $ 27,043 $ 27,875 $ 3,507 $ 1,122 $ 1,374 $ 1,010
1 3 (2,723) (5,212) 69,364 78,932 19,412 12,660
-- -- 1,050 (7,517) (13,942) 13,575 (3,759) (5,275)
-- -- -- -- (229) 1,892 -- --
----------- ----------- --------- --------- ---------- --------- -------- --------
81,039 45,001 25,370 15,146 58,700 95,521 17,027 8,395
----------- ----------- --------- --------- ---------- --------- -------- --------
(67,958) (38,276) (43,331) (20,104) (2,690) (2,640) (1,296) (1,554)
(13,080) (6,722) (14,091) (6,761) (351) (359) (2) (1)
(1) (2) -- -- (49,201) (38,240) (19,902) (25,314)
-- (1) -- -- (18,032) (14,866) (33) (26)
-- -- -- -- -- (9,243) -- --
-- -- -- -- -- (3,594) -- --
----------- ----------- --------- --------- ---------- --------- -------- --------
(81,039) (45,001) (57,422) (26,865) (70,274) (68,942) (21,233) (26,895)
----------- ----------- --------- --------- ---------- --------- -------- --------
1,780,507 4,751,573 39,710 89,049 167,603 556,140 3,893 9,236
68,099 41,530 43,331 20,104 51,891 50,123 21,198 26,868
(1,644,009) (4,733,793) (109,527) (164,139) (171,018) (424,352) (22,009) (28,569)
----------- ----------- --------- --------- ---------- --------- -------- --------
204,597 59,310 (26,486) (54,986) 48,476 181,911 3,082 7,535
----------- ----------- --------- --------- ---------- --------- -------- --------
300,900 237,251 10,303 16,701 79,810 77,064 53 120
13,111 7,288 14,091 6,761 18,383 18,820 35 27
(258,125) (233,306) (42,979) (37,529) (91,120) (33,653) (56) (14)
----------- ----------- --------- --------- ---------- --------- -------- --------
55,886 11,233 (18,585) (14,067) 7,073 62,231 32 133
----------- ----------- --------- --------- ---------- --------- -------- --------
260,483 70,543 (45,071) (69,053) 55,549 244,142 3,114 7,668
----------- ----------- --------- --------- ---------- --------- -------- --------
260,483 70,543 (77,123) (80,772) 43,975 270,721 (1,092) (10,832)
1,617,876 1,547,333 620,631 701,403 976,027 705,306 103,496 114,328
----------- ----------- --------- --------- ---------- --------- -------- --------
$ 1,878,359 $ 1,617,876 $ 543,508 $ 620,631 $1,020,002 $ 976,027 $102,404 $103,496
=========== =========== ========= ========= ========== ========= ======== ========
$ -- $ -- $ 879 $ 30,369 $ -- $ -- $ 30 $ --
=========== =========== ========= ========= ========== ========= ======== ========
1,780,507 4,751,573 3,523 7,669 7,759 27,199 269 577
68,099 41,530 3,999 1,755 2,481 2,423 1,622 1,877
(1,644,009) (4,733,793) (9,703) (14,142) (8,077) (20,752) (1,523) (1,833)
----------- ----------- --------- --------- ---------- --------- -------- --------
204,597 59,310 (2,181) (4,718) 2,163 8,870 368 621
----------- ----------- --------- --------- ---------- --------- -------- --------
300,900 237,251 924 1,449 3,701 3,811 3 7
13,111 7,288 1,310 594 881 912 3 2
(258,125) (233,306) (3,832) (3,266) (4,435) (1,643) (4) --
----------- ----------- --------- --------- ---------- --------- -------- --------
55,886 11,233 (1,598) (1,223) 147 3,080 2 9
----------- ----------- --------- --------- ---------- --------- -------- --------
</Table>
177
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD TOTAL RETURN BOND
STOCK HLS FUND HLS FUND
--------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 65,537 $ 69,252 $ 185,710 $ 146,946
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 646,070 542,806 (23,745) 8,818
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ (4,441) (91,561) 22,008 (70,299)
Payments from (to) affiliate.............................. 5,820 -- 107 --
----------- ----------- ---------- -----------
Net increase in net assets resulting from operations...... 712,986 520,497 184,080 85,465
----------- ----------- ---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (57,414) (91,246) (146,134) (197,249)
Class IB................................................ (7,809) (11,661) (46,861) (74,748)
From net realized gain on investments
Class IA................................................ (250,786) -- (400) (19,030)
Class IB................................................ (42,418) -- (149) (7,689)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
----------- ----------- ---------- -----------
Total distributions..................................... (358,427) (102,907) (193,544) (298,716)
----------- ----------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 162,487 288,047 692,110 1,473,648
Issued on reinvestment of distributions............... 308,200 91,246 146,534 216,279
Redeemed.............................................. (1,065,093) (1,611,066) (533,586) (1,298,118)
----------- ----------- ---------- -----------
Total capital share transactions........................ (594,406) (1,231,773) 305,058 391,809
----------- ----------- ---------- -----------
Class IB
Sold.................................................. 33,536 103,222 114,885 176,135
Issued on reinvestment of distributions............... 50,227 11,661 47,010 82,437
Redeemed.............................................. (144,888) (119,161) (189,475) (121,501)
----------- ----------- ---------- -----------
Total capital share transactions........................ (61,125) (4,278) (27,580) 137,071
----------- ----------- ---------- -----------
Net increase (decrease) from capital share
transactions...................................... (655,531) (1,236,051) 277,478 528,880
----------- ----------- ---------- -----------
Net increase (decrease) in net assets............... (300,972) (818,461) 268,014 315,629
NET ASSETS:
Beginning of period....................................... 5,557,775 6,376,236 3,813,715 3,498,086
----------- ----------- ---------- -----------
End of period............................................. $ 5,256,803 $ 5,557,775 $4,081,729 $ 3,813,715
=========== =========== ========== ===========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 4,252 $ 835 $ 4,639 $ 13,086
=========== =========== ========== ===========
SHARE ACTIVITY:
Class IA
Sold.................................................. 3,194 6,202 61,030 124,101
Issued on reinvestment of distributions............... 5,888 1,889 13,029 18,858
Redeemed.............................................. (20,812) (34,543) (47,107) (109,269)
----------- ----------- ---------- -----------
Total share activity.................................... (11,730) (26,452) 26,952 33,690
----------- ----------- ---------- -----------
Class IB
Sold.................................................. 656 2,244 10,191 14,913
Issued on reinvestment of distributions............... 962 242 4,198 7,228
Redeemed.............................................. (2,835) (2,555) (16,792) (10,349)
----------- ----------- ---------- -----------
Total share activity.................................... (1,217) (69) (2,403) 11,792
----------- ----------- ---------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
178
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
U.S. GOVERNMENT HARTFORD VALUE OPPORTUNITIES
SECURITIES HLS FUND VALUE HLS FUND HLS FUND
--------------------------- --------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
$ 41,615 $ 30,650 $ 4,580 $ 4,025 $ 7,275 $ 4,539
(8,996) (10,913) 36,922 10,537 46,699 35,150
4,926 (7,426) 30,229 9,277 47,434 2,149
-- -- 33 -- 280 --
---------- --------- -------- --------- -------- ---------
37,545 12,311 71,764 23,839 101,688 41,838
---------- --------- -------- --------- -------- ---------
(22,204) (15,790) (3,189) (4,525) (5,905) (5,185)
(10,055) (8,805) (1,169) (2,537) (1,488) (1,585)
-- -- (6,002) (2,309) (51,405) (8,272)
-- -- (3,835) (1,626) (18,120) (3,381)
-- -- -- -- -- --
-- -- -- -- -- --
---------- --------- -------- --------- -------- ---------
(32,259) (24,595) (14,195) (10,997) (76,918) (18,423)
---------- --------- -------- --------- -------- ---------
263,885 755,831 87,474 155,582 124,587 290,951
22,204 15,790 9,192 6,834 57,311 13,458
(169,642) (696,805) (48,293) (138,656) (81,630) (190,552)
---------- --------- -------- --------- -------- ---------
116,447 74,816 48,373 23,760 100,268 113,857
---------- --------- -------- --------- -------- ---------
31,121 67,804 27,688 22,364 30,780 90,102
10,055 8,805 5,003 4,163 19,607 4,966
(75,234) (42,744) (35,942) (22,574) (44,699) (31,632)
---------- --------- -------- --------- -------- ---------
(34,058) 33,865 (3,251) 3,953 5,688 63,436
---------- --------- -------- --------- -------- ---------
82,389 108,681 45,122 27,713 105,956 177,293
---------- --------- -------- --------- -------- ---------
87,675 96,397 102,691 40,555 130,726 200,708
914,927 818,530 323,426 282,871 542,073 341,365
---------- --------- -------- --------- -------- ---------
$1,002,602 $ 914,927 $426,117 $ 323,426 $672,799 $ 542,073
========== ========= ======== ========= ======== =========
$ 42,556 $ 32,259 $ 332 $ 128 $ 345 $ 282
========== ========= ======== ========= ======== =========
23,908 67,835 7,229 14,333 6,343 16,008
2,082 1,426 773 622 3,023 738
(15,347) (62,553) (4,040) (12,792) (4,203) (10,428)
---------- --------- -------- --------- -------- ---------
10,643 6,708 3,962 2,163 5,163 6,318
---------- --------- -------- --------- -------- ---------
2,843 6,089 2,289 2,074 1,570 5,028
946 798 427 381 1,042 274
(6,870) (3,858) (2,997) (2,073) (2,322) (1,761)
---------- --------- -------- --------- -------- ---------
(3,081) 3,029 (281) 382 290 3,541
---------- --------- -------- --------- -------- ---------
</Table>
179
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Hartford HLS Funds serve as underlying investment vehicles for certain
variable annuity and variable life insurance separate accounts of Hartford
Life Insurance Company and its affiliates ("HLIC") and certain qualified
retirement plans. Certain Hartford HLS Funds may also serve as underlying
investment options for certain variable annuity and variable life separate
accounts of other insurance companies. Owners of variable annuity contracts
and policyholders of variable life insurance contracts may choose the funds
permitted in the accompanying variable insurance contract prospectus. In
addition, participants in certain qualified retirement plans may choose the
funds permitted by their plans.
Hartford Series Fund, Inc. is comprised of twenty-six portfolios, nineteen
are included in these financial statements, each a "Fund" or together the
"Funds" (they are Hartford Advisers HLS Fund, Hartford Capital Appreciation
HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Dividend and Growth
HLS Fund, Hartford Equity Income HLS Fund, Hartford Focus HLS Fund, Hartford
Global Advisers HLS Fund, Hartford Global Leaders HLS Fund, Hartford Growth
HLS Fund, Hartford High Yield HLS Fund, Hartford Index HLS Fund, Hartford
International Capital Appreciation HLS Fund, Hartford International
Opportunities HLS Fund, Hartford International Small Company HLS Fund,
Hartford Money Market HLS Fund, Hartford Mortgage Securities HLS Fund,
Hartford Stock HLS Fund, Hartford Total Return Bond HLS Fund and Hartford
Value HLS Fund) and Hartford HLS Series Fund II, Inc. is comprised of ten
funds, each a "Fund" or together the "Funds" (they are Hartford Blue Chip
Stock HLS Fund, Hartford Capital Opportunities HLS Fund, Hartford Growth
Opportunities HLS Fund, Hartford International Stock HLS Fund, Hartford
LargeCap Growth HLS Fund, Hartford MidCap Growth HLS Fund, Hartford SmallCap
Growth HLS Fund, Hartford SmallCap Value HLS Fund, Hartford U.S. Government
Securities HLS Fund and Hartford Value Opportunities HLS Fund) (the
"Companies"). The Companies are organized under the laws of the State of
Maryland and are registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended ("1940 Act"),
as diversified open-end management investment companies, except for Hartford
Focus HLS Fund which is non-diversified.
Effective December 11, 2006, the name of the Hartford MidCap Stock HLS Fund
was changed to Hartford MidCap Growth HLS Fund.
Hartford Advisers HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford
Disciplined Equity HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford
Equity Income HLS Fund, Hartford Focus HLS Fund, Hartford Global Advisers
HLS Fund, Hartford Global Leaders HLS Fund, Hartford Growth HLS Fund,
Hartford Growth Opportunities HLS Fund, Hartford High Yield HLS Fund,
Hartford International Capital Appreciation HLS Fund, Hartford Index HLS
Fund, Hartford International Opportunities HLS Fund, Hartford International
Small Company HLS Fund, Hartford Money Market HLS Fund, Hartford SmallCap
Growth HLS Fund, Hartford SmallCap Value HLS Fund, Hartford Stock HLS Fund,
Hartford Total Return Bond HLS Fund, Hartford U.S. Government Securities HLS
Fund, Hartford Value HLS Fund and Hartford Value Opportunities HLS Fund,
offer both Class IA and IB shares. The remainder of the funds, offer Class
IA shares. Each class is offered at net asset value without a sales charge
and is subject to the same expenses, except that the Class IB shares are
subject to distribution fees charged pursuant to Distribution and Service
Plans. These Distribution and Service Plans have been adopted in accordance
with Rule 12b-1 of the 1940 Act.
Indemnifications: Under the Funds' organizational documents, their
directors and officers are indemnified against certain liabilities arising
out of the performance of their duties to the Funds. In addition, the Funds'
enter into contracts that contain a variety of indemnifications. The Funds'
maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expect
the risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost. Trade date for
senior floating rate interests purchased in the primary market is
considered the date on which the loan allocations are determined. Trade
date for senior floating rate interests purchased in the secondary
market is the date on which the transaction is entered into.
b) Security Valuation and Investment Income -- Except for Hartford Money
Market HLS Fund, the Funds generally use market prices in valuing
portfolio securities. If market quotations are not readily available or
are deemed unreliable, a Fund will use the fair value of the security as
determined in good faith under policies and procedures established by
and under the supervision of that Fund's Board of Directors. Market
prices may be deemed unreliable, for example, if a security is thinly
traded or if an event has occurred after the close of the exchange on
which a portfolio security is primarily traded but before the close of
the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. Eastern
Time, referred to as the "Valuation Time") that is expected to affect
the value of the portfolio security. The circumstances in which a Fund
may use fair value pricing include, among others: (i) the occurrence of
events that are significant to a particular issuer, such as mergers,
restructuring or defaults; (ii) the occurrence of events that are
significant to an entire market, such as natural disasters in a
particular region or governmental actions; (iii) trading restrictions on
securities; (iv) thinly traded securities and (v) market events such as
trading halts and early market closings. In addition, with respect to
the valuation of securities primarily traded on foreign markets, each
Fund uses a fair value pricing service approved by that Fund's Board of
Directors which employs quantitative models to adjust for "stale" prices
caused by the movement of other markets and other factors occurring
after the close of the foreign markets but before the close of the
Exchange. Securities that are primarily traded on foreign markets may
trade on days that are not business days of the Funds. Because the NAV
of each Fund's shares is determined only on business days of the Funds,
the value of the portfolio securities of a Fund that invests in foreign
securities may change on days when a shareholder will not be able to
purchase or redeem shares of the Fund. Fair value pricing is subjective
in nature and the use of fair value pricing by the Funds may cause the
net asset value of their respective shares to differ significantly from
the net asset value that would have been calculated using market prices
at the close of the exchange on which a portfolio security is primarily
traded but before the close of the
180
- --------------------------------------------------------------------------------
Exchange. There can be no assurance that any Fund could obtain the fair
value assigned to a security if the Fund were to sell the security at
approximately the time at which that Fund determines its Net Asset Value
("NAV") per share.
Debt securities (other than short-term investments and Senior Floating
Rate Interests), held by the Fund 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. Senior
Floating Rate Interests generally trade in over-the-counter markets and
are priced through an unaffiliated pricing service utilizing independent
market quotations from loan dealers or financial institutions.
Securities for which prices are not available from an independent
pricing service, but where an active market exists, are valued using
market quotations obtained from one or more dealers that make markets in
securities or from a widely-used quotation system in accordance with
procedures established by that Fund's Board of Directors. Generally,
each Fund may use fair valuation in regards to debt securities when a
Fund holds defaulted or distressed securities or securities in a company
in which reorganization is pending. Short term investments with a
maturity of more than 60 days when purchased are valued based on market
quotations until the remaining days to maturity become less than 61
days. The Hartford Money Market HLS Fund's investments and investments
that mature in 60 days or less are valued at amortized cost, which
approximates market value.
Exchange traded equity securities shall be valued at the last reported
sale price on the exchange or market on which the security is primarily
traded (the "Primary Market") at the Valuation Time. If the security did
not trade on the Primary Market, it may be valued at the Valuation Time
at the last reported sale price on another exchange where it trades. The
value of an equity security not traded on any exchange but traded on the
Nasdaq Stock Market, Inc. System ("Nasdaq") or another over-the-counter
("OTC") market shall be valued at the last reported sale price or
official closing price on the exchange or market on which the security
is traded as of the Valuation Time. If it is not possible to determine
the last reported sale price or official closing price on the relevant
exchange or market at the Valuation Time, the value of the security
shall be the most recent bid quotation on such exchange or market at the
Valuation Time.
Securities of foreign issuers and non-dollar securities are translated
from the local currency into U.S. dollars using prevailing exchange
rates.
Options contracts on securities, currencies, indexes, futures contracts,
commodities and other instruments shall be valued at their most recent
sales price at the Valuation Time on the Primary Market on which the
instrument is traded. If the instrument did not trade on the Primary
Market, it may be valued at the most recent sales price at the Valuation
Time on another exchange or market where it did trade.
Futures contracts shall be valued at the final settlement price reported
by the applicable futures exchange. If there were no trades as of the
valuation day, then the contract shall be valued at the closing bid
price as of the Valuation Time.
Financial instruments for which prices are not available from an
independent pricing service, but where an active market exists, are
valued using market quotations obtained from one or more dealers that
make markets in securities or from a widely-used quotation system in
accordance with procedures established by that Fund's Board of
Directors.
A forward currency contract shall be valued based on the price of the
underlying currency at the prevailing interpolated exchange rate, which
is a combination of the spot currency rate and the forward currency
rate. Spot currency rates and forward currency rates are obtained from
an independent pricing service on a daily basis not more than one hour
before the Valuation Time. In the event that the applicable pricing
service cannot provide the spot currency rates and forward currency
rates in a timely fashion, such rates may be obtained from a widely-used
quotation system in accordance with procedures established by that
Fund's Board of Directors.
Swaps and other derivative or contractual type instruments shall be
valued using market prices if such instruments trade on an exchange or
market. If such instruments do not trade on an exchange or market, such
instruments shall be valued at a price at which the counterparty to such
contract would repurchase the instrument. In the event that the
counterparty cannot provide a price, such valuation may be determined in
accordance with procedures established by the Fund's Board of Directors.
Dividend income is accrued as of the ex-dividend date, except that
certain dividends for foreign securities where the ex-dividend date may
have passed are recorded as soon as the Fund is informed of the dividend
in the exercise of reasonable diligence. Interest income, including
amortization of premium and accretion of discount, is accrued on a daily
basis. Income and capital gain distributions from Underlying Funds are
recorded on the ex-dividend date.
c) Foreign Currency Transactions -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of portfolio security valuation
resulting from fluctuations in the foreign currency exchange rates on
portfolio securities from the fluctuations arising from changes in the
market prices of securities held. Such fluctuations are included within
the net realized and unrealized gain or loss on investments in the
accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability
amounts initially stated in foreign currencies and the U.S. dollar value
of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of other assets
and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
d) Securities Lending -- The Funds, except for the Hartford Money Market
HLS Fund, may lend their securities to certain qualified brokers who pay
these Funds negotiated lender fees. The loans are collateralized at all
times with cash, which is then invested in short-term money market
instruments or U.S. government securities with a market value at least
equal to the market value of the securities on loan. The adequacy of the
collateral for securities on loan is monitored on a daily basis. For
instances where the market value of collateral falls below the market
value of
181
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
the securities out on loan, such collateral is supplemented on the
following day. As with other extensions of credit, these Funds may bear
the risk of delay in recovery of loaned securities or even loss of rights
in the collateral should the borrower of the securities fail financially.
e) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Funds may transfer uninvested cash balances into a joint
trading account managed by Hartford Investment Management Company
(Hartford Investment Management), a wholly-owned subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford), or Wellington
Management Company LLP (Wellington). These balances may be invested in
one or more repurchase agreements and/or short-term money market
instruments.
f) Repurchase Agreements -- A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that 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 Funds or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable.
Certain Funds, together with other investment management companies
having investment advisory agreements with Wellington, have an interest
in joint repurchase agreements dated 12/29/06 in the amount of
$2,097,116 due 01/02/07 with the brokers indicated in the table below.
These joint repurchase agreements are collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ----- --------- ---------- ------------------ --------------- ------------
Bank of America.......... 5.31% $475,000 $484,500 FNMA 5.00% 2034
BNP Paribas.............. 5.31% 655,000 668,100 FHLMC 5.00% - 5.50% 2035 - 2036
FNMA 5.00% - 6.00% 2020 - 2036
Deutsche Bank............ 4.80% 7,116 7,226 U.S. Treasury Bill 4.825% 2007
Deutsche Bank............ 5.30% 410,000 418,200 FHLMC 4.50% - 8.00% 2116 - 2036
Morgan Stanley........... 5.30% 140,000 142,800 FHLMC 4.00% - 6.50% 2008 - 2046
FNMA 4.50% - 7.06% 2009 - 2046
UBS Securities LLC....... 5.31% 410,000 418,203 FNLMC 4.50% - 8.00% 2007 - 2036
FNMA 4.50% - 6.00% 2018 - 2046
</Table>
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Advisers HLS Fund.................................. $ 84,691
Hartford Capital Appreciation HLS Fund...................... 369,759
Hartford Disciplined Equity HLS Fund........................ 54,512
Hartford Dividend and Growth HLS Fund....................... 75,643
Hartford Equity Income HLS fund............................. 7,435
Hartford Focus HLS Fund..................................... 623
Hartford Global Advisers HLS Fund........................... 16,679
Hartford Global Leaders HLS Fund............................ 7,955
Hartford Growth HLS Fund.................................... 1,924
Hartford Growth Opportunities HLS Fund...................... 40,840
Hartford International Capital Appreciation HLS Fund........ 25,310
Hartford International Opportunities HLS Fund............... 23,806
Hartford International Small Company HLS Fund............... 3,059
Hartford SmallCap Growth HLS Fund........................... 1,091
Hartford Stock HLS Fund..................................... 8,922
Hartford Value HLS Fund..................................... 11,435
Hartford Value Opportunities HLS Fund....................... 8,541
</Table>
Certain Funds, together with other investment management companies
having investment advisory agreements with Hartford Investment
Management, have an interest in joint repurchase agreements dated
12/29/06 in the amount of $697,665 due 01/02/07 with the brokers
indicated in the table below. These joint repurchase agreements are
collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ----- --------- ---------- ------------------- ----------------- ------------
BNP Paribas.............. 4.75% $250,000 $255,050 U.S. Treasury Bonds 5.25% - 8.50% 2020 - 2029
RBS Greenwich Capital
Markets................ 4.75% 197,665 201,624 U.S. Treasury Note 12.00% 2013
UBS Securities LLC....... 4.75% 250,000 255,262 U.S. Treasury Bonds 8.125% - 8.875% 2017 - 2021
U.S. Treasury Note 11.75% 2014
</Table>
182
- --------------------------------------------------------------------------------
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Blue Chip Stock HLS Fund........................... $ 832
Hartford Index HLS Fund..................................... 13,734
Hartford MidCap Growth HLS Fund............................. 2,677
Hartford Mortgage Securities HLS Fund....................... 8,186
Hartford SmallCap Growth HLS Fund........................... 2,316
Hartford Total Return Bond HLS Fund......................... 309,937
Hartford U.S. Government Securities HLS Fund................ 106,677
</Table>
g) Futures and Options Transactions -- Certain Funds may invest in futures
and options contracts in order to gain exposure to or protect against
changes in the market. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. When
the Funds enter into futures contracts, they are required to deposit
with a futures commission merchant an amount of initial margin of cash,
commercial paper or U.S. Treasury Bills. Subsequent payments, called
maintenance margin, to and from the broker, are made on a daily basis as
the price of the underlying security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds.
At any time prior to the expiration of the futures contract, a Fund may
close the position by taking an opposite position, which would
effectively 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 use of futures contracts involve elements of market risk, which may
exceed the amounts recognized in the Statements of Assets and
Liabilities. Changes in the value of the futures contracts may decrease
the effectiveness of the Funds' strategies and potentially result in
loss. Certain Funds, as shown in the Schedule of Investments, had
outstanding futures contracts as of December 31, 2006.
The premium paid by the Funds for the purchase of a call or put option
is included in the Funds' Statements of Assets and Liabilities as an
investment and subsequently "marked-to-market" through net unrealized
appreciation (depreciation) of options to reflect the current market
value of the option as of the end of the reporting period.
The Funds may write covered options. "Covered" means that so long as the
Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option and an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to or greater
than the fluctuating market value of the option securities or
currencies. A Fund receives a premium for writing a call or put option,
which is recorded on the Funds' Statements of Assets and Liabilities and
subsequently "mark-to-market" through net unrealized appreciation
(depreciation) of options. There is a risk of loss from a change in the
value of such options, which may exceed the related premiums received.
Transactions involving written option contracts for the Funds during the
year ended December 31, 2006, are summarized below:
<Table>
<Caption>
HARTFORD CAPITAL APPRECIATION HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
----------------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 42,696 7,385
Expired..................................................... -- --
Closed...................................................... (42,696) (7,385)
Exercised................................................... -- --
------- -------
End of the period........................................... -- $ --
======= =======
</Table>
<Table>
<Caption>
HARTFORD DISCIPLINED EQUITY HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
----------------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 14,931 1,225
Expired..................................................... (4,239) (259)
Closed...................................................... (7,661) (689)
Exercised................................................... (509) (69)
------ ------
End of the period........................................... 2,522 $ 208
====== ======
</Table>
183
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD GLOBAL ADVISERS HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
----------------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 2,020,000 19
Expired..................................................... -- --
Closed...................................................... (2,020,000) (19)
Exercised................................................... -- --
----------- ----
End of the period........................................... -- $ --
=========== ====
</Table>
* The number of contracts does not omit 000's.
h) Forward Foreign Currency Contracts -- For the year ended December 31,
2006, certain Funds, as shown in the Schedule of Investments, entered
into forward foreign currency contracts that obligate the Funds to
repurchase/replace or sell currencies at specified future dates. The
Funds enter into forward foreign currency contracts to hedge against
adverse fluctuations in exchange rates between currencies.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statement of Assets and
Liabilities. In addition, risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of the contracts and from unanticipated movements in the value of
the foreign currencies relative to the U.S. dollar.
i) Indexed Securities -- The Funds may invest in indexed securities whose
values are linked to changes in interest rates, indices, or other
underlying instruments. The Funds use these securities to increase or
decrease their exposure to different underlying instruments and to gain
exposure to markets that might be difficult to invest in using
conventional securities. Indexed securities may be more volatile than
their underlying instruments, but any loss is limited to the amount of
the original investment and there may be a limit to the potential
appreciation of the investment. Certain Funds had investments in indexed
securities, as of December 31, 2006, as shown in the Schedule of
Investments under Exchange Traded Funds.
j) (1) 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 (IRC) by distributing
substantially all of their taxable net investment income and net
realized capital gains to their shareholders and otherwise complying
with the requirements of regulated investment companies. The Funds have
distributed substantially all of their income and capital gains in prior
years and each Fund intends to distribute substantially all of its
income and gains prior to the next fiscal year end. Accordingly, no
provision for federal income taxes has been made in the accompanying
financial statements. Distributions from short-term capital gains are
treated as ordinary income distributions for federal income tax
purposes.
184
- --------------------------------------------------------------------------------
j) (2) The tax character of distributions paid for the periods indicated is
as follows (as adjusted for dividends payable):
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
------------------------ ------------------------------------
TAX
ORDINARY LONG-TERM ORDINARY LONG-TERM RETURN OF
FUND INCOME CAPITAL GAINS INCOME CAPITAL GAINS CAPITAL
---- -------- ------------- -------- ------------- ---------
Hartford Advisers HLS Fund.............................. $515,345 $ 282,069 $471,157 $ 250,471 $138,672
Hartford Blue Chip Stock HLS Fund....................... 458 -- 1,289 -- --
Hartford Capital Appreciation HLS Fund.................. 787,497 1,177,329 340,357 1,659,106 --
Hartford Capital Opportunities HLS Fund................. -- -- 42 -- 11
Hartford Disciplined Equity HLS Fund.................... 17,225 -- 14,155 -- --
Hartford Dividend and Growth HLS Fund................... 138,240 486,777 149,221 242,526 --
Hartford Equity Income HLS Fund......................... 7,996 787 4,870 -- --
Hartford Focus HLS Fund................................. 3,929 3,223 2,083 2,526 --
Hartford Global Advisers HLS Fund....................... 17,582 6,391 14,813 -- --
Hartford Global Leaders HLS Fund........................ 29,720 44,208 8,693 -- --
Hartford Growth HLS Fund................................ 2,054 33,419 4,299 15,645 --
Hartford Growth Opportunities HLS Fund.................. 48,149 89,358 1,991 73,463 --
Hartford High Yield HLS Fund............................ 103,905 -- 48,629 -- --
Hartford Index HLS Fund................................. 30,059 203,364 37,778 63,847 --
Hartford International Capital Appreciation HLS Fund.... 47,161 22,551 23,969 6,376 --
Hartford International Opportunities HLS Fund........... 109,112 79,473 -- -- --
Hartford International Small Company HLS Fund........... 32,458 17,566 27,176 8,311 --
Hartford International Stock HLS Fund................... 1,457 -- 1,248 -- --
Hartford LargeCap Growth HLS Fund....................... 286 -- 595 -- --
Hartford MidCap Growth HLS Fund......................... 2,321 5,502 1,853 6,310 --
Hartford Money Market HLS Fund.......................... 81,039 -- 45,001 -- --
Hartford Mortgage Securities HLS Fund................... 57,422 -- 26,865 -- --
Hartford SmallCap Growth HLS Fund....................... 5,050 65,224 12,859 43,245 12,838
Hartford SmallCap Value HLS Fund........................ 6,571 14,662 7,799 19,096 --
Hartford Stock HLS Fund................................. 128,118 230,309 102,907 -- --
Hartford Total Return Bond HLS Fund..................... 192,995 549 286,964 11,752 --
Hartford U.S. Government Securities HLS Fund............ 32,259 -- 24,595 -- --
Hartford Value HLS Fund................................. 5,204 8,991 7,062 3,935 --
Hartford Value Opportunities HLS Fund................... 34,290 42,628 12,269 6,154 --
</Table>
185
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
As of December 31, 2006, the components of distributable earnings
(deficit) on a tax basis were as follows:
<Table>
<Caption>
UNDISTRIBUTED ACCUMULATED TOTAL
UNDISTRIBUTED LONG-TERM CAPITAL UNREALIZED ACCUMULATED
ORDINARY CAPITAL GAINS APPRECIATION EARNINGS
FUND INCOME GAIN (LOSSES)* (DEPRECIATION)@ (DEFICIT)
---- ------------- ------------- ----------- --------------- -----------
Hartford Advisers HLS Fund.............. $76,281 $ 52,423 $ -- $ 426,510 $ 555,214
Hartford Blue Chip Stock HLS Fund....... 47 13,190 -- 6,870 20,107
Hartford Capital Appreciation HLS
Fund.................................. 81,234 433,398 -- 2,462,262 2,976,894
Hartford Capital Opportunities HLS
Fund.................................. 35 -- (9,554) 1,441 (8,078)
Hartford Disciplined Equity HLS Fund.... 1,000 -- (17,969) 228,085 211,116
Hartford Dividend and Growth HLS Fund... 21,396 67,413 -- 1,517,063 1,605,872
Hartford Equity Income HLS Fund......... 1,993 15,828 -- 61,246 79,067
Hartford Focus HLS Fund................. 5,855 956 -- 4,174 10,985
Hartford Global Advisers HLS Fund....... 3,215 4,741 -- 32,875 40,831
Hartford Global Leaders HLS Fund........ 14,597 18,965 (389) 189,557 222,730
Hartford Growth HLS Fund................ 75 12,139 -- 44,429 56,643
Hartford Growth Opportunities HLS
Fund.................................. 17,980 11,359 -- 183,441 212,780
Hartford High Yield HLS Fund............ 993 -- (33,053) 13,825 (18,235)
Hartford Index HLS Fund................. 1,537 6,441 -- 354,533 362,511
Hartford International Capital
Appreciation HLS Fund................. 13,697 15,666 -- 142,961 172,324
Hartford International Opportunities HLS
Fund.................................. 15,677 58,669 (5,720) 297,213 365,839
Hartford International Small Company HLS
Fund.................................. 5,706 7,457 -- 51,637 64,800
Hartford International Stock HLS Fund... 1,607 -- (767) 20,088 20,928
Hartford LargeCap Growth HLS Fund....... 9 -- (37,963) 6,763 (31,191)
Hartford MidCap Growth HLS Fund......... 2,361 1,423 -- (3) 3,781
Hartford Mortgage Securities HLS Fund... 879 -- (19,936) (3,082) (22,139)
Hartford SmallCap Growth HLS Fund....... 1,061 1,357 -- 85,892 88,310
Hartford SmallCap Value HLS Fund........ 1,585 391 -- 8,765 10,741
Hartford Stock HLS Fund................. 52,671 57,643 -- 365,274 475,588
Hartford Total Return Bond HLS Fund..... 4,098 -- (40,586) (475) (36,963)
Hartford U.S. Government Securities HLS
Fund.................................. 42,556 -- (31,992) (3,193) 7,371
Hartford Value HLS Fund................. 3,709 33,289 -- 80,733 117,731
Hartford Value Opportunities HLS Fund... 4,140 8,321 -- 98,634 111,095
</Table>
* Certain Funds had capital loss carryforwards that are identified in
Note 2 (j) (4).
@ The differences between book-basis and tax-basis unrealized
appreciation (depreciation) are attributable primarily to the tax
deferral of losses on wash sales, the marked-to-market adjustment for
certain derivatives in accordance with IRC Sec. 1256, the for
mark-to-market of Passive Foreign Investment Companies and basis
differences in real estate investment trusts.
j) (3) Reclassification of Capital Accounts:
In accordance with American Institute of Certified Public Accountants
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, the Funds have recorded several
reclassifications in their capital accounts. These reclassifications had
no impact on the net asset value per share of the Funds and are designed
generally to present accumulated undistributed (distribution in excess
of) net investment income and accumulated net realized gains (losses) on
investments on a tax basis which is considered to be more informative to
a shareholder. The reclassifications are a result of permanent
differences between GAAP and tax accounting for such items as foreign
currency, distributions representing a return of capital, class action
settlements received, expiration of capital loss carryforwards,
expiration of net operating losses, and net operating losses that reduce
short-term capital gain distribution requirements. Adjustments are made
to reflect the impact these items have on current and future
distributions to shareholders. Therefore, the source of the Funds'
distributions may be shown in the accompanying Statements of Changes in
Net Assets as
186
- --------------------------------------------------------------------------------
from net investment income, from net realized gains on investments or
from capital depending on the type of book and tax differences that
exist. For the year ended December 31, 2006, the Funds recorded the
following reclassifications to increase (decrease) the accounts listed
below.
<Table>
<Caption>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN (LOSS) ON PAID-IN-
FUND INCOME (LOSS) INVESTMENTS CAPITAL
---- -------------- -------------- --------
Hartford Advisers HLS Fund.................................. $ 2,798 $ (2,798) $ --
Hartford Blue Chip Stock HLS Fund........................... (13) 12 1
Hartford Capital Appreciation HLS Fund...................... 62,578 (62,578) --
Hartford Capital Opportunities HLS Fund..................... -- (1) 1
Hartford Disciplined Equity HLS Fund........................ (63) 64 (1)
Hartford Dividend and Growth HLS Fund....................... (340) 340 --
Hartford Equity Income HLS Fund............................. (21) 21 --
Hartford Focus HLS Fund..................................... (23) 24 (1)
Hartford Global Advisers HLS Fund........................... (35) 35 --
Hartford Global Leaders HLS Fund............................ (905) 905 --
Hartford Growth HLS Fund.................................... (99) 99 --
Hartford Growth Opportunities HLS Fund...................... (249) 249 --
Hartford High Yield HLS Fund................................ (167) 8,921 (8,754)
Hartford Index HLS Fund..................................... (298) 298 --
Hartford International Capital Appreciation HLS Fund........ 295 (295) --
Hartford International Opportunities HLS Fund............... 1,059 (1,084) 25
Hartford International Small Company HLS Fund............... 2,692 (2,692) --
Hartford International Stock HLS Fund....................... (150) 150 --
Hartford LargeCap Growth HLS Fund........................... (1) 1 --
Hartford MidCap Growth HLS Fund............................. 45 (45) --
Hartford Mortgage Securities HLS Fund....................... 889 (889) --
Hartford SmallCap Growth HLS Fund........................... (149) 150 (1)
Hartford SmallCap Value HLS Fund............................ (46) 46 --
Hartford Stock HLS Fund..................................... 1,327 (1,328) 1
Hartford Total Return Bond HLS Fund......................... (1,269) 1,269 --
Hartford U.S. Government Securities HLS Fund................ 941 (941) --
Hartford Value HLS Fund..................................... (27) 27 --
Hartford Value Opportunities HLS Fund....................... (55) 56 (1)
</Table>
j) (4) Capital Loss Carryforwards:
At December 31, 2006 (tax-year-end), the following Funds had capital
loss carryforwards for U.S. Federal income tax purposes of
approximately:
<Table>
<Caption>
YEAR OF EXPIRATION
------------------------------------------------------------------------------------
FUND 2007 2008 2009 2010 2011 2012 2013 2014 TOTAL
---- ------ ------ ------- ------- ------- ------ ------- ------- -------
Hartford Capital Opportunities HLS
Fund............................. $ -- $ -- $ 2,344 $ 7,123 $ 79 $ 8 $ -- $ -- $ 9,554
Hartford Disciplined Equity HLS
Fund............................. -- 5,272 8,430 758 3,509 -- -- -- 17,969
Hartford Global Leaders HLS Fund... -- -- 19 370 -- -- -- -- 389
Hartford High Yield HLS Fund....... 5,209 3,479 875 -- 20,644 -- -- 2,846 33,053
Hartford International
Opportunities HLS Fund........... -- 826 3,848 1,046 -- -- -- -- 5,720
Hartford International Stock HLS
Fund............................. -- -- -- -- 767 -- -- -- 767
Hartford LargeCap Growth HLS
Fund............................. -- -- 18,649 17,450 1,527 -- 337 -- 37,963
Hartford Mortgage Securities HLS
Fund............................. -- -- -- -- -- 8,992 2,409 8,362 19,763
Hartford Total Return Bond HLS
Fund............................. -- -- -- -- -- -- -- 40,586 40,586
Hartford U.S. Government Securities
HLS Fund......................... 2,513 1,398 -- -- -- 3,025 10,631 13,820 31,387
</Table>
Hartford High Yield HLS Fund had expiration of capital loss carryover in
the amount of $8,764 in 2006.
Based on certain provisions in the Internal Revenue Code, various
limitations regarding the future utilization of the Hartford Disciplined
Equity HLS Fund, Hartford Global Leaders HLS Fund, Hartford High Yield
HLS Fund, Hartford International Opportunities HLS Fund and Hartford
Total Return Bond HLS Fund carryforwards may apply.
187
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
For the fiscal year ended December 31, 2006 the following Funds have
elected to defer losses occurring between November 1, 2006 and December
31, 2006 as follows:
<Table>
<Caption>
CAPITAL LOSS
FUND DEFERRED
---- ------------
Hartford Mortgage Securities HLS Fund....................... $173
Hartford U.S. Government Securities HLS Fund................ 605
</Table>
Such deferred losses will be treated as arising on the first day of the
fiscal year ending December 31, 2007.
k) Fund Share Valuation and Dividend Distributions to
Shareholders -- Orders for the Funds' shares are executed in accordance
with the investment instructions of the contract holders or plan
participants. The net asset value of each Fund's shares is determined as
of the close of each business day of the Exchange. The net asset value
per share is determined separately for each class of each Fund by
dividing the Fund's net assets attributable to that class by the number
of shares of the class outstanding. Orders for the purchase of a Fund's
shares received by an insurance company or plan prior to the close of
the Exchange on any day on which the Exchange is open for business are
priced at the per-share net asset value determined as of the close of
the Exchange. Orders received after the close of the Exchange, or on a
day on which the Exchange and/or the Fund is not open for business, are
priced at the next determined per-share net asset value.
Dividends are declared pursuant to a policy adopted by the Funds' Board
of Directors based upon the investment performance of the respective
Funds. The policy of all Funds except Hartford Money Market HLS Fund is
to pay dividends from net investment income and distribute realized
capital gains, if any, at least once a year.
Hartford Money Market HLS Fund seeks to maintain a stable net asset
value per share of $1.00 by declaring a daily dividend from net
investment income, including net short-term capital gains and losses,
and by valuing its investments using the amortized cost method.
Dividends are declared daily and distributed monthly.
Distributions from net investment income, net realized capital gains and
capital are determined in accordance with federal income tax
regulations, which may differ from U. S. generally accepted accounting
principles with respect to character and timing. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, losses deferred due to
wash sales and excise tax regulations. Permanent book and federal income
tax basis differences relating to shareholder distributions will result
in reclassifications to certain of the Fund's capital accounts (see Note
2 (j) (3)).
l) Illiquid and Restricted Securities -- Each Fund is permitted to invest
up to 15% of its net assets in illiquid securities, except for Hartford
Money Market HLS Fund, which may invest up to 10% in such securities.
"Illiquid Securities" are those that may not be sold or disposed of in
the ordinary course of business within seven days, at approximately the
price used to determine a Fund's net asset value per share. A Fund may
not be able to sell illiquid securities or other investments when its
sub-adviser considers it desirable to do so or may have to sell such
securities or investments at a price that is lower than the price that
could be obtained if the securities or investments were more liquid. A
sale of illiquid securities or other investments may require more time
and may result in higher dealer discounts and other selling expenses
than does the sale of those that are liquid. Illiquid securities and
investments also may be more difficult to value, due to the
unavailability of reliable market quotations for such securities or
investments, and investments in them may have an adverse impact on net
asset value. Each Fund may also purchase certain restricted securities,
commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by that Fund's Board of Directors.
m) Securities Purchased on a When-Issued or Delayed-Delivery
Basis -- Delivery and payment for securities that have been purchased by
the Funds on a forward commitment or when-issued or delayed-delivery
basis take place beyond the customary settlement period. During this
period, such securities are subject to market fluctuations, and the Funds
identify securities segregated in their records with value at least equal
to the amount of the commitment. As of December 31, 2006, the Funds
entered into outstanding when-issued or forward commitments as follows:
<Table>
<Caption>
MARKET
FUND VALUE
---- --------
Hartford Global Advisers HLS Fund........................... $ 93,684
Hartford High Yield HLS Fund................................ 4,820
Hartford International Stock HLS Fund....................... 75
Hartford Mortgage Securities HLS Fund....................... 81,705
Hartford Total Return Bond HLS Fund......................... 370,173
Hartford U.S. Government Securities HLS Fund................ 163,522
</Table>
n) Credit Risk -- Credit risk depends largely on the perceived financial
health of bond issuers. In general, lower rated bonds have higher credit
risk. High yield bond prices can fall on bad news about the economy, an
industry or a company. The share price, yield and total return of a fund
which holds securities with higher credit risk may fluctuate more than
with less aggressive bond funds.
o) Senior Floating Rate Interests -- Certain Funds, as shown in the
Schedule of Investments, may invest in senior floating rate interests.
Senior floating rate interests hold the most senior position in the
capital structure of a business entity (the "Borrower"), are typically
secured by specific collateral, and have a claim on the assets and/or
stock of the Borrower that is senior to that held by subordinated
debtholders and stockholders of the Borrower. Senior floating rate loans
are typically structured and administered by a financial institution
that acts as the agent of the lenders participating in the floating rate
interests. Senior floating rate interests are rated
below-investment-grade, which suggests they are
188
- --------------------------------------------------------------------------------
more likely to default than investment-grade loans. A default could lead
to non-payment of income which would result in a reduction of income to
the Fund and there can be no assurance that the liquidation of any
collateral would satisfy the Borrower's obligation in the event of non-
payment of scheduled interest or principal payments, or that such
collateral could be readily liquidated.
p) Prepayment Risks -- Most senior floating rate interests and certain debt
securities allow for prepayment of principal without penalty. Senior
floating rate interests and securities subject to prepayment risk
generally offer less potential for gains when interest rates decline,
and may offer a greater potential for loss when interest rates rise. In
addition, with respect to securities, rising interest rates may cause
prepayments to occur at a slower than expected rate, thereby effectively
lengthening the maturity of the security and making the security more
sensitive to interest rate changes. Prepayment risk is a major risk of
mortgage-backed securities and certain asset-backed securities.
Accordingly, the potential for the value of senior floating rate
interests or securities to increase in response to interest rate
declines is limited. For certain asset-backed securities, the actual
maturity may be less than the stated maturity shown in the Schedule of
Investments. As a result, the timing of income recognition relating to
these securities may vary based upon the actual maturity. Senior
floating rate interests or debt securities purchased to replace a
prepaid loan or a debt security may have lower yields than the yield on
the prepaid loan or debt security in the Schedule of Investments.
Senior floating rate interests generally are subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions
and because there may be significant economic incentives for the
Borrower to repay, prepayments of senior loans may occur. As a result,
the actual remaining maturity of senior loans held may be substantially
less than the stated maturities shown.
q) Use of Estimates -- The preparation of financial statements in
conformity with U.S. 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
year. Operating results in the future could vary from the amounts
derived from management's estimates.
r) Credit Default Swaps -- Certain HLS Funds may enter into event linked
swaps, including credit default swaps. The credit default swap market
allows a Fund to manage credit risk through buying and selling credit
protection on a specific issuer, an index, or a basket of issuers. The
transactions are documented through swap documents. A "buyer" of credit
protection agrees to pay a counterparty to assume the credit risk of an
issuer upon the occurrence of certain events. The "seller" of the
protection receives periodic payments and agrees to assume the credit
risk of an issuer upon the occurrence of certain events. A "seller's"
exposure is limited to the total notional amount of the credit default
swap contract. A Fund will generally not buy protection on issuers that
are not currently held by such Fund. A Fund, as shown in the Schedule of
Investments, had outstanding credit default swaps as of December 31,
2006.
s) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Funds' tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006, but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Funds' financial statements has not yet been determined.
t) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal periods. As of December 31, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of
certain measurements reported in the Statements of Operations for a
fiscal period.
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors), an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Funds pursuant to investment
management agreements approved by each Fund's Board of Directors and
shareholders, as applicable.
189
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered a portion of which is used to compensate
the sub-advisors. Investment management and advisory fees are accrued
daily and paid monthly.
HARTFORD INDEX HLS FUND(1)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.200%
On next $3 billion................................................. 0.100%
On next $5 billion................................................. 0.080%
Over $10 billion................................................... 0.070%
</Table>
(1) Effective November 1, 2005, HL Advisors voluntarily waived management fees
of 0.10% of average total net assets until October 31, 2006. Effective
November 1, 2006, HL Advisors has permanently reduced its management fees
for this fund. The new schedule is as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
On first $2 billion................................................ 0.100%
Over $3 billion.................................................... 0.000%
</Table>
HARTFORD MONEY MARKET HLS FUND(2) AND HARTFORD
MORTGAGE SECURITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.250%
On next $3 billion................................................. 0.200%
On next $5 billion................................................. 0.180%
Over $10 billion................................................... 0.170%
</Table>
(2) Effective January 1, 2007, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until December 31,
2007.
HARTFORD TOTAL RETURN BOND HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
On next $4 billion................................................. 0.250%
On next $5 billion................................................. 0.230%
Over $10 billion................................................... 0.220%
</Table>
HARTFORD U.S. GOVERNMENT SECURITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $50 million............................................... 0.500%
On next $4.95 billion.............................................. 0.450%
On next $5 billion................................................. 0.430%
Over $10 billion................................................... 0.420%
</Table>
HARTFORD CAPITAL APPRECIATION HLS FUND,
HARTFORD DISCIPLINED EQUITY HLS FUND,
HARTFORD DIVIDEND AND GROWTH HLS FUND,
HARTFORD GLOBAL ADVISERS HLS FUND,
HARTFORD GLOBAL LEADERS HLS FUND AND
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
Over $1 billion.................................................... 0.425%
</Table>
HARTFORD GROWTH OPPORTUNITIES HLS FUND,
HARTFORD SMALLCAP GROWTH HLS FUND AND
HARTFORD VALUE OPPORTUNITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.700%
Over $100 million.................................................. 0.600%
</Table>
HARTFORD ADVISERS HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.480%
On next $250 million............................................... 0.455%
On next $500 million............................................... 0.445%
Over $1 billion.................................................... 0.395%
</Table>
HARTFORD HIGH YIELD HLS FUND(3)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250...................................................... 0.575%
On next $250....................................................... 0.525%
On next $500....................................................... 0.475%
On next $4 billion................................................. 0.425%
On next $5 billion................................................. 0.405%
Over $10 billion................................................... 0.395%
</Table>
(3) Effective November 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until October 31, 2006.
This waiver has been continued until October 31, 2007.
190
- --------------------------------------------------------------------------------
HARTFORD CAPITAL OPPORTUNITIES HLS FUND(4)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $200 million.............................................. 0.900%
On next $300 million............................................... 0.850%
Over $500 million.................................................. 0.800%
</Table>
(4) HL Advisors voluntarily agreed to waive management fees of 0.20% of average
total net assets until December 31, 2007.
HARTFORD INTERNATIONAL STOCK HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.850%
Over $100 million.................................................. 0.800%
</Table>
HARTFORD MIDCAP GROWTH HLS FUND(6)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.900%
On next $150 million............................................... 0.850%
Over $250 million.................................................. 0.800%
</Table>
(6) HL Advisors voluntarily agreed to waive management fees of 0.20% of average
total net assets until December 31, 2007.
HARTFORD LARGECAP GROWTH HLS FUND(5)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.900%
On next $100 million............................................... 0.850%
Over $200 million.................................................. 0.800%
</Table>
(5) HL Advisors voluntarily agreed to waive management fees of 0.10% of average
total net assets until December 31, 2006.
HARTFORD EQUITY INCOME HLS FUND(7),
HARTFORD GROWTH HLS FUND AND
HARTFORD VALUE HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.625%
On next $250 million............................................... 0.575%
On next $500 million............................................... 0.525%
Over $1 billion.................................................... 0.475%
</Table>
(7) HL Advisors voluntarily agreed to waive management fees of 0.10% average
total net assets until December 31, 2006.
HARTFORD SMALLCAP VALUE HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first 50 million................................................ 0.900%
Over $50 million................................................... 0.850%
</Table>
HARTFORD BLUE CHIP STOCK HLS FUND(9)(10)(11)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.900%
Over $100 million.................................................. 0.850%
</Table>
(9) HL Advisors voluntarily agreed to waive management fees of 0.10% of average
total net assets until November 13, 2006.
(10) Effective November 13, 2006, HL Advisers has voluntarily agreed to
permanently reduce its management fees for this fund. The new schedule is
as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
On first $100 million.............................................. 0.650%
On next $500 million............................................... 0.600%
Over $1 billion.................................................... 0.550%
</Table>
(11) Effective November 13, 2006, HL Advisors voluntarily agreed to waive
management fees of 0.21% of average total net assets until December 31,
2007.
HARTFORD FOCUS HLS FUND(8),
HARTFORD INTERNATIONAL CAPITAL APPRECIATION HLS FUND AND
HARTFORD INTERNATIONAL SMALL COMPANY HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.650%
On next $250 million............................................... 0.600%
Over $500 million.................................................. 0.550%
</Table>
(8) HL Advisors voluntarily agreed to waive management fees of 0.10% of average
total net assets until October 31, 2006.
HARTFORD STOCK HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
Over $1 billion.................................................... 0.250%
</Table>
191
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
A portion of the compensation above is used to compensate the Funds
respective sub-adviser. Pursuant to sub-advisory agreements between HL
Advisors and the sub-advisers, the sub-adviser provides the day-to-day
investment management services for the Funds. The sub-advisers determine
the purchase and sale of portfolio securities and place such orders for
execution in the name of the respective Fund. In conjunction with their
respective activity, the sub-advisers regularly furnish reports to the
Funds' board of Directors concerning economic forecasts, investment
strategy, portfolio activity and performance of the Funds.
The Funds and their respective sub-adviser are listed below:
<Table>
<Caption>
FUND SUB-ADVISER
---- -----------
Hartford Advisers HLS Fund.................................. Wellington
Hartford Blue Chip Stock HLS Fund*.......................... Hartford Investment Management
Hartford Bond HLS Fund...................................... Hartford Investment Management
Hartford Capital Appreciation HLS Fund...................... Wellington
Hartford Capital Opportunities HLS Fund..................... Holland Capital Management, L.P.
Hartford Disciplined Equity HLS Fund........................ Wellington
Hartford Dividend and Growth HLS Fund....................... Wellington
Hartford Equity Income HLS Fund............................. Wellington
Hartford Focus HLS Fund..................................... Wellington
Hartford Global Advisers HLS Fund........................... Wellington
Hartford Global Leaders HLS Fund............................ Wellington
Hartford Growth HLS Fund.................................... Wellington
Hartford Growth Opportunities HLS Fund...................... Wellington
Hartford High Yield HLS Fund................................ Hartford Investment Management
Hartford Index HLS Fund..................................... Hartford Investment Management
Hartford International Capital Appreciation HLS Fund........ Wellington
Hartford International Opportunities HLS Fund............... Wellington
Hartford International Small Company HLS Fund............... Wellington
Hartford International Stock HLS Fund....................... Lazard-Freres Asset Management
Hartford LargeCap Growth HLS Fund........................... Holland Capital Management, L.P.
Hartford MidCap Growth HLS Fund**........................... Hartford Investment Management
Hartford Money Market HLS Fund.............................. Hartford Investment Management
Hartford Mortgage Securities HLS Fund....................... Hartford Investment Management
Hartford SmallCap Growth HLS Fund***........................ Wellington;
Hartford Investment Management
Hartford SmallCap Value HLS Fund****........................ Kayne Anderson Rudnick Investment Management, LLC;
Metropolitan West Capital Management, LLC;
SSgA Funds Management, Inc.
Hartford Stock HLS Fund..................................... Wellington
Hartford U.S. Government Securities HLS Fund................ Hartford Investment Management
Hartford Value HLS Fund..................................... Wellington
Hartford Value Opportunities HLS Fund....................... Wellington
</Table>
* On November 11, 2006, T. Rowe Price Associates, Inc. was terminated
as the subadviser to the Fund and replaced by Hartford Investment
Management.
** Effective December 4, 2006, Northern Capital Management LLC was
terminated as the subadviser to the Fund and replaced by Hartford
Investment Management.
*** Effective November 13, 2006, Hartford Investment Management was
added as a subadviser to the Fund.
**** On March 20, 2006, Janus Capital Management LLC and Perkins, Wolf,
McDonnell and Company, LLC were terminated as subadvisers to the
Fund. They were replaced by Kayne Anderson Rudnick Investment
Management, LLC, Metropolitan West Capital Management, LLC and SSgA
Funds Management, Inc., with each subadviser responsible for
managing a sleeve of the Fund.
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and the following Funds, Hartford Advisers HLS
Fund, Hartford Capital Appreciation HLS Fund, Hartford Disciplined
Equity HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford Equity
Income HLS Fund, Hartford Focus HLS Fund, Hartford Global Advisers HLS
Fund, Hartford Global Leaders HLS Fund, Hartford High Yield HLS Fund,
Hartford Index HLS Fund, Hartford International Capital Appreciation HLS
Fund, Hartford International Opportunities HLS Fund, Hartford
International Small Company HLS Fund, Hartford Money Market HLS Fund,
Hartford Mortgage Securities HLS Fund, Hartford Stock HLS Fund, Hartford
Total Return Bond HLS Fund and Hartford Value HLS Fund, HLIC provides
administrative services to the Funds and receives monthly compensation
at the annual rate of 0.20% of each Fund's average daily net assets,
except for Hartford Index HLS Fund. Effective November 1, 2006, the
Hartford Index HLS Fund pays an administrative service fee of 0.20% for
the first $5 billion in average net assets, 0.18% of average net assets
for the next $5 billion and 0.17% for average net assets over $10
billion. The Funds assume and pay certain other expenses (including, but
not limited to, accounting, custodian, state taxes and directors'
192
- --------------------------------------------------------------------------------
fees). Directors' fees represent remuneration paid or accrued to
directors not affiliated with HLIC or any other related company. The
Funds' administrative services fees are accrued daily and paid monthly.
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and Hartford Series Fund, Inc., HLIC provides accounting
services to the Funds and receives monthly compensation at the annual
rate of 0.015% of each Fund's average daily net assets. The Funds'
accounting services fees are accrued daily and paid monthly.
Under the Fund Accounting Agreement between HLIC, HL Advisors and
Hartford HLS Series Fund, Inc., HLIC provides accounting to the Funds
and HL Advisors pays HLIC monthly compensation based on cost
reimbursement.
d) Operating Expenses -- Allocable expenses of the Funds are charged to
each Fund based on the ratio of the average net assets of each fund to
the combined average net assets of the Funds. Non-allocable expenses are
charged to each fund based on specific identification.
e) Fees Paid Indirectly -- The Funds have entered into agreements with
State Street Global Advisors, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Funds' expenses. In addition, the Funds'
custodian bank has also agreed to reduce its fees when the Funds
maintain cash on deposit in the non-interest-bearing custody account.
For the year ended December 31, 2006, these amounts are included in the
Statements of Operations.
The ratio of expenses to average net assets in the accompanying
financial highlights excludes the reduction in expenses related to fees
paid indirectly. Had the fees paid indirectly been included, the
annualized expense ratio for the years ended listed below, would have
been as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
RATIO OF EXPENSES RATIO OF EXPENSES RATIO OF EXPENSES
TO AVERAGE NET TO AVERAGE NET TO AVERAGE NET
ASSETS AFTER ASSETS AFTER ASSETS AFTER
WAIVERS AND OFFSETS WAIVERS AND OFFSETS WAIVERS AND OFFSETS
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Advisers HLS
Fund...................... 0.62% 0.87% 0.64% 0.89% 0.66% 0.91%
Hartford Blue Chip Stock HLS
Fund...................... 0.78 NA 0.81 NA 0.90 NA
Hartford Capital
Appreciation HLS Fund..... 0.66 0.91 0.67 0.92 0.67 0.92
Hartford Capital
Opportunities HLS Fund.... 0.92 NA 0.86 NA 1.05 NA
Hartford Disciplined Equity
HLS Fund.................. 0.71 0.96 0.72 0.97 0.74 0.99
Hartford Dividend and Growth
HLS Fund.................. 0.66 0.91 0.66 0.91 0.67 0.92
Hartford Equity Income HLS
Fund...................... 0.74 0.99 0.75 1.00 0.88 1.13
Hartford Focus HLS Fund..... 0.83 1.08 0.89 1.14 0.86 1.11
Hartford Global Advisers HLS
Fund...................... 0.80 1.05 0.77 1.03 0.78 1.03
Hartford Global Leaders HLS
Fund...................... 0.74 0.99 0.68 0.93 0.68 0.93
Hartford Growth HLS Fund.... 0.82 1.07 0.82 1.07 0.83 1.08
Hartford Growth
Opportunities HLS Fund.... 0.63 0.88 0.58 0.84 0.57 0.82
Hartford High Yield HLS
Fund...................... 0.72 0.97 0.76 1.01 0.77 1.02
Hartford Index HLS Fund..... 0.33 0.58 0.42 0.67 0.44 0.69
Hartford International
Capital Appreciation HLS
Fund...................... 0.85 1.10 0.86 1.11 0.89 1.14
Hartford International
Opportunities HLS Fund.... 0.73 0.98 0.74 0.99 0.74 0.99
Hartford International Small
Company HLS Fund.......... 0.92 1.17 0.97 1.22 1.01 1.26
Hartford International Stock
HLS Fund.................. 0.91 NA 0.91 NA 0.96 NA
Hartford LargeCap Growth HLS
Fund...................... 0.86 NA 0.86 NA 0.96 NA
Hartford MidCap Growth HLS
Fund...................... 0.78 NA 0.81 NA 0.94 NA
Hartford Money Market HLS
Fund...................... 0.48 0.73 0.49 0.74 0.48 0.73
Hartford Mortgage Securities
HLS Fund.................. 0.49 0.74 0.49 0.74 0.49 0.74
Hartford SmallCap Growth HLS
Fund...................... 0.62 0.87 0.62 0.87 0.63 0.88
Hartford SmallCap Value HLS
Fund...................... 0.97 1.22 0.92 1.17 0.92 1.17
Hartford Stock HLS Fund..... 0.47 0.72 0.48 0.73 0.48 0.73
Hartford Total Return Bond
HLS Fund.................. 0.49 0.74 0.50 0.75 0.50 0.75
Hartford U.S Government
Securities HLS Fund....... 0.48 0.73 0.47 0.72 0.47 0.72
Hartford Value HLS Fund..... 0.84 1.09 0.85 1.10 0.85 1.10
Hartford Value Opportunities
HLS Fund.................. 0.64 0.89 0.64 0.89 0.66 0.91
</Table>
f) Distribution Plan for Class IB shares -- The following Funds: Hartford
Advisers HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford
Disciplined Equity HLS Fund, Hartford Dividend and Growth HLS Fund,
Hartford Equity Income HLS Fund, Hartford Focus HLS Fund, Hartford
Global Advisers HLS Fund, Hartford Global Leaders HLS Fund, Hartford
Growth HLS Fund, Hartford Growth Opportunities HLS Fund, Hartford High
Yield HLS Fund, Hartford Index HLS Fund, Hartford International Capital
Appreciation HLS Fund, Hartford International Opportunities HLS Fund,
Hartford International Small Company HLS Fund, Hartford Money Market HLS
Fund, Hartford Mortgage Securities HLS Fund, Hartford SmallCap Growth
HLS Fund, Hartford SmallCap Value HLS Fund, Hartford Stock HLS Fund,
Hartford Total Return Bond HLS Fund, Hartford U.S. Government Securities
HLS Fund, Hartford Value HLS Fund and Hartford Value
193
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
Opportunities HLS Fund, have adopted a Distribution Plan pursuant to Rule
12b-1 under the 1940 Act for the Class IB shares. Pursuant to the
Distribution Plan, each Fund compensates the Distributor, Hartford
Securities Distribution Company, Inc. (a wholly owned, ultimate
subsidiary of Hartford Life, Inc.) from assets attributable to the Class
IB shares for services rendered and expenses borne in connection with
activities primarily intended to result in the sale of the Class IB
shares.
The Distributions Plan provides that each Fund may pay annually up to
0.25% of the average daily net assets of a Fund attributable to its
Class IB shares for activity primarily intended to result in the sale of
Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard. The Funds' distributions fees are
accrued daily and paid monthly.
g) Payments from (to) Affiliate -- The Funds are available for purchase by
the separate accounts of different variable universal life policies,
variable annuity products, and funding agreements and they are offered
directly to certain qualified retirement plans ("Products"). Although
existing Products contain transfer restrictions, some Products,
particularly older variable annuity products, did not contain
restrictions on the frequency of transfers. In addition, as the result
of the settlement of litigation against Hartford Life (the issuers of
such variable annuity products), the Funds' ability to restrict
transfers by certain owners of older variable annuity products was
limited. During 2006, these annuity owners surrendered the older
variable annuity contracts that were the subject of prior litigation. In
February 2005, Hartford Life agreed with the Board of Directors of the
Funds to indemnify the Funds for any material harm caused to the Funds
from frequent trading by these contracts owners. Pursuant to the
agreement, the following amounts have been paid (received) to (from) the
Funds indicated in 2006 and 2005. Amounts are recorded as Payments from
(to) Affiliate in the Statements of Operations:
<Table>
<Caption>
FUND 2006 2005
---- ----- ------
Hartford Disciplined Equity HLS Fund........................ $ 104 $ --
Hartford Dividend and Growth HLS Fund....................... 398 --
Hartford Growth HLS Fund.................................... 253 440
Hartford Growth Opportunities HLS Fund...................... 257 1,140
Hartford High Yield HLS Fund................................ 129 4,027
Hartford Index HLS Fund..................................... 90 --
Hartford SmallCap Growth HLS Fund........................... (350) 1,892
Hartford Stock HLS Fund..................................... 259 --
Hartford Total Return Bond HLS Fund......................... 107 --
Hartford Value Opportunities HLS Fund....................... 220 --
</Table>
In 2005, Hartford SmallCap Growth HLS Fund recorded a receivable from
affiliate for $494 as an estimate of the total due from affiliate for
the calendar year. When the final calculation was completed for the full
indemnification period (which ended in 2006), it was determined the
payment from affiliate should be only $144. The table above reflects the
net payment from affiliate.
On November 8, 2006, the SEC issued an order setting forth the terms of
a settlement reached with three subsidiaries of The Hartford that
resolves the SEC's Division of Enforcement's investigation of aspects of
The Hartford's variable annuity and mutual fund operations related to
directed brokerage and revenue sharing. Under the terms of the
settlement, The Hartford paid a total of $39.6 million to the Funds in
the amounts indicated below. These amounts were recorded November 8,
2006 and paid on November 22, 2006. The Hartford settled this matter
without admitting or denying the findings of the SEC.
<Table>
<Caption>
FUND AMOUNT
---- ----------
Hartford Advisers HLS Fund.................................. $ 6,804
Hartford Capital Appreciation HLS Fund...................... 11,567
Hartford Disciplined Equity HLS Fund........................ 501
Hartford Dividend and Growth HLS Fund....................... 3,856
Hartford Focus HLS Fund..................................... 110
Hartford Global Advisers HLS Fund........................... 572
Hartford Global Leaders HLS Fund............................ 3,344
Hartford Growth HLS Fund.................................... 33
Hartford Growth Opportunities HLS Fund...................... 841
Hartford International Capital Appreciation HLS Fund........ 11
Hartford International Opportunities HLS Fund............... 314
Hartford International Small Company HLS Fund............... 11
Hartford SmallCap Growth HLS Fund........................... 121
Hartford Stock HLS Fund..................................... 5,561
Hartford Value HLS Fund..................................... 33
Hartford Value Opportunities HLS Fund....................... 60
</Table>
194
- --------------------------------------------------------------------------------
The total return in the financial highlights includes the impact of the
Payments from (to) Affiliate. The tables below show the impact of each
of the two payments from (to) Affiliates and the total return for the
years ended December 31, 2006 and December 31, 2005, had the payments
from (to) been excluded.
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
--------------------- --------------------- -----------------------
IMPACT OF PAYMENTS
IMPACT OF PAYMENT FROM (TO) AFFILIATE TOTAL RETURN EXCLUDING
FROM AFFILIATE FOR UNRESTRICTED PAYMENTS FROM (TO)
FOR SEC SETTLEMENT TRANSFERS AFFILIATE
--------------------- --------------------- -----------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- --------- ---------
Hartford Advisers HLS Fund..................... 0.09% 0.09% 10.61% 10.34%
Hartford Capital Appreciation HLS Fund......... 0.09 0.09 16.52 16.23
Hartford Disciplined Equity HLS Fund........... 0.03 0.03 0.01% 0.01% 12.41 12.13
Hartford Dividend and Growth HLS Fund.......... 0.06 0.06 0.01 0.01 20.29 19.99
Hartford Focus HLS Fund........................ 0.14 0.15 9.58 9.30
Hartford Global Advisers HLS Fund.............. 0.17 0.16 8.67 8.40
Hartford Global Leaders HLS Fund............... 0.31 0.32 13.83 13.54
Hartford Growth HLS Fund....................... 0.01 0.01 0.04 0.04 4.56 4.30
Hartford Growth Opportunities HLS Fund......... 0.07 0.07 0.02 0.02 11.96 11.70
Hartford High Yield HLS Fund................... 0.02 0.02 11.15 10.87
Hartford Index HLS Fund........................ 0.01 0.01 15.45 15.16
Hartford International Capital Appreciation HLS
Fund......................................... -- -- 24.08 23.77
Hartford International Opportunities HLS
Fund......................................... 0.02 0.02 24.44 24.13
Hartford International Small Company HLS
Fund......................................... 0.01 -- 29.33 29.01
Hartford SmallCap Growth HLS Fund.............. 0.01 0.01 (0.03) (0.03) 6.88 6.61
Hartford Stock HLS Fund........................ 0.11 0.12 0.01 0.01 14.53 14.24
Hartford Value HLS Fund........................ 0.01 0.01 21.81 21.51
Hartford Value Opportunities HLS Fund.......... 0.01 0.01 0.04 0.05 18.97 18.67
</Table>
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2005
----------------------- -----------------------
IMPACT OF PAYMENT
FROM AFFILIATE FOR TOTAL RETURN EXCLUDING
UNRESTRICTED TRANSFERS PAYMENT FROM AFFILIATE
----------------------- -----------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB
---- --------- --------- --------- ---------
Hartford Growth HLS Fund.................................... 0.09% 0.09% 4.58% 4.33%
Hartford Growth Opportunities HLS Fund...................... 0.11 0.11 16.20 15.91
Hartford High Yield HLS Fund................................ 0.57 0.56 1.56 1.29
Hartford SmallCap Growth HLS Fund........................... 0.22 0.22 10.80 10.56
</Table>
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the cost of purchases and proceeds
from sales of securities for Hartford Money Market HLS Fund were $18,993,247
and $18,729,737; respectively. The cost of purchases and proceeds from sales
of securities (excluding short-term investments) for the other portfolios
were as follows:
<Table>
<Caption>
COST OF PURCHASES SALES PROCEEDS COST OF PURCHASES SALES PROCEEDS
EXCLUDING EXCLUDING FOR FOR
U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT
FUND OBLIGATIONS OBLIGATIONS OBLIGATIONS OBLIGATIONS
---- ----------------- --------------- ----------------- ---------------
Hartford Advisers HLS Fund................. $6,986,202 $8,318,448 $ 798,579 $1,349,254
Hartford Blue Chip Stock HLS Fund.......... 167,264 192,794 -- --
Hartford Capital Appreciation HLS Fund..... 10,255,815 12,028,310 -- --
Hartford Capital Opportunities HLS Fund.... 1,043 4,141 -- --
Hartford Disciplined Equity HLS Fund....... 1,170,809 943,574 -- --
Hartford Dividend And Growth HLS Fund...... 1,793,071 2,064,383 -- --
Hartford Equity Income HLS Fund............ 193,885 102,576 -- --
Hartford Focus HLS Fund.................... 95,144 110,560 -- --
Hartford Global Advisers HLS Fund.......... 425,429 506,183 20,495 74,189
Hartford Global Leaders HLS Fund........... 1,398,412 1,545,322 -- --
Hartford Growth HLS Fund................... 530,313 534,049 -- --
Hartford Growth Opportunities HLS Fund..... 1,719,202 1,755,120 -- --
Hartford High Yield HLS Fund............... 1,123,593 1,111,325 -- --
</Table>
195
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
COST OF PURCHASES SALES PROCEEDS COST OF PURCHASES SALES PROCEEDS
EXCLUDING EXCLUDING FOR FOR
U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT
FUND OBLIGATIONS OBLIGATIONS OBLIGATIONS OBLIGATIONS
---- ----------------- --------------- ----------------- ---------------
Hartford Index HLS Fund.................... $ 75,531 $ 406,235 $ -- $ --
Hartford International Capital Appreciation
HLS Fund................................. 1,258,659 1,173,064 -- --
Hartford International Opportunities HLS
Fund..................................... 2,073,088 2,046,904 -- --
Hartford International Small Company HLS
Fund..................................... 388,575 340,481 -- --
Hartford International Stock HLS Fund...... 67,861 81,351 -- --
Hartford LargeCap Growth HLS Fund.......... 6,430 20,327 -- --
Hartford MidCap Growth HLS Fund............ 112,188 121,559 -- --
Hartford Mortgage Securities HLS Fund...... 772,243 809,679 114,085 119,826
Hartford SmallCap Growth HLS Fund.......... 907,716 917,988 -- --
Hartford SmallCap Value HLS Fund........... 158,492 162,284 -- --
Hartford Stock HLS Fund.................... 5,128,616 6,056,470 -- --
Hartford Total Return Bond HLS Fund........ 10,448,823 10,092,089 8,901,151 9,068,329
Hartford U.S. Government Securities HLS
Fund..................................... 2,322,678 1,928,065 1,027,435 1,256,019
Hartford Value HLS Fund.................... 166,156 142,466 -- --
Hartford Value Opportunities HLS Fund...... 337,819 305,251 -- --
</Table>
5. LINE OF CREDIT:
The Funds, except for the Hartford Money Market HLS Fund, participate in a
$650,000 committed revolving line of credit facility. The facility is to be
used for temporary or emergency purposes. Under the arrangement, the Funds
are required to own securities having a market value in excess of 300% of
the total bank borrowings. The interest rate on borrowings varies depending
on the nature of the loan. The facility also requires a fee to be paid based
on the amount of the commitment which has not been utilized. During the year
ended December 31, 2006, the Funds did not have any borrowings under this
facility.
6. SUBSEQUENT EVENT:
A special meeting of shareholders was held on January 23, 2007, in
connection with a proposed merger of Hartford LargeCap Growth HLS Fund and
Hartford Capital Opportunities HLS Fund by Hartford Blue Chip Stock HLS Fund
(the "Acquiring Fund"). The proposal was approved on January 23, 2007, and
the Fund merger was effective on February 2, 2007, (the "Effective Date").
The Acquiring Fund will be renamed Hartford LargeCap Growth HLS Fund, as of
the Effective Date.
196
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $22.53 $ 0.58 $ 0.02 $ 1.81
Class IB............................... 22.70 0.51 0.02 1.83
For the Year Ended December 31, 2005
Class IA............................... 23.04 0.54 -- 1.12
Class IB............................... 23.17 0.47 -- 1.15
For the Year Ended December 31, 2004
Class IA............................... 22.67 0.51 -- 0.33
Class IB............................... 22.81 0.48 -- 0.30
For the Year Ended December 31, 2003
Class IA............................... 19.59 0.42 -- 3.18
Class IB............................... 19.72 0.41 -- 3.16
For the Year Ended December 31, 2002
Class IA............................... 23.44(5) 0.51(5) -- (4.10)(5)
Class IB............................... 23.60(5) 0.46(5) -- (4.10)(5)
HARTFORD BLUE CHIP STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 18.74 0.07 -- 1.44
For the Year Ended December 31, 2005
Class IA............................... 17.84 0.07 -- 0.98
For the Year Ended December 31, 2004
Class IA............................... 16.42 0.10 -- 1.35
For the Year Ended December 31, 2003
Class IA............................... 12.70 0.03 -- 3.69
For the Year Ended December 31, 2002
Class IA............................... 16.80 0.01 -- (4.11)
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 52.99 0.50 0.04 7.88
Class IB............................... 52.75 0.36 0.04 7.83
For the Year Ended December 31, 2005
Class IA............................... 53.43 0.45 -- 7.57
Class IB............................... 53.18 0.25 -- 7.59
For the Year Ended December 31, 2004
Class IA............................... 44.91 0.35 -- 8.34
Class IB............................... 44.76 0.27 -- 8.26
For the Year Ended December 31, 2003
Class IA............................... 31.70 0.26 -- 13.17
Class IB............................... 31.63 0.19 -- 13.10
For the Year Ended December 31, 2002
Class IA............................... 39.75(5) 0.15(5) -- (8.01)(5)
Class IB............................... 39.68(5) 0.12(5) -- (8.03)(5)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.41 $(0.57) $(1.77) $ -- $(2.34)
Class IB............................... 2.36 (0.51) (1.77) -- (2.28)
For the Year Ended December 31, 2005
Class IA............................... 1.66 (0.77) (1.04) (0.36) (2.17)
Class IB............................... 1.62 (0.69) (1.04) (0.36) (2.09)
For the Year Ended December 31, 2004
Class IA............................... 0.84 (0.47) -- -- (0.47)
Class IB............................... 0.78 (0.42) -- -- (0.42)
For the Year Ended December 31, 2003
Class IA............................... 3.60 (0.52) -- -- (0.52)
Class IB............................... 3.57 (0.48) -- -- (0.48)
For the Year Ended December 31, 2002
Class IA............................... (3.59) (0.26)(5) --(5) -- (0.26)
Class IB............................... (3.64) (0.24)(5) --(5) -- (0.24)
HARTFORD BLUE CHIP STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.51 (0.07) -- -- (0.07)
For the Year Ended December 31, 2005
Class IA............................... 1.05 (0.15) -- -- (0.15)
For the Year Ended December 31, 2004
Class IA............................... 1.45 (0.03) -- -- (0.03)
For the Year Ended December 31, 2003
Class IA............................... 3.72 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (4.10) -- -- -- --
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 8.42 (0.76) (7.16) -- (7.92)
Class IB............................... 8.23 (0.61) (7.16) -- (7.77)
For the Year Ended December 31, 2005
Class IA............................... 8.02 (0.52) (7.94) -- (8.46)
Class IB............................... 7.84 (0.33) (7.94) -- (8.27)
For the Year Ended December 31, 2004
Class IA............................... 8.69 (0.17) -- -- (0.17)
Class IB............................... 8.53 (0.11) -- -- (0.11)
For the Year Ended December 31, 2003
Class IA............................... 13.43 (0.22) -- -- (0.22)
Class IB............................... 13.29 (0.16) -- -- (0.16)
For the Year Ended December 31, 2002
Class IA............................... (7.86) (0.19)(5) --(5) -- (0.19)
Class IB............................... (7.91) (0.14)(5) --(5) -- (0.14)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.07 $22.60 10.70%(7) $ 7,207,926
Class IB............................... 0.08 22.78 10.43(7) 1,252,293
For the Year Ended December 31, 2005
Class IA............................... (0.51) 22.53 0.07 8,157,354
Class IB............................... (0.47) 22.70 6.97 1,366,216
For the Year Ended December 31, 2004
Class IA............................... 0.37 23.04 3.74 9,699,374
Class IB............................... 0.36 23.17 3.48 1,462,319
For the Year Ended December 31, 2003
Class IA............................... 3.08 22.67 18.49 10,358,449
Class IB............................... 3.09 22.81 18.20 1,263,641
For the Year Ended December 31, 2002
Class IA............................... (3.85) 19.59(5) (13.79) 9,249,397
Class IB............................... (3.88) 19.72(5) (13.99) 672,078
HARTFORD BLUE CHIP STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.44 20.18 8.04 139,150
For the Year Ended December 31, 2005
Class IA............................... 0.90 18.74 5.85 155,020
For the Year Ended December 31, 2004
Class IA............................... 1.42 17.84 8.90 173,702
For the Year Ended December 31, 2003
Class IA............................... 3.72 16.42 29.30 182,530
For the Year Ended December 31, 2002
Class IA............................... (4.10) 12.70 (24.40) 155,333
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.50 53.49 16.61(7) 11,746,831
Class IB............................... 0.46 53.21 16.32(7) 2,810,587
For the Year Ended December 31, 2005
Class IA............................... (0.44) 52.99 15.55 11,317,561
Class IB............................... (0.43) 52.75 15.26 2,793,612
For the Year Ended December 31, 2004
Class IA............................... 8.52 53.43 19.36 10,751,945
Class IB............................... 8.42 53.18 19.07 2,505,798
For the Year Ended December 31, 2003
Class IA............................... 13.21 44.91 42.38 8,912,749
Class IB............................... 13.13 44.76 42.02 1,579,399
For the Year Ended December 31, 2002
Class IA............................... (8.05) 31.70(5) (19.70) 6,240,859
Class IB............................... (8.05) 31.63(5) (19.88) 588,013
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64% 0.64% 2.24% 87%
Class IB............................... 0.89 0.89 1.99 --
For the Year Ended December 31, 2005
Class IA............................... 0.66 0.65 1.96 89
Class IB............................... 0.91 0.90 1.72 --
For the Year Ended December 31, 2004
Class IA............................... 0.67 0.67 2.16 36
Class IB............................... 0.92 0.92 1.91 --
For the Year Ended December 31, 2003
Class IA............................... 0.67 0.67 2.03 48
Class IB............................... 0.92 0.92 1.78 --
For the Year Ended December 31, 2002
Class IA............................... 0.67 0.67 2.29 47
Class IB............................... 0.92 0.90 2.07 --
HARTFORD BLUE CHIP STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.89 0.78 0.31 116
For the Year Ended December 31, 2005
Class IA............................... 0.91 0.81 0.32 27
For the Year Ended December 31, 2004
Class IA............................... 0.90 0.90 0.56 26
For the Year Ended December 31, 2003
Class IA............................... 0.90 0.90 0.22 28
For the Year Ended December 31, 2002
Class IA............................... 0.92 0.92 0.04 37
HARTFORD CAPITAL APPRECIATION HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.67 0.67 0.82 73
Class IB............................... 0.92 0.92 0.57 --
For the Year Ended December 31, 2005
Class IA............................... 0.70 0.70 0.78 97
Class IB............................... 0.95 0.95 0.53 --
For the Year Ended December 31, 2004
Class IA............................... 0.70 0.70 0.77 89
Class IB............................... 0.95 0.95 0.52 --
For the Year Ended December 31, 2003
Class IA............................... 0.69 0.69 0.77 94
Class IB............................... 0.94 0.94 0.52 --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 0.64 94
Class IB............................... 0.94 0.92 0.41 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
197
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD CAPITAL OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 7.03 $ 0.02 $ -- $ 0.54
For the Year Ended December 31, 2005
Class IA............................... 7.08 0.02 -- (0.04)
For the Year Ended December 31, 2004
Class IA............................... 6.46 0.03 -- 0.62
For the Year Ended December 31, 2003
Class IA............................... 5.09 0.02 -- 1.37
For the Year Ended December 31, 2002
Class IA............................... 7.15 -- -- (2.06)
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 12.66 0.14 0.01 1.42
Class IB............................... 12.58 0.13 0.01 1.39
For the Year Ended December 31, 2005
Class IA............................... 12.02 0.12 -- 0.67
Class IB............................... 11.93 0.08 -- 0.68
For the Year Ended December 31, 2004
Class IA............................... 11.20 0.16 -- 0.79
Class IB............................... 11.14 0.14 -- 0.76
For the Year Ended December 31, 2003
Class IA............................... 8.80 0.07 -- 2.45
Class IB............................... 8.75 0.05 -- 2.43
For the Year Ended December 31, 2002
Class IA............................... 11.72(5) 0.05(5) -- (2.97)(5)
Class IB............................... 11.67(5) 0.04(5) -- (2.96)(5)
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 20.74 0.40 0.01 3.77
Class IB............................... 20.68 0.35 0.01 3.74
For the Year Ended December 31, 2005
Class IA............................... 20.83 0.36 -- 0.87
Class IB............................... 20.76 0.29 -- 0.89
For the Year Ended December 31, 2004
Class IA............................... 18.77 0.32 -- 2.01
Class IB............................... 18.72 0.27 -- 2.00
For the Year Ended December 31, 2003
Class IA............................... 15.09 0.24 -- 3.79
Class IB............................... 15.07 0.21 -- 3.76
For the Year Ended December 31, 2002
Class IA............................... 18.80(5) 0.25(5) -- (3.64)(5)
Class IB............................... 18.79(5) 0.24(5) -- (3.66)(5)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD CAPITAL OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.56 $ -- $ -- $ -- $ --
For the Year Ended December 31, 2005
Class IA............................... (0.02) (0.02) -- (0.01) (0.03)
For the Year Ended December 31, 2004
Class IA............................... 0.65 (0.03) -- -- (0.03)
For the Year Ended December 31, 2003
Class IA............................... 1.39 (0.02) -- -- (0.02)
For the Year Ended December 31, 2002
Class IA............................... (2.06) -- -- -- --
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.57 (0.15) -- -- (0.15)
Class IB............................... 1.53 (0.10) -- -- (0.10)
For the Year Ended December 31, 2005
Class IA............................... 0.79 (0.15) -- -- (0.15)
Class IB............................... 0.76 (0.11) -- -- (0.11)
For the Year Ended December 31, 2004
Class IA............................... 0.95 (0.13) -- -- (0.13)
Class IB............................... 0.90 (0.11) -- -- (0.11)
For the Year Ended December 31, 2003
Class IA............................... 2.52 (0.12) -- -- (0.12)
Class IB............................... 2.48 (0.09) -- -- (0.09)
For the Year Ended December 31, 2002
Class IA............................... (2.92) --(5) --(5) -- --
Class IB............................... (2.92) --(5) --(5) -- --
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 4.18 (0.41) (1.72) -- (2.13)
Class IB............................... 4.10 (0.34) (1.72) -- (2.06)
For the Year Ended December 31, 2005
Class IA............................... 1.23 (0.40) (0.92) -- (1.32)
Class IB............................... 1.18 (0.34) (0.92) -- (1.26)
For the Year Ended December 31, 2004
Class IA............................... 2.33 (0.27) -- -- (0.27)
Class IB............................... 2.27 (0.23) -- -- (0.23)
For the Year Ended December 31, 2003
Class IA............................... 4.03 (0.25) (0.10) -- (0.35)
Class IB............................... 3.97 (0.22) (0.10) -- (0.32)
For the Year Ended December 31, 2002
Class IA............................... (3.39) (0.23)(5) (0.09)(5) -- (0.32)
Class IB............................... (3.42) (0.21)(5) (0.09)(5) -- (0.30)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD CAPITAL OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.56 $ 7.59 7.89% $ 11,114
For the Year Ended December 31, 2005
Class IA............................... (0.05) 7.03 (0.22) 13,416
For the Year Ended December 31, 2004
Class IA............................... 0.62 7.08 9.93 15,380
For the Year Ended December 31, 2003
Class IA............................... 1.37 6.46 27.38 17,794
For the Year Ended December 31, 2002
Class IA............................... (2.06) 5.09 (28.85) 16,387
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.42 14.08 12.45(7) 1,401,619
Class IB............................... 1.43 14.01 12.17(7) 354,559
For the Year Ended December 31, 2005
Class IA............................... 0.64 12.66 6.58 1,019,703
Class IB............................... 0.65 12.58 6.31 340,108
For the Year Ended December 31, 2004
Class IA............................... 0.82 12.02 8.41 770,938
Class IB............................... 0.79 11.93 8.14 270,171
For the Year Ended December 31, 2003
Class IA............................... 2.40 11.20 28.82 685,888
Class IB............................... 2.39 11.14 28.50 155,810
For the Year Ended December 31, 2002
Class IA............................... (2.92) 8.80(5) (24.65) 460,807
Class IB............................... (2.92) 8.75(5) (24.85) 58,930
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 2.05 22.79 20.36(7) 5,671,552
Class IB............................... 2.04 22.72 20.06(7) 1,603,952
For the Year Ended December 31, 2005
Class IA............................... (0.09) 20.74 5.96 4,978,773
Class IB............................... (0.08) 20.68 5.70 1,506,556
For the Year Ended December 31, 2004
Class IA............................... 2.06 20.83 12.42 4,719,663
Class IB............................... 2.04 20.76 12.14 1,393,412
For the Year Ended December 31, 2003
Class IA............................... 3.68 18.77 26.80 3,927,415
Class IB............................... 3.65 18.72 26.48 902,779
For the Year Ended December 31, 2002
Class IA............................... (3.71) 15.09(5) (14.23) 2,810,625
Class IB............................... (3.72) 15.07(5) (14.42) 327,617
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD CAPITAL OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.12% 0.92% 0.29% 9%
For the Year Ended December 31, 2005
Class IA............................... 1.06 0.86 0.31 24
For the Year Ended December 31, 2004
Class IA............................... 1.05 1.05 0.38 119
For the Year Ended December 31, 2003
Class IA............................... 1.06 1.06 0.28 68
For the Year Ended December 31, 2002
Class IA............................... 1.05 1.05 0.04 109
HARTFORD DISCIPLINED EQUITY HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.72 0.72 1.19 63
Class IB............................... 0.97 0.97 0.93 --
For the Year Ended December 31, 2005
Class IA............................... 0.74 0.74 1.07 58
Class IB............................... 0.99 0.99 0.82 --
For the Year Ended December 31, 2004
Class IA............................... 0.75 0.75 1.53 62
Class IB............................... 1.00 1.00 1.28 --
For the Year Ended December 31, 2003
Class IA............................... 0.78 0.78 0.89 73
Class IB............................... 1.03 1.03 0.64 --
For the Year Ended December 31, 2002
Class IA............................... 0.79 0.79 0.65 92
Class IB............................... 1.04 1.02 0.42 --
HARTFORD DIVIDEND AND GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.67 0.67 1.77 27
Class IB............................... 0.92 0.92 1.52 --
For the Year Ended December 31, 2005
Class IA............................... 0.67 0.67 1.70 26
Class IB............................... 0.92 0.92 1.45 --
For the Year Ended December 31, 2004
Class IA............................... 0.68 0.68 1.73 27
Class IB............................... 0.93 0.93 1.48 --
For the Year Ended December 31, 2003
Class IA............................... 0.69 0.69 1.61 31
Class IB............................... 0.94 0.94 1.36 --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 1.56 43
Class IB............................... 0.94 0.92 1.33 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
198
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $12.01 $ 0.26 $ -- $ 2.22
Class IB............................... 11.98 0.25 -- 2.20
For the Year Ended December 31, 2005
Class IA............................... 11.64 0.21 -- 0.36
Class IB............................... 11.62 0.17 -- 0.36
For the Year Ended December 31, 2004
Class IA............................... 10.75 0.12 -- 0.89
Class IB............................... 10.74 0.10 -- 0.88
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 10.00 0.02 -- 0.75
Class IB............................... 10.00 0.02 -- 0.74
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 10.56 0.09 0.01 0.82
Class IB............................... 10.53 0.06 0.01 0.82
For the Year Ended December 31, 2005
Class IA............................... 10.18 0.10 -- 0.87
Class IB............................... 10.13 0.04 -- 0.89
For the Year Ended December 31, 2004
Class IA............................... 9.90 0.10 -- 0.21
Class IB............................... 9.86 0.08 -- 0.20
For the Year Ended December 31, 2003
Class IA............................... 7.74 0.03 -- 2.16
Class IB............................... 7.71 0.02 -- 2.15
For the Year Ended December 31, 2002
Class IA............................... 10.38(5) 0.03(5) -- (2.66)(5)
Class IB............................... 10.37(5) 0.02(5) -- (2.67)(5)
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 12.48 0.23 0.02 0.83
Class IB............................... 12.41 0.20 0.02 0.83
For the Year Ended December 31, 2005
Class IA............................... 12.53 0.21 -- 0.20
Class IB............................... 12.44 0.23 -- 0.14
For the Year Ended December 31, 2004
Class IA............................... 11.15 0.19 -- 1.19
Class IB............................... 11.09 0.14 -- 1.21
For the Year Ended December 31, 2003
Class IA............................... 9.16 0.12 -- 1.95
Class IB............................... 9.12 0.11 -- 1.93
For the Year Ended December 31, 2002
Class IA............................... 10.07(5) (0.50)(5) -- (0.41)(5)
Class IB............................... 10.05(5) (0.41)(5) -- (0.52)(5)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.48 $(0.26) $(0.03) $ -- $(0.29)
Class IB............................... 2.45 (0.21) (0.03) -- (0.24)
For the Year Ended December 31, 2005
Class IA............................... 0.57 (0.20) -- -- (0.20)
Class IB............................... 0.53 (0.17) -- -- (0.17)
For the Year Ended December 31, 2004
Class IA............................... 1.01 (0.12) -- -- (0.12)
Class IB............................... 0.98 (0.10) -- -- (0.10)
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 0.77 (0.02) -- -- (0.02)
Class IB............................... 0.76 (0.02) -- -- (0.02)
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.92 (0.09) (0.83) -- (0.92)
Class IB............................... 0.89 (0.05) (0.83) -- (0.88)
For the Year Ended December 31, 2005
Class IA............................... 0.97 (0.19) (0.40) -- (0.59)
Class IB............................... 0.93 (0.13) (0.40) -- (0.53)
For the Year Ended December 31, 2004
Class IA............................... 0.31 (0.03) -- -- (0.03)
Class IB............................... 0.28 (0.01) -- -- (0.01)
For the Year Ended December 31, 2003
Class IA............................... 2.19 (0.03) -- -- (0.03)
Class IB............................... 2.17 (0.02) -- -- (0.02)
For the Year Ended December 31, 2002
Class IA............................... (2.63) --(5) (0.01)(5) -- (0.01)
Class IB............................... (2.65) --(5) (0.01)(5) -- (0.01)
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.08 (0.38) (0.47) -- (0.85)
Class IB............................... 1.05 (0.32) (0.47) -- (0.79)
For the Year Ended December 31, 2005
Class IA............................... 0.41 (0.46) -- -- (0.46)
Class IB............................... 0.37 (0.40) -- -- (0.40)
For the Year Ended December 31, 2004
Class IA............................... 1.38 -- -- -- --
Class IB............................... 1.35 -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 2.07 (0.08) -- -- (0.08)
Class IB............................... 2.04 (0.07) -- -- (0.07)
For the Year Ended December 31, 2002
Class IA............................... (0.91) --(5) --(5) -- --
Class IB............................... (0.93) --(5) --(5) -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.19 $14.20 20.79% $ 360,210
Class IB............................... 2.21 14.19 20.49 106,733
For the Year Ended December 31, 2005
Class IA............................... 0.37 12.01 4.81 231,151
Class IB............................... 0.36 11.98 4.56 79,417
For the Year Ended December 31, 2004
Class IA............................... 0.89 11.64 9.43 90,197
Class IB............................... 0.88 11.62 9.16 24,876
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 0.75 10.75 26.80(2) 8,511
Class IB............................... 0.74 10.74 26.48(2) 1,609
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... -- 10.56 9.72(7) 48,852
Class IB............................... 0.01 10.54 9.45(7) 34,041
For the Year Ended December 31, 2005
Class IA............................... 0.38 10.56 9.88 52,679
Class IB............................... 0.40 10.53 9.60 41,972
For the Year Ended December 31, 2004
Class IA............................... 0.28 10.18 3.16 49,519
Class IB............................... 0.27 10.13 2.90 41,587
For the Year Ended December 31, 2003
Class IA............................... 2.16 9.90 28.37 49,891
Class IB............................... 2.15 9.86 28.05 39,674
For the Year Ended December 31, 2002
Class IA............................... (2.64) 7.74(5) (24.59) 35,237
Class IB............................... (2.66) 7.71(5) (24.76) 18,361
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.23 12.71 8.84(7) 306,498
Class IB............................... 0.26 12.67 8.56(7) 64,076
For the Year Ended December 31, 2005
Class IA............................... (0.05) 12.48 3.37 332,169
Class IB............................... (0.03) 12.41 3.11 71,346
For the Year Ended December 31, 2004
Class IA............................... 1.38 12.53 12.75 362,757
Class IB............................... 1.35 12.44 12.47 86,937
For the Year Ended December 31, 2003
Class IA............................... 1.99 11.15 22.26 312,492
Class IB............................... 1.97 11.09 21.97 41,594
For the Year Ended December 31, 2002
Class IA............................... (0.91) 9.16(5) (8.95) 269,329
Class IB............................... (0.93) 9.12(5) (9.15) 16,078
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD EQUITY INCOME HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.85% 0.75% 2.32% 28%
Class IB............................... 1.10 1.00 2.07 --
For the Year Ended December 31, 2005
Class IA............................... 0.86 0.76 2.27 21
Class IB............................... 1.11 1.01 2.03 --
For the Year Ended December 31, 2004
Class IA............................... 0.90 0.90 1.99 18
Class IB............................... 1.15 1.15 1.74 --
From inception October 31, 2003 through
December 31, 2003
Class IA............................... 1.13(1) 1.13(1) 1.50(1) 2
Class IB............................... 1.38(1) 1.38(1) 1.25(1) --
HARTFORD FOCUS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.94 0.85 0.80 112
Class IB............................... 1.19 1.10 0.55 --
For the Year Ended December 31, 2005
Class IA............................... 0.92 0.91 0.77 136
Class IB............................... 1.17 1.16 0.52 --
For the Year Ended December 31, 2004
Class IA............................... 0.90 0.90 1.06 111
Class IB............................... 1.15 1.15 0.81 --
For the Year Ended December 31, 2003
Class IA............................... 0.90 0.90 0.40 129
Class IB............................... 1.15 1.15 0.15 --
For the Year Ended December 31, 2002
Class IA............................... 0.88 0.88 0.40 212
Class IB............................... 1.13 1.11 0.17 --
HARTFORD GLOBAL ADVISERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.82 0.82 1.73 88
Class IB............................... 1.07 1.07 1.48 --
For the Year Ended December 31, 2005
Class IA............................... 0.83 0.83 1.59 502
Class IB............................... 1.09 1.09 1.33 --
For the Year Ended December 31, 2004
Class IA............................... 0.84 0.84 1.27 511
Class IB............................... 1.09 1.09 1.02 --
For the Year Ended December 31, 2003
Class IA............................... 0.84 0.84 1.26 455
Class IB............................... 1.09 1.09 1.01 --
For the Year Ended December 31, 2002
Class IA............................... 0.83 0.83 2.05 288
Class IB............................... 1.08 1.06 1.82 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
199
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $18.74 $ 0.10 $ 0.05 $ 2.48
Class IB............................... 18.66 0.05 0.05 2.47
For the Year Ended December 31, 2005
Class IA............................... 18.41 0.14 -- 0.33
Class IB............................... 18.32 0.07 -- 0.35
For the Year Ended December 31, 2004
Class IA............................... 15.53 0.12 -- 2.85
Class IB............................... 15.47 0.10 -- 2.82
For the Year Ended December 31, 2003
Class IA............................... 11.50 0.07 -- 4.02
Class IB............................... 11.47 0.04 -- 4.00
For the Year Ended December 31, 2002
Class IA............................... 14.43(5) 0.13(5) -- (2.95)(5)
Class IB............................... 14.40(5) 0.12(5) -- (2.96)(5)
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 12.54 0.01 0.01 0.56
Class IB............................... 12.42 (0.02) 0.01 0.55
For the Year Ended December 31, 2005
Class IA............................... 12.47 0.01 0.01 0.53
Class IB............................... 12.38 (0.04) 0.01 0.55
For the Year Ended December 31, 2004
Class IA............................... 11.16 0.01 -- 1.39
Class IB............................... 11.11 0.01 -- 1.35
For the Year Ended December 31, 2003
Class IA............................... 8.66 (0.01) -- 2.85
Class IB............................... 8.64 (0.02) -- 2.83
From inception April 30, 2002 through
December 31, 2002
Class IA............................... 10.00 -- -- (1.34)
Class IB............................... 10.00 -- -- (1.36)
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 30.07 0.22 0.03 3.27
Class IB............................... 29.85 0.14 0.03 3.25
For the Year Ended December 31, 2005
Class IA............................... 27.63 0.09 0.03 4.36
Class IB............................... 27.44 0.01 0.03 4.35
For the Year Ended December 31, 2004
Class IA............................... 23.57 0.05 -- 4.01
Class IB............................... 23.48 0.03 -- 3.93
For the Year Ended December 31, 2003
Class IA............................... 16.40 (0.01) -- 7.18
Class IB............................... 16.37 (0.01) -- 7.12
For the Year Ended December 31, 2002
Class IA............................... 22.66 (0.03) -- (6.23)
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 21.16 (0.01) -- (4.78)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.63 $(0.16) $(1.12) $ -- $(1.28)
Class IB............................... 2.57 (0.09) (1.12) -- (1.21)
For the Year Ended December 31, 2005
Class IA............................... 0.47 (0.14) -- -- (0.14)
Class IB............................... 0.42 (0.08) -- -- (0.08)
For the Year Ended December 31, 2004
Class IA............................... 2.97 (0.09) -- -- (0.09)
Class IB............................... 2.92 (0.07) -- -- (0.07)
For the Year Ended December 31, 2003
Class IA............................... 4.09 (0.06) -- -- (0.06)
Class IB............................... 4.04 (0.04) -- -- (0.04)
For the Year Ended December 31, 2002
Class IA............................... (2.82) (0.11)(5) --(5) -- (0.11)
Class IB............................... (2.84) (0.09)(5) --(5) -- (0.09)
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.58 (0.01) (0.79) -- (0.80)
Class IB............................... 0.54 -- (0.79) -- (0.79)
For the Year Ended December 31, 2005
Class IA............................... 0.55 -- (0.48) -- (0.48)
Class IB............................... 0.52 -- (0.48) -- (0.48)
For the Year Ended December 31, 2004
Class IA............................... 1.40 -- (0.09) -- (0.09)
Class IB............................... 1.36 -- (0.09) -- (0.09)
For the Year Ended December 31, 2003
Class IA............................... 2.84 -- (0.34) -- (0.34)
Class IB............................... 2.81 -- (0.34) -- (0.34)
From inception April 30, 2002 through
December 31, 2002
Class IA............................... (1.34) -- -- -- --
Class IB............................... (1.36) -- -- -- --
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 3.52 (0.24) (3.22) -- (3.46)
Class IB............................... 3.42 (0.15) (3.22) -- (3.37)
For the Year Ended December 31, 2005
Class IA............................... 4.48 (0.06) (1.98) -- (2.04)
Class IB............................... 4.39 -- (1.98) -- (1.98)
For the Year Ended December 31, 2004
Class IA............................... 4.06 -- -- -- --
Class IB............................... 3.96 -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 7.17 -- -- -- --
Class IB............................... 7.11 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (6.26) -- -- -- --
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.79) -- -- -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.35 $20.09 14.14(7)% $ 942,258
Class IB............................... 1.36 20.02 13.86(7) 280,283
For the Year Ended December 31, 2005
Class IA............................... 0.33 18.74 2.59 935,539
Class IB............................... 0.34 18.66 2.33 280,050
For the Year Ended December 31, 2004
Class IA............................... 2.88 18.41 19.19 1,004,850
Class IB............................... 2.85 18.32 18.89 273,202
For the Year Ended December 31, 2003
Class IA............................... 4.03 15.53 35.57 728,049
Class IB............................... 4.00 15.47 35.24 129,315
For the Year Ended December 31, 2002
Class IA............................... (2.93) 11.50(5) (19.51) 544,901
Class IB............................... (2.93) 11.47(5) (19.70) 55,421
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.22) 12.32 4.61(7) 379,601
Class IB............................... (0.25) 12.17 4.35(7) 190,063
For the Year Ended December 31, 2005
Class IA............................... 0.07 12.54 4.67(7) 345,558
Class IB............................... 0.04 12.42 4.42(7) 206,105
For the Year Ended December 31, 2004
Class IA............................... 1.31 12.47 12.49 249,473
Class IB............................... 1.27 12.38 12.21 170,895
For the Year Ended December 31, 2003
Class IA............................... 2.50 11.16 32.81 127,944
Class IB............................... 2.47 11.11 32.48 90,188
From inception April 30, 2002 through
December 31, 2002
Class IA............................... (1.34) 8.66 (13.43)(2) 13,452
Class IB............................... (1.36) 8.64 (13.57)(2) 7,937
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.06 30.13 12.05(7) 1,103,590
Class IB............................... 0.05 29.90 11.79(7) 197,797
For the Year Ended December 31, 2005
Class IA............................... 2.44 30.07 16.31(7) 1,012,774
Class IB............................... 2.41 29.85 16.02(7) 179,308
For the Year Ended December 31, 2004
Class IA............................... 4.06 27.63 17.18 848,674
Class IB............................... 3.96 27.44 16.89 112,896
For the Year Ended December 31, 2003
Class IA............................... 7.17 23.57 43.79 696,900
Class IB............................... 7.11 23.48 43.43 59,686
For the Year Ended December 31, 2002
Class IA............................... (6.26) 16.40 (27.65) 478,045
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.79) 16.37 (22.65)(2) 5,287
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.76% 0.76% 0.48% 116%
Class IB............................... 1.01 1.01 0.23 --
For the Year Ended December 31, 2005
Class IA............................... 0.77 0.77 0.74 262
Class IB............................... 1.02 1.02 0.48 --
For the Year Ended December 31, 2004
Class IA............................... 0.78 0.78 0.83 255
Class IB............................... 1.03 1.03 0.58 --
For the Year Ended December 31, 2003
Class IA............................... 0.80 0.80 0.54 292
Class IB............................... 1.05 1.05 0.29 --
For the Year Ended December 31, 2002
Class IA............................... 0.81 0.81 1.06 324
Class IB............................... 1.06 1.03 0.84 --
HARTFORD GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.84 0.84 0.10 95
Class IB............................... 1.09 1.09 (0.14) --
For the Year Ended December 31, 2005
Class IA............................... 0.84 0.84 0.02 76
Class IB............................... 1.09 1.09 (0.23) --
For the Year Ended December 31, 2004
Class IA............................... 0.86 0.86 0.09 79
Class IB............................... 1.11 1.11 (0.16) --
For the Year Ended December 31, 2003
Class IA............................... 0.88 0.88 (0.20) 111
Class IB............................... 1.13 1.13 (0.45) --
From inception April 30, 2002 through
December 31, 2002
Class IA............................... 0.99(1) 0.99(1) 0.01(1) 76
Class IB............................... 1.24(1) 1.24(1) (0.25)(1) --
HARTFORD GROWTH OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.65 0.65 0.71 139
Class IB............................... 0.90 0.90 0.46 --
For the Year Ended December 31, 2005
Class IA............................... 0.64 0.64 0.33 140
Class IB............................... 0.89 0.89 0.06 --
For the Year Ended December 31, 2004
Class IA............................... 0.63 0.63 0.23 137
Class IB............................... 0.88 0.88 (0.03) --
For the Year Ended December 31, 2003
Class IA............................... 0.64 0.64 (0.05) 145
Class IB............................... 0.89 0.89 (0.30) --
For the Year Ended December 31, 2002
Class IA............................... 0.66 0.66 (0.16) 189
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 0.84(1) 0.84(1) (0.10)(1) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
200
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ 9.80 $ 0.72 $ -- $ 0.31
Class IB............................... 9.70 0.69 -- 0.30
For the Year Ended December 31, 2005
Class IA............................... 10.26 0.74 0.05 (0.58)
Class IB............................... 10.17 0.71 0.05 (0.59)
For the Year Ended December 31, 2004
Class IA............................... 10.06 0.58 -- 0.12
Class IB............................... 9.98 0.64 -- 0.03
For the Year Ended December 31, 2003
Class IA............................... 8.49 0.19 -- 1.75
Class IB............................... 8.44 0.28 -- 1.63
For the Year Ended December 31, 2002
Class IA............................... 9.64(5) 0.63(5) -- (1.73)(5)
Class IB............................... 9.61(5) 0.49(5) -- (1.61)(5)
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 31.97 0.56 -- 4.05
Class IB............................... 31.84 0.44 -- 4.06
For the Year Ended December 31, 2005
Class IA............................... 32.17 0.51 -- 0.90
Class IB............................... 32.02 0.40 -- 0.93
For the Year Ended December 31, 2004
Class IA............................... 29.60 0.50 -- 2.56
Class IB............................... 29.49 0.44 -- 2.53
For the Year Ended December 31, 2003
Class IA............................... 23.46 0.36 -- 6.23
Class IB............................... 23.39 0.31 -- 6.19
For the Year Ended December 31, 2002
Class IA............................... 31.81(5) 0.32(5) -- (8.29)(5)
Class IB............................... 31.75(5) 0.28(5) -- (8.30)(5)
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 12.48 0.10 -- 2.84
Class IB............................... 12.40 0.06 -- 2.83
For the Year Ended December 31, 2005
Class IA............................... 12.45 0.11 -- 0.60
Class IB............................... 12.37 0.06 -- 0.61
For the Year Ended December 31, 2004
Class IA............................... 10.20 0.05 -- 2.44
Class IB............................... 10.16 0.06 -- 2.39
For the Year Ended December 31, 2003
Class IA............................... 7.09 -- -- 3.61
Class IB............................... 7.08 -- -- 3.58
For the Year Ended December 31, 2002
Class IA............................... 8.59(5) 0.03(5) -- (1.51)(5)
Class IB............................... 8.59(5) 0.01(5) -- (1.51)(5)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ 1.03 $(1.48) $ -- $ -- $(1.48)
Class IB............................... 0.99 (1.42) -- -- (1.42)
For the Year Ended December 31, 2005
Class IA............................... 0.21 (0.67) -- -- (0.67)
Class IB............................... 0.17 (0.64) -- -- (0.64)
For the Year Ended December 31, 2004
Class IA............................... 0.70 (0.50) -- -- (0.50)
Class IB............................... 0.67 (0.48) -- -- (0.48)
For the Year Ended December 31, 2003
Class IA............................... 1.94 (0.37) -- -- (0.37)
Class IB............................... 1.91 (0.37) -- -- (0.37)
For the Year Ended December 31, 2002
Class IA............................... (1.10) (0.05)(5) --(5) -- (0.05)
Class IB............................... (1.12) (0.05)(5) --(5) -- (0.05)
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 4.61 (0.56) (3.66) -- (4.22)
Class IB............................... 4.50 (0.46) (3.66) -- (4.12)
For the Year Ended December 31, 2005
Class IA............................... 1.41 (0.61) (1.00) -- (1.61)
Class IB............................... 1.33 (0.51) (1.00) -- (1.51)
For the Year Ended December 31, 2004
Class IA............................... 3.06 (0.39) (0.10) -- (0.49)
Class IB............................... 2.97 (0.34) (0.10) -- (0.44)
For the Year Ended December 31, 2003
Class IA............................... 6.59 (0.37) (0.08) -- (0.45)
Class IB............................... 6.50 (0.32) (0.08) -- (0.40)
For the Year Ended December 31, 2002
Class IA............................... (7.97) (0.28)(5) (0.10)(5) -- (0.38)
Class IB............................... (8.02) (0.24)(5) (0.10)(5) -- (0.34)
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 2.94 (0.11) (1.13) -- (1.24)
Class IB............................... 2.89 (0.06) (1.13) -- (1.19)
For the Year Ended December 31, 2005
Class IA............................... 0.71 (0.10) (0.58) -- (0.68)
Class IB............................... 0.67 (0.06) (0.58) -- (0.64)
For the Year Ended December 31, 2004
Class IA............................... 2.49 -- (0.24) -- (0.24)
Class IB............................... 2.45 -- (0.24) -- (0.24)
For the Year Ended December 31, 2003
Class IA............................... 3.61 -- (0.50) -- (0.50)
Class IB............................... 3.58 -- (0.50) -- (0.50)
For the Year Ended December 31, 2002
Class IA............................... (1.48) (0.02)(5) --(5) -- (0.02)
Class IB............................... (1.50) (0.01)(5) --(5) -- (0.01)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ (0.45) $ 9.35 11.17(7)% $ 471,327
Class IB............................... (0.43) 9.27 10.89(7) 264,525
For the Year Ended December 31, 2005
Class IA............................... (0.46) 9.80 2.13(7) 443,859
Class IB............................... (0.47) 9.70 1.85(7) 272,538
For the Year Ended December 31, 2004
Class IA............................... 0.20 10.26 7.40 518,881
Class IB............................... 0.19 10.17 7.14 309,672
For the Year Ended December 31, 2003
Class IA............................... 1.57 10.06 23.18 481,315
Class IB............................... 1.54 9.98 22.88 259,544
For the Year Ended December 31, 2002
Class IA............................... (1.15) 8.49(5) (6.89) 200,017
Class IB............................... (1.17) 8.44(5) (7.14) 57,084
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.39 32.36 15.46(7) 1,598,176
Class IB............................... 0.38 32.22 15.17(7) 276,850
For the Year Ended December 31, 2005
Class IA............................... (0.20) 31.97 4.50 1,701,424
Class IB............................... (0.18) 31.84 4.24 263,579
For the Year Ended December 31, 2004
Class IA............................... 2.57 32.17 10.39 1,973,470
Class IB............................... 2.53 32.02 10.12 252,959
For the Year Ended December 31, 2003
Class IA............................... 6.14 29.60 28.13 1,934,490
Class IB............................... 6.10 29.49 27.81 195,900
For the Year Ended December 31, 2002
Class IA............................... (8.35) 23.46(5) (22.45) 1,553,260
Class IB............................... (8.36) 23.39(5) (22.63) 68,832
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 1.70 14.18 24.08(7) 574,806
Class IB............................... 1.70 14.10 23.77(7) 302,729
For the Year Ended December 31, 2005
Class IA............................... 0.03 12.48 6.16 370,555
Class IB............................... 0.03 12.40 5.89 244,572
For the Year Ended December 31, 2004
Class IA............................... 2.25 12.45 24.72 208,703
Class IB............................... 2.21 12.37 24.40 137,183
For the Year Ended December 31, 2003
Class IA............................... 3.11 10.20 51.02 67,147
Class IB............................... 3.08 10.16 50.65 63,698
For the Year Ended December 31, 2002
Class IA............................... (1.50) 7.09(5) (17.21) 21,368
Class IB............................... (1.51) 7.08(5) (17.40) 13,878
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD HIGH YIELD HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.77% 0.72% 7.39% 160%
Class IB............................... 1.02 0.97 7.14 --
For the Year Ended December 31, 2005
Class IA............................... 0.77 0.76 6.51 138
Class IB............................... 1.02 1.01 6.25 --
For the Year Ended December 31, 2004
Class IA............................... 0.77 0.77 6.31 92
Class IB............................... 1.02 1.02 6.06 --
For the Year Ended December 31, 2003
Class IA............................... 0.78 0.78 7.00 44
Class IB............................... 1.03 1.03 6.75 --
For the Year Ended December 31, 2002
Class IA............................... 0.82 0.82 9.33 60
Class IB............................... 1.07 1.05 9.10 --
HARTFORD INDEX HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.42 0.33 1.60 4
Class IB............................... 0.67 0.58 1.36 --
For the Year Ended December 31, 2005
Class IA............................... 0.42 0.42 1.46 5
Class IB............................... 0.67 0.67 1.21 --
For the Year Ended December 31, 2004
Class IA............................... 0.44 0.44 1.60 5
Class IB............................... 0.69 0.69 1.35 --
For the Year Ended December 31, 2003
Class IA............................... 0.44 0.44 1.40 3
Class IB............................... 0.69 0.69 1.15 --
For the Year Ended December 31, 2002
Class IA............................... 0.44 0.44 1.18 15
Class IB............................... 0.69 0.67 0.95 --
HARTFORD INTERNATIONAL CAPITAL
APPRECIATION HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.88 0.88 0.70 164
Class IB............................... 1.13 1.13 0.48 --
For the Year Ended December 31, 2005
Class IA............................... 0.93 0.93 1.05 179
Class IB............................... 1.18 1.18 0.79 --
For the Year Ended December 31, 2004
Class IA............................... 0.97 0.97 0.86 215
Class IB............................... 1.22 1.22 0.61 --
For the Year Ended December 31, 2003
Class IA............................... 1.01 1.01 0.23 244
Class IB............................... 1.26 1.26 (0.02) --
For the Year Ended December 31, 2002
Class IA............................... 1.26 1.26 0.59 285
Class IB............................... 1.51 1.49 0.36 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
201
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $13.59 $ 0.22 $ -- $ 3.05
Class IB............................... 13.52 0.18 -- 3.07
For the Year Ended December 31, 2005
Class IA............................... 11.86 0.14 -- 1.59
Class IB............................... 11.83 0.13 -- 1.56
For the Year Ended December 31, 2004
Class IA............................... 10.11 0.10 -- 1.73
Class IB............................... 10.09 0.08 -- 1.72
For the Year Ended December 31, 2003
Class IA............................... 7.66 0.09 -- 2.44
Class IB............................... 7.66 0.07 -- 2.43
For the Year Ended December 31, 2002
Class IA............................... 9.53(5) 0.17(5) -- (1.94)(5)
Class IB............................... 9.51(5) 0.14(5) -- (1.91)(5)
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 14.84 0.18 -- 4.08
Class IB............................... 14.71 0.15 -- 4.04
For the Year Ended December 31, 2005
Class IA............................... 14.52 0.11 -- 2.44
Class IB............................... 14.42 0.08 -- 2.40
For the Year Ended December 31, 2004
Class IA............................... 12.62 0.16 -- 1.96
Class IB............................... 12.56 0.14 -- 1.94
For the Year Ended December 31, 2003
Class IA............................... 8.89 0.09 -- 4.68
Class IB............................... 8.86 0.08 -- 4.64
For the Year Ended December 31, 2002
Class IA............................... 9.39(5) 0.02(5) -- (0.52)(5)
Class IB............................... 9.38(5) 0.01(5) -- (0.53)(5)
HARTFORD INTERNATIONAL STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 14.97 0.33 -- 3.00
For the Year Ended December 31, 2005
Class IA............................... 13.63 0.26 -- 1.26
For the Year Ended December 31, 2004
Class IA............................... 11.85 0.21 -- 1.61
For the Year Ended December 31, 2003
Class IA............................... 9.33 0.20 -- 2.57
For the Year Ended December 31, 2002
Class IA............................... 10.43 0.17 -- (1.18)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $ 3.27 $(0.40) $(1.23) $ -- $(1.63)
Class IB............................... 3.25 (0.18) (1.23) -- (1.41)
For the Year Ended December 31, 2005
Class IA............................... 1.73 -- -- -- --
Class IB............................... 1.69 -- -- -- --
For the Year Ended December 31, 2004
Class IA............................... 1.83 (0.08) -- -- (0.08)
Class IB............................... 1.80 (0.06) -- -- (0.06)
For the Year Ended December 31, 2003
Class IA............................... 2.53 (0.08) -- -- (0.08)
Class IB............................... 2.50 (0.07) -- -- (0.07)
For the Year Ended December 31, 2002
Class IA............................... (1.77) (0.10)(5) --(5) -- (0.10)
Class IB............................... (1.77) (0.08)(5) --(5) -- (0.08)
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 4.26 (0.32) (2.01) -- (2.33)
Class IB............................... 4.19 (0.25) (2.01) -- (2.26)
For the Year Ended December 31, 2005
Class IA............................... 2.55 (0.38) (1.85) -- (2.23)
Class IB............................... 2.48 (0.34) (1.85) -- (2.19)
For the Year Ended December 31, 2004
Class IA............................... 2.12 -- (0.22) -- (0.22)
Class IB............................... 2.08 -- (0.22) -- (0.22)
For the Year Ended December 31, 2003
Class IA............................... 4.77 (0.11) (0.93) -- (1.04)
Class IB............................... 4.72 (0.09) (0.93) -- (1.02)
For the Year Ended December 31, 2002
Class IA............................... (0.50) --(5) --(5) -- --
Class IB............................... (0.52) --(5) --(5) -- --
HARTFORD INTERNATIONAL STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 3.33 (0.24) -- -- (0.24)
For the Year Ended December 31, 2005
Class IA............................... 1.52 (0.18) -- -- (0.18)
For the Year Ended December 31, 2004
Class IA............................... 1.82 (0.04) -- -- (0.04)
For the Year Ended December 31, 2003
Class IA............................... 2.77 (0.25) -- -- (0.25)
For the Year Ended December 31, 2002
Class IA............................... (1.01) (0.09) -- -- (0.09)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.64 $15.23 24.46(7)% $ 1,596,055
Class IB............................... 1.84 15.36 24.15(7) 382,371
For the Year Ended December 31, 2005
Class IA............................... 1.73 13.59 14.62 1,251,426
Class IB............................... 1.69 13.52 14.33 319,626
For the Year Ended December 31, 2004
Class IA............................... 1.75 11.86 18.08 1,054,884
Class IB............................... 1.74 11.83 17.79 247,752
For the Year Ended December 31, 2003
Class IA............................... 2.45 10.11 33.10 823,760
Class IB............................... 2.43 10.09 32.76 76,246
For the Year Ended December 31, 2002
Class IA............................... (1.87) 7.66(5) (17.93) 646,903
Class IB............................... (1.85) 7.66(5) (18.12) 26,641
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 1.93 16.77 29.34(7) 294,660
Class IB............................... 1.93 16.64 29.01(7) 117,251
For the Year Ended December 31, 2005
Class IA............................... 0.32 14.84 18.60 193,712
Class IB............................... 0.29 14.71 18.30 92,157
For the Year Ended December 31, 2004
Class IA............................... 1.90 14.52 16.96 84,012
Class IB............................... 1.86 14.42 16.67 54,750
For the Year Ended December 31, 2003
Class IA............................... 3.73 12.62 53.73 44,088
Class IB............................... 3.70 12.56 53.35 22,704
For the Year Ended December 31, 2002
Class IA............................... (0.50) 8.89(5) (5.08) 16,722
Class IB............................... (0.52) 8.86(5) (5.30) 5,130
HARTFORD INTERNATIONAL STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 3.09 18.06 22.47 102,063
For the Year Ended December 31, 2005
Class IA............................... 1.34 14.97 11.40 96,129
For the Year Ended December 31, 2004
Class IA............................... 1.78 13.63 15.31 96,582
For the Year Ended December 31, 2003
Class IA............................... 2.52 11.85 30.01 94,895
For the Year Ended December 31, 2002
Class IA............................... (1.10) 9.33 (9.74) 81,352
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 0.75% 0.75% 1.47% 119%
Class IB............................... 1.00 1.00 1.24 --
For the Year Ended December 31, 2005
Class IA............................... 0.78 0.78 1.22 120
Class IB............................... 1.03 1.03 0.97 --
For the Year Ended December 31, 2004
Class IA............................... 0.80 0.80 1.13 142
Class IB............................... 1.05 1.05 0.88 --
For the Year Ended December 31, 2003
Class IA............................... 0.83 0.83 1.08 144
Class IB............................... 1.08 1.08 0.83 --
For the Year Ended December 31, 2002
Class IA............................... 0.81 0.81 1.23 161
Class IB............................... 1.06 1.04 1.00 --
HARTFORD INTERNATIONAL SMALL COMPANY HLS
FUND
For the Year Ended December 31, 2006
Class IA............................... 0.93 0.93 1.05 99
Class IB............................... 1.18 1.18 0.82 --
For the Year Ended December 31, 2005
Class IA............................... 1.00 1.00 1.19 95
Class IB............................... 1.25 1.25 0.97 --
For the Year Ended December 31, 2004
Class IA............................... 1.08 1.08 1.53 119
Class IB............................... 1.33 1.33 1.28 --
For the Year Ended December 31, 2003
Class IA............................... 1.23 1.23 1.35 150
Class IB............................... 1.48 1.48 1.10 --
For the Year Ended December 31, 2002
Class IA............................... 1.71 1.71 0.23 183
Class IB............................... 1.96 1.96 (0.01) --
HARTFORD INTERNATIONAL STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.93 0.93 1.77 69
For the Year Ended December 31, 2005
Class IA............................... 0.94 0.94 1.72 57
For the Year Ended December 31, 2004
Class IA............................... 0.96 0.96 1.49 58
For the Year Ended December 31, 2003
Class IA............................... 0.96 0.96 1.83 43
For the Year Ended December 31, 2002
Class IA............................... 0.97 0.97 1.53 53
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
202
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD LARGECAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 9.59 $ 0.05 $ -- $ 0.58
For the Year Ended December 31, 2005
Class IA............................... 9.58 0.02 -- 0.07
For the Year Ended December 31, 2004
Class IA............................... 8.59 0.06 -- 0.93
For the Year Ended December 31, 2003
Class IA............................... 6.96 -- -- 1.63
For the Year Ended December 31, 2002
Class IA............................... 10.09 (0.02) -- (3.11)
HARTFORD MIDCAP GROWTH HLS FUND(9)
For the Year Ended December 31, 2006
Class IA............................... 11.33 (0.01) -- 1.39
For the Year Ended December 31, 2005
Class IA............................... 12.63 (0.04) -- 0.53
For the Year Ended December 31, 2004
Class IA............................... 11.21 0.01 -- 1.43
For the Year Ended December 31, 2003
Class IA............................... 8.57 0.02 -- 2.64
For the Year Ended December 31, 2002
Class IA............................... 9.85 0.02 -- (1.30)
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.00 0.05 -- --
Class IB............................... 1.00 0.04 -- --
For the Year Ended December 31, 2005
Class IA............................... 1.00 0.03 -- --
Class IB............................... 1.00 0.03 -- --
For the Year Ended December 31, 2004
Class IA............................... 1.00 -- -- --
Class IB............................... 1.00 -- -- --
For the Year Ended December 31, 2003
Class IA............................... 1.00 0.01 -- --
Class IB............................... 1.00 -- -- --
For the Year Ended December 31, 2002
Class IA............................... 1.00 0.01 -- --
Class IB............................... 1.00 0.01 -- --
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD LARGECAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.63 $(0.05) $ -- $ -- $(0.05)
For the Year Ended December 31, 2005
Class IA............................... 0.09 (0.08) -- -- (0.08)
For the Year Ended December 31, 2004
Class IA............................... 0.99 -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 1.63 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (3.13) -- -- -- --
HARTFORD MIDCAP GROWTH HLS FUND(9)
For the Year Ended December 31, 2006
Class IA............................... 1.38 -- (1.83) -- (1.83)
For the Year Ended December 31, 2005
Class IA............................... 0.49 -- (1.79) -- (1.79)
For the Year Ended December 31, 2004
Class IA............................... 1.44 (0.02) -- -- (0.02)
For the Year Ended December 31, 2003
Class IA............................... 2.66 (0.02) -- -- (0.02)
For the Year Ended December 31, 2002
Class IA............................... (1.28) -- -- -- --
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.05 (0.05) -- -- (0.05)
Class IB............................... 0.04 (0.04) -- -- (0.04)
For the Year Ended December 31, 2005
Class IA............................... 0.03 (0.03) -- -- (0.03)
Class IB............................... 0.03 (0.03) -- -- (0.03)
For the Year Ended December 31, 2004
Class IA............................... -- -- -- -- --
Class IB............................... -- -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 0.01 (0.01) -- -- (0.01)
Class IB............................... -- -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... 0.01 (0.01) -- -- (0.01)
Class IB............................... 0.01 (0.01) -- -- (0.01)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD LARGECAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 0.58 $10.17 6.47% $ 59,482
For the Year Ended December 31, 2005
Class IA............................... 0.01 9.59 0.99 69,136
For the Year Ended December 31, 2004
Class IA............................... 0.99 9.58 11.54 59,766
For the Year Ended December 31, 2003
Class IA............................... 1.63 8.59 23.42 58,670
For the Year Ended December 31, 2002
Class IA............................... (3.13) 6.96 (31.04) 51,944
HARTFORD MIDCAP GROWTH HLS FUND(9)
For the Year Ended December 31, 2006
Class IA............................... (0.45) 10.88 12.27 53,395
For the Year Ended December 31, 2005
Class IA............................... (1.30) 11.33 4.55 55,209
For the Year Ended December 31, 2004
Class IA............................... 1.42 12.63 12.83 59,730
For the Year Ended December 31, 2003
Class IA............................... 2.64 11.21 31.05 56,285
For the Year Ended December 31, 2002
Class IA............................... (1.28) 8.57 (13.06) 43,251
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... -- 1.00 4.69 1,558,433
Class IB............................... -- 1.00 4.43 319,926
For the Year Ended December 31, 2005
Class IA............................... -- 1.00 2.84 1,353,836
Class IB............................... -- 1.00 2.58 264,040
For the Year Ended December 31, 2004
Class IA............................... -- 1.00 0.94 1,294,525
Class IB............................... -- 1.00 0.69 252,808
For the Year Ended December 31, 2003
Class IA............................... -- 1.00 0.75 1,609,439
Class IB............................... -- 1.00 0.50 240,930
For the Year Ended December 31, 2002
Class IA............................... -- 1.00 1.47 2,319,456
Class IB............................... -- 1.00 1.24 261,914
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD LARGECAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.96% 0.86% 0.43% 10%
For the Year Ended December 31, 2005
Class IA............................... 0.96 0.86 0.33 34
For the Year Ended December 31, 2004
Class IA............................... 0.96 0.96 0.70 30
For the Year Ended December 31, 2003
Class IA............................... 0.93 0.93 0.05 121
For the Year Ended December 31, 2002
Class IA............................... 0.95 0.95 (0.19) 44
HARTFORD MIDCAP GROWTH HLS FUND(9)
For the Year Ended December 31, 2006
Class IA............................... 0.98 0.78 (0.08) 211
For the Year Ended December 31, 2005
Class IA............................... 1.01 0.81 (0.39) 112
For the Year Ended December 31, 2004
Class IA............................... 0.94 0.94 0.02 179
For the Year Ended December 31, 2003
Class IA............................... 0.95 0.95 0.16 76
For the Year Ended December 31, 2002
Class IA............................... 0.97 0.97 0.16 77
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.48 0.48 4.63 --
Class IB............................... 0.73 0.73 4.38 --
For the Year Ended December 31, 2005
Class IA............................... 0.49 0.49 2.79 --
Class IB............................... 0.75 0.75 2.54 --
For the Year Ended December 31, 2004
Class IA............................... 0.48 0.48 0.93 --
Class IB............................... 0.73 0.73 0.68 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 0.75 --
Class IB............................... 0.74 0.74 0.50 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 1.43 --
Class IB............................... 0.74 0.72 1.20 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
(9) Previously known as Hartford MidCap Stock HLS Fund. Name change effective
December 11, 2006.
203
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $11.50 $ 0.54 $ -- $ (0.03)
Class IB............................... 11.40 0.50 -- (0.02)
For the Year Ended December 31, 2005
Class IA............................... 11.71 0.55 -- (0.28)
Class IB............................... 11.61 0.53 -- (0.29)
For the Year Ended December 31, 2004
Class IA............................... 11.84 0.42 -- 0.05
Class IB............................... 11.75 0.45 -- (0.02)
For the Year Ended December 31, 2003
Class IA............................... 12.01 0.35 -- (0.08)
Class IB............................... 11.94 0.38 -- (0.14)
For the Year Ended December 31, 2002
Class IA............................... 11.54(5) 0.37(5) -- 0.15(5)
Class IB............................... 11.50(5) 0.31(5) -- 0.18(5)
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 20.88 0.09 -- 1.35
Class IB............................... 20.83 0.04 -- 1.35
For the Year Ended December 31, 2005
Class IA............................... 20.26 0.05 0.04 2.13
Class IB............................... 20.21 (0.02) 0.04 2.15
For the Year Ended December 31, 2004
Class IA............................... 17.55 0.04 -- 2.67
Class IB............................... 17.55 0.03 -- 2.63
For the Year Ended December 31, 2003
Class IA............................... 11.70 -- -- 5.85
Class IB............................... 11.73 (0.01) -- 5.83
For the Year Ended December 31, 2002
Class IA............................... 16.44 (0.02) -- (4.72)
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 15.96 (0.01) -- (4.22)
HARTFORD SMALLCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 13.77 0.21 -- 2.26
Class IB............................... 13.74 0.17 -- 2.27
For the Year Ended December 31, 2005
Class IA............................... 16.61 0.15 -- 1.08
Class IB............................... 16.59 0.16 -- 1.02
For the Year Ended December 31, 2004
Class IA............................... 14.81 0.13 -- 1.92
Class IB............................... 14.78 0.15 -- 1.91
For the Year Ended December 31, 2003
Class IA............................... 10.88 0.13 -- 4.01
From inception July 1, 2003 through
December 31, 2003
Class IB............................... 12.06 -- -- 2.72
For the Year Ended December 31, 2002
Class IA............................... 14.20 0.07 -- (1.93)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ 0.51 $(1.19) $ -- $ -- $(1.19)
Class IB............................... 0.48 (1.13) -- -- (1.13)
For the Year Ended December 31, 2005
Class IA............................... 0.27 (0.48) -- -- (0.48)
Class IB............................... 0.24 (0.45) -- -- (0.45)
For the Year Ended December 31, 2004
Class IA............................... 0.47 (0.58) (0.02) -- (0.60)
Class IB............................... 0.43 (0.55) (0.02) -- (0.57)
For the Year Ended December 31, 2003
Class IA............................... 0.27 (0.38) (0.06) -- (0.44)
Class IB............................... 0.24 (0.37) (0.06) -- (0.43)
For the Year Ended December 31, 2002
Class IA............................... 0.52 (0.05)(5) --(5) -- (0.05)
Class IB............................... 0.49 (0.05)(5) --(5) -- (0.05)
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 1.44 (0.08) (1.45) -- (1.53)
Class IB............................... 1.39 (0.03) (1.45) -- (1.48)
For the Year Ended December 31, 2005
Class IA............................... 2.22 (0.08) (1.22) (0.30) (1.60)
Class IB............................... 2.17 (0.03) (1.22) (0.30) (1.55)
For the Year Ended December 31, 2004
Class IA............................... 2.71 -- -- -- --
Class IB............................... 2.66 -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 5.85 -- -- -- --
Class IB............................... 5.82 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (4.74) -- -- -- --
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.23) -- -- -- --
HARTFORD SMALLCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 2.47 (0.20) (3.05) -- (3.25)
Class IB............................... 2.44 (0.16) (3.05) -- (3.21)
For the Year Ended December 31, 2005
Class IA............................... 1.23 (0.23) (3.84) -- (4.07)
Class IB............................... 1.18 (0.19) (3.84) -- (4.03)
For the Year Ended December 31, 2004
Class IA............................... 2.05 (0.10) (0.15) -- (0.25)
Class IB............................... 2.06 (0.10) (0.15) -- (0.25)
For the Year Ended December 31, 2003
Class IA............................... 4.14 (0.06) (0.15) -- (0.21)
From inception July 1, 2003 through
December 31, 2003
Class IB............................... 2.72 -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... (1.86) (0.10) (1.36) -- (1.46)
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... $ (0.68) $10.82 4.68% $ 406,971
Class IB............................... (0.65) 10.75 4.41 136,537
For the Year Ended December 31, 2005
Class IA............................... (0.21) 11.50 2.36 457,600
Class IB............................... (0.21) 11.40 2.11 163,031
For the Year Ended December 31, 2004
Class IA............................... (0.13) 11.71 4.12 521,171
Class IB............................... (0.14) 11.61 3.86 180,232
For the Year Ended December 31, 2003
Class IA............................... (0.17) 11.84 2.29 587,833
Class IB............................... (0.19) 11.75 2.03 180,982
For the Year Ended December 31, 2002
Class IA............................... 0.47 12.01(5) 8.15 727,323
Class IB............................... 0.44 11.94(5) 7.89 116,549
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.09) 20.79 6.86(7) 746,266
Class IB............................... (0.09) 20.74 6.59(7) 273,736
For the Year Ended December 31, 2005
Class IA............................... 0.62 20.88 11.02(7) 704,168
Class IB............................... 0.62 20.83 10.78(7) 271,859
For the Year Ended December 31, 2004
Class IA............................... 2.71 20.26 15.43 503,717
Class IB............................... 2.66 20.21 15.14 201,589
For the Year Ended December 31, 2003
Class IA............................... 5.85 17.55 50.06 346,380
Class IB............................... 5.82 17.55 49.70 74,592
For the Year Ended December 31, 2002
Class IA............................... (4.74) 11.70 (28.83) 184,062
From inception April, 30 2002 through
December 31, 2002
Class IB............................... (4.23) 11.73 (26.51)(2) 7,150
HARTFORD SMALLCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... (0.78) 12.99 18.31 102,233
Class IB............................... (0.77) 12.97 18.02 171
For the Year Ended December 31, 2005
Class IA............................... (2.84) 13.77 8.11 103,350
Class IB............................... (2.85) 13.74 7.83 146
For the Year Ended December 31, 2004
Class IA............................... 1.80 16.61 13.98 114,296
Class IB............................... 1.81 16.59 14.06 32
For the Year Ended December 31, 2003
Class IA............................... 3.93 14.81 38.46 105,589
From inception July 1, 2003 through
December 31, 2003
Class IB............................... 2.72 14.78 25.54(2) 1
For the Year Ended December 31, 2002
Class IA............................... (3.32) 10.88 (15.17) 85,029
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD MORTGAGE SECURITIES HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.49% 0.49% 4.76% 45%
Class IB............................... 0.74 0.74 4.51 --
For the Year Ended December 31, 2005
Class IA............................... 0.49 0.49 4.25 131
Class IB............................... 0.74 0.74 4.00 --
For the Year Ended December 31, 2004
Class IA............................... 0.49 0.49 3.29 100
Class IB............................... 0.74 0.74 3.04 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 2.84 338
Class IB............................... 0.74 0.74 2.59 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 3.86 339
Class IB............................... 0.74 0.73 3.62 --
HARTFORD SMALLCAP GROWTH HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64 0.64 0.42 92
Class IB............................... 0.89 0.89 0.17 --
For the Year Ended December 31, 2005
Class IA............................... 0.63 0.63 0.20 77
Class IB............................... 0.88 0.88 (0.05) --
For the Year Ended December 31, 2004
Class IA............................... 0.64 0.64 0.27 88
Class IB............................... 0.89 0.89 0.02 --
For the Year Ended December 31, 2003
Class IA............................... 0.66 0.66 (0.01) 101
Class IB............................... 0.91 0.91 (0.26) --
For the Year Ended December 31, 2002
Class IA............................... 0.69 0.69 (0.18) 99
From inception April, 30 2002 through
December 31, 2002
Class IB............................... 0.89(1) 0.89(1) (0.13)(1) --
HARTFORD SMALLCAP VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.99 0.99 1.35 166
Class IB............................... 1.24 1.24 1.07 --
For the Year Ended December 31, 2005
Class IA............................... 0.92 0.92 0.94 49
Class IB............................... 1.17 1.17 0.71 --
For the Year Ended December 31, 2004
Class IA............................... 0.92 0.92 0.80 51
Class IB............................... 1.17 1.17 0.55 --
For the Year Ended December 31, 2003
Class IA............................... 0.92 0.92 0.99 57
From inception July 1, 2003 through
December 31, 2003
Class IB............................... 1.17(1) 1.17(1) 0.74(1) --
For the Year Ended December 31, 2002
Class IA............................... 0.92 0.92 0.60 44
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
204
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $49.21 $ 0.72 $ 0.06 $ 6.41
Class IB............................... 49.10 0.56 0.06 6.42
For the Year Ended December 31, 2005
Class IA............................... 45.72 0.66 -- 3.72
Class IB............................... 45.59 0.51 -- 3.74
For the Year Ended December 31, 2004
Class IA............................... 44.37 0.74 -- 1.10
Class IB............................... 44.29 0.64 -- 1.08
For the Year Ended December 31, 2003
Class IA............................... 35.46 0.46 -- 8.93
Class IB............................... 35.42 0.38 -- 8.88
For the Year Ended December 31, 2002
Class IA............................... 47.36(5) 0.43(5) -- (11.94)(5)
Class IB............................... 47.31(5) 0.38(5) -- (11.95)(5)
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 11.27 0.55 -- (0.01)
Class IB............................... 11.20 0.51 -- --
For the Year Ended December 31, 2005
Class IA............................... 11.94 0.44 -- (0.14)
Class IB............................... 11.86 0.43 -- (0.17)
For the Year Ended December 31, 2004
Class IA............................... 12.32 0.40 -- 0.12
Class IB............................... 12.25 0.45 -- 0.04
For the Year Ended December 31, 2003
Class IA............................... 11.95 0.36 -- 0.57
Class IB............................... 11.90 0.40 -- 0.50
For the Year Ended December 31, 2002
Class IA............................... 11.46(5) 0.56(5) -- (0.01)(5)
Class IB............................... 11.43(5) 0.46(5) -- 0.07(5)
HARTFORD U.S GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 11.09 0.49 -- (0.06)
Class IB............................... 11.03 0.46 -- (0.06)
For the Year Ended December 31, 2005
Class IA............................... 11.24 0.35 -- (0.17)
Class IB............................... 11.19 0.37 -- (0.22)
For the Year Ended December 31, 2004
Class IA............................... 11.43 0.29 -- (0.07)
Class IB............................... 11.39 0.37 -- (0.18)
For the Year Ended December 31, 2003
Class IA............................... 11.36 0.31 -- (0.07)
Class IB............................... 11.34 0.27 -- (0.05)
For the Year Ended December 31, 2002
Class IA............................... 10.79 0.22 -- 0.89
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 10.51 0.15 -- 0.68
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 7.19 $(0.71) $(3.12) $ -- $(3.83)
Class IB............................... 7.04 (0.57) (3.12) -- (3.69)
For the Year Ended December 31, 2005
Class IA............................... 4.38 (0.89) -- -- (0.89)
Class IB............................... 4.25 (0.74) -- -- (0.74)
For the Year Ended December 31, 2004
Class IA............................... 1.84 (0.49) -- -- (0.49)
Class IB............................... 1.72 (0.42) -- -- (0.42)
For the Year Ended December 31, 2003
Class IA............................... 9.39 (0.48) -- -- (0.48)
Class IB............................... 9.26 (0.39) -- -- (0.39)
For the Year Ended December 31, 2002
Class IA............................... (11.51) (0.39)(5) --(5) -- (0.39)
Class IB............................... (11.57) (0.32)(5) --(5) -- (0.32)
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.54 (0.57) -- -- (0.57)
Class IB............................... 0.51 (0.52) -- -- (0.52)
For the Year Ended December 31, 2005
Class IA............................... 0.30 (0.88) (0.09) -- (0.97)
Class IB............................... 0.26 (0.83) (0.09) -- (0.92)
For the Year Ended December 31, 2004
Class IA............................... 0.52 (0.58) (0.32) -- (0.90)
Class IB............................... 0.49 (0.56) (0.32) -- (0.88)
For the Year Ended December 31, 2003
Class IA............................... 0.93 (0.50) (0.06) -- (0.56)
Class IB............................... 0.90 (0.49) (0.06) -- (0.55)
For the Year Ended December 31, 2002
Class IA............................... 0.55 (0.05)(5) (0.01)(5) -- (0.06)
Class IB............................... 0.53 (0.05)(5) (0.01)(5) -- (0.06)
HARTFORD U.S GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.43 (0.39) -- -- (0.39)
Class IB............................... 0.40 (0.36) -- -- (0.36)
For the Year Ended December 31, 2005
Class IA............................... 0.18 (0.33) -- -- (0.33)
Class IB............................... 0.15 (0.31) -- -- (0.31)
For the Year Ended December 31, 2004
Class IA............................... 0.22 (0.41) -- -- (0.41)
Class IB............................... 0.19 (0.39) -- -- (0.39)
For the Year Ended December 31, 2003
Class IA............................... 0.24 (0.17) -- -- (0.17)
Class IB............................... 0.22 (0.17) -- -- (0.17)
For the Year Ended December 31, 2002
Class IA............................... 1.11 (0.54) -- -- (0.54)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.83 -- -- -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 3.36 $52.57 14.65(7)% $ 4,498,001
Class IB............................... 3.35 52.45 14.37(7) 758,802
For the Year Ended December 31, 2005
Class IA............................... 3.49 49.21 9.62 4,787,612
Class IB............................... 3.51 49.10 9.35 770,163
For the Year Ended December 31, 2004
Class IA............................... 1.35 45.72 4.17 5,657,942
Class IB............................... 1.30 45.59 3.91 718,293
For the Year Ended December 31, 2003
Class IA............................... 8.91 44.37 26.47 6,014,675
Class IB............................... 8.87 44.29 26.16 562,979
For the Year Ended December 31, 2002
Class IA............................... (11.90) 35.46(5) (24.25) 5,094,276
Class IB............................... (11.89) 35.42(5) (24.42) 296,767
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... (0.03) 11.24 4.80(7) 3,041,321
Class IB............................... (0.01) 11.19 4.54(7) 1,040,408
For the Year Ended December 31, 2005
Class IA............................... (0.67) 11.27 2.45 2,745,115
Class IB............................... (0.66) 11.20 2.19 1,068,600
For the Year Ended December 31, 2004
Class IA............................... (0.38) 11.94 4.62 2,507,021
Class IB............................... (0.39) 11.86 4.36 991,065
For the Year Ended December 31, 2003
Class IA............................... 0.37 12.32 7.85 2,332,343
Class IB............................... 0.35 12.25 7.58 734,768
For the Year Ended December 31, 2002
Class IA............................... 0.49 11.95(5) 10.08 2,145,266
Class IB............................... 0.47 11.90(5) 9.83 382,864
HARTFORD U.S GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.04 11.13 4.01 711,639
Class IB............................... 0.04 11.07 3.75 290,963
For the Year Ended December 31, 2005
Class IA............................... (0.15) 11.09 1.55 591,007
Class IB............................... (0.16) 11.03 1.30 323,920
For the Year Ended December 31, 2004
Class IA............................... (0.19) 11.24 2.07 523,819
Class IB............................... (0.20) 11.19 1.82 294,711
For the Year Ended December 31, 2003
Class IA............................... 0.07 11.43 2.15 514,243
Class IB............................... 0.05 11.39 1.89 239,023
For the Year Ended December 31, 2002
Class IA............................... 0.57 11.36 10.73 590,626
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.83 11.34 7.96(2) 100,867
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD STOCK HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.49% 0.49% 1.27% 97%
Class IB............................... 0.74 0.74 1.02 --
For the Year Ended December 31, 2005
Class IA............................... 0.50 0.50 1.21 91
Class IB............................... 0.75 0.75 0.96 --
For the Year Ended December 31, 2004
Class IA............................... 0.49 0.49 1.61 30
Class IB............................... 0.74 0.74 1.36 --
For the Year Ended December 31, 2003
Class IA............................... 0.49 0.49 1.18 37
Class IB............................... 0.74 0.74 0.93 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 0.97 44
Class IB............................... 0.74 0.72 0.75 --
HARTFORD TOTAL RETURN BOND HLS FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.50 0.50 4.82 344
Class IB............................... 0.75 0.75 4.56 --
For the Year Ended December 31, 2005
Class IA............................... 0.50 0.50 4.09 190
Class IB............................... 0.75 0.75 3.84 --
For the Year Ended December 31, 2004
Class IA............................... 0.50 0.50 3.72 164
Class IB............................... 0.75 0.75 3.47 --
For the Year Ended December 31, 2003
Class IA............................... 0.50 0.50 3.74 215
Class IB............................... 0.75 0.75 3.49 --
For the Year Ended December 31, 2002
Class IA............................... 0.51 0.51 5.58 108
Class IB............................... 0.76 0.75 5.34 --
HARTFORD U.S GOVERNMENT SECURITIES HLS
FUND
For the Year Ended December 31, 2006(8)
Class IA............................... 0.48 0.48 4.48 199
Class IB............................... 0.73 0.73 4.21 --
For the Year Ended December 31, 2005
Class IA............................... 0.47 0.47 3.60 257
Class IB............................... 0.72 0.72 3.34 --
For the Year Ended December 31, 2004
Class IA............................... 0.47 0.47 3.08 247
Class IB............................... 0.72 0.72 2.83 --
For the Year Ended December 31, 2003
Class IA............................... 0.47 0.47 2.74 191
Class IB............................... 0.72 0.72 2.49 --
For the Year Ended December 31, 2002
Class IA............................... 0.49 0.49 3.47 283
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.74(1) 0.74(1) 5.13(1) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
205
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED
VALUE AT INVESTMENT PAYMENTS GAIN
BEGINNING INCOME FROM (TO) (LOSS) ON
OF PERIOD (LOSS) AFFILIATE INVESTMENTS
--------- ---------- --------- -----------
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $11.18 $ 0.15 $ -- $ 2.23
Class IB............................... 11.14 0.13 -- 2.21
For the Year Ended December 31, 2005
Class IA............................... 10.73 0.15 -- 0.71
Class IB............................... 10.67 0.10 -- 0.73
For the Year Ended December 31, 2004
Class IA............................... 9.72 0.13 -- 0.91
Class IB............................... 9.69 0.12 -- 0.89
For the Year Ended December 31, 2003
Class IA............................... 7.61 0.10 -- 2.08
Class IB............................... 7.60 0.09 -- 2.06
For the Year Ended December 31, 2002
Class IA............................... 9.94(5) 0.08(5) -- (2.33)(5)
Class IB............................... 9.93(5) 0.07(5) -- (2.33)(5)
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 18.93 0.25 0.01 3.14
Class IB............................... 18.83 0.21 0.01 3.11
For the Year Ended December 31, 2005
Class IA............................... 18.16 0.14 -- 1.34
Class IB............................... 18.06 0.09 -- 1.33
For the Year Ended December 31, 2004
Class IA............................... 15.33 0.13 -- 2.75
Class IB............................... 15.27 0.11 -- 2.72
For the Year Ended December 31, 2003
Class IA............................... 10.86 0.06 -- 4.48
Class IB............................... 10.84 0.08 -- 4.41
For the Year Ended December 31, 2002
Class IA............................... 14.83 0.07 -- (3.68)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 13.51 0.02 -- (2.69)
<Caption>
-- SELECTED PER-SHARE DATA(4) --
-----------------------------------------------------------------------
DISTRIBUTIONS
TOTAL DIVIDENDS FROM
FROM FROM NET REALIZED DISTRIBUTIONS
INVESTMENT INVESTMENT CAPITAL FROM TOTAL
OPERATIONS INCOME GAINS CAPITAL DISTRIBUTIONS
---------- ---------- ------------- ------------- -------------
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 2.38 $(0.15) $(0.35) $ -- $(0.50)
Class IB............................... 2.34 (0.10) (0.35) -- (0.45)
For the Year Ended December 31, 2005
Class IA............................... 0.86 (0.27) (0.14) -- (0.41)
Class IB............................... 0.83 (0.22) (0.14) -- (0.36)
For the Year Ended December 31, 2004
Class IA............................... 1.04 (0.03) -- -- (0.03)
Class IB............................... 1.01 (0.03) -- -- (0.03)
For the Year Ended December 31, 2003
Class IA............................... 2.18 (0.07) -- -- (0.07)
Class IB............................... 2.15 (0.06) -- -- (0.06)
For the Year Ended December 31, 2002
Class IA............................... (2.25) (0.08)(5) --(5) -- (0.08)
Class IB............................... (2.26) (0.07)(5) --(5) -- (0.07)
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 3.40 (0.26) (2.33) -- (2.59)
Class IB............................... 3.33 (0.19) (2.33) -- (2.52)
For the Year Ended December 31, 2005
Class IA............................... 1.48 (0.26) (0.45) -- (0.71)
Class IB............................... 1.42 (0.20) (0.45) -- (0.65)
For the Year Ended December 31, 2004
Class IA............................... 2.88 (0.05) -- -- (0.05)
Class IB............................... 2.83 (0.04) -- -- (0.04)
For the Year Ended December 31, 2003
Class IA............................... 4.54 (0.07) -- -- (0.07)
Class IB............................... 4.49 (0.06) -- -- (0.06)
For the Year Ended December 31, 2002
Class IA............................... (3.61) (0.09) (0.27) -- (0.36)
From inception April 30, 2002 through
December 31, 2002
Class IB............................... (2.67) -- -- -- --
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
---------------------------------------------------------
NET
NET ASSET
INCREASE VALUE
(DECREASE) AT
IN NET END NET ASSETS
ASSET OF TOTAL AT END OF
VALUE PERIOD RETURN PERIOD
---------- ------ ------- ---------------
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.88 $13.06 21.82(7)% $ 277,982
Class IB............................... 1.89 13.03 21.52(7) 148,135
For the Year Ended December 31, 2005
Class IA............................... 0.45 11.18 8.13 193,655
Class IB............................... 0.47 11.14 7.86 129,771
For the Year Ended December 31, 2004
Class IA............................... 1.01 10.73 10.71 162,644
Class IB............................... 0.98 10.67 10.43 120,227
For the Year Ended December 31, 2003
Class IA............................... 2.11 9.72 28.60 155,085
Class IB............................... 2.09 9.69 28.28 99,825
For the Year Ended December 31, 2002
Class IA............................... (2.33) 7.61(5) (22.64) 69,388
Class IB............................... (2.33) 7.60(5) (22.81) 34,006
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.81 19.74 19.02(7) 508,648
Class IB............................... 0.81 19.64 18.73(7) 164,151
For the Year Ended December 31, 2005
Class IA............................... 0.77 18.93 8.32 390,113
Class IB............................... 0.77 18.83 8.05 151,960
For the Year Ended December 31, 2004
Class IA............................... 2.83 18.16 18.87 259,593
Class IB............................... 2.79 18.06 18.58 81,772
For the Year Ended December 31, 2003
Class IA............................... 4.47 15.33 41.87 156,879
Class IB............................... 4.43 15.27 41.52 32,572
For the Year Ended December 31, 2002
Class IA............................... (3.97) 10.86 (24.95) 88,793
From inception April 30, 2002 through
December 31, 2002
Class IB............................... (2.67) 10.84 (19.74)(2) 3,160
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD VALUE HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.85% 0.85% 1.37% 40%
Class IB............................... 1.10 1.10 1.10 --
For the Year Ended December 31, 2005
Class IA............................... 0.86 0.86 1.42 30
Class IB............................... 1.11 1.11 1.17 --
For the Year Ended December 31, 2004
Class IA............................... 0.87 0.87 1.36 45
Class IB............................... 1.12 1.12 1.11 --
For the Year Ended December 31, 2003
Class IA............................... 0.87 0.87 1.53 40
Class IB............................... 1.12 1.12 1.28 --
For the Year Ended December 31, 2002
Class IA............................... 0.89 0.89 1.30 37
Class IB............................... 1.14 1.12 1.07 --
HARTFORD VALUE OPPORTUNITIES HLS FUND
For the Year Ended December 31, 2006
Class IA............................... 0.64 0.64 1.31 52
Class IB............................... 0.89 0.89 1.05 --
For the Year Ended December 31, 2005
Class IA............................... 0.65 0.65 1.05 52
Class IB............................... 0.90 0.90 0.79 --
For the Year Ended December 31, 2004
Class IA............................... 0.67 0.67 1.10 80
Class IB............................... 0.92 0.92 0.85 --
For the Year Ended December 31, 2003
Class IA............................... 0.71 0.71 0.62 48
Class IB............................... 0.96 0.96 0.37 --
For the Year Ended December 31, 2002
Class IA............................... 0.73 0.73 0.60 67
From inception April 30, 2002 through
December 31, 2002
Class IB............................... 0.91(1) 0.91(1) 1.06(1) --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from (to) Affiliate, as
noted on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
206
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
HARTFORD SERIES FUND, INC. AND
HARTFORD HLS SERIES FUND II, INC.
- --------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Hartford Advisers HLS Fund, Hartford Capital
Appreciation HLS Fund, Hartford Disciplined Equity HLS Fund, Hartford Dividend
and Growth HLS Fund, Hartford Equity Income HLS Fund, Hartford Focus HLS Fund,
Hartford Global Advisers HLS Fund, Hartford Global Leaders HLS Fund, Hartford
Growth HLS Fund, Hartford High Yield HLS Fund, Hartford Index HLS Fund, Hartford
International Capital Appreciation HLS Fund, Hartford International
Opportunities HLS Fund, Hartford International Small Company HLS Fund, Hartford
Money Market HLS Fund, Hartford Mortgage Securities HLS Fund, Hartford Stock HLS
Fund, Hartford Total Return Bond HLS Fund and Hartford Value HLS Fund (nineteen
of the twenty-six portfolios constituting the Hartford Series Fund, Inc.) and
Hartford Blue Chip Stock HLS Fund, Hartford Capital Opportunities HLS Fund,
Hartford Growth Opportunities HLS Fund, Hartford International Stock HLS Fund,
Hartford LargeCap Growth HLS Fund, Hartford MidCap Growth HLS Fund, Hartford
SmallCap Growth HLS Fund, Hartford SmallCap Value HLS Fund, Hartford U.S.
Government Securities HLS Fund, and Hartford Value Opportunities HLS Fund (ten
portfolios constituting the Hartford HLS Series Fund II, Inc.) (collectively,
the "Funds") as of December 31, 2006, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods indicated therein. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian,
agent banks or brokers or by other appropriate auditing procedures where replies
from agent banks or brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds listed above constituting portfolios within Hartford Series Fund,
Inc. and Hartford HLS Series Fund II, Inc. at December 31, 2006, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
207
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Funds and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the funds
pursuant to the Investment Company Act of 1940. Each officer and three of the
Funds' directors, as noted in the chart below, are "interested" persons of the
funds. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by each Fund can
be found in the Statement of Operations herein. The Funds do not pay salaries or
compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
208
- --------------------------------------------------------------------------------
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms.
Fleege was Counsel for Amerprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005.
209
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities and a record of how the Funds
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Funds file a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
SHAREHOLDER MEETING RESULTS
The following proposal was addressed and approved at a special meeting of
shareholders held on October 24, 2006.
1. Proposal to approve a sub-advisory agreement between HL Investment Advisors,
LLC ("HL Advisors"), the Fund's investment manager, and Hartford Investment
Management Company ("Hartford Investment Management"), an affiliate of HL
Advisors pursuant to which Hartford Investment Management will serve as an
additional sub-adviser of the Hartford SmallCap Growth HLS Fund (the "Fund")
and manage a portion of the Fund's assets.
<Table>
<Caption>
FUND NAME FOR AGAINST ABSTAIN
- --------- -------------- ------------- -------------
Hartford SmallCap Growth HLS Fund........................... 35,769,980.346 1,480,665.687 3,222,626.038
</Table>
The following proposal was addressed and approved at a special meeting of
shareholders held on October 24, 2006.
1. Proposal to approve a sub-advisory agreement between HL Investment Advisors,
LLC ("HL Advisors"), the Fund's investment manager, and Hartford Investment
Management Company ("Hartford Investment Management"), an affiliate of HL
Advisors pursuant to which Hartford Investment Management will serve as the
sole sub-adviser of the Hartford Blue Chip Stock HLS Fund (the "Fund) and
manage the Fund's assets.
<Table>
<Caption>
FUND NAME FOR AGAINST ABSTAIN
- --------- -------------- ------------- -------------
Hartford Blue Chip Stock HLS Fund........................... 6,451,195.808 360,550.933 642,150.304
</Table>
The following proposal was addressed and approved at a special meeting of
shareholders held on November 16, 2006.
1. Proposal to approve a sub-advisory agreement between HL Investment Advisors,
LLC ("HL Advisors"), the Fund's investment manager, and Hartford Investment
Management Company ("Hartford Investment Management"), an affiliate of HL
Advisors pursuant to which Hartford Investment Management will serve as the
sole sub-adviser of the Hartford MidCap Stock HLS Fund* (the "Fund) and
manage the Fund's assets.
<Table>
<Caption>
FUND NAME FOR AGAINST ABSTAIN
- --------- -------------- ------------- -------------
Hartford MidCap Stock HLS Fund*............................. 3,785,561.004 229,813.731 375,275.626
</Table>
The following proposals were addressed and approved at a special meeting of
shareholders held on January 23, 2007.
Proposal to approve a plan of reorganization providing for the acquisition of
all of the assets and liabilities of Hartford Capital Opportunities HLS Fund
(the "Acquired Fund") by Hartford Blue Chip Stock HLS Fund (the "Acquiring
Fund"), a series of Hartford HLS Series Fund II, Inc., solely in exchange for
shares of the Acquiring Fund follows by the complete liquidation of the Acquired
fund.
<Table>
<Caption>
FUND NAME FOR AGAINST ABSTAIN
- --------- ------------- ------------- -------------
Hartford Capital Opportunities HLS Fund..................... 1,271,875.921 73,262.424 183,212.445
</Table>
Proposal to approve a plan of reorganization providing for the acquisition of
all of the assets and liabilities of Hartford LargeCap Growth HLS Fund (the
"Acquired Fund") by Hartford Blue Chip Stock HLS Fund (the "Acquiring Fund"), a
series of Hartford HLS Series Fund II, Inc., solely in exchange for shares of
the Acquiring Fund followed by the complete liquidation of the Acquired fund.
<Table>
<Caption>
FUND NAME FOR AGAINST ABSTAIN
- --------- ------------- ------------- -------------
Hartford LargeCap Growth HLS Fund........................... 5,355,118.815 175,856.665 401,314.425
</Table>
- ---------------
* Name changed to Hartford MidCap Growth Fund effective December 11, 2006.
210
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,102.32 $3.34
Class IB........... $1,000.00 $1,099.84 $4.66
HARTFORD BLUE CHIP
HLS FUND
Class IA........... $1,000.00 $1,089.54 $3.90
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,121.09 $3.53
Class IB........... $1,000.00 $1,158.66 $4.95
HARTFORD CAPITAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,088.53 $5.11
HARTFORD DISCIPLINED
EQUITY HLS FUND
Class IA........... $1,000.00 $1,101.47 $3.76
Class IB........... $1,000.00 $1,116.88 $5.12
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- -------- ---------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,022.03 $3.21 0.63% 184 365
Class IB........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
HARTFORD BLUE CHIP
HLS FUND
Class IA........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD CAPITAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,020.32 $4.94 0.97% 184 365
HARTFORD DISCIPLINED
EQUITY HLS FUND
Class IA........... $1,000.00 $1,021.63 $3.62 0.71% 184 365
Class IB........... $1,000.00 $1,020.37 $4.89 0.96% 184 365
</Table>
211
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
EXPENSE EXAMPLE (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,138.54 $3.61
Class IB........... $1,000.00 $1,195.97 $5.09
HARTFORD EQUITY
INCOME HLS FUND
Class IA........... $1,000.00 $1,125.15 $4.02
Class IB........... $1,000.00 $1,199.89 $5.54
HARTFORD FOCUS HLS
FUND
Class IA........... $1,000.00 $1,119.92 $4.70
Class IB........... $1,000.00 $1,088.81 $5.95
HARTFORD GLOBAL
ADVISERS HLS FUND
Class IA........... $1,000.00 $1,055.43 $4.20
Class IB........... $1,000.00 $1,080.29 $5.56
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,081.57 $3.94
Class IB........... $1,000.00 $1,133.56 $5.38
HARTFORD GROWTH HLS
FUND
Class IA........... $1,000.00 $1,072.36 $4.39
Class IB........... $1,000.00 $1,038.03 $5.60
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,100.93 $3.50
Class IB........... $1,000.00 $1,113.35 $4.85
HARTFORD HIGH YIELD
HLS FUND
Class IA........... $1,000.00 $1,078.15 $3.82
Class IB........... $1,000.00 $1,103.98 $5.20
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,123.98 $1.82
Class IB........... $1,000.00 $1,148.71 $3.20
HARTFORD
INTERNATIONAL
CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,147.67 $4.66
Class IB........... $1,000.00 $1,232.13 $6.25
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,135.15 $3.93
Class IB........... $1,000.00 $1,236.54 $5.52
HARTFORD
INTERNATIONAL SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,163.35 $5.02
Class IB........... $1,000.00 $1,284.22 $6.74
HARTFORD
INTERNATIONAL STOCK
HLS FUND
Class IA........... $1,000.00 $1,119.62 $4.92
HARTFORD LARGECAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,079.49 $4.61
HARTFORD MIDCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,080.06 $4.19
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.53 $2.45
Class IB........... $1,000.00 $1,040.60 $3.75
HARTFORD MORTGAGE
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,045.71 $2.53
Class IB........... $1,000.00 $1,040.39 $3.81
HARTFORD SMALLCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,058.45 $3.32
Class IB........... $1,000.00 $1,061.43 $4.62
HARTFORD SMALLCAP
VALUE HLS FUND
Class IA........... $1,000.00 $1,108.38 $5.31
Class IB........... $1,000.00 $1,173.90 $6.85
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,133.32 $2.63
Class IB........... $1,000.00 $1,139.95 $3.99
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- -------- ---------
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.83 $3.41 0.67% 184 365
Class IB........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
HARTFORD EQUITY
INCOME HLS FUND
Class IA........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
Class IB........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
HARTFORD FOCUS HLS
FUND
Class IA........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
Class IB........... $1,000.00 $1,019.51 $5.75 1.13% 184 365
HARTFORD GLOBAL
ADVISERS HLS FUND
Class IA........... $1,000.00 $1,021.12 $4.13 0.81% 184 365
Class IB........... $1,000.00 $1,019.86 $5.40 1.06% 184 365
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
Class IB........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
HARTFORD GROWTH HLS
FUND
Class IA........... $1,000.00 $1,020.97 $4.28 0.84% 184 365
Class IB........... $1,000.00 $1,019.71 $5.55 1.09% 184 365
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD HIGH YIELD
HLS FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,023.49 $1.73 0.34% 184 365
Class IB........... $1,000.00 $1,022.23 $3.01 0.59% 184 365
HARTFORD
INTERNATIONAL
CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,020.87 $4.38 0.86% 184 365
Class IB........... $1,000.00 $1,019.61 $5.65 1.11% 184 365
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD
INTERNATIONAL SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
Class IB........... $1,000.00 $1,019.31 $5.96 1.17% 184 365
HARTFORD
INTERNATIONAL STOCK
HLS FUND
Class IA........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
HARTFORD LARGECAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
HARTFORD MIDCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.17 $4.08 0.80% 184 365
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.79 $2.45 0.48% 184 365
Class IB........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
HARTFORD MORTGAGE
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,022.74 $2.50 0.49% 184 365
Class IB........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
HARTFORD SMALLCAP
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.98 $3.26 0.64% 184 365
Class IB........... $1,000.00 $1,020.72 $4.53 0.89% 184 365
HARTFORD SMALLCAP
VALUE HLS FUND
Class IA........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
Class IB........... $1,000.00 $1,018.90 $6.36 1.25% 184 365
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,022.74 $2.50 0.49% 184 365
Class IB........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
</Table>
212
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<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,051.37 $2.59
Class IB........... $1,000.00 $1,041.65 $3.86
HARTFORD U.S.
GOVERNMENT
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,037.93 $2.41
Class IB........... $1,000.00 $1,033.91 $3.69
HARTFORD VALUE HLS
FUND
Class IA........... $1,000.00 $1,127.63 $4.56
Class IB........... $1,000.00 $1,209.67 $6.13
HARTFORD VALUE
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,132.44 $3.49
Class IB........... $1,000.00 $1,182.73 $4.95
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- -------- ---------
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,022.68 $2.55 0.50% 184 365
Class IB........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
HARTFORD U.S.
GOVERNMENT
SECURITIES HLS FUND
Class IA........... $1,000.00 $1,022.84 $2.40 0.47% 184 365
Class IB........... $1,000.00 $1,021.58 $3.67 0.72% 184 365
HARTFORD VALUE HLS
FUND
Class IA........... $1,000.00 $1,020.92 $4.33 0.85% 184 365
Class IB........... $1,000.00 $1,019.66 $5.60 1.10% 184 365
HARTFORD VALUE
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.93 $3.31 0.65% 184 365
Class IB........... $1,000.00 $1,020.67 $4.58 0.90% 184 365
</Table>
213
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
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Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested person" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
continuation of the funds' investment advisory and sub-advisory agreements after
an initial two-year period.
In addition to the existing agreements discussed beginning on page 218, the
Board of Directors, including each of the Independent Directors, approved the
following investment management agreements (collectively, the "Agreements"):
- - At a meeting held on August 1-2, 2006, the Board of Directors voted to
approve, on behalf of Hartford MidCap Stock HLS Fund*, an investment
sub-advisory agreement between HL Advisors, the fund's investment adviser, and
Hartford Investment Management (the "MidCap Stock Agreement").
- - At a meeting held on August 1-2, 2006, the Board of Directors voted to
approve, on behalf of Hartford Blue Chip HLS Fund, an investment sub-advisory
agreement between HL Advisors, the fund's investment adviser, and Hartford
Investment Management (the "Blue Chip Agreement").
In advance of each meeting, the Board reviewed written responses from HL
Advisors and each fund's proposed sub-adviser to questions posed to them on
behalf of the Independent Directors and supporting materials (the "Adviser
Materials"). In addition, for each fund, the Board or the Board's Investment
Committee received in-person presentations about the Agreements by
representatives of HL Advisors and the relevant sub-adviser.
In determining to approve the Agreements, the Board determined that each
Agreement, including the appointment of the sub-adviser, was fair and reasonable
and in the best interests of each fund and its shareholders, as applicable. In
determining to approve the Agreements, the Board considered the following
categories of material factors, among others, relating to each Agreement.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board considered the nature, extent, and quality of the services to be
provided to each fund by HL Advisors and the respective sub-adviser(s). The
Board considered, among other things, HL Advisors' and each sub-adviser's
organizational structure, personnel who would provide services to the funds,
capacity, investment process and regulatory/compliance history. In addition, the
Board considered each sub-adviser's investment philosophy, performance record
and trade execution capabilities. The Board further considered its past
experiences with HL Advisors with respect to the services it has provided to
other Hartford-sponsored funds, including HL Advisors' management and monitoring
of the funds' sub-advisers, the quality of HL Advisors' communications with the
Board, the compliance structure and systems established by HL Advisors and it's
responsiveness to Board inquiries.
With respect to the MidCap Stock Agreement, the Investment Committee met with
Mark Waterhouse, the proposed portfolio manager for the fund, and members of his
management team and considered the quality of Hartford Investment Management's
investment personnel hired to managed the fund; Hartford Investment Management's
investment philosophy and process (and adherence to that philosophy and
process); and its investment research capabilities and resources, performance
record, and trade execution capabilities and experience.
With respect to the Blue Chip Agreement, the Board and the Investment Committee
met with Hugh Whelan, the proposed portfolio manager for the fund, and
considered HL Advisors' and Hartford Investment Management's investments in
infrastructure in light of increased regulatory requirements and the needs of
Hartford Investment Management's proposed active equity management function. The
Board considered the quality of Hartford Investment Management's investment
personnel hired to managed the fund; Hartford Investment Management's investment
philosophy and process (and adherence to that philosophy and process); and its
investment research capabilities and resources, performance record, and trade
execution capabilities and experience.
With respect to the MidCap Stock and Blue Chip Agreements, the Board also
requested and evaluated information concerning Hartford Investment Management's
regulatory and compliance environment. In this regard, the Board requested
* Name changed to Hartford MidCap Growth HLS Fund effective December 11, 2006.
214
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and reviewed information on Hartford Investment Management's compliance policies
and procedures, compliance history, and reports from the Fund's Chief Compliance
Officer on Hartford Investment Management's compliance with applicable laws and
regulations, including its responses to regulatory developments and compliance
issues raised by regulators.
In considering this information, the Board evaluated not only the information
presented to the Board and the Investment Committee in connection with their
consideration of the Agreements, but also the Board's experience through past
interactions with HL Advisors and Hartford Investment Management. Based on these
considerations, the Board concluded that it was satisfied with the nature,
extent and quality of the services to be provided to the funds by HL Advisors
and each fund's proposed sub-adviser(s).
PERFORMANCE OF HL ADVISORS AND THE SUB-ADVISER(S)
The Board considered the investment performance of the sub-adviser(s) or their
portfolio management teams in managing funds and accounts which follow
investment strategies similar to the Hartford funds. In this regard, for each
agreement approved, the Board considered the sub-adviser(s) previous performance
in managing assets in the relevant asset categories and/or other asset
categories with respect to both benchmark and various peer-group comparisons.
Regarding the MidCap Stock Agreement, the Board considered the investment
performance of Hartford MidCap Stock HLS Fund under it former sub-adviser,
Northern Capital Management, LLC ("Northern Capital"), and noted among other
things, that the fund's three-year and one-year returns as of June 30, 2006 were
below its benchmark. The Board considered information presented by HL Advisors
and Hartford Investment Management regarding the performance record of Mr.
Waterhouse. The Board reviewed materials that compared the performance of funds
previously managed by Mr. Waterhouse to the performance of appropriate
benchmarks and other matrices as well as to a universe of funds selected by
Lipper Inc., an independent provider of investment company data ("Lipper"). This
information consisted of Mr. Waterhouse's track record in managing small
capitalization growth, multi capitalization core, and large capitalization
growth funds at various points during the period from June 30, 1994 through
December 31, 1999. The Board also considered HL Advisors' representations and
judgment that although Mr. Waterhouse had not previously managed a mid cap
growth fund prior to his recent management of Hartford MidCap Growth HLS Fund,
his experience in managing portfolios with small cap and multi cap core mandates
demonstrated his ability to manage assets in the mid cap growth mandate.
Regarding the Blue Chip Agreement, the Board considered the investment
performance of Hartford Blue Chip HLS Fund under its former sub-adviser, T. Rowe
Price Associates, Inc. ("T. Rowe"), and noted among other things, that the
fund's one-, three- and five-year performance was ahead of its benchmark. The
Board considered information presented by HL Advisors and Hartford Investment
Management regarding the performance record of funds managed by Mr. Whelan for
his previous employer between 2000 and 2005. The Board reviewed materials that
compared the performance of funds previously managed by Mr. Whelan and his team
to the performance of appropriate benchmarks and other matrices as well as to a
universe of funds selected by Lipper. HL Advisors and Hartford Investment
Management provided additional information about the broad range of Mr. Whelan's
and his team's recent investment experience and about their investment
philosophy and process. The Board considered HL Advisors' representations and
judgment that although Mr. Whelan's team has not previously managed a large cap
growth fund using the proposed quantitative strategy, the team has demonstrated
its ability to do so by successfully managing large cap assets in another
strategy and successfully using a similar quantitative strategy in different
asset classes.
Based on these considerations, the Board concluded that, while there could be no
guarantee of future results, the Board was satisfied that HL Advisors and each
fund's proposed sub-adviser(s) have the capability of providing satisfactory
investment performance for the funds.
COST OF SERVICES AND PROFITABILITY OF HL ADVISORS AND THE SUB-ADVISER(S)
The Board reviewed information regarding HL Advisors' and each proposed
sub-advisers' cost to provide investment management and related services to the
funds and the profitability to them from managing the funds. The Board
considered information about the profitability to HL Advisors and its affiliates
from all services to be provided to the funds and all aspects of their
relationships with the funds. The Board reviewed with HL Advisors the
assumptions and allocation methods used in preparing the cost and profitability
data provided to the Board. The Board recognized that allocation methods are
inherently subjective, and different methods may be reasonable although they
lead to different results. The Board noted the
215
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
difficulty in obtaining reliable comparative data about adviser profitability,
since such information is not generally publicly available and is impacted by
numerous factors, including the structure of an adviser's organization, the
types of funds it manages, and the adviser's capital structure and costs of
capital. The Board considered representations by HL Advisors that it did not
recommend the proposed sub-advisers for the relevant funds with a view to
increase profitability as investment manager to the funds.
With respect to the Blue Chip Agreement, the Board recognized that, over time,
after expiration of fee waivers and as assets in Hartford Blue Chip HLS Fund
grow, HL Advisors expects to realize substantial increased profitability from
the replacement of T. Rowe with Hartford Investment Management, but that
profitability after the first year will be addressed in light of these
developments in the Board's annual review of its investment advisory and
sub-advisory agreements.
With respect to the MidCap Stock and Blue Chip Agreements, the Board reviewed
information regarding HL Advisors' and Hartford Investment Management's costs to
provide investment management and related services to Hartford MidCap Stock HLS
Fund and Hartford Blue Chip HLS Fund and the profitability to them from managing
the funds. The Board considered information related to both HL Advisors and
Hartford Investment Management because it was proposed that Hartford Investment
Management be reimbursed for its costs rather than receive a set fee, with the
result that any profitability from managing the funds would be realized only
with respect to HL Advisors. The Board also reviewed information about the
profitability to HL Advisors and its affiliates from all services provided to
the funds and all aspects of its relationships with the funds.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by HL Advisors, the proposed sub-advisers and their affiliates
from their relationships with the funds would not be excessive.
COMPARISON OF FEES AND SERVICES PROVIDED BY HL ADVISORS AND THE SUB-ADVISER(S)
The Board considered both the investment management fees to be paid by the funds
to HL Advisors and the sub-advisory fees to be paid by HL Advisors to the
sub-advisers under each agreement. In this regard, the Board received
information from HL Advisors and the proposed sub-advisers relating to the
management fees, sub-advisory fees, and total operating expenses for each fund.
For each proposed sub-adviser, HL Advisors also referenced information in the
Adviser Materials comparing, in each instance, the relevant fund's management
fees and total operating expenses relative to those of a peer universe of funds
identified as being in the appropriate asset category for the fund. In
considering the reasonableness of the funds' fees and total expense ratios, the
Board particularly considered how the proposed management fees for each fund
compared with the average and median management fees of its peer group at
different asset levels.
The Board considered HL Advisors' representation that it had negotiated the
sub-advisers' fees at arm's length, and that the fees that HL Advisors would pay
to the sub-advisers were comparable to fees charged by the sub-advisers to other
institutional clients.
With respect to the MidCap Stock and Blue Chip Agreements, the Board considered
that the overall management fee for Hartford MidCap Stock HLS Fund and Hartford
Blue Chip HLS Fund would be reduced. The Board noted that because under each
agreement HL Advisors is responsible for paying the sub-advisory fee to Hartford
Investment Management, approval of the MidCap Stock and Blue Chip Agreements
would not increase the funds expenses and was anticipated to decrease each fund
expenses.
Based on these considerations, and after taking into account the fee reductions
noted above, the Board concluded that the comparative information reviewed
indicates that each fund's management fee and sub-advisory fee and total
operating expenses are within a range that is competitive and, in conjunction
with the information about quality of services, profitability, economies of
scale, and other matters discussed, supports the conclusion that these fees and
expenses are reasonable.
ECONOMIES OF SCALE
For each fund, the Board considered the extent to which economies of scale would
be realized as the fund grows and whether fee levels reflect these economies of
scale for the benefit of fund's investors. The Board reviewed the breakpoints in
HL Advisors' management fee schedule and considered the breakpoints in each
fund's sub-advisory fee schedules and how any benefits from economies of scale
would be realized by the various parties. With respect to economies of scale
under each
216
- --------------------------------------------------------------------------------
agreement, the Board reviewed information included in the Adviser Materials
providing comparative breakpoint information for other funds in relevant fund
peer groups.
In its review of the Agreements, the Board considered how the breakpoints in
each fund's proposed management fee schedule may reduce management fees,
sub-advisory fees and operating expenses as fund assets grow over time. The
Board considered that these breakpoints provide economies of scale to each fund
and its shareholders in that, as the fund grows, its effective management and
sub-advisory fee rates decline.
With respect to the MidCap Stock and Blue Chip Agreements, the Board received
information regarding HL Advisors' and Hartford Investment Management's
realization of economies of scale with respect to Hartford MidCap Stock HLS Fund
and Hartford Blue Chip HLS Fund. The Board considered representations from HL
Advisors that the initial start-up costs Hartford Investment Management would
incur in building its equity management capability relating to the funds would
be high relative to the small amount of assets under management. However, the
Board considered that HL Advisors and Hartford Investment Management were likely
to realize substantial economies of scale over time as Hartford Investment
Management's equity assets under management increased, which the Board would
consider in determining whether to renew the agreement on an annual basis. The
Board also considered management's representation that the replacement of
Northern Capital and T. Rowe with Hartford Investment Management would enable
the funds to gain greater acceptance among potential investors, resulting in
increased opportunities for growth. The Board noted that increasing assets would
increase the likelihood that each fund's shareholders would benefit from the
breakpoints in the management fee schedule.
OTHER BENEFITS
The Board considered other benefits to HL Advisors, the sub-advisers and their
affiliates from their relationships with each of the funds.
With respect to the MidCap Stock and Blue Chip Agreements, the Board considered
Hartford Investment Management's statements that Hartford Investment Management
was undertaking a review of its soft dollar practices in light of the recent
addition of equity management capability, but that it had determined that at
present Hartford Investment Management will utilize soft dollars to obtain only:
(i) brokerage services; (ii) research created and provided by a broker-dealer
involved in effecting a trade (i.e., research provided by a full service
broker-dealer, or provided by a broker-dealer to which a portion of a trade is
directed for the purpose of obtaining access to the research, in either case on
a bundled basis); and (iii) access to management personnel. The Board considered
Hartford Investment Management's representations that it will not, at present,
utilize soft dollars to obtain research from parties who have no role in
effecting a trade, although Hartford Investment Management's practices could
change in the future. The Board considered that these soft dollar practices
would benefit Hartford Investment Management by providing it with research that
could be utilized with its other active equity clients. The Board also
considered that the following companies, which are affiliates of Hartford
Investment Management, provide services to The Hartford-sponsored funds and
receive compensation from the funds:
- - Hartford Life Insurance Company provides administrative and fund accounting
services to the funds and receives administrative and fund accounting fees.
- - The funds currently pays the cost of certain legal services in support of the
funds provided by personnel of Hartford Life Insurance Company, but such cost
will be absorbed by Hartford Life Insurance Company as of January 1, 2007.
- - Hartford Investor Services Company, LLC, the funds' transfer and dividend
disbursing agent is reimbursed for out-of-pocket expenses and other costs
associated with the services it provides.
- - Hartford Administrative Services Company, the funds' sub-transfer agent,
receives transfer agency compensation from the funds.
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the funds and its shareholders to
approve the Agreements. In reaching this decision, the Board did not assign
relative weights to the factors discussed above or deem any one or group of them
to be controlling in and of themselves. In connection with the
217
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
Board's deliberations described above the Independent Directors met with
independent legal counsel to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
* * * *
In addition to the new agreements discussed above the Board of Directors
considered the continuation of the investment advisory and sub-advisory
agreements discussed below.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each Fund with an agreement up for renewal
with HL Investment Advisors, LLC ("HL Advisors") and the investment sub-advisory
agreements between HL Advisors and each Fund's respective sub-adviser(s)
("sub-advisers," and together with HL Advisors, "advisers") -- Hartford
Investment Management Company ("Hartford Investment"), Holland Capital
Management, L.P. ("Holland Capital"), Lazard Asset Management LLC ("Lazard"),
Northern Capital Management, LLC ("Northern Capital"), T. Rowe Price Associates,
Inc. ("T. Rowe Price") and Wellington Management Company, LLP ("Wellington")
(collectively, the "agreements"). In the months preceding this meeting, the
Board requested, received, and reviewed written responses from the advisers to
questions posed to them on behalf of the Independent Directors and supporting
materials relating to those questions and responses. In addition, the Board
received in-person presentations about each Fund and the related agreements by
Fund officers and representatives of HL Advisors at the Board's meetings on June
20-21, 2006 and August 1-2, 2006. In considering the approval of the agreements,
the Board also took into account information provided to the Board at its
meetings throughout the year, including reports on Fund performance, compliance,
shareholder services, and the other services provided to the Funds by the
advisers and their affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as well as
its willingness to consider and implement organizational and operational
changes, including hiring additional personnel, designed to improve services to
the Funds, and its investments in infrastructure in light of increased
regulatory requirements and other developments. The Board considered the
progress that Hartford Investment has made in developing
(1) Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life
Insurance Company ("Hartford Life"), under which Hartford Life provides
certain administrative services to those Funds. For those Funds that have
separate management and administrative agreements, the Board considered the
fees payable under both agreements in the aggregate.
218
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an equity management capability. In addition, the Board considered the quality
of each adviser's communications with the Board, and responsiveness to Board
inquiries.
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
PERFORMANCE OF THE FUNDS, HL ADVISORS, AND THE SUB-ADVISERS
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
With respect to certain specific Funds, the Board considered actions HL Advisors
was planning to take to address performance. With respect to MidCap Stock HLS
Fund (the Fund's name was changed to Hartford MidCap Growth HLS Fund, effective
December 11, 2006), sub-advised by Northern Capital, the Board considered HL
Advisors' plan to seek shareholder approval in December 2006 of a proposal to
replace Northern Capital as sub-adviser to the Fund with Hartford Investment.
With respect to Capital Opportunities HLS Fund and LargeCap Growth HLS Fund,
each sub-advised by Holland Capital, the Board considered HL Advisors' plan to
seek shareholder approval in January 2007 with respect to a plan of
reorganization by which the Funds would be merged into Blue Chip Stock HLS Fund.
Due to the timing of these proposed changes, the Board concluded that it would
be in the best interests of each Fund's shareholders to renew the existing
sub-advisory agreements for these Funds while HL Advisors sought shareholder
approval of these proposals.
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, in the case of
the Funds mentioned above, that HL Advisors is addressing the Board's concerns
about
219
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
investment performance, and the Board had continued confidence in HL Advisors'
and the sub-advisers' overall capabilities to manage each Fund.
COSTS OF THE SERVICES AND PROFITABILITY OF HL ADVISORS AND THE SUB-ADVISERS
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability of the other sub-advisers. In evaluating such sub-adviser's
profitability with respect to the Funds, the Board considered primarily HL
Advisors' and the sub-advisers' representations that HL Advisors had negotiated
the sub-advisory fees at arm's length, and the sub-advisers' representations
that the fees charged to HL Advisors were comparable to fees charged by the
sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
COMPARISON OF FEES AND SERVICES PROVIDED BY HL ADVISORS AND THE SUB-ADVISERS
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer groups. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio, net of these reductions. The following reductions were agreed to at the
meeting, each effective January 1, 2007, unless otherwise noted:
- - Blue Chip Stock HLS Fund -- 5 basis points ("bps") contractual fee reduction
plus 5 bps fee waiver;
- - Capital Opportunities HLS Fund -- 20 bps fee waiver;
- - High Yield HLS Fund -- 5 bps fee waiver, effective November 1, 2006;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - LargeCap Growth HLS Fund -- 10 bps fee waiver;
- - MidCap Stock HLS Fund -- 20 bps fee waiver; and
- - Money Market HLS Fund -- 5 bps fee waiver.
220
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
ECONOMIES OF SCALE
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by HL Advisors, Lipper, and the Consultant, the Board recognized that
there is no uniform methodology for establishing breakpoints, or uniform pattern
in asset levels that trigger breakpoints or the amounts of breakpoints
triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
OTHER BENEFITS
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from the certain Funds for providing
certain administrative services for those Funds, and that Hartford Life also
receives fees for fund accounting and related services from each of the Funds,
and the Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds' transfer agent and an
affiliate of HL Advisors, receives transfer agency compensation from the Funds,
and the Board reviewed information on the expected profitability of the Funds'
transfer agency function to HISC. The Board considered information provided by
HL Advisors indicating that the fees charged by HISC to the Funds are reasonable
and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research, and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the Funds of
approximately $480,000 per year.
221
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY
AGREEMENTS -- (CONTINUED)
- --------------------------------------------------------------------------------
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
222
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
Hartford Advisers HLS Fund inception 3/31/1983
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND
ADVISERS IB S&P 500 INDEX INDEX
----------- ------------- ----------------------
12/96 10000.00 10000.00 10000.00
10435.00 10624.00 10012.00
10474.00 10708.00 10033.00
10176.00 10269.00 9914.00
10633.00 10881.00 10059.00
11106.00 11542.00 10153.00
11586.00 12060.00 10274.00
12303.00 13018.00 10589.00
11693.00 12289.00 10470.00
12185.00 12962.00 10635.00
11961.00 12529.00 10805.00
12316.00 13109.00 10862.00
12/97 12420.00 13334.00 10976.00
12597.00 13481.00 11130.00
13213.00 14453.00 11108.00
13713.00 15193.00 11142.00
13928.00 15346.00 11198.00
13806.00 15082.00 11318.00
14320.00 15695.00 11434.00
14419.00 15528.00 11443.00
13160.00 13283.00 11666.00
13697.00 14134.00 12000.00
14377.00 15283.00 11915.00
14922.00 16209.00 11986.00
12/98 15449.00 17143.00 12016.00
15786.00 17860.00 12101.00
15418.00 17305.00 11813.00
15886.00 17997.00 11872.00
16305.00 18694.00 11901.00
15904.00 18253.00 11779.00
16501.00 19266.00 11742.00
16164.00 18664.00 11709.00
16016.00 18571.00 11700.00
15834.00 18062.00 11805.00
16372.00 19205.00 11836.00
16500.00 19595.00 11829.00
12/99 17053.00 20749.00 11757.00
16458.00 19707.00 11754.00
16353.00 19334.00 11902.00
17458.00 21224.00 12074.00
17088.00 20586.00 12015.00
16878.00 20164.00 12004.00
17126.00 20661.00 12249.00
16964.00 20338.00 12379.00
17567.00 21601.00 12553.00
17105.00 20460.00 12601.00
17214.00 20374.00 12680.00
16655.00 18769.00 12896.00
12/00 16896.00 18861.00 13151.00
17244.00 19529.00 13371.00
16585.00 17750.00 13509.00
15906.00 16626.00 13571.00
16565.00 17916.00 13470.00
16687.00 18036.00 13547.00
16260.00 17598.00 13612.00
16277.00 17425.00 13951.00
15657.00 16335.00 14131.00
15041.00 15016.00 14261.00
15391.00 15303.00 14622.00
16039.00 16477.00 14382.00
12/01 16082.00 16622.00 14269.00
15868.00 16379.00 14374.00
15778.00 16063.00 14496.00
16059.00 16668.00 14202.00
15212.00 15658.00 14477.00
15112.00 15543.00 14610.00
14468.00 14436.00 14735.00
13975.00 13311.00 14912.00
13984.00 13398.00 15247.00
13062.00 11943.00 15574.00
13672.00 12993.00 15426.00
14321.00 13757.00 15435.00
12/02 13833.00 12949.00 15844.00
13588.00 12611.00 15843.00
13491.00 12422.00 16125.00
13514.00 12543.00 16104.00
14203.00 13575.00 16276.00
14783.00 14289.00 16739.00
14898.00 14472.00 16672.00
14973.00 14728.00 15973.00
15135.00 15014.00 16078.00
15080.00 14855.00 16588.00
15565.00 15695.00 16377.00
15670.00 15832.00 16420.00
12/03 16350.00 16662.00 16582.00
16439.00 16968.00 16733.00
16574.00 17204.00 16938.00
16414.00 16944.00 17093.00
16121.00 16679.00 16568.00
16253.00 16907.00 16484.00
16518.00 17236.00 16551.00
16130.00 16665.00 16726.00
16222.00 16732.00 17080.00
16195.00 16913.00 17140.00
16209.00 17172.00 17288.00
16508.00 17866.00 17096.00
12/04 16920.00 18474.00 17278.00
16751.00 18024.00 17398.00
16967.00 18403.00 17283.00
16608.00 18077.00 17162.00
16567.00 17735.00 17419.00
17002.00 18298.00 17637.00
17012.00 18325.00 17753.00
17465.00 19006.00 17553.00
17560.00 18832.00 17815.00
17630.00 18985.00 17582.00
17435.00 18668.00 17431.00
17945.00 19374.00 17521.00
12/05 18099.00 19380.00 17687.00
18452.00 19894.00 17655.00
18416.00 19947.00 17702.00
18487.00 20196.00 17508.00
18657.00 20467.00 17453.00
18277.00 19878.00 17443.00
18101.00 19905.00 17484.00
18172.00 20027.00 17711.00
18603.00 20503.00 17991.00
18934.00 21031.00 18167.00
19409.00 21716.00 18282.00
19866.00 22128.00 18496.00
12/06 19986.00 22439.00 18355.00
</Table>
<Table>
--- ADVISERS IB --- S&P 500 INDEX -- LEHMAN BROTHERS
$10,000 starting value $10,000 starting value GOVERNMENT/
$19,986 ending value $22,439 ending value CREDIT BOND INDEX
$10,000 starting value
$18,355 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX is an unmanaged,
market-value-weighted index of all debt obligations of the U.S. Treasury and
U.S. Government agencies (excluding mortgage-backed securities) and of all
publicly issued fixed-rate, nonconvertible, investment grade domestic corporate
debt.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- --------------------------------------------------------
Advisers IB(3) 10.43% 4.44% 7.17%
- --------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- --------------------------------------------------------
Lehman Brothers
Government/Credit Bond
Index 3.78% 5.17% 6.26%
- --------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA JOHN C. KEOGH CHRISTOPHER L. GOOTKIND, CFA
Senior Vice Vice President Senior Vice President, Vice President
President, Partner Partner
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IB shares of The Hartford Advisers HLS Fund returned 10.43% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78%, and outperforming the Lehman Brothers
Government/Credit Bond Index, which returned 3.78% for the same period. The Fund
also underperformed the 11.67% return of the average fund in the Lipper VA
Mixed-Asset Target Allocation Growth Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Financial markets have been strong for the past twelve month period. Equity
markets as measured by the S&P 500 hit record highs and were up 15.78% while the
bond market as measured by the Lehman Brothers Government/Credit Bond Index
increased 3.78%. The Fund has three primary levers to generate investment
performance: equity investments, fixed income investments, and asset allocation
among stocks, bonds, and cash. During the past year both the equity portion and
the fixed income portion of the Fund underperformed their respective benchmarks.
Asset Allocation contributed positively to the Fund's performance as the Fund's
consistent overweight to equities helped during the year.
The Equity portion of the Fund underperformed due primarily to negative stock
selection within the Consumer Discretionary, Health Care and Materials sectors.
This was offset somewhat by strong stock selection within Information
Technology, Industrials and Financials.
Stocks that detracted the most from relative (i.e. performance of the Fund as
measured against the benchmark) returns included XM Satellite, Boston
Scientific, Marvell Technology and Dollar General. Media company XM Satellite
came under pressure as decelerating customer addition trends and regulatory
review of product compliance caused investors to question the market
opportunity. The Fund continues to hold the stock based on positive long-term
trends in satellite radio due to original equipment manufacturer (OEM) adoption.
Boston Scientific had a tough year, suffering from erosion of its Implantable
Cardioverter Defibrillator (ICD) market share, concerns surrounding its drug
eluting stent business, and continued issues with cardiac product recalls from
its recently acquired Guidant business. We retain our position as the
fundamentals of the company remain sound and the stock is attractively priced.
Chip maker Marvell declined on disruption in the hard disk drive market and
worries over stock option grants. Discount retailer Dollar General disappointed
due
1
- --------------------------------------------------------------------------------
to high gasoline prices hitting Dollar General customers and thus impacting the
company's top line. Additionally, Dollar General has been selling a greater
proportion of lower-margin "highly consumable products" than anticipated. These
are products like perishable foods and cleaning supplies that are used up
quickly by consumers and need to be replaced frequently, but carry thin margins.
The Fund's overweight (i.e. the Fund's sector position was more than the
benchmark position) allocation to Health Care, which posted positive absolute
(i.e. total return) returns but lagged the market, also hurt returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and Lexmark. The Fund also benefited from not owning
Intel, whose shares declined during the year. AT&T is benefiting from the
stabilization of its long distance pricing. Also, cost-cutting from its recent
acquisitions is going well. Cisco's revenue and earnings growth has surprised
the market on the upside. The strong secular move of enterprise and service
provider networks toward all-IP networks plays into Cisco's strength. We
continue to hold a position in the stock. UBS, the Swiss-based financial
institution, posted outstanding results due primarily to its well-performing
wealth management business. UBS remains one of our top holdings. We initiated a
position in Broadcom during a low in its share price during the summer after it
guided down estimates and faced pressures due to options investigations. Despite
its solid gains, Broadcom remains a material holding as we see strong business
prospects for many years to come and valuation is still reasonable. Shares in
Lexmark, a manufacturer and supplier of printing and imaging solutions, rose as
the company recovered from its product and distribution missteps last year.
Other positive contributors to absolute performance included Exxon Mobil, Bank
of America, Citigroup and Munich Re.
While absolute performance was positive in the fixed income portion of the Fund,
relative returns slightly lagged the benchmark. The bonds underperformed their
benchmark during the year due mainly to starting the year with a longer
duration. Additionally sector allocation produced mixed results. The benefit
derived from the Fund's overweight allocations to structured sectors such as
mortgage pass-throughs and commercial mortgage-backed securities (CMBS) was more
than offset by our out-of-benchmark allocation to Treasury Inflation Protected
Securities (TIPS). Weakness in the commodity markets, as well as several
below-trend reports on CPI (Consumer Price Index), caused TIPS to underperform
during the period. We believe an economic growth slowdown is apparent, but a
hard landing is unlikely. We continue to overweight the non-government sectors
with a preference towards structured securities and MBS. We view the current
environment, with strong balance sheets and solid earnings and cash flow
generation, as being favorable for investment grade credit. While we acknowledge
that the best is probably behind us, with corporations starting to increase
balance sheet leverage, the low default environment is likely to continue into
2007. While valuations are not compelling historically, they are likely fair for
the current environment. Security selection continues to be important given the
frequency of capital restructurings through Leveraged buyouts. We maintain an
underweight allocation to the credit sector.
WHAT IS THE OUTLOOK?
The stock portion of the Fund is managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio. We look for companies that exhibit some or all of the following
characteristics: industry leadership, strong balance sheets, solid management
teams, high return on equity, accelerating earnings, and/or attractive valuation
with a catalyst. At the end of the period, the equity portion of the Fund was
overweight positions in Information Technology and Health Care and underweight
positions in Energy and Financials.
The equity and fixed income managers will continue to work collaboratively to
make decisions regarding portfolio weights in stocks, bonds, and cash. As of
December 31, 2006, the Fund's equity exposure was at 68% compared to 60% in its
benchmark and at the upper end of the 50-70% range, as we expect equities to
continue to outperform bonds and cash.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.6%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 6.8
- -------------------------------------------------------------------
Consumer Staples 5.3
- -------------------------------------------------------------------
Energy 4.2
- -------------------------------------------------------------------
Finance 23.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 7.4
- -------------------------------------------------------------------
Other Direct Federal Obligations 2.2
- -------------------------------------------------------------------
Services 7.2
- -------------------------------------------------------------------
Technology 20.2
- -------------------------------------------------------------------
Transportation 0.1
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 10.1
- -------------------------------------------------------------------
Utilities 1.2
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY SECTOR
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
SECTOR NET ASSETS
- -------------------------------------------------------------------
Asset and Commercial Backed Securities 2.9%
- -------------------------------------------------------------------
Common Stock 67.8
- -------------------------------------------------------------------
Corporate Bonds: Investment Grade 0.1
- -------------------------------------------------------------------
Corporate Bonds: Non Investment Grade 10.5
- -------------------------------------------------------------------
Municipal Bonds 0.2
- -------------------------------------------------------------------
U.S. Government Agencies 2.0
- -------------------------------------------------------------------
U.S. Government Securities 12.3
- -------------------------------------------------------------------
Short-Term Investments 24.3
- -------------------------------------------------------------------
Other Assets & Liabilities (20.1)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
2
Hartford Capital Appreciation HLS Fund inception 4/2/1984
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
CAPITAL APPRECIATION IB S&P 500 INDEX RUSSELL 3000 INDEX
----------------------- ------------- ------------------
12/96 10000.00 10000.00 10000.00
10382.00 10624.00 10553.00
10181.00 10708.00 10565.00
9606.00 10269.00 10087.00
9849.00 10881.00 10584.00
10970.00 11542.00 11307.00
11442.00 12060.00 11777.00
12387.00 13018.00 12700.00
12237.00 12289.00 12185.00
13047.00 12962.00 12876.00
12264.00 12529.00 12443.00
12164.00 13109.00 12920.00
12/97 12204.00 13334.00 13178.00
12091.00 13481.00 13247.00
13232.00 14453.00 14194.00
13752.00 15193.00 14898.00
13992.00 15346.00 15044.00
13374.00 15082.00 14673.00
13631.00 15695.00 15169.00
13288.00 15528.00 14894.00
10641.00 13283.00 12612.00
11267.00 14134.00 13472.00
12365.00 15283.00 14495.00
13135.00 16209.00 15381.00
12/98 14064.00 17143.00 16359.00
14673.00 17860.00 16915.00
14023.00 17305.00 16317.00
15106.00 17997.00 16915.00
15815.00 18694.00 17678.00
15589.00 18253.00 17342.00
16453.00 19266.00 18218.00
16275.00 18664.00 17666.00
16075.00 18571.00 17465.00
15528.00 18062.00 17018.00
16571.00 19205.00 18085.00
17458.00 19595.00 18591.00
12/99 19297.00 20749.00 19777.00
18903.00 19707.00 19002.00
21818.00 19334.00 19179.00
22344.00 21224.00 20680.00
21168.00 20586.00 19951.00
20463.00 20164.00 19391.00
21735.00 20661.00 19965.00
21766.00 20338.00 19612.00
23963.00 21601.00 21067.00
23090.00 20460.00 20113.00
22426.00 20374.00 19827.00
20564.00 18769.00 17999.00
12/00 21810.00 18861.00 18301.00
23109.00 19529.00 18927.00
22066.00 17750.00 17197.00
20866.00 16626.00 16076.00
22480.00 17916.00 17365.00
22784.00 18036.00 17504.00
22114.00 17598.00 17182.00
21295.00 17425.00 16899.00
20227.00 16335.00 15902.00
17896.00 15016.00 14499.00
18412.00 15303.00 14837.00
19737.00 16477.00 15979.00
12/01 20261.00 16622.00 16205.00
19716.00 16379.00 16002.00
19295.00 16063.00 15674.00
20032.00 16668.00 16361.00
18951.00 15658.00 15502.00
18876.00 15543.00 15322.00
17200.00 14436.00 14219.00
15812.00 13311.00 13089.00
16179.00 13398.00 13150.00
14955.00 11943.00 11768.00
16064.00 12993.00 12705.00
17301.00 13757.00 13473.00
12/02 16233.00 12949.00 12712.00
15900.00 12611.00 12401.00
15722.00 12422.00 12196.00
15538.00 12543.00 12324.00
16702.00 13575.00 13331.00
18022.00 14289.00 14136.00
18494.00 14472.00 14327.00
18828.00 14728.00 14655.00
19530.00 15014.00 14981.00
19452.00 14855.00 14818.00
20973.00 15695.00 15715.00
21496.00 15832.00 15931.00
12/03 23054.00 16662.00 16660.00
23428.00 16968.00 17007.00
24279.00 17204.00 17236.00
24289.00 16944.00 17031.00
23366.00 16679.00 16679.00
23859.00 16907.00 16922.00
24865.00 17236.00 17258.00
23618.00 16665.00 16605.00
23258.00 16732.00 16674.00
24084.00 16913.00 16930.00
24633.00 17172.00 17208.00
26423.00 17866.00 18008.00
12/04 27450.00 18474.00 18650.00
26788.00 18024.00 18153.00
27793.00 18403.00 18553.00
26708.00 18077.00 18239.00
25883.00 17735.00 17842.00
26639.00 18298.00 18519.00
27143.00 18325.00 18648.00
28573.00 19006.00 19413.00
28832.00 18832.00 19228.00
29903.00 18985.00 19396.00
29347.00 18668.00 19033.00
30967.00 19374.00 19775.00
12/05 31638.00 19380.00 19791.00
33363.00 19894.00 20452.00
33009.00 19947.00 20489.00
33564.00 20196.00 20843.00
34529.00 20467.00 21069.00
33164.00 19878.00 20394.00
32771.00 19905.00 20430.00
32502.00 20027.00 20411.00
33304.00 20503.00 20911.00
33774.00 21031.00 21379.00
35288.00 21716.00 22148.00
36359.00 22128.00 22630.00
12/06 36803.00 22439.00 22901.00
</Table>
<Table>
--- CAPITAL APPRECIATION IB -- RUSSELL 3000 INDEX --- S&P 500 INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$36,803 ending value $22,901 ending value $22,439 ending value
</Table>
RUSSELL 3000 INDEX is an unmanaged index that measures the performance of the
3,000 largest U.S. companies based on total market capitalization.
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
The Fund has changed its benchmark from the S&P 500 Index to the Russell 3000
Index because the Fund's investment manager believes that the Russell 3000 Index
is better suited to the investment strategy of the fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Capital Appreciation
IB(3) 16.32% 12.68% 13.92%
- ------------------------------------------------------
Russell 3000 Index 15.72% 7.16% 8.64%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
SAUL J. PANNELL, CFA FRANK D. CATRICKES, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IB shares of the Hartford Capital Appreciation HLS Fund returned
16.32% for the twelve month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Index, which returned 15.72% for the same period.
The Fund also outperformed the 14.45% return of the average fund in the Lipper
VA Multi-Cap Core Funds peer group, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Equity markets posted a strong return for the year. US large cap equities
performed well (+15.5% as measured by the Russell 1000 Index) but continued to
lag smaller companies as the small cap Russell 2000 rose 18.4%. Value stocks
extended their lead over their growth oriented peers, with the broad market
Russell 3000 Value finishing ahead of the Russell 3000 Growth by nearly thirteen
percentage points. Every sector in the benchmark Russell 3000 finished with
positive returns, led by Telecommunication Services, Utilities, and Energy.
Health Care and Technology stocks had positive returns, but lagged the
benchmark.
Outperformance in this robust environment was driven by stock selection.
Performance was particularly positive in Financials, Industrials, and Materials
stocks. In Financials, Brazilian bank Unibanco rose over 54% during the year,
making it a top relative (i.e. performance of the Fund as measured against the
benchmark) and absolute (i.e. total return) contributor. Two other top relative
and absolute contributors, Citi Access India and JPM Access India, are so-called
"market access" products. These are securities that allow investors to obtain
the economic exposure of stock ownership through a counterparty without
obtaining direct ownership in the underlying security. Market access products
are subject to the same risks as direct investments in securities of foreign
issuers, as well as the risk that the counterparty issuing the security may
default. Both market access products held in the Fund take the form of warrants.
In the case of Citi Access India, the warrants are for Bharti Televentures, the
dominant wireless provider in India. The Indian wireless market is growing
rapidly, and Bharti is garnering most of the new subscriber growth. The JPM
Access India position represents warrants for ICICI bank, India's largest bank
by market capitalization. The company is benefiting from the growth of credit to
Indian consumers.
Other top absolute and relative contributors during the year included nickel
miner Inco, defense contractor Lockheed Martin, and telecommunications giant
AT&T. Inco rose on news that it was being acquired by CVRD. Shares in Lockheed
Martin gained throughout the year on continued strong defense spending by the US
and its allies. AT&T's stock rose on optimism surrounding its merger with
BellSouth, which closed at the end of the year.
3
- --------------------------------------------------------------------------------
Stock selection was weakest in the Energy and Health Care sectors. Within Health
Care, medical device company Boston Scientific fell on safety concerns regarding
the company's implantable defibrillators and a Wall Street Journal article
stating that drug-eluting stents could be linked to higher incidences of blood
clots. We have exited our position in the stock. Shares in Israeli generic drug
company Teva traded lower as the market absorbed news that Merck would be
pricing its Zocor drug competitively when it came off patent. We continue to
hold Teva as we believe the market is overestimating the impact of this
development. Lagging performance in Energy was primarily a result of not holding
a position in rising Exxon Mobil stock and owning shares of coal miner Arch
Coal, which fell during the year. Other negative relative and absolute
contributors included global semiconductor company Marvell, flash storage
company SanDisk, and credit card company Capital One Financial.
WHAT IS THE OUTLOOK?
Beginning January 8, 2007, the Fund will shift to a multiple portfolio manager
model consisting of two investment teams. The first team is comprised of the
Fund's current managers, Saul Pannell and Frank Catrickes. The second team will
be comprised of a combination of multiple Wellington Management investment
professionals with complementary investment approaches, each separately managing
a portion of the Fund in a distinct style and in combination seeking to achieve
the Fund's investment objective.
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on hold for interest rate
hikes over the next year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. At the end of the period, our stock-by-stock
investment process resulted in greater-than-benchmark weights in Materials,
Industrials, and Information Technology stocks and less-than-benchmark weights
in Financials, Consumer Staples, and Health Care. Our largest absolute sector
weights at year-end were in the Financials, Technology, and Industrials sectors.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 0.3
- -------------------------------------------------------------------
Brazil 4.5
- -------------------------------------------------------------------
Canada 3.3
- -------------------------------------------------------------------
China 0.7
- -------------------------------------------------------------------
France 1.2
- -------------------------------------------------------------------
Germany 1.2
- -------------------------------------------------------------------
India 0.7
- -------------------------------------------------------------------
Israel 0.9
- -------------------------------------------------------------------
Japan 3.9
- -------------------------------------------------------------------
Liberia 0.3
- -------------------------------------------------------------------
Luxembourg 0.7
- -------------------------------------------------------------------
Netherlands 0.3
- -------------------------------------------------------------------
Russia 0.7
- -------------------------------------------------------------------
South Africa 0.8
- -------------------------------------------------------------------
South Korea 1.0
- -------------------------------------------------------------------
Switzerland 1.9
- -------------------------------------------------------------------
Taiwan 0.7
- -------------------------------------------------------------------
Turkey 1.6
- -------------------------------------------------------------------
United Kingdom 4.5
- -------------------------------------------------------------------
United States 68.0
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 12.7%
- -------------------------------------------------------------------
Capital Goods 9.2
- -------------------------------------------------------------------
Consumer Cyclical 6.5
- -------------------------------------------------------------------
Consumer Staples 3.7
- -------------------------------------------------------------------
Energy 6.8
- -------------------------------------------------------------------
Exchange Traded Funds 3.2
- -------------------------------------------------------------------
Finance 14.4
- -------------------------------------------------------------------
Health Care 4.1
- -------------------------------------------------------------------
Services 5.5
- -------------------------------------------------------------------
Technology 27.3
- -------------------------------------------------------------------
Transportation 0.6
- -------------------------------------------------------------------
Utilities 3.7
- -------------------------------------------------------------------
Short-Term Investments 6.6
- -------------------------------------------------------------------
Other Assets & Liabilities (4.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
4
Hartford Dividend and Growth HLS Fund inception 3/9/1994
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
DIVIDEND AND GROWTH IB S&P 500 INDEX
---------------------- -------------
12/96 10000.00 10000.00
10522.00 10624.00
10675.00 10708.00
10273.00 10269.00
10627.00 10881.00
11319.00 11543.00
11939.00 12060.00
12647.00 13019.00
12048.00 12290.00
12773.00 12963.00
12393.00 12531.00
12908.00 13110.00
12/97 13156.00 13335.00
13344.00 13482.00
13934.00 14454.00
14690.00 15194.00
14617.00 15347.00
14373.00 15083.00
14577.00 15695.00
14474.00 15529.00
12638.00 13283.00
13478.00 14135.00
14415.00 15284.00
14848.00 16210.00
12/98 15284.00 17143.00
15151.00 17860.00
14929.00 17305.00
15310.00 17997.00
16247.00 18694.00
15834.00 18253.00
16373.00 19266.00
15858.00 18665.00
15445.00 18572.00
15047.00 18062.00
15928.00 19205.00
15849.00 19595.00
12/99 16067.00 20750.00
15418.00 19707.00
14568.00 19335.00
16176.00 21225.00
15978.00 20586.00
16314.00 20164.00
15810.00 20661.00
15807.00 20338.00
16722.00 21601.00
16876.00 20461.00
17227.00 20374.00
16880.00 18769.00
12/00 17795.00 18861.00
17538.00 19530.00
17363.00 17750.00
16809.00 16626.00
17670.00 17916.00
17986.00 18036.00
17528.00 17598.00
17655.00 17425.00
17078.00 16335.00
15962.00 15017.00
15968.00 15303.00
16854.00 16477.00
12/01 17046.00 16622.00
17083.00 16380.00
17361.00 16064.00
17842.00 16668.00
17091.00 15658.00
17250.00 15543.00
16326.00 14436.00
15010.00 13312.00
14905.00 13398.00
13257.00 11943.00
14262.00 12993.00
15241.00 13757.00
12/02 14588.00 12949.00
14089.00 12611.00
13798.00 12422.00
13771.00 12543.00
14799.00 13575.00
15749.00 14290.00
15889.00 14472.00
16044.00 14728.00
16398.00 15014.00
16206.00 14855.00
16975.00 15695.00
17291.00 15833.00
12/03 18451.00 16662.00
18503.00 16968.00
18851.00 17204.00
18609.00 16945.00
18434.00 16679.00
18447.00 16907.00
18925.00 17236.00
18505.00 16666.00
18649.00 16732.00
18973.00 16914.00
19180.00 17172.00
19990.00 17867.00
12/04 20691.00 18474.00
20185.00 18024.00
20909.00 18403.00
20494.00 18078.00
20062.00 17735.00
20412.00 18299.00
20513.00 18325.00
21239.00 19006.00
21239.00 18833.00
21623.00 18985.00
21118.00 18669.00
21767.00 19374.00
12/05 21869.00 19381.00
22649.00 19894.00
22530.00 19948.00
22893.00 20196.00
23498.00 20467.00
22987.00 19879.00
23022.00 19905.00
23441.00 20028.00
23874.00 20504.00
24311.00 21032.00
25144.00 21716.00
25736.00 22129.00
12/06 26257.00 22439.00
</Table>
<Table>
--- DIVIDEND AND GROWTH IB --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$26,257 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Dividend and Growth
IB(3) 20.06% 9.02% 10.13%
- -------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
EDWARD P. BOUSA, CFA
Senior Vice President, Partner
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Dividend and Growth HLS Fund Class IB shares returned 20.06% for
the twelve-month period ended December 31, 2006. The Fund outperformed its
benchmark, the S&P 500 Index, which returned 15.78% over the same period and the
average return of the Lipper VA Equity Income Funds, a group of funds with
investment strategies similar to those of the Fund, which returned 18.19%.
WHY DID THE FUND PERFORM THIS WAY?
During the period, US equities posted strong positive returns supporting the
Fund's positive absolute (i.e. total return) returns for the period. For the
seventh year in a row, value-oriented stocks outperformed growth-oriented
stocks, measured by the Russell 1000 Value Index (22.25%) versus the Russell
1000 Growth Index (9.07%). All ten broad industry sectors of the Fund's S&P 500
benchmark posted strong positive returns. Telecommunication Services, Energy and
Utilities were the top performers.
The Fund's outperformance relative (i.e. performance of the Fund as measured
against the benchmark) to the S&P 500 was attributable to a combination of
strong stock selection and sector allocation. Stock selection was strongest
within Industrials, Consumer Discretionary and Health Care. Additionally, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) position in Energy and underweight position in Information Technology
were additive to performance.
Key contributors to performance during the period were Exxon Mobil (Energy),
AT&T (Telecommunication Services) and Chevron (Energy). Exxon Mobil and
Chevron's shares were supported by the continued supply/demand imbalance in
energy and higher prices. AT&T benefited from its strongly anticipated merger
with BellSouth. All three stocks were held in the Fund at the end of the period.
In addition, not owning chip-maker Intel (Information Technology) for much of
the period was additive to relative performance, as shares struggled following
news that the company sold its communications and applications processing
business to a competitor.
The largest detractors from returns on an absolute basis included Sprint Nextel
(Telecommunication Services), Newmont Mining (Materials) and Eli Lilly (Health
Care). Sprint Nextel's shares struggled as the company continues to consolidate
their networks and convert subscribers from their merger. Newmont Mining's stock
fell as production declined while costs increased. Eli Lilly's shares declined
due to the negative story in the New York Times that alleged the company knew of
negative side effects from Zyprexa, the drug that treats both schizophrenia and
bipolar disorder. We held our positions in these stocks at the end of the
period. In addition, on a relative basis, not owning Cisco Systems (Information
Technology) and owning Motorola (Telecommunications Services) detracted from
performance. Cisco's shares rose due to the market's expectations that they will
benefit from increased broadband traffic which will result in an
5
- --------------------------------------------------------------------------------
increased demand for routing and transport services. Motorola's shares fell on
concerns of their product line as the RAZR matures and competitors gain traction
in the cell phone market. We held Motorola at the end of the period.
WHAT IS THE OUTLOOK?
The Fund takes a long-term view. Our discipline focuses primarily on the
supply/demand balance across sectors. While our long-term bet on Energy
continues to pay off, we are reducing our exposure to this sector on strength.
We are cautious of the US economy as consumer spending moderates, but we expect
modest growth to continue in 2007. Housing is a major concern for us, and as a
result, we are underweight in Regional Banks and Retail, where we believe there
is excess supply. That excess will become quite evident in the face of a
weakening consumer. We believe that our strategy of buying high quality
companies with above-average dividends will continue to be successful versus the
S&P 500 Index.
Based on these views and our bottom-up stock selection, at the end of the
period, the Fund was overweight Energy, Materials, Telecommunication Services,
Utilities and Consumer Staples and underweight Industrials, Health Care,
Consumer Discretionary, Financials and Information Technology, relative to the
S&P 500 Index.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.1%
- -------------------------------------------------------------------
Capital Goods 5.1
- -------------------------------------------------------------------
Consumer Cyclical 8.2
- -------------------------------------------------------------------
Consumer Staples 5.4
- -------------------------------------------------------------------
Energy 15.7
- -------------------------------------------------------------------
Finance 17.9
- -------------------------------------------------------------------
Health Care 9.3
- -------------------------------------------------------------------
Services 7.0
- -------------------------------------------------------------------
Technology 17.9
- -------------------------------------------------------------------
Transportation 0.5
- -------------------------------------------------------------------
Utilities 5.0
- -------------------------------------------------------------------
Short-Term Investments 16.9
- -------------------------------------------------------------------
Other Assets & Liabilities (16.0)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
6
Hartford International Opportunities HLS Fund inception 7/2/1990
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INTERNATIONAL OPP. IB MSCI AC WORLD FREE EX US INDEX
--------------------- ------------------------------
12/96 10000.00 10000.00
9897.00 9816.00
9938.00 9996.00
9945.00 9975.00
9881.00 10059.00
10527.00 10681.00
11013.00 11270.00
11337.00 11498.00
10501.00 10594.00
11071.00 11167.00
10231.00 10216.00
10068.00 10088.00
12/97 10009.00 10204.00
10123.00 10510.00
10806.00 11211.00
11318.00 11598.00
11576.00 11681.00
11653.00 11469.00
11671.00 11426.00
11792.00 11535.00
10072.00 9908.00
9685.00 9699.00
10393.00 10715.00
10995.00 11291.00
12/98 11304.00 11680.00
11628.00 11667.00
11347.00 11406.00
11993.00 11957.00
12448.00 12555.00
11931.00 11965.00
12514.00 12515.00
12832.00 12808.00
12849.00 12853.00
12924.00 12940.00
13354.00 13421.00
14117.00 13958.00
12/99 15781.00 15289.00
14892.00 14460.00
15971.00 14850.00
15823.00 15409.00
14948.00 14549.00
14319.00 14177.00
14875.00 14780.00
14414.00 14197.00
14608.00 14373.00
13849.00 13575.00
13183.00 13144.00
12586.00 12554.00
12/00 13059.00 12983.00
13135.00 13178.00
12081.00 12134.00
11221.00 11277.00
12059.00 12044.00
11589.00 11711.00
11219.00 11262.00
10972.00 11011.00
10665.00 10738.00
9539.00 9599.00
9791.00 9868.00
10372.00 10319.00
12/01 10593.00 10452.00
10117.00 10004.00
10147.00 10076.00
10710.00 10665.00
10660.00 10693.00
10787.00 10809.00
10312.00 10342.00
9262.00 9334.00
9153.00 9335.00
8068.00 8345.00
8665.00 8793.00
9070.00 9215.00
12/02 8674.00 8918.00
8291.00 8605.00
8050.00 8430.00
7885.00 8267.00
8607.00 9063.00
9101.00 9641.00
9247.00 9908.00
9514.00 10171.00
9862.00 10474.00
9943.00 10768.00
10535.00 11466.00
10751.00 11716.00
12/03 11516.00 12610.00
11659.00 12813.00
11930.00 13138.00
12010.00 13219.00
11683.00 12808.00
11763.00 12837.00
12056.00 13127.00
11505.00 12745.00
11522.00 12847.00
11867.00 13260.00
12308.00 13721.00
13062.00 14673.00
12/04 13565.00 15303.00
13325.00 15040.00
13713.00 15782.00
13391.00 15354.00
13150.00 14975.00
13216.00 15069.00
13476.00 15352.00
14138.00 15919.00
14518.00 16326.00
15033.00 17168.00
14436.00 16543.00
14741.00 17100.00
12/05 15509.00 17922.00
16604.00 19172.00
16298.00 19117.00
16846.00 19672.00
17789.00 20686.00
17002.00 19732.00
16928.00 19713.00
16985.00 19914.00
17420.00 20479.00
17247.00 20492.00
17905.00 21327.00
18591.00 22101.00
12/06 19254.00 22790.00
</Table>
<Table>
--- INTERNATIONAL OPPORTUNITIES IB --- MSCI AC WORLD FREE EX US INDEX
$10,000 starting value $10,000 starting value
$19,254 ending value $22,790 ending value
</Table>
MSCI AC WORLD FREE EX U.S. INDEX is a broad based, unmanaged, market
capitalization weighted, total return index that measures the performance of
both developed and emerging stock markets, excluding the U.S. The index is
calculated to companies and share classes which cannot be freely purchased by
foreigners.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------------
International Opportunities
IB(3) 24.15% 12.69% 6.77%
- -------------------------------------------------------------
MSCI AC World Free ex US Index 27.16% 16.87% 8.59%
- -------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
<Table>
NICOLAS M. CHOUMENKOVITCH
Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IB shares of the Hartford International Opportunities HLS Fund
returned 24.15% for the twelve-month period ended December 31, 2006,
underperforming its benchmark, the MSCI All Country World Free ex US Index,
which returned 27.16% and the 24.35% return of the average fund in the Lipper VA
International Large Cap Core Funds peer group, a group of funds with investment
strategies similar to those of the Fund, for the same period.
WHY DID THE FUND PERFORM THIS WAY?
International equity markets advanced in 2006 as corporate earnings growth
remained strong. Every sector in the benchmark rose in US dollar terms, led by
Utilities, Materials, and Telecommunication Services. Even the laggards in this
market posted attractive absolute (i.e. total return) returns. Technology
stocks, Health Care stocks and Energy stocks gained between twelve and twenty
percent.
The Fund's underperformance versus its benchmark reflected the cross currents of
positive overall stock selection offset by negative sector allocation results.
In particular, performance suffered as a result of the Fund's underweights (i.e.
the Fund's sector position was less than the benchmark position) in the
high-performing Utilities and Telecommunication sectors and an overweight in
lagging Health Care stocks.
Stock selection was strongest in the Materials, Financial, Technology and Health
Care sectors. New to the Fund in 2006, Xstrata (Materials) was the top
contributing stock to both relative (i.e. performance of the Fund as measured
against the benchmark) and absolute performance during the year. The value of
coal assets amid rising energy prices was finally recognized in the market,
boosting the company's stock price. Other top contributors in the Materials
sector included CVRD and Inco, mining companies that announced plans to merge
during the year. In the Financials sector, shares in Hong Kong Exchanges had
strong performance during the beginning of the year driven by higher trading
fees. Although market volumes are down, the company remains a proxy for growth
in China. Other positive contributors to relative and absolute returns included
Electricite de France, a French Utility, and Banco Bilbao Vizcaya, a Spanish
commercial bank.
Key detractors from relative and absolute performance included Seven & I
(Consumer Staples), Matsui Securities (Financials), and Rakuten (Consumer
Discretionary). Seven & I, operator of Denny's and Seven Eleven stores in Japan,
and consumer financial company Matsui Securities suffered a downdraft along with
other Japanese consumer related stocks on concerns that the economy is not
recovering as quickly as hoped. Rakuten's stock price fell as a temporary rise
in the costs necessary to grow a healthy sales base of this Japanese internet
retailer disappointed investors. The company also had adverse press which hit
the stock hard. We remain
7
- --------------------------------------------------------------------------------
confident in Rakuten's leading market position and added to our holdings on
weakness.
WHAT IS THE OUTLOOK?
Effective December 15, 2006, Nicolas Choumenkovitch took over as lead Portfolio
Manager of the Fund. He has been part of the portfolio management team on the
Fund since 2000.
Our emphasis is on bottom-up stock selection. We recently reduced our exposures
to Consumer Staples (Nestle, Carrefour and Seven & I) and Health Care (Daiichi
Sankyo and Terumo) and increased exposure to Materials (Freeport-McMoran, Impala
Platinum) and Consumer Discretionary. We increased our airline exposure and
reduced our weight in Financials by selling banking stocks. At the end of the
year, our largest overweight sectors were Consumer Staples and Materials and our
largest underweight sectors were Financials and Utilities.
Based on our bottom-up stock selection, we ended the year with overweight
positions in continental Europe and Latin America, offset by underweight
positions in the United Kingdom and Asia Pacific ex-Japan.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 16.6%
- -------------------------------------------------------------------
Consumer Cyclical 11.2
- -------------------------------------------------------------------
Consumer Staples 6.9
- -------------------------------------------------------------------
Energy 7.6
- -------------------------------------------------------------------
Finance 21.3
- -------------------------------------------------------------------
Health Care 8.7
- -------------------------------------------------------------------
Services 1.3
- -------------------------------------------------------------------
Technology 15.8
- -------------------------------------------------------------------
Transportation 7.1
- -------------------------------------------------------------------
Utilities 2.0
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Belgium 0.9%
- -------------------------------------------------------------------
Brazil 4.0
- -------------------------------------------------------------------
Canada 6.5
- -------------------------------------------------------------------
Egypt 1.5
- -------------------------------------------------------------------
France 11.1
- -------------------------------------------------------------------
Germany 7.3
- -------------------------------------------------------------------
Hong Kong 3.1
- -------------------------------------------------------------------
India 1.6
- -------------------------------------------------------------------
Ireland 1.9
- -------------------------------------------------------------------
Italy 5.4
- -------------------------------------------------------------------
Japan 17.2
- -------------------------------------------------------------------
Korea (Republic of) 0.8
- -------------------------------------------------------------------
Luxembourg 0.2
- -------------------------------------------------------------------
Mexico 2.0
- -------------------------------------------------------------------
Netherlands 4.1
- -------------------------------------------------------------------
Norway 1.0
- -------------------------------------------------------------------
Panama 0.7
- -------------------------------------------------------------------
Russia 3.3
- -------------------------------------------------------------------
Singapore 0.9
- -------------------------------------------------------------------
South Africa 1.2
- -------------------------------------------------------------------
Spain 0.9
- -------------------------------------------------------------------
Sweden 2.0
- -------------------------------------------------------------------
Switzerland 5.1
- -------------------------------------------------------------------
Taiwan 1.5
- -------------------------------------------------------------------
United Kingdom 12.0
- -------------------------------------------------------------------
United States 2.3
- -------------------------------------------------------------------
Short-Term Investments 10.0
- -------------------------------------------------------------------
Other Assets & Liabilities (8.5)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
8
Hartford Small Company HLS Fund inception 8/9/1996
(subadvised by: Wellington Management Company, LLP,
Hartford Investment Management Company*)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
SMALL COMPANY IB RUSSELL 2000 GROWTH INDEX
---------------- -------------------------
12/96 10000.00 10000.00
10027.00 10250.00
9843.00 9631.00
9322.00 8951.00
9407.00 8848.00
10423.00 10177.00
11033.00 10523.00
11503.00 11062.00
11756.00 11394.00
12901.00 12303.00
12107.00 11564.00
11896.00 11288.00
12/97 11808.00 11295.00
11428.00 11144.00
12729.00 12128.00
13259.00 12636.00
13388.00 12714.00
12689.00 11790.00
12844.00 11911.00
12385.00 10916.00
9428.00 8396.00
10307.00 9248.00
11063.00 9730.00
11789.00 10485.00
12/98 13155.00 11433.00
13800.00 11948.00
12319.00 10855.00
13391.00 11241.00
14504.00 12234.00
14799.00 12253.00
16040.00 12899.00
16013.00 12500.00
15674.00 12033.00
16028.00 12265.00
16566.00 12579.00
18367.00 13909.00
12/99 21777.00 16360.00
21068.00 16208.00
24811.00 19979.00
24364.00 17879.00
22205.00 16074.00
19725.00 14666.00
22548.00 16561.00
20672.00 15142.00
22327.00 16734.00
21357.00 15903.00
20046.00 14612.00
17583.00 11959.00
12/00 18886.00 12691.00
18093.00 13718.00
16109.00 11838.00
14732.00 10761.00
16749.00 12079.00
16542.00 12359.00
16806.00 12696.00
15911.00 11613.00
15246.00 10887.00
12835.00 9131.00
13884.00 10009.00
15220.00 10844.00
12/01 16039.00 11520.00
15779.00 11110.00
15050.00 10391.00
16175.00 11294.00
15776.00 11050.00
15159.00 10404.00
14127.00 9521.00
11834.00 8058.00
11597.00 8054.00
11122.00 7472.00
11524.00 7850.00
12236.00 8628.00
12/02 11164.00 8033.00
10873.00 7815.00
10673.00 7606.00
11044.00 7721.00
12207.00 8451.00
13550.00 9404.00
13978.00 9585.00
14965.00 10310.00
15704.00 10863.00
15153.00 10588.00
16565.00 11503.00
17033.00 11878.00
12/03 17358.00 11931.00
18067.00 12558.00
18097.00 12539.00
18452.00 12597.00
17499.00 11965.00
17818.00 12203.00
18216.00 12609.00
16716.00 11477.00
16016.00 11230.00
17258.00 11851.00
17583.00 12139.00
18601.00 13165.00
12/04 19424.00 13638.00
18336.00 13024.00
18971.00 13203.00
18721.00 12708.00
17897.00 11899.00
19130.00 12738.00
20211.00 13150.00
21437.00 14069.00
21514.00 13870.00
22110.00 13980.00
21558.00 13464.00
22884.00 14226.00
12/05 23446.00 14205.00
25545.00 15575.00
25374.00 15492.00
26500.00 16245.00
27033.00 16198.00
25633.00 15058.00
24977.00 15067.00
23959.00 14285.00
24229.00 14703.00
24340.00 14802.00
25307.00 15762.00
26304.00 16139.00
12/06 26761.00 16101.00
</Table>
<Table>
--- SMALL COMPANY IB --- RUSSELL 2000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$26,761 ending value $16,101 ending value
</Table>
RUSSELL 2000 GROWTH INDEX is an unmanaged index of those Russell 2000 Index
growth companies with higher price-to-book ratios and higher forecasted growth
values. (The Russell 2000 Index is a broad-based unmanaged index comprised of
2,000 of the smallest U.S. domiciled company common stocks (on the basis of
capitalization) that are traded in the United States on the New York Stock
Exchange, American Stock Exchange and Nasdaq.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ---------------------------------------------------------
Small Company IB(3) 14.14% 10.78% 10.34%
- ---------------------------------------------------------
Russell 2000 Growth Index 13.35% 6.93% 4.88%
- ---------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
* Effective June 12, 2006, Hartford Investment Management
Company was added as a sub-adviser to the Fund. As of the same
date, the Fund's Class IA and IB shares were re-opened to new
investors.
PORTFOLIO MANAGERS
<Table>
<Caption>
WELLINGTON MANAGEMENT COMPANY, LLP HARTFORD INVESTMENT MANAGEMENT COMPANY
STEVEN C. ANGELI, CFA STEPHEN MORTIMER MARIO E. ABULARACH MARK WATERHOUSE
Senior Vice President, Partner Vice President Vice President Executive Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Hartford Small Company HLS Fund Class IB shares returned 14.14% for the
twelve-month period ended December 31, 2006, outperforming its benchmark, the
Russell 2000 Growth Index which returned 13.35% for the same period. The Fund
also outperformed the 11.12% return of the average fund in the Lipper Small Cap
Growth VA-UF Funds peer group, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
During the period, U.S. Equities posted strong positive returns, supporting the
Fund's positive absolute (i.e. total return) return for the year. The small cap
benchmarks have now beaten the S&P 500 seven out of the last eight years. All
sectors within the Russell 2000 Growth Index posted positive returns for the
period. The best performing sectors were Utilities, Consumer Staples and
Materials, while Healthcare, Information Technology and Consumer Discretionary
rose the least.
Favorable security selection within several sectors drove the Fund's
outperformance during the period, as we remained steadfast in our focus on
individual stock selection as opposed to macro or sector allocation decisions.
Information Technology, Financials and Materials were areas of particular
strength relative to the benchmark. Copa Holdings (Industrials), Equinix Plc
(Software & Services), Admiral Group (Insurance) and Corrections Corporation of
America (Commercial Services) were among top contributors to relative (i.e.
performance of the Fund as measured against the benchmark) and absolute
performance. Panamanian airline Copa Holdings rose with strong traffic and
passenger load factors. The company is benefiting from Panama's rise as a
north-south hub complex and the successful restructuring of a recently acquired
Colombian airline. Equinix Plc delivered solid top and bottom line results
during the period, driven by share gains in already fast growing markets.
Admiral Group, a United Kingdom insurance company, saw strong growth despite a
soft market cycle. Corrections Corporation of America's private correctional
facilities benefited from high occupancy rates, rising capacity, and margin
expansion. There has also been a continuing industry-wide capacity imbalance due
to strong demand and limited new supply from the government. However, we sold
our position as we believed the capacity crisis was largely reflected in the
stock's 50% increase.
Stocks that detracted from performance during the period included Arch Coal
(Energy), Frontier Oil Corp (Energy), and Netflix
9
- --------------------------------------------------------------------------------
(Consumer Discretionary). Arch Coal suffered due to lower prices and higher
operating costs as coal stock prices fell in tandem with sharp declines in the
natural gas market. Similarly, Frontier Oil fell with oil prices and was
eliminated from the Fund. On-line DVD rental firm Netflix declined as results
fell short of expectations, despite its foray into mass market, low-priced
subscription plans. The company faced higher subscriber acquisition costs and
growing competition from the proliferation of on-line media options. Given these
headwinds, we eliminated the position. The Fund's sector allocations, which are
fallout of our bottom-up investment approach, detracted from relative
performance at the margin, particularly our underweight (i.e. the Fund's sector
position was less than the benchmark position) in Energy.
On June 12, 2006, Hartford Investment Management Company was added as an
additional sub-adviser to the Fund.
WHAT IS THE OUTLOOK?
While neither decidedly bullish or bearish about the economy, we are cautious
about the prospects for growth in the first half of 2007. Our caution may force
us to pare back our exposure to more economically sensitive sectors.
Although the market seems to teeter on every new macroeconomic data point, we
expect our relative performance will be driven by stock selection as opposed to
sector allocation. We are focused on companies that have unique business models,
special market opportunities, and can deliver growth regardless of the economic
cycle.
As a result of our bottom-up stock selection process we ended the period with
overweight positions in the Information Technology, Consumer Discretionary and
Telecommunication Services sectors and were most underweight Health Care and
Financials.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.1%
- -------------------------------------------------------------------
Capital Goods 3.9
- -------------------------------------------------------------------
Consumer Cyclical 9.3
- -------------------------------------------------------------------
Consumer Staples 0.6
- -------------------------------------------------------------------
Energy 4.7
- -------------------------------------------------------------------
Finance 9.0
- -------------------------------------------------------------------
Health Care 10.4
- -------------------------------------------------------------------
Services 15.9
- -------------------------------------------------------------------
Technology 30.5
- -------------------------------------------------------------------
Transportation 6.0
- -------------------------------------------------------------------
Short-Term Investments 9.8
- -------------------------------------------------------------------
Other Assets & Liabilities (7.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
10
Hartford Stock HLS Fund inception 8/31/1977
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
STOCK IB S&P 500 INDEX
-------- -------------
12/96 10000.00 10000.00
10627.00 10624.00
10678.00 10708.00
10310.00 10269.00
10906.00 10881.00
11558.00 11543.00
12191.00 12060.00
13072.00 13019.00
12240.00 12290.00
12884.00 12963.00
12461.00 12531.00
12999.00 13110.00
12/97 13105.00 13335.00
13266.00 13482.00
14269.00 14454.00
15065.00 15194.00
15396.00 15347.00
15130.00 15083.00
15885.00 15695.00
16033.00 15529.00
13684.00 13283.00
14293.00 14135.00
15580.00 15284.00
16537.00 16210.00
12/98 17455.00 17143.00
17988.00 17860.00
17582.00 17305.00
18375.00 17997.00
19135.00 18694.00
18536.00 18253.00
19717.00 19266.00
19151.00 18665.00
18915.00 18572.00
18436.00 18062.00
19438.00 19205.00
19714.00 19595.00
12/99 20871.00 20750.00
19737.00 19707.00
19420.00 19335.00
21424.00 21225.00
20786.00 20586.00
20408.00 20164.00
20651.00 20661.00
20244.00 20338.00
21241.00 21601.00
20287.00 20461.00
20401.00 20374.00
19164.00 18769.00
12/00 19366.00 18861.00
19881.00 19530.00
18485.00 17750.00
17217.00 16626.00
18482.00 17916.00
18633.00 18036.00
17831.00 17598.00
17625.00 17425.00
16403.00 16335.00
15259.00 15017.00
15628.00 15303.00
16845.00 16477.00
12/01 16967.00 16622.00
16547.00 16380.00
16308.00 16064.00
16899.00 16668.00
15443.00 15658.00
15220.00 15543.00
14143.00 14436.00
13264.00 13312.00
13151.00 13398.00
11689.00 11943.00
12747.00 12993.00
13706.00 13757.00
12/02 12824.00 12949.00
12486.00 12611.00
12237.00 12422.00
12286.00 12543.00
13224.00 13575.00
13871.00 14290.00
14075.00 14472.00
14427.00 14728.00
14613.00 15014.00
14376.00 14855.00
15135.00 15695.00
15273.00 15833.00
12/03 16178.00 16662.00
16260.00 16968.00
16379.00 17204.00
16093.00 16945.00
15878.00 16679.00
16084.00 16907.00
16435.00 17236.00
15844.00 16666.00
15854.00 16732.00
15799.00 16914.00
15775.00 17172.00
16276.00 17867.00
12/04 16810.00 18474.00
16511.00 18024.00
16858.00 18403.00
16374.00 18078.00
16221.00 17735.00
16774.00 18299.00
16738.00 18325.00
17492.00 19006.00
17538.00 18833.00
17727.00 18985.00
17507.00 18669.00
18228.00 19374.00
12/05 18382.00 19381.00
18954.00 19894.00
18886.00 19948.00
19108.00 20196.00
19419.00 20467.00
18828.00 19879.00
18533.00 19905.00
18536.00 20028.00
19052.00 20504.00
19488.00 21032.00
20162.00 21716.00
20746.00 22129.00
12/06 21023.00 22439.00
</Table>
<Table>
--- STOCK IB --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,023 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------
Stock IB(3) 14.37% 4.38% 7.71%
- -------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- -------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
STEVEN T. IRONS, CFA PETER I. HIGGINS, CFA
Senior Vice President, Partner Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IB shares of the Hartford Stock HLS Fund returned 14.37% for the
twelve-month period ended December 31, 2006, underperforming its benchmark, the
S&P 500 Index, which returned 15.78% for the same period. However, the Fund
outperformed the 13.29% return of the average fund in the Lipper VA Large Cap
Core Funds peer group, a group of funds with investment strategies similar to
those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Robust merger and acquisition activity and a better-than-expected retail
environment helped equity markets end the year on a strong note, marking the
fourth straight year of positive returns for the S&P 500. The S&P 500 finished
the year at record levels, returning 15.78%, posting positive results in all ten
sectors. Sector results were led by Telecommunication Services, Energy,
Utilities, and Materials. Health Care, Information Technology, Industrials and
Consumer Staples all posted positive returns but lagged the general market.
The Fund's performance versus the benchmark was driven by both security
selection and aggregate sector allocations which results from our bottom-up
stock picking. Stock selection was weakest within the Consumer Discretionary,
Health Care and Materials sectors. Stocks that detracted the most from relative
(i.e. performance of the Fund as measured against the benchmark) returns
included XM Satellite, Boston Scientific, Marvell Technology and Dollar General.
Media company XM Satellite came under pressure as decelerating customer addition
trends and regulatory review of product compliance caused investors to question
the market opportunity. The Fund continues to hold the stock based on positive
long-term trends in satellite radio due to OEM adoption. Boston Scientific had a
tough year, suffering from erosion of its Implantable Cardioverter Defibrillator
(ICD) market share, concerns surrounding its drug eluting stent business and
continued issues with cardiac product recalls from its recently acquired Guidant
business. We retain our position as the fundamentals of the company remain sound
and the stock is attractively priced. Chip maker Marvell declined on disruption
in the hard disk drive market and worries over stock option grants. Discount
retailer Dollar General disappointed due to high gasoline prices hitting Dollar
General customers and thus impacting the company's top line. Additionally,
Dollar General has been selling a greater proportion of lower-margin "highly
consumable products" than anticipated. These are products like perishable foods
and cleaning supplies that are used up quickly by consumers and need to be
replaced frequently, but carry thin margins. In terms of sector allocations, the
Fund's overweight (i.e. the Fund's sector position was more than the benchmark
position) in Health Care, which posted positive absolute returns. However, it
lagged the market, and hurt relative returns.
Stock selection was strongest within the Information Technology, Industrials and
Financials sectors. Top relative contributors to the Fund included AT&T, Cisco
Systems, UBS, Broadcom and
11
- --------------------------------------------------------------------------------
Lexmark. The Fund also benefited from not owning Intel, whose shares declined
during the year. AT&T is benefiting from the stabilization of its long distance
pricing. Also, cost-cutting from its acquisitions is going well. Cisco's revenue
and earnings growth has surprised the market on the upside. The strong secular
(i.e. long term) move of enterprise and service provider networks toward all-IP
networks plays into Cisco's strength. We continue to hold a position in the
stock. UBS, the Swiss-based financial institution, posted outstanding results
due primarily to its well-performing wealth management business. UBS remains one
of our top holdings. We initiated a position in Broadcom during a low in its
share price during the summer after it guided down estimates and faced pressures
due to options investigations. Despite its solid gains, Broadcom remains a
material holding as we see strong business prospects for many years to come and
valuation is still reasonable. Shares in Lexmark, a manufacturer and supplier of
printing and imaging solutions, rose as the company recovered from its product
and distribution missteps last year. Other positive contributors to performance
included ExxonMobil, Bank of America and Citigroup.
WHAT IS THE OUTLOOK?
Hartford Stock HLS Fund continues to be managed with a large cap core investment
approach. We apply a bottom-up investment process in constructing a diversified
portfolio and look for companies that exhibit industry leadership, strong
balance sheets, solid management, high return on equity, accelerating earnings,
and/or attractive valuation with a catalyst. Our bottom-up investment approach
resulted in the Fund being most overweight Information Technology, Health Care
and Materials, and most underweight Energy, Utilities and Financials at the end
of the period.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.1%
- -------------------------------------------------------------------
Capital Goods 2.6
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 6.2
- -------------------------------------------------------------------
Energy 6.2
- -------------------------------------------------------------------
Finance 22.4
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 8.9
- -------------------------------------------------------------------
Technology 28.3
- -------------------------------------------------------------------
Utilities 1.0
- -------------------------------------------------------------------
Short-Term Investments 0.5
- -------------------------------------------------------------------
Other Assets & Liabilities (0.3)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
12
Hartford Total Return Bond HLS Fund inception 8/31/1977
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS U.S. AGGREGATE BOND
TOTAL RETURN BOND IB INDEX
-------------------- -----------------------------------
12/96 10000.00 10000.00
10040.00 10031.00
10083.00 10056.00
9975.00 9944.00
10103.00 10094.00
10213.00 10190.00
10358.00 10311.00
10706.00 10589.00
10593.00 10499.00
10758.00 10655.00
10893.00 10809.00
10960.00 10859.00
12/97 11107.00 10968.00
11257.00 11109.00
11246.00 11100.00
11298.00 11138.00
11344.00 11196.00
11462.00 11302.00
11569.00 11398.00
11564.00 11422.00
11665.00 11608.00
11972.00 11880.00
11842.00 11817.00
11960.00 11884.00
12/98 11988.00 11920.00
12080.00 12004.00
11771.00 11794.00
11841.00 11859.00
11901.00 11897.00
11741.00 11792.00
11670.00 11755.00
11643.00 11705.00
11620.00 11700.00
11731.00 11835.00
11775.00 11879.00
11781.00 11878.00
12/99 11725.00 11821.00
11701.00 11782.00
11841.00 11924.00
12022.00 12082.00
12000.00 12047.00
12006.00 12041.00
12279.00 12291.00
12355.00 12403.00
12509.00 12583.00
12586.00 12662.00
12617.00 12746.00
12805.00 12955.00
12/00 13107.00 13196.00
13409.00 13411.00
13482.00 13527.00
13515.00 13595.00
13489.00 13538.00
13566.00 13619.00
13547.00 13671.00
13867.00 13977.00
14040.00 14138.00
14073.00 14302.00
14323.00 14601.00
14266.00 14399.00
12/01 14219.00 14307.00
14271.00 14423.00
14329.00 14563.00
14127.00 14321.00
14417.00 14599.00
14568.00 14723.00
14562.00 14850.00
14590.00 15029.00
14868.00 15283.00
14995.00 15531.00
15066.00 15459.00
15231.00 15455.00
12/02 15617.00 15775.00
15746.00 15789.00
15992.00 16007.00
16009.00 15994.00
16213.00 16126.00
16582.00 16427.00
16570.00 16394.00
16075.00 15843.00
16198.00 15948.00
16625.00 16370.00
16513.00 16218.00
16586.00 16257.00
12/03 16801.00 16422.00
16945.00 16555.00
17080.00 16734.00
17177.00 16859.00
16769.00 16420.00
16706.00 16355.00
16784.00 16447.00
16925.00 16610.00
17215.00 16927.00
17286.00 16973.00
17454.00 17115.00
17385.00 16979.00
12/04 17534.00 17135.00
17619.00 17243.00
17562.00 17141.00
17455.00 17053.00
17681.00 17284.00
17824.00 17471.00
17951.00 17566.00
17836.00 17406.00
18033.00 17629.00
17854.00 17447.00
17703.00 17309.00
17768.00 17386.00
12/05 17918.00 17551.00
17943.00 17552.00
17977.00 17610.00
17825.00 17438.00
17806.00 17406.00
17776.00 17387.00
17796.00 17424.00
18007.00 17660.00
18273.00 17930.00
18417.00 18088.00
18567.00 18207.00
18786.00 18419.00
12/06 18732.00 18312.00
</Table>
<Table>
--- TOTAL RETURN BOND IB --- LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX
$10,000 starting value $10,000 starting value
$18,732 ending value $18,312 ending value
</Table>
LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX is an unmanaged index and is composed
of securities from the Lehman Brothers Government/Credit Bond Index,
Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial
Mortgage-Backed Securities Index.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------------
Total Return Bond IB(3) 4.54% 5.67% 6.48%
- ------------------------------------------------------------
Lehman Brothers U.S. Aggregate
Bond Index 4.33% 5.06% 6.24%
- ------------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on April 1, 1998. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
NASRI TOUTOUNGI
Managing Director
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IB Shares of the Hartford Total Return Bond HLS Fund gained 4.54% for
the year, vs. the Lehman Brothers U.S. Aggregate Bond Index which gained 4.33%.
The Fund also outpaced the 4.14% average return of the Lipper VA Intermediate
Investment Grade Funds category, a group of funds with investment strategies
similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Sector allocation, duration (i.e. sensitivity to changes in interest rates)
positioning and security selection all contributed to Fund outperformance during
2006. Sector allocation accounted for more than half of the Fund's
outperformance during the period. The Fund was underweight (i.e. the Fund's
sector position was less than the benchmark position) Treasuries versus the
benchmark, which proved beneficial, as Treasuries underperformed the overall
market. Our positions in the High Yield sector, driven largely by exposure to
industrial issuers in the automotive industry (GMAC and Ford Motor Company),
boosted performance. The Fund's underweight to mortgages detracted from
performance, as this sector had positive excess returns.
Interest rate positioning accounted for more than a quarter of outperformance,
with most of the value added during the first six months of the year. Early in
the year, the strong economy, core inflation numbers and upward pressure on
energy prices led to our view that the Federal Reserve Bank (the "Fed") would
continue to raise rates, which proved accurate. Thus, the Fund's shorter
duration (i.e. lower sensitivity to changes in interest rates) position during
this period enhanced returns.
Security selection within the Investment Grade Corporate sector was also a
positive performance driver. Leading this outperformance was the Fund's
overweight to the hybrid sector of the corporate bond market. Research by our
analyst team led to investment in these securities, which have generally
provided superior yields with high liquidity. Also beneficial were tactical
purchases on the long end (i.e. longer maturity) of the Industrial Investment
Grade Corporate sector, as well as Technology, Media and Telecommunication
holdings which underperformed early in the year but outperformed during the
second half. Although spread tightening (i.e. the difference between short and
long term interest rates narrowing) reduced overall attractiveness for emerging
markets, we were able to identify a number of opportunities in specific issuers
within the sector that added to the Fund's excess returns.
WHAT IS YOUR OUTLOOK?
Economic leading indicators suggest that we are entering an environment of
sub-par, though non-recessionary, growth. Employment and income data have offset
weakness in housing. Monetary policy should remain on hold in the near future
given the Fed's cautious outlook on inflation amidst moderating growth. As such,
we have positioned the portfolio to be neutral on interest
13
- --------------------------------------------------------------------------------
rates, but anticipate adding duration over the coming weeks and months. Having
increased our allocations to investment grade corporate bonds and to high yield
in the third quarter, we will maintain this stance unless more evidence arises
that either inflation is out of hand or that leading indicators of growth point
to a recession. If either of these unlikely scenarios becomes more apparent, we
would seek to protect the portfolio's performance by migrating toward safer
bonds such as Treasuries and Agencies. In the interim, given the amount of
excess liquidity driven by foreign demand for U.S. assets, we remain optimistic
on the prospects for credit to perform. We find little value in non-dollar (i.e.
foreign) denominated sovereigns and corporates, as rates are expected to rise in
Europe and Asia more so than in the U.S. That said, we view the dollar as
overvalued, in particular versus the Japanese Yen. As a result, we may
opportunistically invest in short duration, Yen-denominated securities.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 0.9
- -------------------------------------------------------------------
Consumer Cyclical 3.4
- -------------------------------------------------------------------
Consumer Staples 0.7
- -------------------------------------------------------------------
Energy 2.2
- -------------------------------------------------------------------
Finance 31.5
- -------------------------------------------------------------------
Foreign Governments 0.5
- -------------------------------------------------------------------
General Obligations 0.2
- -------------------------------------------------------------------
Health Care 2.0
- -------------------------------------------------------------------
Services 4.3
- -------------------------------------------------------------------
Technology 5.5
- -------------------------------------------------------------------
Transportation 0.8
- -------------------------------------------------------------------
U.S. Government Agencies 31.8
- -------------------------------------------------------------------
U.S. Government Securities 5.6
- -------------------------------------------------------------------
Utilities 1.9
- -------------------------------------------------------------------
Short-Term Investments 20.8
- -------------------------------------------------------------------
Other Assets & Liabilities (15.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY CREDIT QUALITY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
LONG-TERM
CREDIT QUALITY HOLDINGS
- -------------------------------------------------------------------
AAA 54.7%
- -------------------------------------------------------------------
AA 4.5
- -------------------------------------------------------------------
A 10.0
- -------------------------------------------------------------------
BBB 14.2
- -------------------------------------------------------------------
BB 10.8
- -------------------------------------------------------------------
B 5.7
- -------------------------------------------------------------------
NR 0.1
- -------------------------------------------------------------------
TOTAL 100%
- -------------------------------------------------------------------
</Table>
14
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- 67.8%
BASIC MATERIALS -- 3.5%
3,205 Alcoa, Inc. ...................................... $ 96,194
834 Cameco Corp. ..................................... 33,719
1,588 Companhia Vale do Rio Doce ADR.................... 47,233
929 Dow Chemical Co. ................................. 37,092
609 E.I. DuPont de Nemours & Co. ..................... 29,645
1,148 Mittal Steel Co. ................................. 48,402
-----------
292,285
-----------
CAPITAL GOODS -- 1.8%
1,046 American Standard Cos., Inc. ..................... 47,977
644 Boeing Co. ....................................... 57,177
513 Deere & Co. ...................................... 48,799
-----------
153,953
-----------
CONSUMER CYCLICAL -- 6.0%
1,335 Altria Group, Inc. ............................... 114,604
3,128 Circuit City Stores, Inc. ........................ 59,373
2,198 D.R. Horton, Inc. ................................ 58,212
1,434 eBay, Inc. (D).................................... 43,105
1,390 Gap, Inc. ........................................ 27,113
1,289 Home Depot, Inc. ................................. 51,758
1,177 Lowe's Cos., Inc. ................................ 36,657
443 Toyota Motor Corp. (A)............................ 29,669
1,898 Wal-Mart Stores, Inc. ............................ 87,640
-----------
508,131
-----------
CONSUMER STAPLES -- 4.3%
441 Bunge Ltd. ....................................... 31,984
520 Clorox Co. ....................................... 33,384
6 Japan Tobacco, Inc. (A)........................... 30,968
1,457 PepsiCo, Inc. .................................... 91,154
1,488 Procter & Gamble Co. ............................. 95,653
1,345 Tyson Foods, Inc. Class A......................... 22,119
2,133 Unilever N.V. NY Shares........................... 58,113
-----------
363,375
-----------
ENERGY -- 4.2%
342 CNOOC Ltd. ADR.................................... 32,392
1,321 EnCana Corp. ..................................... 60,714
1,227 ExxonMobil Corp. ................................. 94,040
2,911 Halliburton Co. .................................. 90,380
997 Occidental Petroleum Corp. ....................... 48,659
73 Ultra Petroleum Corp (D).......................... 3,476
611 XTO Energy, Inc. ................................. 28,752
-----------
358,413
-----------
FINANCE -- 15.1%
3,126 Aegon N.V. (A).................................... 59,323
5,032 Akbank T.A.S. (A)................................. 30,194
1,929 American International Group, Inc. ............... 138,246
2,435 Bank of America Corp. ............................ 130,020
1,268 Bank of New York Co., Inc. ....................... 49,929
709 Capital One Financial Corp. ...................... 54,450
2,984 Citigroup, Inc. .................................. 166,234
1,789 Countrywide Financial Corp. ...................... 75,960
2,341 E*Trade Financial Corp. (D)....................... 52,474
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
667 Federal Home Loan Mortgage Corp. ................. $ 45,316
571 ING Groep N.V. ................................... 25,239
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 62,500
361 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 61,955
960 State Street Corp. ............................... 64,709
1,850 UBS AG............................................ 111,582
2,221 UnitedHealth Group, Inc. ......................... 119,318
1,522 Western Union Co.................................. 34,123
-----------
1,281,572
-----------
HEALTH CARE -- 7.0%
1,732 Abbott Laboratories............................... 84,366
4,278 Boston Scientific Corp. (D)....................... 73,498
3,088 Bristol-Myers Squibb Co. ......................... 81,274
344 Cardinal Health, Inc. ............................ 22,183
3,808 Elan Corp. plc ADR (D)............................ 56,161
1,735 Eli Lilly & Co. .................................. 90,399
1,897 Sanofi-Aventis S.A. ADR........................... 87,589
2,542 Schering-Plough Corp. ............................ 60,088
1,790 Shionogi & Co. Ltd. (A)........................... 35,154
-----------
590,712
-----------
SERVICES -- 6.2%
1,511 Accenture Ltd. Class A............................ 55,783
503 Fluor Corp. ...................................... 41,062
699 Monster Worldwide, Inc. (D)....................... 32,601
5,542 Sun Microsystems, Inc. (D)(G)..................... 30,039
2,357 Time Warner, Inc. ................................ 51,327
1,800 United Parcel Service, Inc. Class B............... 134,957
1,715 Viacom, Inc. Class B (D).......................... 70,375
1,235 Walt Disney Co. .................................. 42,337
4,415 XM Satellite Radio Holdings, Inc. Class A (D)..... 63,803
-----------
522,284
-----------
TECHNOLOGY -- 19.0%
1,287 Adobe Systems, Inc. (D)........................... 52,901
3,852 AT&T, Inc. ....................................... 137,716
1,659 Broadcom Corp. Class A (D)........................ 53,615
5,343 Cisco Systems, Inc. (D)........................... 146,030
2,914 Corning, Inc. (D)................................. 54,519
8,432 EMC Corp. (D)..................................... 111,297
4,433 First Data Corp. ................................. 113,125
4,793 Flextronics International Ltd. (D)................ 55,025
7,219 General Electric Co. ............................. 268,630
194 Google, Inc. (D).................................. 89,517
2,525 Maxim Integrated Products, Inc. .................. 77,309
2,512 Medtronic, Inc. .................................. 134,390
2,697 Microsoft Corp. .................................. 80,523
1,121 Motorola, Inc. ................................... 23,046
1,140 Sharp Corp. (A)................................... 19,601
4,347 Sprint Nextel Corp. .............................. 82,113
1,677 Texas Instruments, Inc. .......................... 48,303
2,368 Yahoo!, Inc. (D).................................. 60,476
-----------
1,608,136
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
15
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- -----------
COMMON STOCK -- (CONTINUED)
UTILITIES -- 0.7%
2,588 British Energy Group plc (D)(A)................... $ 27,432
221 E.On AG (A)....................................... 29,802
-----------
57,234
-----------
Total common stock
(cost $5,293,269)............................... $ 5,736,095
-----------
<Caption>
PRINCIPAL
AMOUNT
- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 10,000 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 9,080
10,000 State of Illinois, Taxable Pension,
5.10%, 06/01/2033............................... 9,584
-----------
Total municipal bonds
(cost $19,888).................................. $ 18,664
-----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 2.9%
FINANCE -- 2.9%
17,200 Asset Securitization Corp.,
6.93%, 02/14/2043............................... $ 18,513
7,301 Asset Securitization Corp.,
7.49%, 04/14/2029............................... 7,314
4,590 Banc of America Commercial Mortgage, Inc.,
5.35%, 09/10/2047 (L)........................... 4,561
9,575 Bear Stearns Commercial Mortgage Securities, Inc.,
5.30%, 10/12/2042 (L)........................... 9,511
676 Capital Auto Receivables Asset Trust,
2.00%, 11/15/2007............................... 676
3,255 Centex Home Equity,
4.72%, 10/25/2031............................... 3,227
16,000 Citibank Credit Card Issuance Trust,
2.55%, 01/20/2009............................... 15,980
15,000 Citigroup/Deutsche Bank Commercial Mortgage Trust,
5.40%, 07/15/2044 (L)........................... 14,966
15,000 Commercial Mortgage Pass Through Certificates,
5.12%, 06/10/2044............................... 14,789
5,322 Connecticut RRB Special Purpose Trust CL&P,
5.73%, 03/30/2009............................... 5,323
3,952 Countrywide Home Loans,
5.29%, 11/25/2035 (L)........................... 3,931
7,365 Credit Suisse Mortgage Capital Certificates,
5.47%, 09/15/2039............................... 7,422
6,945 Credit Suisse Mortgage Capital Certificates,
5.61%, 02/15/2039 (L)........................... 7,057
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 10,385 Greenwich Capital Commercial Funding Corp.,
5.22%, 04/10/2037 (L)........................... $ 10,311
9,327 Harley-Davidson Motorcycle Trust,
2.53%, 11/15/2011............................... 9,100
9,125 Household Automotive Trust,
5.28%, 09/17/2011............................... 9,152
6,305 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.34%, 12/15/2044 (L)........................... 6,282
7,755 JP Morgan Chase Commercial Mortgage Security
Corp.,
5.48%, 12/12/2044............................... 7,829
2,894 Marriott Vacation Club Owner Trust,
5.36%, 10/20/2028 (I)........................... 2,888
3,963 Merrill Lynch Mortgage Investors Trust,
5.89%, 03/25/2036 (L)........................... 3,996
15,000 Merrill Lynch Mortgage Trust,
5.05%, 07/12/2038............................... 14,711
9,580 Morgan Stanley Capital I,
5.23%, 09/15/2042............................... 9,505
10,853 Residential Accredit Loans, Inc.,
5.27%, 02/25/2035 (L)........................... 10,778
12,910 Susquehanna Auto Lease Trust,
5.21%, 03/16/2009 (I)........................... 12,891
182 USAA Auto Owner Trust,
2.06%, 04/15/2008............................... 181
10,000 Wachovia Bank Commercial Mortgage Trust,
5.12%, 07/15/2042............................... 9,839
9,918 Wells Fargo Mortgage Backed Securities Trust,
4.55%, 03/25/2035 (L)........................... 9,774
14,130 Wells Fargo Mortgage Backed Securities Trust,
5.54%, 04/25/2036 (L)........................... 14,091
-----------
Total asset & commercial
mortgage backed securities
(cost $243,470)................................. $ 244,598
-----------
CORPORATE BONDS: INVESTMENT GRADE -- 10.5%
BASIC MATERIALS -- 0.1%
10,000 Alcan, Inc.,
7.25%, 11/01/2028............................... $ 11,181
-----------
CONSUMER CYCLICAL -- 0.8%
9,400 DaimlerChrysler N.A. Holdings Corp.,
5.88%, 03/15/2011............................... 9,435
9,550 DaimlerChrysler N.A. Holdings Corp.,
6.50%, 11/15/2013............................... 9,805
3,084 Federated Retail Holdings, Inc.,
5.90%, 12/01/2016............................... 3,079
12,946 SCL Term Aereo Santiago S.A.,
6.95%, 07/01/2012 (I)........................... 13,158
</Table>
The accompanying notes are an integral part of these financial statements.
16
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
$ 14,200 Target Corp.,
5.88%, 11/01/2008............................... $ 14,369
15,000 Wal-Mart Stores, Inc.,
6.88%, 08/10/2009............................... 15,627
-----------
65,473
-----------
CONSUMER STAPLES -- 1.0%
6,500 Coca-Cola Enterprises, Inc.,
6.75%, 09/15/2028............................... 7,137
500 Coca-Cola Enterprises, Inc.,
8.50%, 02/01/2022............................... 634
13,140 Colgate-Palmolive Co.,
5.58%, 11/06/2008............................... 13,245
13,037 ConAgra Foods, Inc.,
7.88%, 09/15/2010............................... 14,108
9,825 Diageo Capital plc,
4.38%, 05/03/2010............................... 9,557
13,400 PepsiAmericas, Inc.,
6.38%, 05/01/2009............................... 13,633
20,775 Procter & Gamble Co.,
9.36%, 01/01/2021............................... 26,021
2,975 Weyerhaeuser Co.,
7.38%, 03/15/2032............................... 3,105
-----------
87,440
-----------
FINANCE -- 5.5%
16,800 Ace INA Holdings, Inc.,
5.88%, 06/15/2014............................... 17,123
10,500 AMBAC Financial Group, Inc.,
5.95%, 12/05/2035............................... 10,456
500 American General Finance Corp.,
6.63%, 02/15/2029............................... 552
20,000 AXA Financial, Inc.,
7.00%, 04/01/2028............................... 22,511
20,000 Bank of America Corp.,
5.88%, 02/15/2009............................... 20,281
4,830 BB&T Corp.,
4.90%, 06/30/2017............................... 4,568
17,000 Berkshire Hathaway Finance Corp.,
4.85%, 01/15/2015............................... 16,472
12,585 Brandywine Operating Partnership,
6.00%, 04/01/2016............................... 12,804
3,750 Capital One Bank,
6.50%, 06/13/2013............................... 3,953
3,900 Capital One Financial Corp.,
5.70%, 09/15/2011............................... 3,958
10,000 Cincinnati Financial Corp.,
6.92%, 05/15/2028............................... 11,068
6,500 Citigroup, Inc.,
3.63%, 02/09/2009............................... 6,308
8,800 Citigroup, Inc.,
6.00%, 10/31/2033............................... 9,013
1,000 Citigroup, Inc.,
6.50%, 01/18/2011............................... 1,046
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
FINANCE -- (CONTINUED)
$ 8,920 Credit Suisse First Boston USA, Inc.,
4.88%, 01/15/2015............................... $ 8,650
7,900 Developers Diversified Realty Corp.,
5.38%, 10/15/2012............................... 7,824
13,500 EOP Operating L.P.,
4.75%, 03/15/2014............................... 13,374
16,355 ERAC USA Finance Co.,
7.35%, 06/15/2008 (I)........................... 16,764
4,525 Everest Reinsurance Holdings, Inc.,
5.40%, 10/15/2014............................... 4,431
8,000 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 7,989
11,550 HSBC Bank USA,
3.88%, 09/15/2009............................... 11,199
10,500 International Lease Finance Corp.,
5.00%, 09/15/2012............................... 10,287
12,650 Jackson National Life Insurance Co.,
8.15%, 03/15/2027 (I)........................... 15,679
8,320 John Deere Capital Corp.,
4.88%, 10/15/2010............................... 8,175
14,375 JP Morgan Chase & Co.,
5.13%, 09/15/2014............................... 14,135
750 KeyCorp Capital II,
6.88%, 03/17/2029............................... 788
7,880 Kimco Realty Corp.,
5.78%, 03/15/2016............................... 7,980
8,750 Liberty Mutual Group, Inc.,
5.75%, 03/15/2014 (I)........................... 8,718
20,000 Liberty Property L.P.,
7.25%, 08/15/2007............................... 20,109
6,875 National City Corp.,
6.88%, 05/15/2019............................... 7,571
30,000 New England Mutual Life Insurance Co.,
7.88%, 02/15/2024 (I)........................... 36,308
6,500 Prologis Trust,
5.63%, 11/15/2016............................... 6,451
11,000 Prudential Financial, Inc.,
5.50%, 03/15/2016............................... 10,997
500 Republic New York Capital I,
7.75%, 11/15/2006............................... 519
1,250 Santander Central Hispano Issuances Ltd.,
7.63%, 11/03/2009............................... 1,325
15,100 Simon Property Group L.P.,
6.10%, 05/01/2016............................... 15,652
7,250 Sovereign Capital Trust IV,
7.91%, 06/13/2036............................... 8,155
14,600 Torchmark Corp.,
8.25%, 08/15/2009............................... 15,586
9,000 Toyota Motor Credit Corp.,
5.50%, 12/15/2008............................... 9,026
21,400 U.S. Bank NA,
4.95%, 10/30/2014............................... 20,839
5,500 UnitedHealth Group, Inc.,
4.75%, 02/10/2014............................... 5,278
5,345 Wachovia Capital Trust III,
5.80%, 08/29/2049............................... 5,389
</Table>
The accompanying notes are an integral part of these financial statements.
17
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 10,000 Wachovia Corp.,
5.25%, 08/01/2014............................... $ 9,878
2,725 Wellpoint, Inc.,
5.00%, 01/15/2011............................... 2,692
1,000 Wells Fargo Bank NA,
6.45%, 02/01/2011............................... 1,044
2,760 Willis North America, Inc.,
5.63%, 07/15/2015............................... 2,642
-----------
455,567
-----------
HEALTH CARE -- 0.4%
9,000 Becton, Dickinson & Co.,
6.70%, 08/01/2028............................... 9,872
7,725 CVS Corp.,
6.13%, 08/15/2016............................... 7,971
8,575 Pharmacia Corp.,
6.60%, 12/01/2028............................... 9,708
8,000 Wyeth,
7.25%, 03/01/2023............................... 9,069
-----------
36,620
-----------
SERVICES -- 0.9%
13,500 COX Communications, Inc.,
5.45%, 12/15/2014............................... 13,152
15,000 FedEx Corp.,
3.50%, 04/01/2009............................... 14,407
7,850 Harrah's Operating Co., Inc.,
6.50%, 06/01/2016............................... 7,028
10,900 Harvard University,
8.13%, 04/15/2007............................... 10,983
10,800 News America, Inc.,
6.40%, 12/15/2035............................... 10,729
5,530 Time Warner, Inc.,
5.50%, 11/15/2011............................... 5,516
15,020 Viacom, Inc.,
6.88%, 04/30/2036............................... 14,850
-----------
76,665
-----------
TECHNOLOGY -- 1.2%
10,000 BellSouth Telecommunications,
6.38%, 06/01/2028............................... 10,011
15,000 Comcast Cable Communications, Inc.,
6.88%, 06/15/2009............................... 15,517
1,000 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027............................... 1,228
8,500 Deutsche Telekom International Finance B.V.,
8.25%, 06/15/2030............................... 10,449
3,400 Embarq Corp.,
7.08%, 06/01/2016............................... 3,461
19,425 General Electric Co.,
5.00%, 02/01/2013............................... 19,209
14,325 Siemens Finance,
5.75%, 10/17/2016 (I)........................... 14,518
15,000 Telecom Italia Capital,
5.25%, 10/01/2015............................... 14,012
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
TECHNOLOGY -- (CONTINUED)
$ 5,000 Verizon Communications, Inc.,
5.35%, 02/15/2011............................... $ 5,008
4,400 Verizon Communications, Inc.,
5.55%, 02/15/2016............................... 4,385
500 Verizon Global Funding Corp.,
7.25%, 12/01/2010............................... 533
500 Verizon Global Funding Corp.,
7.75%, 12/01/2030............................... 586
-----------
98,917
-----------
TRANSPORTATION -- 0.1%
8,700 Southwest Airlines Co.,
5.75%, 12/15/2016............................... 8,526
-----------
UTILITIES -- 0.5%
1,000 Alabama Power Co.,
7.13%, 10/01/2007............................... 1,012
4,605 Consolidated Edison,
5.30%, 12/01/2016............................... 4,525
7,800 Midamerican Energy Holdings Co.,
6.13%, 04/01/2036............................... 7,863
17,285 Northern Border Pipeline Co.,
7.75%, 09/01/2009............................... 18,280
8,000 Southern Cal Edison Co.,
5.55%, 01/15/2037............................... 7,646
3,335 Taqa Abu Dhabi National,
5.88%, 10/27/2016 (I)........................... 3,359
750 TransCanada Pipelines Ltd.,
6.49%, 01/21/2009............................... 766
-----------
43,451
-----------
Total corporate bonds: investment grade
(cost $866,744)................................. $ 883,840
-----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.1%
SERVICES -- 0.1%
10,400 Times Mirror Co.,
7.50%, 07/01/2023............................... $ 9,222
3,100 Wyndham Worldwide,
6.00%, 12/01/2016 (I)........................... 3,045
-----------
Total corporate bonds: non-investment grade
(cost $14,233).................................. $ 12,267
-----------
U.S. GOVERNMENT SECURITIES -- 12.3%
OTHER DIRECT FEDERAL OBLIGATIONS -- 2.2%
FEDERAL HOME LOAN BANK
61,000 4.875% 2011....................................... $ 60,758
-----------
FINANCING CORPORATION
17,617 Zero Coupon Strip,
4.44% 2013 (M).................................. 12,502
-----------
TENNESSEE VALLEY AUTHORITY
64,300 4.375% 2015....................................... 61,652
50,000 6.00% 2013........................................ 52,675
-----------
114,327
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
18
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
U.S. GOVERNMENT SECURITIES -- (CONTINUED)
U.S. TREASURY SECURITIES -- 10.1%
$ 63,075 2.00% 2016 (O).................................... $ 61,921
64,600 2.375% 2025 (O)................................... 68,854
171,300 3.50% 2010........................................ 165,278
201,225 3.875% 2010....................................... 195,896
100,175 4.375% 2010....................................... 99,021
171,875 4.875% 2011....................................... 172,989
44,700 5.375% 2031....................................... 47,881
38,650 6.25% 2023........................................ 44,487
-----------
856,327
-----------
Total U.S. government securities
(cost $1,048,030)............................... $ 1,043,914
-----------
U.S. GOVERNMENT AGENCIES -- 2.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.8%
9,345 2.50% 2013........................................ $ 9,125
59,656 6.50% 2035 -- 2036................................ 60,761
-----------
69,886
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.0%
131 6.50% 2036........................................ 134
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.7%
26,622 5.50% 2036........................................ 26,487
10,393 6.00% 2024 -- 2035................................ 10,558
3,764 6.50% 2026 -- 2035................................ 3,869
14,146 7.00% 2031 -- 2033................................ 14,618
132 7.50% 2035........................................ 137
2,474 8.00% 2026 -- 2031................................ 2,620
191 9.00% 2016 -- 2023................................ 205
-----------
58,494
-----------
OTHER GOVERNMENT AGENCIES -- 0.5%
35,028 Postal Square L.P.,
8.95% 2022...................................... 43,239
-----------
Total U.S. government agencies
(cost $168,333)................................. $ 171,753
-----------
Total long-term investments
(cost $7,653,967)............................... $ 8,111,131
-----------
SHORT-TERM INVESTMENTS -- 24.3%
FINANCE -- 2.2%
90,000 FHLB Discount Note,
5.26%, 01/12/2007 (M)........................... $ 89,845
100,000 FNMA Discount Note,
5.17%, 01/30/2007 (M)........................... 99,571
-----------
189,416
-----------
REPURCHASE AGREEMENTS -- 1.0%
19,171 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... 19,171
26,436 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 26,436
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- ---------- -----------
REPURCHASE AGREEMENTS -- (CONTINUED)
$ 287 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... $ 287
16,548 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 16,548
5,651 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,651
16,548 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 16,548
-----------
84,641
-----------
<Caption>
SHARES
- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 21.1%
1,781,676 BNY Institutional Cash Reserve Fund............... $ 1,781,676
-----------
Total short-term investments
(cost $2,055,733)............................... $ 2,055,733
-----------
Total investments in securities
(cost $9,709,700) (C)........................... $10,166,864
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 12.52% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $386,598, which represents 4.57% of total net assets.
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $9,740,353 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 598,962
Unrealized depreciation....................... (172,451)
---------
Net unrealized appreciation................... $ 426,511
=========
</Table>
(D) Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(I) Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities
Act of 1933, as amended, and may be sold only to qualified institutional
buyers. Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid. The aggregate value of these securities
at December 31, 2006, was $127,328, which represents 1.51% of total net
assets.
(L) Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
The accompanying notes are an integral part of these financial statements.
19
HARTFORD ADVISERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(O) U.S. Treasury inflation-protection securities (TIPS) are securities
in which the principal amount is adjusted for inflation and the semiannual
interest payments equal a fixed percentage of the inflation-adjusted
principal amount.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Japanese Yen Sell $793 $794 1/05/2007 $1
==
</Table>
The accompanying notes are an integral part of these financial statements.
20
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- 94.3%
BASIC MATERIALS -- 12.7%
2,008 Aracruz Celulose S.A. ADR......................... $ 122,987
2,013 Arch Coal, Inc. .................................. 60,438
1,819 BHP Billiton Ltd. ADR (G)......................... 72,285
5,787 Cameco Corp. ..................................... 234,100
7,247 Companhia Vale do Rio Doce ADR.................... 215,530
5,506 Dow Chemical Co. ................................. 219,902
1,198 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 66,759
501 Peabody Energy Corp. ............................. 20,241
832 Phelps Dodge Corp. ............................... 99,547
586 Potash Corp. of Saskatchewan...................... 84,022
2,695 Rio Tinto plc (A)................................. 142,816
2,221 Teck Cominco Ltd. Class B......................... 167,433
5,306 Vedanta Resources plc (A)......................... 126,374
4,263 Xstrata plc (A)................................... 212,122
-----------
1,844,556
-----------
CAPITAL GOODS -- 9.2%
2,200 3M Co. ........................................... 171,462
10,810 ABB Ltd. ADR...................................... 194,362
1,887 Boeing Co. ....................................... 167,641
1,500 Caterpillar, Inc. ................................ 91,995
1,655 Deere & Co. ...................................... 157,369
4,959 Ingersoll-Rand Co. Class A........................ 194,050
1,752 ITT Corp. ........................................ 99,520
1,509 Joy Global, Inc. ................................. 72,950
500 National Oilwell Varco, Inc. (D).................. 30,590
9,411 Xerox Corp. (G)(D)................................ 159,511
-----------
1,339,450
-----------
CONSUMER CYCLICAL -- 6.5%
7,237 Federated Department Stores, Inc. ................ 275,962
7,438 Gap, Inc. ........................................ 145,033
795 Lotte Shopping Co. GDR (G)(D)..................... 16,134
5,972 Toyota Motor Corp. (A)............................ 399,688
2,375 Wal-Mart Stores, Inc. ............................ 109,678
-----------
946,495
-----------
CONSUMER STAPLES -- 3.7%
3,049 Bunge Ltd. ....................................... 221,068
3,383 Constellation Brands, Inc. Class A (D)............ 98,167
2,373 Cosan S.A. Industria E Comercio (D)............... 49,652
-- Japan Tobacco, Inc. (A)........................... 711
2,012 Procter & Gamble Co. ............................. 129,336
2,208 Tyson Foods, Inc. Class A......................... 36,320
-----------
535,254
-----------
ENERGY -- 6.8%
6,900 Halliburton Co. .................................. 214,245
1,247 Occidental Petroleum Corp. ....................... 60,911
2,312 RAO Gazprom Class S ADR (K)....................... 106,353
2,985 Sasol Ltd. ADR.................................... 110,139
1,000 Valero Energy Corp. .............................. 51,160
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
ENERGY -- (CONTINUED)
4,960 Weatherford International Ltd. (D)................ $ 207,258
5,000 XTO Energy, Inc. (G).............................. 235,250
-----------
985,316
-----------
FINANCE -- 14.2%
4,720 ACE Ltd. ......................................... 285,896
20,590 Akbank T.A.S. (A)................................. 123,547
1,400 American International Group, Inc. ............... 100,324
926 Assurant, Inc. ................................... 51,150
209 Augsburg Re AG (H)(A)(D).......................... --
1,750 Capital One Financial Corp. ...................... 134,435
4,778 Citigroup, Inc. (G)............................... 266,118
975 Eurocastle Investment Ltd. ....................... 49,696
4,400 European Capital Ltd. (D)(H)(A) PFIC.............. 57,304
382 ICICI Bank Ltd. (D)(I)............................ 7,729
646 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 110,819
391 ORIX Corp. (A) PFIC............................... 113,242
259 Raiffeisen International Bank-Holding AG (A)...... 39,453
3,515 Reliance Zero (D)(I).............................. 100,940
1,401 UBS AG............................................ 84,522
2,885 Uniao de Bancos Brasileiros S.A. GDR (G).......... 268,208
3,614 Wellpoint, Inc. (D)............................... 284,401
-----------
2,077,784
-----------
HEALTH CARE -- 4.1%
2,440 Eli Lilly & Co. .................................. 127,114
1,151 Sanofi-Aventis S.A. (A)........................... 106,080
817 Sierra Health Services, Inc. (G)(D)............... 29,445
4,394 Teva Pharmaceutical Industries Ltd. ADR........... 136,562
3,980 Wyeth............................................. 202,667
-----------
601,868
-----------
SERVICES -- 5.5%
527 Fluor Corp. (G)................................... 43,046
30 Harvey Weinstein Master L.P. (D)(H)(A)............ 37,543
313 Melco PBL Entertainment Limited ADR (D)........... 6,661
5,900 News Corp. Class A................................ 126,732
1,610 Starwood Hotels & Resorts......................... 100,650
9,448 Sun Microsystems, Inc. (D)........................ 51,208
2,899 Viacom, Inc. Class B (D).......................... 118,942
9,066 Walt Disney Co. .................................. 310,692
-----------
795,474
-----------
TECHNOLOGY -- 27.3%
3,323 Adobe Systems, Inc. (D)........................... 136,649
2,332 Amdocs Ltd. (D)................................... 90,357
4,106 AT&T, Inc. (G).................................... 146,779
5,579 Broadcom Corp. Class A (G)(D)..................... 180,264
9,032 Cisco Systems, Inc. (D)........................... 246,855
5,133 Citigroup Global Certificate -- Bharti
Televentures (D)................................ 73,197
2,473 Cognex Corp. (G).................................. 58,912
4,787 Corning, Inc. (D)................................. 89,556
22,643 EMC Corp. (D)(G).................................. 298,888
10,939 General Electric Co. ............................. 407,029
541 Google, Inc. (D).................................. 249,304
</Table>
The accompanying notes are an integral part of these financial statements.
21
HARTFORD CAPITAL APPRECIATION HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- -----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
v5,133 Hewlett-Packard Co. .............................. $ 211,420
13,953 Hon Hai Precision Industry Co., Ltd. (A).......... 99,274
1,558 Intel Corp. ...................................... 31,554
1,462 International Business Machines Corp. ............ 142,033
1,352 L-3 Communications Holdings, Inc. (G)............. 110,575
3,200 Lockheed Martin Corp. ............................ 294,661
7,003 Medtronic, Inc. (G)............................... 374,747
10,631 Motorola, Inc. ................................... 218,565
6,483 Oracle Corp. (D).................................. 111,110
106 Rakuten, Inc. (D)(A).............................. 49,400
2,244 Raytheon Co. ..................................... 118,483
254 S.O.I. Tec, S.A. (D)(A)........................... 8,987
200 Samsung Electronics Co., Ltd. (A)................. 131,202
5,502 Turkcell Iletisim Hizmetleri ADR.................. 73,614
6,757 Turkcell Iletisim Hizmetleri AS (A)............... 33,119
-----------
3,986,534
-----------
TRANSPORTATION -- 0.6%
57,507 Air China Ltd. (A)................................ 30,992
993 Royal Caribbean Cruises Ltd. ..................... 41,078
245 US Airways Group, Inc. (D)(J)..................... 13,182
-----------
85,252
-----------
UTILITIES -- 3.7%
3,017 American Electric Power Co., Inc. ................ 128,468
15,945 British Energy Group plc (D)(A)................... 169,012
1,872 Suntech Power Holdings Co. Ltd. ADR (G)(D)........ 63,671
2,016 TXU Corp. ........................................ 109,266
835 Veolia Environment S.A. (A)....................... 63,702
-----------
534,119
-----------
Total common stock
(cost $11,241,252).............................. $13,732,102
-----------
EXCHANGE-TRADED FUNDS -- 3.2%
INVESTMENT POOLS AND FUNDS -- 3.2%
1,280 Ishares MSCI EAFE Index Fund (G).................. $ 93,765
4,259 Nasdaq 100 Shares (G)............................. 183,831
1,309 S&P 500 Depositary Receipt (G).................... 185,540
-----------
Total exchange-traded funds
(cost $465,380)................................. $ 463,136
-----------
PRINCIPAL
AMOUNT
- --------
V
CORPORATE BONDS: INVESTMENT GRADE -- 0.2%
FINANCE -- 0.2%
$ 26,500 UBS Luxembourg, S.A.,
6.23%, 02/11/2015............................... $ 26,962
-----------
Total corporate bonds: investment grade
(cost $26,909).................................. $ 26,962
-----------
PRINCIPAL MARKET
AMOUNT VALUE (W)
- -------- -----------
v
CORPORATE BONDS: NON-INVESTMENT GRADE -- 0.0%
FINANCE -- 0.0%
$ 412 Augsburg Re AG,
0.00%, 12/31/2049 (H)(A) +...................... $ 226
-----------
Total corporate bonds: non-investment grade
(cost $767)..................................... $ 226
-----------
Total long-term investments
(cost $11,734,308).............................. $14,222,426
-----------
SHORT-TERM INVESTMENTS -- 6.6%
REPURCHASE AGREEMENTS -- 2.5%
83,702 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 83,702
115,419 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 115,419
1,254 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 1,254
72,248 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 72,248
24,670 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 24,670
72,248 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 72,248
-----------
369,541
-----------
SHARES
- --------
V
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 4.1%
596,978 Mellon GSL DBTII Collateral Fund.................. $ 596,978
-----------
Total short-term investments
(cost $966,519)................................. $ 966,519
-----------
Total investments in securities
(cost $12,700,827) (C).......................... $15,188,945
===========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 29.66% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $2,055,613, which represents 14.12% of total net assets.
PFIC -- Passive Foreign Investment Company
The accompanying notes are an integral part of these financial statements.
22
- --------------------------------------------------------------------------------
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $12,726,354 and the aggregate gross unrealized appreciation
and depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $2,592,857
Unrealized depreciation....................... (130,266)
----------
Net unrealized appreciation................... $2,462,591
==========
</Table>
(D) Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(H) The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
June, 2006 209 Augsburg Re AG -- 144A $ 67
June, 2006 $ 412 Augsburg Re AG -- 144A,
0.00%, 12/31/2049 766
October,
2005 --
December,
2006 4,400 European Capital Ltd. --
Reg D 55,431
October, 2005 30 Harvey Weinstein Master
L.P. -- Reg D 27,951
</Table>
The aggregate value of these securities at December 31, 2006 was $95,073,
which represents 0.65% of total net assets.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $106,353 or 0.73% of net assets.
(I) Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities
Act of 1933, as amended, and may be sold only to qualified institutional
buyers. Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid. The aggregate value of these securities
at December 31, 2006, was $108,669, which represents 0.75% of total net
assets.
(J) Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $13,182, which
represents 0.09% of total net assets.
+ Convertible debt security.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ---------------------------------------------------------------
Australia 0.5%
- ---------------------------------------------------------------
Austria 0.3
- ---------------------------------------------------------------
Brazil 4.5
- ---------------------------------------------------------------
Canada 3.3
- ---------------------------------------------------------------
China 0.7
- ---------------------------------------------------------------
France 1.2
- ---------------------------------------------------------------
Germany 1.2
- ---------------------------------------------------------------
India 0.7
- ---------------------------------------------------------------
Israel 0.9
- ---------------------------------------------------------------
Japan 3.9
- ---------------------------------------------------------------
Liberia 0.3
- ---------------------------------------------------------------
Luxembourg 0.7
- ---------------------------------------------------------------
Netherlands 0.3
- ---------------------------------------------------------------
Russia 0.7
- ---------------------------------------------------------------
South Africa 0.8
- ---------------------------------------------------------------
South Korea 1.0
- ---------------------------------------------------------------
Switzerland 1.9
- ---------------------------------------------------------------
Taiwan 0.7
- ---------------------------------------------------------------
Turkey 1.6
- ---------------------------------------------------------------
United Kingdom 4.5
- ---------------------------------------------------------------
United States 68.0
- ---------------------------------------------------------------
Short-Term Investments 6.6
- ---------------------------------------------------------------
Other Assets & Liabilities (4.3)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- ---------- --------------
British Pound Buy $ 413 $ 413 1/2/2007 $ --
British Pound Buy 688 690 1/2/2007 (2)
Euro Buy 7,995 7,951 1/2/2007 44
Euro Buy 1,210 1,207 1/3/2007 3
Euro Sell 668,286 661,948 12/20/2007 (6,338)
New Turkish Lira Buy 1,023 1,023 1/4/2007 --
New Turkish Lira Buy 1,138 1,139 1/5/2007 (1)
-------
$(6,294)
=======
</Table>
The accompanying notes are an integral part of these financial statements.
23
HARTFORD DIVIDEND AND GROWTH HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- 99.1%
BASIC MATERIALS -- 7.1%
3,440 Alcoa, Inc. ...................................... $ 103,240
454 Bowater, Inc. (G)................................. 10,208
1,330 Companhia Vale do Rio Doce ADR (G)................ 39,564
2,602 E.I. DuPont de Nemours & Co. (G).................. 126,740
1,726 International Paper Co. (G)....................... 58,846
1,263 Kimberly-Clark Corp. ............................. 85,848
755 Newmont Mining Corp. (G).......................... 34,084
114 Rio Tinto plc ADR................................. 24,288
653 Rohm & Haas Co. .................................. 33,387
----------
516,205
----------
CAPITAL GOODS -- 5.1%
1,151 American Standard Cos., Inc. ..................... 52,783
1,200 Deere & Co. ...................................... 114,036
779 KLA-Tencor Corp. (G).............................. 38,775
571 Parker-Hannifin Corp. ............................ 43,929
1,276 Pitney Bowes, Inc. ............................... 58,920
3,578 Xerox Corp. (D)................................... 60,654
----------
369,097
----------
CONSUMER CYCLICAL -- 8.2%
1,491 Altria Group, Inc. ............................... 127,966
888 Avery Dennison Corp. ............................. 60,294
153 Genuine Parts Co. ................................ 7,271
593 Home Depot, Inc. (G).............................. 23,819
1,012 Limited Brands, Inc. (G).......................... 29,273
2,120 McDonald's Corp. ................................. 93,993
359 NIKE, Inc. Class B (G)............................ 35,562
1,854 Sysco Corp. (G)................................... 68,146
3,219 Wal-Mart Stores, Inc. (G)......................... 148,649
----------
594,973
----------
CONSUMER STAPLES -- 5.4%
732 Bunge Ltd. (G).................................... 53,063
1,630 Coca-Cola Co. .................................... 78,628
789 Nestle S.A. ADR................................... 69,923
750 Procter & Gamble Co. (G).......................... 48,190
2,526 Tyson Foods, Inc. Class A (G)..................... 41,556
884 Unilever N.V. NY Shares........................... 24,084
1,145 Weyerhaeuser Co. (G).............................. 80,887
----------
396,331
----------
ENERGY -- 15.7%
677 BP plc ADR........................................ 45,400
3,282 Chevron Corp. .................................... 241,318
1,649 ConocoPhillips.................................... 118,638
1,832 EnCana Corp. ..................................... 84,165
3,482 ExxonMobil Corp. ................................. 266,815
1,168 Royal Dutch Shell plc............................. 82,669
833 Schlumberger Ltd. (G)............................. 52,587
2,514 Total S.A. ADR.................................... 180,814
1,475 XTO Energy, Inc. ................................. 69,380
----------
1,141,786
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
FINANCE -- 17.9%
1,081 ACE Ltd. ......................................... $ 65,482
1,186 Allstate Corp. ................................... 77,188
1,352 American International Group, Inc. ............... 96,891
4,116 Bank of America Corp. ............................ 219,731
3,942 Citigroup, Inc. .................................. 219,556
1,000 Federal Home Loan Mortgage Corp. ................. 67,927
466 JP Morgan Chase & Co. ............................ 22,515
977 MBIA, Inc. (G).................................... 71,409
980 Merrill Lynch & Co., Inc. ........................ 91,247
758 Metlife, Inc. (G)................................. 44,700
370 PNC Financial Services Group, Inc. ............... 27,380
530 Prudential Financial, Inc. (G).................... 45,463
1,292 State Street Corp. (G)............................ 87,133
1,471 Synovus Financial Corp. .......................... 45,357
1,766 UBS AG............................................ 106,519
463 Western Union Co. (G)............................. 10,372
----------
1,298,870
----------
HEALTH CARE -- 9.3%
2,879 Abbott Laboratories............................... 140,231
1,004 AstraZeneca plc ADR............................... 53,764
3,694 Bristol-Myers Squibb Co. ......................... 97,223
2,855 Eli Lilly & Co. (G)............................... 148,761
967 Sanofi-Aventis S.A. ADR........................... 44,665
5,267 Schering-Plough Corp. ............................ 124,510
806 Teva Pharmaceutical Industries Ltd. ADR........... 25,047
889 Wyeth............................................. 45,248
----------
679,449
----------
SERVICES -- 7.0%
1,634 Accenture Ltd. Class A............................ 60,355
726 Automatic Data Processing, Inc. .................. 35,755
1,647 CBS Corp. Class B................................. 51,343
1,386 Comcast Corp. Class A (D)(G)...................... 58,680
946 Comcast Corp. Special Class A (D)(G).............. 39,602
1,234 New York Times Co. Class A (G).................... 30,055
2,026 Time Warner, Inc. (G)............................. 44,128
765 United Parcel Service, Inc. Class B (G)........... 57,390
1,109 Viacom, Inc. Class B (D).......................... 45,492
705 Warner Music Group Corp. ......................... 16,175
1,873 Waste Management, Inc. ........................... 68,852
----------
507,827
----------
TECHNOLOGY -- 17.9%
6,465 AT&T, Inc. (G).................................... 231,124
851 BellSouth Corp. .................................. 40,105
3,922 EMC Corp. (D)..................................... 51,772
1,695 First Data Corp. (G).............................. 43,259
5,738 General Electric Co. ............................. 213,525
1,531 International Business Machines Corp. ............ 148,727
678 Lockheed Martin Corp. ............................ 62,460
1,536 Maxim Integrated Products, Inc. .................. 47,027
1,745 Medtronic, Inc. .................................. 93,364
3,178 Microsoft Corp. .................................. 94,898
3,750 Motorola, Inc. ................................... 77,098
846 SanDisk Corp. (D)(G).............................. 36,386
2,795 Sprint Nextel Corp. (G)........................... 52,788
</Table>
The accompanying notes are an integral part of these financial statements.
24
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- ---------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
2,021 Verizon Communications, Inc. ..................... $ 75,271
388 Whirlpool Corp. (G)............................... 32,220
----------
1,300,024
----------
TRANSPORTATION -- 0.5%
2,595 Southwest Airlines Co. (G)........................ 39,762
----------
UTILITIES -- 5.0%
1,136 Dominion Resources, Inc. ......................... 95,217
2,047 Exelon Corp. (G).................................. 126,659
1,615 FPL Group, Inc. (G)............................... 87,872
618 Progress Energy, Inc. (G)......................... 30,307
324 Veolia Environment ADR (G)........................ 24,384
----------
364,439
----------
Total common stock
(cost $5,686,706)............................... $7,208,763
----------
PRINCIPAL
AMOUNT
- ----------
SHORT-TERM INVESTMENTS -- 16.9%
REPURCHASE AGREEMENTS -- 1.0%
$ 17,123 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 17,123
23,612 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 23,612
256 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 256
14,780 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 14,780
5,047 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 5,047
14,780 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 14,780
----------
75,598
----------
MARKET
SHARES VALUE (W)
- ---------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 15.9%
1,155,920 BNY Institutional Cash Reserve Fund............... $1,155,920
----------
Total short-term investments
(cost $1,231,518)............................... $1,231,518
----------
Total investments in securities
(cost $6,918,224) (C)........................... $8,440,281
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.79% of total net assets at December 31, 2006.
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $6,923,219 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $1,578,478
Unrealized depreciation....................... (61,416)
----------
Net unrealized appreciation................... $1,517,062
==========
</Table>
(D) Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
25
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BELGIUM -- 0.9%
270 UCB S.A. (A)...................................... $ 18,536
----------
BRAZIL -- 4.0%
2,056 All America Latina Logistica S.A.................. 21,335
1,926 Companhia Vale do Rio Doce ADR.................... 57,279
----------
78,614
----------
CANADA -- 6.5%
376 Alcan, Inc. ...................................... 18,307
581 Cameco Corp. ..................................... 23,489
621 EnCana Corp. ..................................... 28,575
143 Research in Motion, Ltd. (D)...................... 18,258
1,367 Talisman Energy, Inc. ............................ 23,210
226 Teck Cominco Ltd. Class B......................... 17,005
----------
128,844
----------
EGYPT -- 1.5%
452 Orascom Telecom Holding SAE GDR #................. 29,806
----------
FRANCE -- 11.1%
201 Accor S.A. (A)(G)................................. 15,528
464 Axa S.A. (A)(G)................................... 18,706
222 BNP Paribas (A)(G)................................ 24,175
234 Cie Generale d'Optique Essilor International S.A.
(A)(G).......................................... 25,074
177 CNP Assurances (A)................................ 19,746
182 Lafarge S.A. (A)(G)............................... 27,087
165 LVMH Moet Hennessy Louis Vuitton S.A. (A)(G)...... 17,383
418 Peugeot S.A. (A)(G)............................... 27,664
297 S.O.I. Tec, S.A. (D)(A)(G)........................ 10,483
382 Sanofi-Aventis S.A. (A)(G)........................ 35,251
----------
221,097
----------
GERMANY -- 7.3%
117 Deutsche Boerse AG (A)............................ 21,559
1,346 Deutsche Telekom AG (A)........................... 24,472
208 Henkel KGaA Vorzug................................ 30,700
184 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 31,592
230 RWE AG (A)........................................ 25,204
199 SAP AG ADR (A).................................... 10,573
----------
144,100
----------
HONG KONG -- 3.1%
8,247 Cathay Pacific Airways Ltd. (A)(G)................ 20,285
1,064 Dah Sing Financial Group (A)...................... 9,652
2,804 Hong Kong Exchanges & Clearing Ltd. (A)........... 30,690
----------
60,627
----------
INDIA -- 1.6%
325 Infosys Technologies Ltd. (A)..................... 16,418
1,448 Satyam Computer Services Ltd. (A)................. 15,802
----------
32,220
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
IRELAND -- 1.9%
513 Ryanair Holdings plc (D)(A)....................... $ 7,011
379 Ryanair Holdings plc ADR (D)(G)................... 30,864
----------
37,875
----------
ITALY -- 5.4%
987 Bulgari S.p.A. (A)................................ 13,976
4,361 Intesa Sanpaolo (A)............................... 33,583
287 Tod's S.p.A. (A)(G)............................... 23,115
4,236 UniCredito Italiano S.p.A. (A).................... 37,033
----------
107,707
----------
JAPAN -- 17.2%
516 Aisin Seiki Co., Ltd. (A)(G)(Q)................... 17,297
446 Astellas Pharma, Inc. (A)(G)...................... 20,195
503 Canon, Inc. (G)................................... 28,341
899 Daihatsu Motor Co., Ltd. (A)...................... 9,061
276 Denso Corp. (A)................................... 10,956
485 Eisai Co., Ltd. (A)(G)............................ 26,649
6 Japan Tobacco, Inc. (A)........................... 29,035
223 JFE Holdings, Inc. (A)(G)......................... 11,487
80 Keyence Corp. (A)(G).............................. 19,698
2 Mitsubishi UFJ Financial Group, Inc. (A).......... 28,682
1,712 Nippon Oil Corp. (A).............................. 11,449
2 Nippon Telegraph & Telephone Corp. (A)............ 9,261
30 Rakuten, Inc. (D)(A).............................. 14,096
492 Sega Sammy Holdings, Inc. (A)..................... 13,226
922 Sompo Japan Insurance, Inc. (A)................... 11,231
609 Sony Corp. (A).................................... 26,098
1,445 Sumitomo Chemical Co., Ltd. (A)................... 11,182
1 Sumitomo Mitsui Financial Group, Inc. (A)(G)...... 6,727
163 TDK Corp. (A)..................................... 12,986
714 Tokyo Electric Power Co., Inc. (A)(G)............. 23,054
----------
340,711
----------
KOREA (REPUBLIC OF) -- 0.8%
365 Korea Electric Power Corp......................... 16,641
----------
LUXEMBOURG -- 0.2%
149 Ternium S.A. ADR (D).............................. 4,409
----------
MEXICO -- 2.0%
2,808 Empresas ICA SAB de CV (D)........................ 10,605
366 Grupo Aeroportuario del Centro Norte, S.A.B. de CV
ADR (D)......................................... 8,145
246 Grupo Aeroportuario del Pacifico S.A. de CV
ADR #........................................... 9,649
2,627 Wal-Mart de Mexico................................ 11,559
----------
39,958
----------
NETHERLANDS -- 4.1%
884 Aercap Holdings N.V. (D).......................... 20,491
821 Koninklijke Philips Electronics N.V. (A).......... 30,873
536 Royal Numico N.V. (A)............................. 28,768
----------
80,132
----------
NORWAY -- 1.0%
742 Statoil ASA (A)(G)................................ 19,540
----------
</Table>
The accompanying notes are an integral part of these financial statements.
26
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
PANAMA -- 0.7%
307 Copa Holdings S.A. Class A........................ $ 14,299
----------
RUSSIA -- 3.3%
215 Lukoil ADR........................................ 18,968
521 RAO Gazprom Class S ADR (K)....................... 23,987
653 TMK OAO GDR (D)(I)#............................... 22,869
----------
65,824
----------
SINGAPORE -- 0.9%
1,592 Singapore Airlines Ltd. (A)....................... 18,128
----------
SOUTH AFRICA -- 1.2%
900 Impala Platinum Holdings Ltd. (A)................. 23,528
----------
SPAIN -- 0.9%
746 Banco Bilbao Vizcaya Argentaria S.A. (A)#......... 17,917
----------
SWEDEN -- 2.0%
932 Assa Abloy AB (A)................................. 20,217
4,642 Telefonaktiebolaget LM Ericsson (A)............... 18,668
----------
38,885
----------
SWITZERLAND -- 5.1%
505 Credit Suisse Group (A)........................... 35,185
119 Nestle S.A. (A)................................... 42,335
86 Zurich Financial Services AG (A).................. 23,161
----------
100,681
----------
TAIWAN -- 1.5%
2,204 Chunghwa Telecom Co., Ltd. (A).................... 4,095
1,283 Chunghwa Telecom Co., Ltd. ADR.................... 25,312
----------
29,407
----------
UNITED KINGDOM -- 12.0%
1,488 Alliance Boots plc (A)............................ 24,350
2,164 Amvescap plc (A).................................. 25,244
396 AstraZeneca plc (A)............................... 21,213
4,258 Debenhams plc (A)................................. 15,772
8,219 Old Mutual plc (A)................................ 27,974
790 Reckitt Benckiser plc (A)......................... 36,023
5,113 Tesco plc (A)..................................... 40,404
914 Xstrata plc (A)................................... 45,474
----------
236,454
----------
UNITED STATES -- 2.3%
124 Ctrip.Com International Ltd. (G).................. 7,760
289 Freeport-McMoRan Copper & Gold, Inc. Class B #.... 16,117
7,304 Hopson Development Holdings Ltd. (A).............. 20,648
----------
44,525
----------
Total common stock
(cost $1,651,664)............................... $1,950,465
----------
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- 10.0%
REPURCHASE AGREEMENTS -- 1.2%
$5,389 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 5,389
7,431 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 7,431
81 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 81
4,651 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 4,651
1,588 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 1,588
4,652 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 4,652
----------
23,792
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
173,189 Navigator Prime Portfolio......................... $ 173,189
----------
Total short-term investments
(cost $196,981)................................. $ 196,981
----------
Total investments in securities
(cost $1,848,645) (C)........................... $2,147,446
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 96.24% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $1,412,485, which represents 71.39% of total net assets.
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $1,850,081 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $312,363
Unrealized depreciation........................ (14,998)
--------
Net unrealized appreciation.................... $297,365
========
</Table>
(D) Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At
The accompanying notes are an integral part of these financial statements.
27
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
December 31, 2006, the market value of these securities amounted to $23,987
or 1.21% of net assets.
(I) Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities
Act of 1933, as amended, and may be sold only to qualified institutional
buyers. Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid. The aggregate value of these securities
at December 31, 2006, was $22,869, which represents 1.16% of total net
assets.
(Q) The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $1,989.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY INDUSTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- ---------------------------------------------------------------
Basic Materials 16.6%
- ---------------------------------------------------------------
Consumer Cyclical 11.2
- ---------------------------------------------------------------
Consumer Staples 6.9
- ---------------------------------------------------------------
Energy 7.6
- ---------------------------------------------------------------
Finance 21.3
- ---------------------------------------------------------------
Health Care 8.7
- ---------------------------------------------------------------
Services 1.3
- ---------------------------------------------------------------
Technology 15.8
- ---------------------------------------------------------------
Transportation 7.1
- ---------------------------------------------------------------
Utilities 2.0
- ---------------------------------------------------------------
Short-Term Investments 10.0
- ---------------------------------------------------------------
Other Assets & Liabilities (8.5)
- ---------------------------------------------------------------
TOTAL 100.0%
- ---------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
British Pound Sell $10,022 $ 9,571 1/25/2007 $(451)
British Pound Buy 10,022 9,719 1/25/2007 303
Euro Buy 170 169 1/02/2007 1
Euro Buy 166 166 1/03/2007 --
Euro Buy 89 89 1/04/2007 --
Japanese Yen Buy 8,847 8,883 1/04/2007 (36)
Japanese Yen Buy 1,989 1,992 1/09/2007 (3)
Norwegian Krone Sell 11,551 11,459 1/02/2007 (92)
Swiss Francs Buy 1,964 1,954 1/03/2007 10
Swiss Francs Sell 9,661 9,390 1/25/2007 (271)
Swiss Francs Buy 9,661 9,424 1/25/2007 237
-----
$(302)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
28
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- 1.3%
$25,345 Wal-Mart Stores, Inc. (L)......................... 5.26% 03/28/2007 $ 25,342
----------
CONSUMER STAPLES -- 3.7%
22,080 Alcoa, Inc. ...................................... 5.30% 01/24/2007 22,006
22,000 Alcoa, Inc. ...................................... 5.32% 02/15/2007 21,855
25,000 Stadshypotek...................................... 5.26% 01/22/2007 24,924
----------
68,785
----------
FINANCE -- 94.9%
25,000 Ab Spin Tab Swedmortgage.......................... 5.27% 01/29/2007 24,898
25,000 Ab Spin Tab Swedmortgage.......................... 5.28% 01/30/2007 24,894
25,000 Alliance & Leicester plc.......................... 5.29% 03/02/2007 24,785
21,000 Alliance & Leicester plc.......................... 5.36% 03/20/2007 20,761
25,000 American Express Credit Corp. (L)................. 5.35% 06/12/2007 25,002
24,500 American General Finance Corp. ................... 5.29% 01/10/2007 24,468
21,200 American General Finance Corp. (L)................ 5.40% 03/23/2007 21,203
22,900 American Honda Finance Corp. ..................... 5.27% 02/05/2007 22,783
26,500 American Honda Finance Corp. (I)(L)............... 5.35% 08/08/2007 26,500
30,920 Amsterdam Funding Corp. .......................... 5.27% 02/02/2007 30,776
27,210 Amsterdam Funding Corp. .......................... 5.28% 01/18/2007 27,142
21,700 Bank of America NA (L)............................ 5.32% 05/15/2007 21,851
26,500 Bank of America NA (L)............................ 5.36% 11/08/2007 26,500
32,750 Barton Capital Corp. ............................. 5.26% 01/12/2007 32,697
25,000 Barton Capital Corp. ............................. 5.27% 01/11/2007 24,963
8,600 Barton Capital Corp. ............................. 5.27% 01/17/2007 8,580
22,000 Bear Stearns & Co., Inc. (L)...................... 5.34% 01/14/2008 22,000
22,100 Bear Stearns & Co., Inc. (L)...................... 5.38% 06/29/2007 22,397
22,000 Bradford & Bingley plc............................ 5.30% 02/12/2007 21,865
21,900 Bradford & Bingley plc............................ 5.34% 02/20/2007 21,743
23,400 Britannia Building Society........................ 5.28% 01/31/2007 23,297
21,900 Britannia Building Society........................ 5.31% 02/27/2007 21,717
25,000 Cafco LLC......................................... 5.28% 01/25/2007 24,912
33,400 Cafco LLC......................................... 5.28% 01/30/2007 33,258
44,000 Caterpillar Financial Services Corp. (L).......... 5.39% 07/27/2007 44,006
25,620 Citibank NA (L)................................... 5.32% 02/14/2007 25,620
25,620 Citibank NA (L)................................... 5.32% 02/22/2007 25,620
19,200 Citigroup Funding, Inc. .......................... 5.27% 01/26/2007 19,130
21,120 Countrywide Financial Corp. ...................... 5.30% 01/16/2007 21,073
22,000 Countrywide Financial Corp. ...................... 5.31% 01/02/2007 21,997
20,000 General Electric Capital Corp. ................... 5.26% 01/26/2007 19,927
</Table>
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
FINANCE -- (CONTINUED)
$19,400 General Electric Capital Corp. (L)................ 5.31% 12/24/2007 $ 19,400
34,400 General Electric Capital Corp. (L)................ 5.45% 01/05/2007 34,400
49,580 Goldman Sachs Group, Inc. (L)..................... 5.46% 03/30/2007 49,599
24,300 HBOS Treasury Services plc........................ 5.28% 02/06/2007 24,172
26,440 HBOS Treasury Services plc (I)(L)................. 5.32% 01/09/2008 26,436
22,500 HSBC Finance Corp. (L)............................ 5.34% 01/04/2008 22,500
26,750 HSBC Finance Corp. ............................... 5.36% 03/16/2007 26,462
26,200 JP Morgan Chase & Co. (L)......................... 5.32% 01/02/2008 26,200
44,000 Lehman Brothers Holdings, Inc. (L)................ 5.40% 05/31/2007 44,015
22,000 Merrill Lynch & Co. (L)........................... 5.33% 12/24/2007 22,000
26,900 Merrill Lynch & Co. (L)........................... 5.36% 05/29/2007 26,899
25,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.43% 06/26/2007 25,011
23,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.48% 01/19/2007 23,001
25,000 Nationwide Building Society (I)................... 5.27% 01/25/2007 24,912
25,000 Nationwide Building Society (I)................... 5.28% 01/29/2007 24,898
21,700 Nordea Bank Ab (I)(L)............................. 5.33% 01/09/2008 21,700
25,000 Northern Rock plc................................. 5.28% 01/30/2007 24,894
25,000 Northern Rock plc................................. 5.30% 03/06/2007 24,766
32,500 Old Line Funding LLC.............................. 5.29% 02/08/2007 32,319
26,520 Old Line Funding LLC.............................. 5.33% 02/07/2007 26,376
33,500 Sheffield Receivables............................. 5.27% 01/18/2007 33,417
31,500 Sheffield Receivables............................. 5.30% 01/16/2007 31,431
22,030 Skandinaviska Enskilda Bank NY (I)(L)............. 5.31% 07/19/2007 22,029
21,600 Skandinaviska Enskilda Bank NY (I)(L)............. 5.34% 01/09/2008 21,600
21,700 SLM Corp. (I)(L).................................. 5.35% 01/11/2008 21,700
18,135 SLM Corp. (L)..................................... 5.50% 01/25/2007 18,137
24,600 Svenska Handelsbanken Ab.......................... 5.30% 03/19/2007 24,327
53,000 Toyota Motor Credit Corp. (L)..................... 5.21% 09/24/2007 53,000
22,000 Toyota Motor Credit Corp. ........................ 5.27% 02/07/2007 21,882
19,356 Triple A-1 Funding................................ 5.30% 01/09/2007 19,333
26,379 UBS Finance LLC................................... 5.27% 01/02/2007 26,375
23,700 UBS Finance LLC................................... 5.27% 01/05/2007 23,686
24,680 Washington Mutual Bank FA (L)..................... 5.35% 08/27/2007 24,680
21,135 Washington Mutual Bank FA (L)..................... 5.41% 02/28/2007 21,137
22,000 Wells Fargo & Co. (L)............................. 5.42% 03/23/2007 22,005
10,200 Westpac Banking Corp. ............................ 5.29% 02/06/2007 10,146
21,600 Westpac Banking Corp. (I)(L)...................... 5.32% 01/16/2008 21,600
20,700 Yorktown Capital.................................. 5.27% 01/09/2007 20,676
</Table>
The accompanying notes are an integral part of these financial statements.
29
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
FINANCE -- (CONTINUED)
$17,500 Yorktown Capital.................................. 5.31% 02/15/2007 $ 17,386
22,000 Yorktown Capital.................................. 5.33% 02/21/2007 21,836
----------
$1,782,708
----------
Total investments in securities
(cost $1,876,835) (C)........................... $1,876,835
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 6.04% of total net assets at December 31, 2006.
(C) Also represents cost for federal tax purposes.
(I) Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities
Act of 1933, as amended, and may be sold only to qualified institutional
buyers. Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid. The aggregate value of these securities
at December 31, 2006, was $211,375, which represents 11.25% of total net
assets.
(L) Variable rate securities; the yield reported is the rate in effect at
December 31, 2006.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
30
HARTFORD SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 97.4%
BASIC MATERIALS -- 7.1%
486 Agrium, Inc. (G).................................. $ 15,320
134 Airgas, Inc. ..................................... 5,422
407 Arch Coal, Inc. .................................. 12,210
288 Brush Engineered Materials, Inc. (D).............. 9,713
3,887 Golden Hope Plantations BHD (A)................... 6,625
544 Jarden Corp. (D)(G)............................... 18,935
4,627 Kingboard Chemical Holdings Ltd. (A).............. 18,168
235 Kinross Gold Corp. (D)............................ 2,789
1,118 Terra Industries, Inc. (D)........................ 13,389
----------
102,571
----------
CAPITAL GOODS -- 3.9%
225 Bucyrus International, Inc. ...................... 11,634
117 Daktronics, Inc. ................................. 4,300
622 Goodman Global, Inc. (D).......................... 10,694
36 Hydril Co. (D).................................... 2,684
223 Marvel Entertainment, Inc. (D).................... 6,002
36 Scientific Games Corp. Class A (D)................ 1,097
378 TransDigm Group, Inc. (D)......................... 10,027
215 Varian Semiconductor Equipment Associates, Inc.
(D)............................................. 9,802
----------
56,240
----------
CONSUMER CYCLICAL -- 9.3%
60 Advance Auto Parts, Inc. ......................... 2,123
134 Be Aerospace, Inc. (D)............................ 3,436
57 Buffalo Wild Wings, Inc. (D)...................... 3,027
223 Children's Place Retail Stores, Inc. (D).......... 14,159
95 Conceptus, Inc. (D)............................... 2,031
136 Dick's Sporting Goods, Inc. (D)................... 6,663
172 DSW, Inc. (D)(G).................................. 6,633
154 Dufry Group (D)(A)................................ 12,854
6,079 Esun Holdings Ltd. (D)(A)......................... 6,333
56 Gildan Activewear, Inc. (D)....................... 2,593
134 GSI Commerce, Inc. (D)(G)......................... 2,509
973 LKQ Corp. (D)..................................... 22,371
19 Newell Rubbermaid, Inc. .......................... 556
120 Quanta Services, Inc. (D)......................... 2,362
393 Quicksilver, Inc. (D)............................. 6,187
187 Skechers U.S.A., Inc. Class A (D)................. 6,222
77 The Andersons, Inc. .............................. 3,256
273 Tween Brands, Inc. (D)............................ 10,898
152 Urban Outfitters, Inc. (D)........................ 3,494
517 VistaPrint Ltd. (D)............................... 17,125
----------
134,832
----------
CONSUMER STAPLES -- 0.6%
399 Jones Soda Co. (D)(G)............................. 4,909
45 Jones Soda Co. PIPE (D)++......................... 553
97 Sanderson Farms, Inc. (G)......................... 2,950
----------
8,412
----------
ENERGY -- 4.7%
33 Aegean Marine Petroleum Network (D)............... 540
200 Cabot Oil & Gas Corp. ............................ 12,124
775 Complete Production Services, Inc. (D)............ 16,440
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
ENERGY -- (CONTINUED)
479 Denbury Resources, Inc. (D)....................... $ 13,314
72 ENSCO International, Inc. ........................ 3,604
65 Goodrich Petroleum Corp. (D)(G)................... 2,334
174 Oilsands Quest, Inc. (D).......................... 875
438 OPTI Canada, Inc. (D)............................. 7,429
95 Pride International, Inc. (D)..................... 2,841
311 Western Oil Sands, Inc. Class A (D)............... 8,721
----------
68,222
----------
FINANCE -- 9.0%
4,419 Aberdeen Asset Management PLC (A)................. 16,399
433 Admiral Group plc (A)............................. 9,295
450 Allied World Assurance Holdings Ltd. ............. 19,630
42 BOK Financial Corp. .............................. 2,298
73 CB Richard Ellis Group, Inc. Class A (D).......... 2,437
288 Covanta Holding Corp. (D)......................... 6,339
171 Dade Behring Holdings, Inc. ...................... 6,791
58 Delphi Financial Group Class A.................... 2,359
71 First Republic Bank............................... 2,790
141 Friedman Billings Ramsey Group, Inc. ............. 1,126
48 Investment Technology Group, Inc. (D)............. 2,058
252 Jamba, Inc. (D)(G)................................ 2,537
80 Jefferies Group, Inc. ............................ 2,154
257 Nuveen Investments, Inc. Class A.................. 13,316
351 ProAssurance Corp. (D)............................ 17,535
33 Signature Bank (D)................................ 1,029
79 Sterling Bancshares, Inc. ........................ 1,032
353 U-Store-It (G).................................... 7,252
451 Waddell and Reed Financial, Inc. Class A.......... 12,328
20 Wellcare Health Plans, Inc. (D)................... 1,371
----------
130,076
----------
HEALTH CARE -- 10.4%
58 Abaxis, Inc. (D).................................. 1,122
38 Adams Respiratory Therapeutics, Inc. (D).......... 1,539
48 Alexion Pharmaceuticals, Inc. (D)................. 1,939
494 Alkermes, Inc. (D)................................ 6,606
157 Amylin Pharmaceuticals, Inc. (D).................. 5,679
425 Arena Pharmaceuticals, Inc. (D)(G)................ 5,483
480 AtheroGenics, Inc. (D)(G)......................... 4,754
194 Charles River Laboratories International, Inc.
(D)............................................. 8,397
322 Digene Corp. (D).................................. 15,453
111 DJO, Inc. (D)..................................... 4,762
179 Genomic Health, Inc. (D).......................... 3,320
403 Herbalife Ltd. (D)................................ 16,175
656 Human Genome Sciences, Inc. (D)(G)................ 8,161
137 Inverness Medical Innovation (D).................. 5,286
165 Kyphon, Inc. (D).................................. 6,680
370 LifePoint Hospitals, Inc. (D)..................... 12,452
294 Medicines Co. (D)................................. 9,341
185 Mentor Corp. (G).................................. 9,059
84 Sunrise Senior Living, Inc. (D)................... 2,571
531 Symbion, Inc. (D)................................. 9,825
75 Ventana Medical Systems, Inc. (D)................. 3,219
</Table>
The accompanying notes are an integral part of these financial statements.
31
HARTFORD SMALL COMPANY HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
159 Vertex Pharmaceuticals, Inc. (D).................. $ 5,934
193 Warner Chilcott Ltd. (D).......................... 2,666
----------
150,423
----------
SERVICES -- 15.9%
186 Allscripts Healthcare Solutions, Inc. (D)......... 5,020
44 Anixter International, Inc. (D)................... 2,384
114 Central European Media Enterprises Ltd. (D)....... 7,993
69 Corrections Corp. of America (D).................. 3,105
264 DreamWorks Animation SKG, Inc. (D)................ 7,793
262 Factset Research Systems, Inc. ................... 14,810
292 Focus Media Holding Ltd. ADR (D).................. 19,380
316 Foundry Networks, Inc. (D)........................ 4,740
273 GameTech International, Inc. (D).................. 3,268
302 Hythiam, Inc. (D)................................. 2,791
114 inVentiv Health, Inc. (D)......................... 4,026
299 Iron Mountain, Inc. (D)........................... 12,371
294 Jackson Hewitt Tax Service, Inc. ................. 10,003
34 Jacobs Engineering Group, Inc. (D)................ 2,740
67 Life Time Fitness, Inc. (D)....................... 3,260
388 Live Nation, Inc. (D)............................. 8,701
718 Mentor Graphics Corp. (D)......................... 12,943
717 MoneyGram International, Inc. .................... 22,493
107 Orient Express Hotels Ltd. Class A................ 5,068
336 Pinnacle Entertainment, Inc. (D).................. 11,148
377 Priceline.com, Inc. (D)(G)........................ 16,442
200 Stericycle, Inc. (D).............................. 15,134
5 Taleo Corp. Class A (D)........................... 66
513 TeleTech Holdings, Inc. (D)....................... 12,260
207 Washington Group International, Inc. ............. 12,360
214 WNS Holdings Ltd. ADR (D)......................... 6,642
200 World Wrestling Entertainment, Inc. .............. 3,257
----------
230,198
----------
TECHNOLOGY -- 30.5%
725 Activision, Inc. (D).............................. 12,500
467 American Reprographics Co. (D).................... 15,565
54 Amphenol Corp. Class A............................ 3,321
437 Ansys, Inc. (D)................................... 19,026
770 Art Technology Group, Inc. (D).................... 1,793
208 Aspen Technology, Inc. (D)........................ 2,292
121 Baidu.com ADR (D)(G).............................. 13,618
90 Belden CDT, Inc. ................................. 3,514
402 Brocade Communications Systems, Inc. (D).......... 3,303
137 China Techfaith Wireless Communication Techology
Ltd. ADR (D)(G)................................. 1,480
343 Cirrus Logic, Inc. (D)............................ 2,357
39 CoStar Group, Inc. (D)............................ 2,094
229 Ctrip.Com International Ltd. ..................... 14,330
196 EMCORE Corp. (D).................................. 1,081
141 Equinix, Inc. (D)(G).............................. 10,675
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TECHNOLOGY -- (CONTINUED)
31 FormFactor, Inc. (D).............................. $ 1,147
695 Fossil, Inc. (D).................................. 15,703
206 Global Payments, Inc. ............................ 9,529
526 Himax Techologies, Inc. ADR (D)................... 2,509
283 Hologic, Inc. (D)................................. 13,363
471 IHS, Inc. (D)..................................... 18,586
24 Interactive Data Corp. (D)........................ 565
314 Kenexa Corp. (D)(G)............................... 10,434
337 Leap Wireless International, Inc. (D)............. 20,040
312 Logitech International S.A. (D)................... 8,917
61 MEMC Electronic Materials, Inc. (D)............... 2,391
130 Microsemi Corp. (D)............................... 2,562
198 Ness Technologies, Inc. (D)....................... 2,819
399 Neustar, Inc. (D)................................. 12,952
380 Nuance Communications, Inc. (D)(G)................ 4,358
735 O2Micro International Ltd. ADR (D)................ 6,283
105 Power Integrations, Inc. (D)...................... 2,462
585 QLogic Corp. (D).................................. 12,830
69 Rackable Systems, Inc. (D)(G)..................... 2,146
753 Red Hat, Inc. (D)................................. 17,324
542 S.O.I. Tec, S.A. (D)(A)(G)........................ 19,141
190 SiRF Technology Holdings, Inc. (D)(G)............. 4,851
275 Sirona Dental Systems, Inc. (G)................... 10,596
91 Smith Micro Software, Inc. (D).................... 1,296
1,612 Sonus Networks, Inc. (D).......................... 10,625
304 Teledyne Technologies, Inc. (D)................... 12,196
4,418 Tencent Holdings Ltd. (A)......................... 15,688
285 THQ, Inc. (D)..................................... 9,264
313 Transaction Systems Architects, Inc. (D).......... 10,182
47 Trimble Navigation Ltd. (D)....................... 2,400
188 Triumph Group, Inc. .............................. 9,844
519 Trizetto Group, Inc. (D).......................... 9,543
564 VA Software Corp. (D)............................. 2,838
924 VeriFone Holdings, Inc. (D)....................... 32,699
404 Verint Systems, Inc. (D).......................... 13,847
----------
438,879
----------
TRANSPORTATION -- 6.0%
314 American Commercial Lines, Inc. (D)............... 20,583
97 American Rail Car Industries, Inc. ............... 3,315
385 Copa Holdings S.A. Class A........................ 17,930
173 Florida East Coast Industries, Inc. .............. 10,289
51 Genesee & Wyoming, Inc. Class A (D)............... 1,333
369 GOL Linhas Aereas Inteligentes S.A. ADR (G)....... 10,587
106 Kansas City Southern (D).......................... 3,083
439 Landstar System, Inc. ............................ 16,781
95 Wabtec............................................ 2,877
----------
86,778
----------
Total common stock
(cost $1,264,915)............................... $1,406,631
----------
</Table>
The accompanying notes are an integral part of these financial statements.
32
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- 9.8%
REPURCHASE AGREEMENTS -- 1.7%
$ 784 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 784
7,546 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 7,546
1,081 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 1,081
12 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 12
677 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 677
231 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 231
5,966 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 5,966
7,545 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 7,545
677 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 677
----------
24,519
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.1%
117,490 BNY Institutional Cash Reserve Fund............... $ 117,490
----------
Total short-term investments
(cost $142,009)................................. $ 142,009
----------
Total investments in securities
(cost $1,406,924) (C)........................... $1,548,640
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 11.38% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $104,503, which represents 7.24% of total net assets.
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $1,410,143 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $161,705
Unrealized depreciation........................ (23,208)
--------
Net unrealized appreciation.................... $138,497
========
</Table>
(D) Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
++ Securities exempt from registration under Regulation D of the
Securities Act of 1933. These securities are determined to be liquid. At
December 31, 2006, the market value of these securities was $553, which
represents 0.04% of total net assets.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
33
HARTFORD STOCK HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.8%
BASIC MATERIALS -- 5.1%
2,932 Alcoa, Inc. ...................................... $ 87,995
744 Cameco Corp. ..................................... 30,075
1,460 Companhia Vale do Rio Doce ADR (G)................ 43,412
940 Dow Chemical Co. ................................. 37,532
537 E.I. DuPont de Nemours & Co. ..................... 26,152
993 Mittal Steel Co. (G).............................. 41,876
----------
267,042
----------
CAPITAL GOODS -- 2.6%
982 American Standard Cos., Inc. ..................... 45,039
597 Boeing Co. ....................................... 53,011
425 Deere & Co. (G)................................... 40,376
----------
138,426
----------
CONSUMER CYCLICAL -- 8.9%
1,212 Altria Group, Inc. ............................... 104,048
2,837 Circuit City Stores, Inc. ........................ 53,848
2,006 D.R. Horton, Inc. ................................ 53,136
1,317 eBay, Inc. (D).................................... 39,593
1,415 Gap, Inc. ........................................ 27,601
1,228 Home Depot, Inc. ................................. 49,297
1,065 Lowe's Cos, Inc. ................................. 33,181
407 Toyota Motor Corp. (A)............................ 27,266
1,740 Wal-Mart Stores, Inc. ............................ 80,353
----------
468,323
----------
CONSUMER STAPLES -- 6.2%
399 Bunge Ltd. ....................................... 28,961
429 Clorox Co. ....................................... 27,514
6 Japan Tobacco, Inc. (A)........................... 28,068
1,329 PepsiCo, Inc. .................................... 83,104
1,334 Procter & Gamble Co. (G).......................... 85,730
1,224 Tyson Foods, Inc. Class A......................... 20,128
1,969 Unilever N.V. NY Shares........................... 53,663
----------
327,168
----------
ENERGY -- 6.2%
310 CNOOC Ltd. ADR.................................... 29,297
1,215 EnCana Corp. ..................................... 55,829
1,130 ExxonMobil Corp. ................................. 86,592
2,651 Halliburton Co. .................................. 82,310
905 Occidental Petroleum Corp. ....................... 44,201
66 Ultra Petroleum Corp (D).......................... 3,161
520 XTO Energy, Inc. (G).............................. 24,476
----------
325,866
----------
FINANCE -- 22.4%
2,815 Aegon N.V. (A).................................... 53,425
4,575 Akbank T.A.S (A).................................. 27,452
1,850 American International Group, Inc. ............... 132,578
2,317 Bank of America Corp. ............................ 123,679
1,147 Bank of New York Co., Inc. ....................... 45,142
638 Capital One Financial Corp. ...................... 49,011
2,777 Citigroup, Inc. .................................. 154,706
1,641 Countrywide Financial Corp. (G)................... 69,673
2,055 E*Trade Financial Corp. (D)....................... 46,065
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
613 Federal Home Loan Mortgage Corp. ................. $ 41,589
532 ING Groep N.V.-Sponsored ADR (G).................. 23,507
5 Mitsubishi UFJ Financial Group, Inc. (A).......... 56,620
325 Muenchener Rueckversicherungs-Gesellschaft AG
(A)............................................. 55,672
898 State Street Corp. ............................... 60,534
1,708 UBS AG............................................ 103,069
1,976 UnitedHealth Group, Inc. ......................... 106,154
1,377 Western Union Co.................................. 30,875
----------
1,179,751
----------
HEALTH CARE -- 10.2%
1,479 Abbott Laboratories............................... 72,037
3,709 Boston Scientific Corp. (D)....................... 63,724
2,808 Bristol-Myers Squibb Co. (G)...................... 73,909
355 Cardinal Health, Inc. (G)......................... 22,873
3,387 Elan Corp. plc ADR (D)(G)......................... 49,954
1,642 Eli Lilly & Co. (G)............................... 85,522
1,726 Sanofi-Aventis S.A. ADR (G)....................... 79,699
2,309 Schering-Plough Corp. ............................ 54,573
1,668 Shionogi & Co., Ltd. (A).......................... 32,758
----------
535,049
----------
SERVICES -- 8.9%
1,394 Accenture Ltd. Class A............................ 51,473
450 Fluor Corp. ...................................... 36,710
624 Monster Worldwide, Inc. (D)....................... 29,117
5,308 Sun Microsystems, Inc. (D)........................ 28,769
2,226 Time Warner, Inc. ................................ 48,474
1,616 United Parcel Service, Inc. Class B............... 121,190
1,493 Viacom, Inc. Class B (D)(G)....................... 61,270
1,116 Walt Disney Co. .................................. 38,239
3,671 XM Satellite Radio Holdings, Inc. Class A
(D)(G).......................................... 53,046
----------
468,288
----------
TECHNOLOGY -- 28.3%
1,138 Adobe Systems, Inc. (D)........................... 46,774
3,664 AT&T, Inc. (G).................................... 130,988
1,499 Broadcom Corp. Class A (D)........................ 48,430
4,865 Cisco Systems, Inc. (D)........................... 132,961
2,635 Corning, Inc. (D)................................. 49,307
7,551 EMC Corp. (D)..................................... 99,677
4,016 First Data Corp. ................................. 102,496
4,115 Flextronics International Ltd. (D)................ 47,240
6,823 General Electric Co. ............................. 253,880
177 Google, Inc. (D).................................. 81,505
2,358 Maxim Integrated Products, Inc. (G)............... 72,211
2,290 Medtronic, Inc. .................................. 122,527
2,713 Microsoft Corp. (G)............................... 81,022
1,016 Motorola, Inc. ................................... 20,893
1,027 Sharp Corp. (A)(G)................................ 17,658
4,207 Sprint Nextel Corp. .............................. 79,474
1,523 Texas Instruments, Inc. .......................... 43,868
2,153 Yahoo!, Inc. (D).................................. 54,998
----------
1,485,909
----------
</Table>
The accompanying notes are an integral part of these financial statements.
34
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
@v UTILITIES -- 1.0%
2,374 British Energy Group PLC (D)(A)................... $ 25,163
195 E.On AG (A)....................................... 26,281
----------
51,444
----------
Total common stock
(cost $4,839,704)............................... $5,247,266
----------
PRINCIPAL
AMOUNT
-------
@V
SHORT-TERM INVESTMENTS -- 0.5%
REPURCHASE AGREEMENTS -- 0.2%
$ 2,020 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 2,020
2,785 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,785
30 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 30
1,743 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,743
595 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 595
1,744 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,744
----------
8,917
----------
MARKET
SHARES VALUE (W)
------- ----------
@v SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 0.3%
17,647 Navigator Prime Portfolio......................... $ 17,647
----------
Total short-term investments
(cost $26,564).................................. $ 26,564
----------
Total investments in securities
(cost $4,866,268) (C)........................... $5,273,830
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 16.43% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $350,363, which represents 6.66% of total net assets.
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $4,908,556 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 509,490
Unrealized depreciation....................... (144,216)
---------
Net unrealized appreciation................... $ 365,274
=========
</Table>
(D) Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
35
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
MUNICIPAL BONDS -- 0.2%
GENERAL OBLIGATIONS -- 0.2%
$ 7,325 Oregon School Boards Association, Taxable Pension,
4.76%, 06/30/2028............................... $ 6,651
----------
HOUSING (HFA'S, ETC.) -- 0.0%
275 Industry Urban DA,
6.10%, 05/01/2024............................... 282
----------
Total municipal bonds
(cost $7,606)................................... $ 6,933
----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- 17.6%
FINANCE -- 17.3%
9,450 ACT Depositor Corp.,
5.47%, 09/22/2041 (I)(L)........................ $ 9,114
8,763 AmeriCredit Automobile Receivables Trust,
5.20%, 03/06/2011............................... 8,750
256,064 Banc of America Commercial Mortgage, Inc.,
4.08%, 12/10/2042 (P)#.......................... 4,946
2,695 Banc of America Commercial Mortgage, Inc.,
4.43%, 11/10/2039............................... 2,603
101,748 Banc of America Commercial Mortgage, Inc.,
4.52%, 09/11/2036 (I)(P)........................ 3,457
20,180 Banc of America Commercial Mortgage, Inc.,
5.31%, 10/10/2045............................... 20,226
15,160 Banc of America Commercial Mortgage, Inc.,
5.32%, 09/10/2047............................... 15,200
15,300 Banc of America Commercial Mortgage, Inc.,
5.52%, 07/10/2046 (L)........................... 15,467
19,220 Banc of America Commercial Mortgage, Inc.,
6.01%, 07/10/2044 (L)........................... 20,000
5,880 Banc of America Securities Auto Trust,
4.49%, 02/18/2013............................... 5,793
4,200 Bank One Issuance Trust,
4.77%, 02/16/2016............................... 4,038
1,243 Bear Stearns Commercial Mortgage Securities, Inc.,
2.96%, 08/13/2039............................... 1,212
75,139 Bear Stearns Commercial Mortgage Securities, Inc.,
4.07%, 07/11/2042 (P)#.......................... 2,493
58,968 Bear Stearns Commercial Mortgage Securities, Inc.,
4.12%, 11/11/2041 (P)#.......................... 1,663
132,676 Bear Stearns Commercial Mortgage Securities, Inc.,
5.50%, 02/11/2041 (I)(P)........................ 2,222
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 15,790 Bear Stearns Commercial Mortgage Securities, Inc.,
5.58%, 09/11/2041............................... $ 16,026
2,950 Capital Auto Receivables Asset Trust,
5.77%, 05/20/2010 (I)........................... 2,957
3,850 Capital Auto Receivables Asset Trust,
6.15%, 04/20/2011 (I)........................... 3,858
5,860 Capital One Auto Finance Trust,
4.32%, 05/15/2010 #............................. 5,799
66,452 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 07/25/2035 (I)(P)#....................... 3,260
49,297 CBA Commercial Small Balance Commercial Mortgage,
7.00%, 06/25/2038 (I)(P)........................ 3,240
12,560 Citibank Credit Card Issuance Trust,
5.70%, 05/15/2013............................... 12,637
8,050 Citigroup Commercial Mortgage Trust,
5.25%, 04/15/2040............................... 8,048
19,950 Citigroup Commercial Mortgage Trust,
5.43%, 10/15/2049............................... 20,046
18,500 Citigroup Commercial Mortgage Trust,
5.91%, 03/15/2049 (L)........................... 19,076
3,350 Connecticut RRB Special Purpose Trust CL&P,
6.21%, 12/30/2011............................... 3,454
631 Conseco Finance Securitizations Corp.,
5.79%, 05/01/2033............................... 631
1,753 Countrywide Asset-Backed Certificates,
5.46%, 07/25/2035............................... 1,735
7,816 Credit Suisse Mortgage Capital Certificates,
6.02%, 06/15/2038 (L)........................... 8,120
1,934 CS First Boston Mortgage Securities Corp.,
2.08%, 05/15/2038............................... 1,885
240,946 CS First Boston Mortgage Securities Corp.,
4.39%, 07/15/2037 (I)(P)........................ 6,350
1,835 CS First Boston Mortgage Securities Corp.,
4.51%, 07/15/2037............................... 1,794
15,300 CS First Boston Mortgage Securities Corp.,
4.69%, 04/15/2037 #............................. 14,917
12,470 DB Master Finance LLC,
5.78%, 06/20/2031 (I)........................... 12,625
4,940 Ford Credit Auto Owner Trust,
5.30%, 06/15/2012............................... 4,940
344,101 GE Business Loan Trust,
6.14%, 05/15/2034 (I)(P)........................ 3,782
9,745 GE Business Loan Trust,
6.35%, 05/15/2034 (I)(L)........................ 9,745
67,318 GMAC Commercial Mortgage Securities, Inc.,
4.10%, 12/10/2041 (P)........................... 1,513
11,660 GMAC Commercial Mortgage Securities, Inc.,
5.24%, 11/10/2045 (L)........................... 11,577
12,580 GMAC Mortgage Corp. Loan Trust,
5.75%, 10/25/2036............................... 12,576
</Table>
The accompanying notes are an integral part of these financial statements.
36
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 172,686 Goldman Sachs Mortgage Securities Corp. II,
4.38%, 08/10/2038 (I)(P)........................ $ 1,795
1,718 Green Tree Financial Corp.,
7.24%, 06/15/2028............................... 1,798
19,075 Greenwich Capital Commercial Funding Corp.,
5.12%, 04/10/2037 (L)........................... 19,007
9,725 Greenwich Capital Commercial Funding Corp.,
6.11%, 07/10/2038 (L)........................... 10,179
2,519 Home Equity Asset Trust,
4.75%, 06/27/2035 (I)........................... 2,453
11,405 Hyundai Auto Receivables Trust,
5.19%, 05/15/2013............................... 11,404
3,180 Hyundai Auto Receivables Trust,
5.29%, 11/15/2012............................... 3,182
95,977 JP Morgan Chase Commercial Mortgage Securities
Corp.,
3.68%, 01/15/2038 (I)(P)........................ 2,837
281,619 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.07%, 01/15/2042 (P)........................... 4,510
677,917 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.82%, 08/12/2037 (P)........................... 2,725
10,420 JP Morgan Chase Commercial Mortgage Securities
Corp.,
4.87%, 03/15/2046............................... 10,228
475,922 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.42%, 05/12/2045 (P)........................... 12,152
4,140 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 12/12/2044............................... 4,167
14,725 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.44%, 05/15/2045 (L)........................... 14,773
20,090 JP Morgan Chase Commercial Mortgage Securities
Corp.,
5.54%, 12/12/2043 (L)........................... 20,183
5,738 LB-UBS Commercial Mortgage Trust,
2.72%, 03/15/2027............................... 5,610
18,200 LB-UBS Commercial Mortgage Trust,
5.22%, 02/15/2031 (L)........................... 18,010
14,725 LB-UBS Commercial Mortgage Trust,
5.41%, 09/15/2039 (L)........................... 14,760
4,750 LB-UBS Commercial Mortgage Trust,
5.45%, 11/15/2038 (L)........................... 4,746
11,890 LB-UBS Commercial Mortgage Trust,
5.48%, 11/15/2038 (L)........................... 11,898
6,553 Lehman Brothers Small Balance Commercial,
5.52%, 09/25/2030............................... 6,531
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
$ 5,180 Lehman Brothers Small Balance Commercial,
5.62%, 09/25/2036 (I)........................... $ 5,204
13,390 Marlin Leasing Receivables LLC,
5.33%, 09/16/2013............................... 13,402
8,110 MBNA Credit Card Master Note Trust,
4.10%, 10/15/2012............................... 7,882
5,250 MBNA Credit Card Master Note Trust,
4.30%, 02/15/2011............................... 5,181
13,950 MBNA Credit Card Master Note Trust,
4.50%, 01/15/2013 (G)........................... 13,712
66,175 Merrill Lynch Mortgage Trust,
3.96%, 09/12/2041 (I)(P)........................ 2,067
1,834 Merrill Lynch Mortgage Trust,
4.56%, 06/12/2043............................... 1,795
247,621 Merrill Lynch Mortgage Trust,
4.57%, 06/12/2043 (P)........................... 6,574
14,725 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
5.46%, 07/12/2046 (L)........................... 14,775
9,920 Merrill Lynch/Countrywide Commercial Mortgage
Trust,
6.10%, 06/12/2046 (L)........................... 10,367
2,280 Morgan Stanley Auto Loan Trust,
5.00%, 03/15/2012 (I)........................... 2,274
2,751 Morgan Stanley Capital I,
7.49%, 04/30/2039 (I)(L)........................ 2,752
73,119 Morgan Stanley Dean Witter Capital I,
0.0001%, 08/25/2032 (D)(H)(A)................... --
31,501 Morgan Stanley Dean Witter Capital I,
8.05%, 08/25/2032 (H)(P)........................ 274
7,100 Navistar Financial Corp. Owner Trust,
3.53%, 10/15/2012............................... 6,895
3,775 Popular ABS Mortgage Pass-Through Trust,
4.75%, 12/25/2034............................... 3,629
3,180 Popular ABS Mortgage Pass-Through Trust,
5.42%, 04/25/2035............................... 3,121
6,625 Providian Gateway Master Trust,
3.35%, 09/15/2011 (I)........................... 6,530
7,360 Providian Gateway Master Trust,
5.90%, 03/15/2015 (L)........................... 7,360
4,670 Renaissance Home Equity Loan Trust,
5.36%, 05/25/2035............................... 4,594
6,480 Renaissance Home Equity Loan Trust,
5.75%, 05/25/2036 (L)........................... 6,549
3,250 Residential Asset Mortgage Products, Inc.,
4.98%, 08/25/2034............................... 3,202
9,700 Wachovia Auto Loan Owner Trust,
5.15%, 07/20/2012 (I)........................... 9,690
9,970 Wachovia Auto Loan Owner Trust,
5.29%, 06/20/2012 (I)........................... 10,003
59,751 Wachovia Bank Commercial Mortgage Trust,
3.65%, 02/15/2041 (I)(P)........................ 1,691
</Table>
The accompanying notes are an integral part of these financial statements.
37
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 247,163 Wachovia Bank Commercial Mortgage Trust,
4.48%, 05/15/2044 (I)(P)........................ $ 6,357
1,835 Wachovia Bank Commercial Mortgage Trust,
4.52%, 05/15/2044............................... 1,793
8,050 Wachovia Bank Commercial Mortgage Trust,
4.72%, 01/15/2041............................... 7,897
15,000 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045 (L)........................... 15,069
19,430 Wachovia Bank Commercial Mortgage Trust,
5.77%, 07/15/2045 (L)........................... 19,999
14,725 Wachovia Bank Commercial Mortgage Trust,
5.96%, 05/15/2043 (L)........................... 15,221
----------
706,582
----------
TRANSPORTATION -- 0.3%
4,915 Continental Airlines, Inc.,
6.70%, 06/15/2021 #............................. 5,063
4,750 Continental Airlines, Inc.,
8.05%, 11/01/2020 #............................. 5,284
----------
10,347
----------
Total asset & commercial
mortgage backed securities
(cost $719,434)................................. $ 716,929
----------
CORPORATE BONDS: INVESTMENT GRADE -- 23.6%
BASIC MATERIALS -- 1.0%
2,425 Fortune Brands, Inc.,
5.13%, 01/15/2011 (G)........................... $ 2,380
7,995 Teck Cominco Ltd.,
5.38%, 10/01/2015 #............................. 7,744
6,180 Teck Cominco Ltd.,
6.13%, 10/01/2035 #............................. 5,938
5,855 Vale Overseas Limited,
6.88%, 11/21/2036............................... 6,005
4,975 Westvaco Corp.,
7.95%, 02/15/2031 #............................. 5,447
11,394 Xstrata Finance Canada,
5.80%, 11/15/2016 (I)........................... 11,361
----------
38,875
----------
CAPITAL GOODS -- 0.3%
9,771 Xerox Corp.,
6.75%, 02/01/2017 #............................. 10,211
----------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- 1.0%
$ 11,371 D.R. Horton Inc.,
6.50%, 04/15/2016 (G)........................... $ 11,440
5,890 Energy Transfer Partners L.P.,
6.13%, 02/15/2017............................... 5,972
4,150 Foster's Finance Corp.,
4.88%, 10/01/2014 (I)#.......................... 3,891
19,060 Home Depot, Inc.,
5.25%, 12/16/2013............................... 18,918
----------
40,221
----------
CONSUMER STAPLES -- 0.5%
11,414 Diageo Finance B.V.,
5.50%, 04/01/2013 (G)........................... 11,392
9,025 SABMiller plc,
6.20%, 07/01/2011 (I)#.......................... 9,237
----------
20,629
----------
ENERGY -- 2.1%
9,085 Amerada Hess Corp.,
7.13%, 03/15/2033 #............................. 9,940
10,515 Anadarko Petroleum Corp.,
5.95%, 09/15/2016............................... 10,537
4,000 Consumers Energy Co.,
5.15%, 02/15/2017 #............................. 3,801
5,190 Consumers Energy Co.,
5.38%, 04/15/2013 #............................. 5,140
6,935 Enterprise Products Operating L.P.,
4.63%, 10/15/2009 #............................. 6,790
5,935 Gazprom Capital SA,
6.21%, 11/22/2016 (I)........................... 5,977
220 Husky Oil Co.,
8.90%, 08/15/2028 #............................. 230
5,795 Nexen, Inc.,
7.88%, 03/15/2032 #............................. 6,894
7,960 Petro-Canada,
5.95%, 05/15/2035 #............................. 7,548
2,725 Ras Laffan Liquefied Natural Gas Co., Ltd.,
3.44%, 09/15/2009 (I)#.......................... 2,655
16,410 Ras Laffan Liquefied Natural Gas Co., Ltd.,
5.30%, 09/30/2020 (I)#.......................... 15,722
3,435 Smepra Energy,
6.00%, 02/01/2013 #............................. 3,503
7,195 TNK-BP Finance S.A.,
7.50%, 07/18/2016 (I)#.......................... 7,654
----------
86,391
----------
FINANCE -- 11.7%
5,983 ABX Financing Co.,
6.35%, 10/15/2036 (I)#.......................... 5,954
6,930 Aegon Funding Corp.,
5.75%, 12/15/2020 #............................. 7,004
7,300 AES El Salvador Trust,
6.75%, 02/01/2016 (I)#.......................... 7,261
13,161 Aetna, Inc.,
5.75%, 06/15/2011 (G)........................... 13,361
</Table>
The accompanying notes are an integral part of these financial statements.
38
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
FINANCE -- (CONTINUED)
$ 8,785 Aetna, Inc.,
6.63%, 06/15/2036 #............................. $ 9,394
28,464 American Express Credit Corp.,
6.80%, 09/01/2066 (G)........................... 30,352
75 Americo Life, Inc.,
7.88%, 05/01/2013 (I)#.......................... 75
18,030 Amvescap plc,
4.50%, 12/15/2009 #............................. 17,577
3,544 Amvescap plc,
5.38%, 02/27/2013 #............................. 3,507
5,370 Army Hawaii Family Housing Trust Certificates,
5.52%, 06/15/2050 (I)#.......................... 5,247
18,341 AXA S.A.,
6.46%, 12/14/2049 (I)(L)........................ 18,109
9,550 BAC Capital Trust XI,
6.63%, 05/23/2036 #............................. 10,306
9,535 BAE Systems Holdings, Inc.,
5.20%, 08/15/2015 (I)#.......................... 9,082
200 Bank of New York Institutional Capital Trust,
7.78%, 12/01/2026 (I)#.......................... 208
250 Centura Capital Trust I,
8.85%, 06/01/2027 (H)#.......................... 264
6,300 Credit Suisse First Boston USA, Inc.,
6.50%, 01/15/2012 #............................. 6,621
15,675 Duke Reality L.P.,
5.95%, 02/15/2017............................... 15,902
7,300 ERAC USA Finance Co.,
5.60%, 05/01/2015 (I)#.......................... 7,246
8,170 ERP Operating L.P.,
6.58%, 04/13/2015 #............................. 8,719
16,049 Genworth Financial, Inc.,
6.15%, 11/15/2066............................... 16,026
17,925 Goldman Sachs Group, Inc.,
5.95%, 01/15/2027............................... 17,712
9,530 HSBC Holding plc,
6.50%, 05/02/2036 #............................. 10,252
11,875 iStar Financial, Inc.,
5.95%, 10/15/2013 (I)........................... 11,935
16,135 JP Morgan Chase Capital XX,
6.55%, 09/29/2036 #............................. 16,661
3,785 Kazkommerts International B.V.,
8.00%, 11/03/2015 (I)(G)........................ 3,936
8,597 Lehman Brothers Holdings, Inc.,
5.50%, 04/04/2016 (G)........................... 8,596
9,160 Liberty Mutual Group,
7.50%, 08/15/2036 #............................. 10,022
12,600 Merrill Lynch & Co., Inc.,
6.05%, 05/16/2016 (G)........................... 13,042
6,575 Merrill Lynch & Co., Inc.,
6.22%, 09/15/2026............................... 6,775
28,674 Metlife, Inc.,
6.40%, 12/15/2036............................... 28,806
</Table>
<Table>
<Caption>
PRINCIPAL Market
AMOUNT (B) Value (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 10,500 MUFG Capital Finance I Ltd.,
6.35%, 07/25/2049 (L)#.......................... $ 10,656
3,900 North Street Referenced Linked Notes,
6.43%, 07/30/2010 (I)(L)........................ 3,354
8,700 PNC Preferred Funding Trust,
6.52%, 12/29/2049 (I)(G)........................ 8,851
6,988 Principal Financial Group,
6.05%, 10/15/2036............................... 7,153
200 Prudential Holdings LLC,
7.25%, 12/18/2023 (I)#.......................... 231
96 Regional Diversified Funding,
9.25%, 03/15/2030 (I)#.......................... 110
10,700 Simon Property Group, Inc.,
7.88%, 03/15/2016 (I)#.......................... 12,438
16,392 SMFG Preferred Capital,
6.08%, 12/01/2049 (I)(L)........................ 16,217
6,800 St. Paul Travelers Cos., Inc.,
8.13%, 04/15/2010 #............................. 7,376
15,422 Standard Chartered plc,
6.41%, 01/30/2049 (I)(L)........................ 15,300
16,713 Suntrust Capital VIII,
6.10%, 12/01/2066............................... 16,257
3,740 Suntrust Preferred Capital,
5.85%, 12/29/2049 (L)........................... 3,769
2,882 Travelers Property Casualty Corp.,
5.00%, 03/15/2013 #............................. 2,813
6,260 TuranAlem Finance B.V.,
8.50%, 02/10/2015............................... 6,442
13,200 US Bank Realty Corp.,
6.09%, 12/22/2049 (I)(L)........................ 13,707
6,930 Wachovia Bank Commercial Mortgage Trust,
5.42%, 01/15/2045............................... 6,965
5,862 WellPoint, Inc.,
5.85%, 01/15/2036 (G)........................... 5,695
4,700 WellPoint, Inc.,
6.80%, 08/01/2012 #............................. 4,985
7,913 Wells Fargo Capital X,
5.95%, 12/15/2036............................... 7,755
9,076 Westfield Group,
5.70%, 10/01/2016 (I)........................... 9,110
----------
479,136
----------
FOREIGN GOVERNMENTS -- 0.2%
CAD 200 Canadian Government,
7.25%, 06/01/2007............................... 174
CAD 200 Canadian Government,
9.00%, 03/01/2011............................... 204
3,370 El Salvador (Republic of),
8.25%, 04/10/2032 (I)#.......................... 4,052
AUD 300 Italy,
5.88%, 08/14/2008............................... 234
3,614 United Mexican States,
5.63%, 01/15/2017 #............................. 3,618
----------
8,282
----------
</Table>
The accompanying notes are an integral part of these financial statements.
39
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: INVESTMENT GRADE -- (CONTINUED)
HEALTH CARE -- 0.8%
$ 4,120 Baxter International, Inc.,
5.90%, 09/01/2016 #............................. $ 4,232
9,475 Cardinal Health, Inc.,
5.85%, 12/15/2017 #............................. 9,422
8,124 CVS Lease Pass Through,
6.04%, 12/10/2028 (I)........................... 8,090
12,365 Teva Pharmaceuticals Finance LLC,
6.15%, 02/01/2036............................... 12,014
----------
33,758
----------
SERVICES -- 2.0%
100 Comcast Corp.,
10.63%, 07/15/2012.............................. 121
10,240 Cox Communications, Inc.,
5.45%, 12/15/2014 (G)........................... 9,976
7,758 Cox Communications, Inc.,
5.88%, 12/01/2016 (I)........................... 7,703
4,970 Cox Communications, Inc.,
6.45%, 12/01/2036 (I)(G)........................ 4,892
2,350 Electronic Data Systems Corp.,
3.88%, 07/15/2023 #............................. 2,494
3,800 FedEx Corp.,
3.50%, 04/01/2009 #............................. 3,650
9,625 Marriott International, Inc.,
6.20%, 06/15/2016 #............................. 9,707
4,709 Mashantucket Western Pequot Revenue Bond,
5.91%, 09/01/2021 (I)#.......................... 4,503
15,075 Time Warner Entertainment Co. L.P.,
8.38%, 07/15/2033 (G)........................... 18,219
5,120 Time Warner, Inc.,
6.50%, 11/15/2036............................... 5,096
15,640 Viacom, Inc.,
6.88%, 04/30/2036............................... 15,463
----------
81,824
----------
TECHNOLOGY -- 2.0%
7,672 AT&T Corp.,
8.00%, 11/15/2031 #............................. 9,518
12,600 Cingular Wireless Services, Inc.,
8.75%, 03/01/2031 #............................. 16,375
500 Comcast Cable Communications, Inc.,
8.50%, 05/01/2027 #............................. 614
165 GTE Corp.,
8.75%, 11/01/2021 (G)........................... 201
10,222 Siemens Finance,
6.13%, 08/17/2026 (I)........................... 10,445
11,130 Sprint Capital Corp.,
8.75%, 03/15/2032............................... 13,396
4,025 TCI Communications, Inc.,
8.75%, 08/01/2015 #............................. 4,761
7,975 Tele-Communications, Inc.,
7.88%, 08/01/2013 #............................. 8,868
14,925 Telefonica Emisiones SAU,
6.42%, 06/20/2016 #............................. 15,397
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
TECHNOLOGY -- (CONTINUED)
$ 1,500 Verizon Maryland, Inc.,
8.30%, 08/01/2031 #............................. $ 1,758
125 Verizon Virginia, Inc.,
4.63%, 03/15/2013 (G)........................... 117
----------
81,450
----------
TRANSPORTATION -- 0.5%
5,696 American Airlines, Inc.,
7.86%, 10/01/2011 #............................. 6,223
10,875 CSX Corp.,
6.75%, 03/15/2011 #............................. 11,419
325 Roadway Corp.,
8.25%, 12/01/2008 #............................. 336
4,025 Royal Caribbean Cruises Ltd.,
7.50%, 10/15/2027 (G)........................... 3,944
----------
21,922
----------
UTILITIES -- 1.5%
6,550 Carolina Power & Light Co.,
5.25%, 12/15/2015 #............................. 6,441
7,475 Centerpoint Energy, Inc.,
6.85%, 06/01/2015 (G)........................... 7,910
3,875 Detroit Edison Co.,
6.13%, 10/01/2010 #............................. 3,961
9,251 Kinder Morgan Finance Co.,
5.70%, 01/05/2016 #............................. 8,488
5,735 Northern States Power Co.,
6.25%, 06/01/2036 #............................. 6,109
10,938 Oneok Partners L.P.,
6.65%, 10/01/2036............................... 11,188
6,130 Peco Energy Corp.,
5.95%, 10/01/2036............................... 6,228
3,190 Puget Sound Energy, Inc.,
7.96%, 02/22/2010 #............................. 3,416
4,150 Texas-New Mexico Power Co.,
6.13%, 06/01/2008 #............................. 4,162
1,400 Westar Energy, Inc.,
5.15%, 01/01/2017 #............................. 1,330
----------
59,233
----------
Total corporate bonds: investment grade
(cost $956,513)................................. $ 961,932
----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- 10.4%
BASIC MATERIALS -- 1.5%
8,590 Boise Cascade LLC,
7.13%, 10/15/2014 #............................. $ 8,311
9,503 Equistar Chemicals L.P.,
8.75%, 02/15/2009 (G)........................... 9,954
3,770 Evraz Group S.A.,
8.25%, 11/10/2015 (I)........................... 3,878
3,865 Goodyear Tire & Rubber Co.,
9.14%, 12/01/2009 (I)(L)(G)..................... 3,879
8,275 Goodyear Tire & Rubber Co.,
11.25%, 03/01/2011 #............................ 9,144
12,100 Potlatch Corp.,
13.00%, 12/01/2009 (L)#......................... 13,952
</Table>
The accompanying notes are an integral part of these financial statements.
40
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
BASIC MATERIALS -- (CONTINUED)
$ 4,856 Vedanta Resources plc,
6.63%, 02/22/2010 (I)#.......................... $ 4,795
5,765 Verso Paper Holdings LLC,
11.38%, 08/01/2016 (I)#......................... 6,053
----------
59,966
----------
CAPITAL GOODS -- 0.6%
8,650 Bombardier, Inc.,
6.30%, 05/01/2014 (I)........................... 8,131
7,870 Case Corp.,
7.25%, 01/15/2016............................... 7,968
6,102 L-3 Communications Corp.,
3.00%, 08/01/2035 (G)........................... 6,407
----------
22,506
----------
CONSUMER CYCLICAL -- 1.7%
9,650 ArvinMeritor, Inc.,
8.75%, 03/01/2012 (G)........................... 9,915
10,345 General Motors Corp.,
6.38%, 05/01/2008 (G)........................... 10,293
5,765 K. Hovnanian Enterprises,
6.00%, 01/15/2010 #............................. 5,520
10,110 Mosaic Co.,
7.38%, 12/01/2014 (I)(G)........................ 10,375
4,891 Neiman Marcus Group, Inc.,
10.38%, 10/15/2015 (G).......................... 5,441
6,985 Supervalu, Inc.,
7.50%, 11/15/2014............................... 7,283
11,500 Technical Olympic USA, Inc.,
8.25%, 04/01/2011 (I)(G)........................ 11,213
9,695 Tenneco, Inc.,
8.63%, 11/15/2014 (G)........................... 9,889
----------
69,929
----------
CONSUMER STAPLES -- 0.2%
4,585 Dole Food Co., Inc.,
8.63%, 05/01/2009 #............................. 4,556
4,235 OJSC Myronivsky Hliboproduct,
10.25%, 11/30/2011 (I)(G)....................... 4,325
----------
8,881
----------
ENERGY -- 0.1%
3,876 Chesapeake Energy Corp.,
2.75%, 11/15/2035............................... 3,920
----------
FINANCE -- 1.6%
4,395 American Real Estate Partners L.P.,
7.13%, 02/15/2013 #............................. 4,417
8,070 Avis Budget Car Rental,
7.87%, 05/15/2014 (I)(L)........................ 7,788
2,680 Drummond Co., Inc.,
7.38%, 02/15/2016 (I)(G)........................ 2,626
12,040 Ford Motor Credit Co.,
7.38%, 02/01/2011 (G)........................... 11,919
</Table>
<Table>
<Caption>
PRINCIPAL Market
AMOUNT (B) Value (W)
- ---------- ----------
FINANCE -- (CONTINUED)
$ 12,715 Ford Motor Credit Co.,
9.82%, 04/15/2012 (L)#.......................... $ 13,475
23,935 General Motors Acceptance Corp.,
6.88%, 09/15/2011 #............................. 24,550
----------
64,775
----------
FOREIGN GOVERNMENTS -- 0.3%
4,235 Argentina (Republic of),
7.00%, 09/12/2013............................... 4,069
BRL 8,820 Brazil (Republic of),
12.50%, 01/05/2022.............................. 4,717
3,970 Turkey (Republic of),
7.00%, 09/26/2016............................... 4,035
----------
12,821
----------
HEALTH CARE -- 0.5%
2,825 Biovail Corp.,
7.88%, 04/01/2010............................... 2,885
10,210 HCA, Inc.,
7.88%, 02/01/2011............................... 10,236
5,565 HCA, Inc.,
9.25%, 11/15/2016 (I)........................... 5,962
----------
19,083
----------
SERVICES -- 0.9%
2,220 CSC Holdings, Inc.,
8.13%, 08/15/2009............................... 2,300
18,300 Dex Media West LLC,
9.88%, 08/15/2013 #............................. 19,947
7,910 Echostar DBS Corp.,
6.38%, 10/01/2011............................... 7,861
8,170 SunGard Data Systems, Inc.,
9.13%, 08/15/2013............................... 8,579
----------
38,687
----------
TECHNOLOGY -- 2.8%
6,480 Advanced Micro Devices, Inc.,
7.75%, 11/01/2012 #............................. 6,723
9,170 Citizens Communications Co.,
9.00%, 08/15/2031 #............................. 9,949
6,835 CSC Holdings, Inc.,
8.13%, 07/15/2009............................... 7,083
5,325 Dobson Cellular Systems,
8.38%, 11/01/2011 (I)#.......................... 5,611
8,325 Freescale Semiconductor, Inc.,
10.13%, 12/15/2016 (I)(G)....................... 8,335
8,670 Intelsat Bermuda Ltd.,
9.25%, 06/15/2016 (I)#.......................... 9,320
4,335 Level 3 Financing, Inc.,
9.25%, 11/01/2014 (I)........................... 4,422
9,695 Nortel Networks Ltd.,
9.62%, 07/15/2011 (I)(L)#....................... 10,216
5,150 NXP B.V.,
8.12%, 10/15/2013 (I)(L)........................ 5,227
10,305 Panamsat Corp.,
9.00%, 06/15/2016 (I)#.......................... 10,910
</Table>
The accompanying notes are an integral part of these financial statements.
41
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CORPORATE BONDS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 9,440 Qwest Communications International, Inc.,
7.50%, 02/15/2014 #............................. $ 9,723
2,980 Qwest Corp.,
7.88%, 09/01/2011 #............................. 3,174
7,450 Seagate Technology Holdings,
6.80%, 10/01/2016............................... 7,487
3,815 Vimpel Communications,
8.25%, 05/23/2016 (I)........................... 4,006
9,220 Windstream Corp.,
8.63%, 08/01/2016 (I)#.......................... 10,096
----------
112,282
----------
UTILITIES -- 0.2%
9,645 NRG Energy, Inc.,
7.38%, 02/01/2016 #............................. 9,693
----------
Total corporate bonds: non-investment grade
(cost $410,740)................................. $ 422,543
----------
U.S. GOVERNMENT SECURITIES -- 5.6%
OTHER DIRECT FEDERAL OBLIGATIONS -- 0.3%
2,350 Federal Home Loan Bank,
6.05%, 02/20/2007 (L)........................... $ 2,345
46,200 Tennessee Valley Authority,
4.75%, 11/01/2025 (N)........................... 11,891
----------
14,236
----------
U.S. TREASURY SECURITIES -- 5.3%
104,841 4.50% 2011 -- 2036 (G)............................ 103,559
53,477 4.625% 2016 (G)................................... 53,126
5,935 4.875% 2009 (G)................................... 5,953
53,060 5.00% 2008 (G).................................... 53,147
----------
215,785
----------
Total U.S. government securities
(cost $232,195)................................. $ 230,021
----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- 5.2%
BASIC MATERIALS -- 0.6%
6,085 Compass Minerals Group, Inc.,
6.88%, 12/22/2012 #............................. $ 6,088
12,238 Georgia-Pacific Corp.,
7.35%, 02/14/2013 #............................. 12,290
7,082 Huntsman International, Inc.,
7.10%, 08/16/2012 #............................. 7,084
----------
25,462
----------
CONSUMER CYCLICAL -- 0.7%
19,965 Ford Motor Co.,
8.36%, 12/12/2013 (Q)#.......................... 19,999
3,282 Invista B.V.,
6.88%, 04/30/2010 #............................. 3,276
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
$ 4,923 Supervalu, Inc.,
7.10%, 05/30/2013 #............................. $ 4,933
2,167 William Carter Co.,
6.87%, 07/14/2012 #............................. 2,163
----------
30,371
----------
FINANCE -- 0.9%
11,607 Ameritrade Holding Corp.,
6.85%, 12/31/2011 #............................. 11,599
11,871 General Growth Properties,
6.60%, 02/24/2010............................... 11,802
11,413 Nasdaq Stock Market, Inc.,
7.10%, 05/22/2012 #............................. 11,408
----------
34,809
----------
HEALTH CARE -- 0.7%
7,281 Community Health Systems,
7.07%, 08/19/2011 #............................. 7,273
2,300 DJ Orthopedics LLC,
6.88%, 04/07/2013 (Q)#.......................... 2,294
11,878 Fresenius Medical Care AG,
6.74%, 03/23/2012 #............................. 11,797
8,742 Lifepoint Hospitals, Inc.,
6.98%, 04/15/2012 #............................. 8,709
----------
30,073
----------
SERVICES -- 1.4%
4,567 Allied Waste,
7.08%, 01/15/2012 #............................. 4,576
10,298 Allied Waste,
7.16%, 01/15/2012 #............................. 10,315
3,189 Gray Television, Inc.,
6.87%, 11/22/2012 #............................. 3,181
2,473 Gray Television, Inc.,
6.88%, 05/22/2013 #............................. 2,469
13,573 MGM Mirage, Inc.,
6.53%, 10/03/2011 #............................. 13,360
12,720 Regal Cinemas, Inc.,
7.12%, 11/10/2010 #............................. 12,684
4,319 UPC Financing Partnership,
7.64%, 03/31/2013 #............................. 4,323
4,319 UPC Financing Partnership,
7.64%, 12/31/2013 #............................. 4,322
----------
55,230
----------
TECHNOLOGY -- 0.7%
3,282 Cincinnati Bell, Inc.,
6.93%, 08/31/2012 #............................. 3,275
9,872 Idearc, Inc.,
7.35%, 11/17/2014 #............................. 9,923
3,496 Mediacom Broadband,
7.17%, 01/31/2015 #............................. 3,477
</Table>
The accompanying notes are an integral part of these financial statements.
42
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
$ 10,237 Mediacom Broadband,
7.37%, 01/31/2015............................... $ 10,173
2,057 Mediacom LLC,
7.17%, 01/31/2015 #............................. 2,051
----------
28,899
----------
UTILITIES -- 0.2%
4,496 Mirant North America LLC,
7.10%, 01/03/2013 #............................. 4,486
2,912 NRG Energy, Inc.,
7.36%, 01/27/2013 #............................. 2,928
1,621 Pike Electric, Inc.,
6.88%, 07/01/2012 #............................. 1,618
----------
9,032
----------
Total senior floating rate interests:
non-investment grade
(cost $214,000)................................. $ 213,876
----------
U.S. GOVERNMENT AGENCIES -- 31.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 9.6%
21,000 4.10% 2014 #...................................... $ 20,462
69,128 4.50% 2018........................................ 66,785
47,165 5.00% 2034........................................ 44,921
16,826 5.04% 2035 (L)#................................... 16,671
9,057 5.33% 2036 #...................................... 9,041
4,704 5.45% 2036 (L)#................................... 4,706
72,230 5.49% 2036 (L)#................................... 71,813
19,583 5.50% 2018 -- 2034................................ 19,389
133,425 6.00% 2017 -- 2037 (Q)#........................... 134,501
7 6.50% 2031 -- 2032................................ 7
11 7.50% 2029 -- 2031................................ 11
----------
388,307
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 16.0%
250 3.20% 2009 (L).................................... 244
4,169 4.69% 2034 (L).................................... 4,097
10,245 4.72% 2035 (L).................................... 10,058
4,934 4.73% 2035 (L).................................... 4,855
12,842 4.79% 2035 (L).................................... 12,624
28,554 4.82% 2036 (L).................................... 28,375
30,400 4.875% 2008 (G)................................... 30,297
6,184 4.88% 2035 (L).................................... 6,121
4,420 4.91% 2035 (L).................................... 4,347
11,083 4.93% 2035 (L).................................... 10,909
206,694 5.00% 2018 -- 2037 (Q)............................ 201,893
7,179 5.09% 2035 (L).................................... 7,121
30,525 5.21% 2009........................................ 30,489
112,111 5.50% 2013 -- 2034 (Q)#........................... 111,320
11,546 5.51% 2036 (L).................................... 11,560
164,173 6.00% 2012 -- 2037 (Q)............................ 165,371
11,164 6.50% 2014 -- 2037 (Q)............................ 11,391
43 7.00% 2016 -- 2032................................ 43
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE (W)
- --------- ----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
$ 1,378 7.50% 2015 -- 2032................................ $ 1,435
2 8.00% 2032........................................ 2
----------
652,552
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 3.7%
30,870 5.50% 2033 -- 2034................................ 30,704
96,173 6.00% 2031 -- 2037 (Q)............................ 97,458
23,838 6.50% 2028 -- 2032................................ 24,498
81 7.00% 2030 -- 2031................................ 83
15 8.50% 2024........................................ 16
----------
152,759
----------
SMALL BUSINESS ADMINISTRATION -- 2.5%
6,197 5.12% 2026........................................ 6,128
12,839 5.36% 2026........................................ 12,890
9,604 5.37% 2026........................................ 9,649
8,948 5.54% 2026........................................ 9,073
9,938 5.57% 2026........................................ 10,094
9,782 5.64% 2026........................................ 9,993
10,627 5.70% 2026........................................ 10,865
8,532 5.82% 2026........................................ 8,776
8,670 5.87% 2026........................................ 8,938
7,722 6.07% 2026........................................ 8,039
8,861 6.14% 2022........................................ 9,139
----------
103,584
----------
Total U.S. government agencies
(cost $1,308,692)............................... $1,297,202
----------
<Caption>
SHARES
- ---------
COMMON STOCK -- 0.0%
TECHNOLOGY -- 0.0%
-- XO Holdings, Inc. (D)(H).......................... $ --
----------
Total common stock
(cost $--)...................................... $ --
----------
WARRANTS -- 0.0%
TECHNOLOGY -- 0.0%
-- Ntelos, Inc. (D)(H)(A)............................ $ --
----------
Total warrants
(cost $1)....................................... $ --
----------
Total long-term investments
(cost $3,849,180)............................... $3,849,436
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 20.8%
BASIC MATERIALS -- 0.4%
$ 15,000 Valspar Corp.,
5.38%, 01/16/2007............................... $ 14,964
----------
CONSUMER STAPLES -- 1.0%
40,000 Cargill, Inc.,
5.28%, 01/12/2007............................... 39,930
----------
</Table>
The accompanying notes are an integral part of these financial statements.
43
HARTFORD TOTAL RETURN BOND HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- (CONTINUED)
ENERGY -- 0.2%
$ 10,000 Weatherford International Ltd.,
5.33%, 01/11/2007............................... $ 9,984
----------
FINANCE -- 2.4%
20,000 Countrywide Financial Corp.,
5.43%, 01/02/2007............................... 19,994
40,000 Skandinav Enskilda Bank,
5.28%, 01/10/2007............................... 39,941
40,000 UBS Finance LLC,
5.27%, 01/11/2007............................... 39,935
==========
HEALTH CARE -- 0.7%
30,000 Abbot Laboratories,
5.27%, 01/09/2007............................... 29,962
----------
INVESTMENT POOLS AND FUNDS -- 0.1%
3,035 State Street Bank Money Market Fund............... 3,035
----------
REPURCHASE AGREEMENTS -- 7.6%
111,004 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
87,766 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 87,766
111,004 UBS Securities LLC Repurchase Agreement,
4.75%, 01/02/2007............................... 111,004
----------
309,774
----------
TECHNOLOGY -- 0.5%
20,000 Verizon Communications,
5.29%, 01/11/2007............................... 19,968
----------
U.S. TREASURY SECURITIES -- 0.1%
4,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ 3,962
----------
UTILITIES -- 0.4%
15,000 Dominion Resources, Inc.,
5.36%, 01/12/2007............................... 14,973
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 7.4%
302,916 Navigator Prime Portfolio......................... $ 302,916
----------
Total short-term investments
(cost $849,337)................................. $ 849,338
----------
Total investments in securities
(cost $4,698,517) (C)........................... $4,698,774
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 7.51% of total net assets at December 31, 2006.
(A) The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006 rounds to zero.
(B) All principal amounts are in U.S. dollars unless otherwise indicated.
<Table>
AUD -- Australian Dollar
BRL -- Brazilian Real
CAD -- Canadian Dollar
</Table>
(C) At December 31, 2006, the cost of securities for federal income tax
purposes was $4,699,199 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $ 32,358
Unrealized depreciation........................ (32,783)
--------
Net unrealized depreciation.................... $ (425)
========
</Table>
(D) Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(H) The following securities are considered illiquid. Illiquid securities
are often purchased in private placement transactions, are not registered
under the Securities Act of 1933 and may have contractual restrictions on
resale. A security may also be considered illiquid if the security lacks a
readily available market or if its valuation has not changed for a certain
period of time.
<Table>
<Caption>
PERIOD
ACQUIRED SHARES/PAR SECURITY COST BASIS
-------- ---------- -------- ----------
5/2003 250 Centura Capital Trust I,
due 2027 144A $ 272
4/2005 73,119 Morgan Stanley Dean
Witter Capital I, due
2032 --
10/2005 31,501 Morgan Stanley Dean
Witter Capital I, due
2032 329
7/2000 -- Ntelos, Inc. warrants 1
5/2006 -- XO Holdings, Inc. --
</Table>
The aggregate value of these securities at December 31, 2006
rounds to zero.
(I) Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities
Act of 1933, as amended, and may be sold only to qualified institutional
buyers. Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid. The aggregate value of these securities
at December 31, 2006, was $495,984, which represents 12.15% of total net
assets.
(L) Variable rate securities; the rate reported is the coupon rate in
effect at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(N) The interest rate disclosed for these securities represents the
effective yield as of December 31, 2006.
(P) The interest rate disclosed for interest only strips represents an
effective yield based upon estimated future cash flows at December 31,
2006.
The accompanying notes are an integral part of these financial statements.
44
- --------------------------------------------------------------------------------
(Q) The cost of securities purchased on a when-issued or delayed
delivery basis at December 31, 2006 was $370,173.
(S) Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
CBT 5 Year U.S. Treasury
Note 3,767 Long March 2007 $(1,058)
CBT 2 Year U.S. Treasury
Note 879 Long March 2007 (497)
CBT U.S. Treasury Long
Bond 1,061 Short March 2007 2,302
-------
$ 747
=======
</Table>
* The number of contracts does not omit 000's.
(W) See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- --------- --------------
Euro Buy $41,003 $41,050 1/04/2007 $ (47)
Euro Sell 41,003 40,705 1/04/2007 (298)
Japanese Yen Buy 19,874 20,618 1/23/2007 (744)
Japanese Yen Sell 19,873 20,421 1/23/2007 548
-----
$(541)
=====
</Table>
CREDIT DEFAULT SWAP AGREEMENTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
PAY/ UNREALIZED
REFERENCE BUY/SELL RECEIVE EXPIRATION NOTIONAL APPRECIATION
COUNTERPARTY ENTITY PROTECTION FIXED RATE DATE AMOUNT (DEPRECIATION)
- ------------ --------- ---------- ---------- ---------- -------- --------------
Lehman Brothers Special Financing, Inc. GMAC LLC Sell 0.55% 3/20/2007 $16,500 $ --
Lehman Brothers Special Financing, Inc. HCA, Inc. Buy 2.70% 12/20/2010 10,400 95
Lehman Brothers Special Financing, Inc. HCA, Inc. Sell 3.50% 12/20/2011 10,400 (138)
-----
$ (43)
=====
</Table>
The accompanying notes are an integral part of these financial statements.
45
HARTFORD SERIES FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD CAPITAL
ADVISERS APPRECIATION
HLS FUND HLS FUND
----------------- ----------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $10,166,864 $15,188,945
Cash...................................................... 375 2,806
Foreign currency on deposit with custodian#............... -- 47,898
Unrealized appreciation on forward foreign currency
contracts............................................... 1 47
Unrealized appreciation on credit default swap
contracts............................................... -- --
Receivables:
Investment securities sold.............................. 54,997 46,827
Fund shares sold........................................ 231 2,782
Dividends and interest.................................. 34,763 21,958
Variation margin........................................ -- --
Other assets.............................................. 42 61
----------- -----------
Total assets................................................ 10,257,273 15,311,324
----------- -----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... -- 6,341
Unrealized depreciation on credit default swap
contracts............................................... -- --
Bank overdraft -- U.S. Dollars............................ -- --
Bank overdraft -- foreign cash............................ -- --
Payable upon return of securities loaned.................. 1,781,676 596,978
Payables:
Investment securities purchased......................... 5,583 131,870
Fund shares redeemed.................................... 8,213 15,972
Variation margin........................................ -- --
Investment management and advisory fees................. 467 861
Administrative services fee............................. 232 400
Distribution fees....................................... 43 96
Accrued expenses.......................................... 840 1,388
----------- -----------
Total liabilities........................................... 1,797,054 753,906
----------- -----------
Net assets.................................................. $ 8,460,219 $14,557,418
=========== ===========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 7,905,005 $11,580,524
Accumulated undistributed (distribution in excess of) net
investment income......................................... 7,195 (2,872)
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 90,854 498,316
Unrealized appreciation of investments and the translations
of assets and liabilities denominated in foreign
currency.................................................. 457,165 2,481,450
----------- -----------
Net assets.................................................. $ 8,460,219 $14,557,418
=========== ===========
Shares authorized........................................... 9,500,000 5,000,000
----------- -----------
Par value................................................... $ 0.001 $ 0.001
----------- -----------
CLASS IA: Net asset value per share......................... $ 22.60 $ 53.49
----------- -----------
Shares outstanding................................ 318,941 219,618
----------- -----------
Net assets........................................ $ 7,207,926 $11,746,831
----------- -----------
CLASS IB: Net asset value per share......................... $ 22.78 $ 53.21
----------- -----------
Shares outstanding................................ 54,968 52,824
----------- -----------
Net assets........................................ $ 1,252,293 $ 2,810,587
----------- -----------
@ Cost of securities........................................ $ 9,709,700 $12,700,827
----------- -----------
@ Market value of securities on loan........................ $ 1,729,538 $ 580,043
----------- -----------
# Cost of foreign currency on deposit with custodian........ $ -- $ 48,222
----------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
46
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD INTERNATIONAL HARTFORD HARTFORD HARTFORD HARTFORD
DIVIDEND AND GROWTH OPPORTUNITIES MONEY MARKET SMALL COMPANY STOCK HLS TOTAL RETURN BOND
HLS FUND HLS FUND HLS FUND HLS FUND FUND HLS FUND
------------------- ---------------------- ------------ ------------- ---------- -----------------
$8,440,281 $2,147,446 $1,876,835 $1,548,640 $5,273,830 $4,698,774
-- 9,429 114 -- 19 260
-- 128 -- -- -- 3,581
-- 551 -- -- -- 548
-- -- -- -- -- 95
11,993 18,920 -- 38,521 3,458 18,512
2,847 1,422 11,129 895 191 3,659
7,783 742 3,499 459 6,211 36,500
-- -- -- -- -- 99
26 9 8 23 20 16
---------- ---------- ---------- ---------- ---------- ----------
8,462,930 2,178,647 1,891,585 1,588,538 5,283,729 4,762,044
---------- ---------- ---------- ---------- ---------- ----------
-- 853 -- -- -- 1,089
-- -- -- -- -- 138
-- -- -- 2,761 -- --
-- -- -- 1 -- --
1,155,920 173,189 -- 117,490 17,647 302,916
20,164 24,297 -- 23,460 5,076 370,173
10,083 1,434 12,922 946 3,363 5,291
-- -- -- -- -- 83
437 127 64 95 186 146
200 54 51 40 144 112
55 13 11 10 26 36
567 254 178 148 484 331
---------- ---------- ---------- ---------- ---------- ----------
1,187,426 200,221 13,226 144,951 26,926 680,315
---------- ---------- ---------- ---------- ---------- ----------
$7,275,504 $1,978,426 $1,878,359 $1,443,587 $5,256,803 $4,081,729
========== ========== ========== ========== ========== ==========
$5,669,632 $1,612,587 $1,878,359 $1,245,167 $4,781,215 $4,118,692
3,359 476 -- -- 4,252 4,639
80,456 66,754 -- 56,705 63,774 (42,015)
1,522,057 298,609 -- 141,715 407,562 413
---------- ---------- ---------- ---------- ---------- ----------
$7,275,504 $1,978,426 $1,878,359 $1,443,587 $5,256,803 $4,081,729
========== ========== ========== ========== ========== ==========
4,000,000 2,625,000 7,000,000 1,500,000 4,000,000 5,000,000
---------- ---------- ---------- ---------- ---------- ----------
$ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001
---------- ---------- ---------- ---------- ---------- ----------
$ 22.79 $ 15.23 $ 1.00 $ 19.07 $ 52.57 $ 11.24
---------- ---------- ---------- ---------- ---------- ----------
248,854 104,794 1,558,433 59,730 85,559 270,560
---------- ---------- ---------- ---------- ---------- ----------
$5,671,552 $1,596,055 $1,558,433 $1,138,830 $4,498,001 $3,041,321
---------- ---------- ---------- ---------- ---------- ----------
$ 22.72 $ 15.36 $ 1.00 $ 18.71 $ 52.45 $ 11.19
---------- ---------- ---------- ---------- ---------- ----------
70,589 24,899 319,926 16,291 14,468 92,981
---------- ---------- ---------- ---------- ---------- ----------
$1,603,952 $ 382,371 $ 319,926 $ 304,757 $ 758,802 $1,040,408
---------- ---------- ---------- ---------- ---------- ----------
$6,918,224 $1,848,645 $1,876,835 $1,406,924 $4,866,268 $4,698,517
---------- ---------- ---------- ---------- ---------- ----------
$1,107,089 $ 165,689 $ -- $ 113,301 $ 16,788 $ 296,791
---------- ---------- ---------- ---------- ---------- ----------
$ -- $ 125 $ -- $ -- $ -- $ 3,590
---------- ---------- ---------- ---------- ---------- ----------
</Table>
47
HARTFORD SERIES FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD CAPITAL
ADVISERS APPRECIATION
HLS FUND HLS FUND
----------------- ----------------
INVESTMENT INCOME:
Dividends................................................. $101,204 $ 204,568
Interest.................................................. 149,436 11,133
Securities lending........................................ 4,977 1,978
Less: foreign tax withheld................................ (2,981) (6,354)
-------- ----------
Total investment income, net............................ 252,636 211,325
-------- ----------
EXPENSES:
Investment management and advisory fees................... 35,509 61,249
Administrative services fees.............................. 17,669 28,411
Distribution fees -- Class IB............................. 3,212 6,937
Custodian fees............................................ 290 1,800
Accounting services....................................... 1,325 2,131
Board of Directors' fees.................................. 148 230
Other expenses............................................ 1,255 1,950
-------- ----------
Total expenses (before waivers and fees paid
indirectly)............................................ 59,408 102,708
Commission recapture...................................... (1,015) (1,360)
Custodian fee offset...................................... (77) (52)
-------- ----------
Total waivers and fees paid indirectly.................. (1,092) (1,412)
-------- ----------
Total expenses, net..................................... 58,316 101,296
-------- ----------
Net investment income..................................... 194,320 110,029
-------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments................... 731,054 1,783,272
Net realized gain (loss) on futures, options and swap
contracts............................................... 3,532 (12,413)*
Net realized gain (loss) on foreign currency
transactions............................................ 109 (282)
-------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, OPTIONS
AND SWAP CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS...... 734,695 1,770,577
-------- ----------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation (depreciation) of
investments............................................. (63,623) 293,335
Net unrealized appreciation (depreciation) of futures,
options and swap contracts.............................. (457) --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... 47 (6,972)
-------- ----------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS, FUTURES, OPTIONS AND SWAP CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS............................. (64,033) 286,363
-------- ----------
NET GAIN(LOSS) ON INVESTMENTS, FUTURES, OPTIONS AND SWAP
CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS............... 670,662 2,056,940
-------- ----------
PAYMENTS FROM AFFILIATE (SEE NOTE 3G IN ACCOMPANYING NOTES
TO FINANCIAL STATEMENTS).................................. 6,804 11,567
-------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $871,786 $2,178,536
======== ==========
</Table>
* Realized losses on written options were $12,413 for the Hartford Capital
Appreciation HLS Fund.
The accompanying notes are an integral part of these financial statements.
48
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD HARTFORD
HARTFORD INTERNATIONAL HARTFORD SMALL HARTFORD TOTAL
DIVIDEND AND OPPORTUNITIES MONEY MARKET COMPANY STOCK RETURN BOND
GROWTH HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND HLS FUND
--------------- ------------- ------------ -------------- -------- --------------
$ 161,694 $ 39,111 $ -- $ 9,402 $92,268 $ 367
3,745 2,607 90,349 1,568 1,216 206,125
1,143 1,761 -- 1,492 1,695 1,117
(2,177) (4,771) -- (205) (2,658) --
---------- -------- ------- --------- -------- --------
164,405 38,708 90,349 12,257 92,521 207,609
---------- -------- ------- --------- -------- --------
29,539 8,327 4,419 6,563 13,697 10,202
13,489 3,507 3,535 2,699 10,608 7,811
3,828 864 747 642 1,871 2,622
17 822 10 137 190 116
1,012 263 265 202 796 586
107 27 27 21 95 62
963 282 313 241 731 580
---------- -------- ------- --------- -------- --------
48,955 14,092 9,316 10,505 27,988 21,979
(340) (385) -- (440) (987) --
(4) (3) (5) (32) (17) (80)
---------- -------- ------- --------- -------- --------
(344) (388) (5) (472) (1,004) (80)
---------- -------- ------- --------- -------- --------
48,611 13,704 9,311 10,033 26,984 21,899
---------- -------- ------- --------- -------- --------
115,794 25,004 81,038 2,224 65,537 185,710
---------- -------- ------- --------- -------- --------
538,273 240,667 1 280,268 646,164 (19,320)
-- -- -- -- (200) (1,138)
-- (1,828) -- (60) 106 (3,287)
---------- -------- ------- --------- -------- --------
538,273 238,839 1 280,208 646,070 (23,745)
---------- -------- ------- --------- -------- --------
599,277 122,554 -- (107,792) (4,482) 21,620
-- -- -- -- -- 705
-- (180) -- 3 41 (317)
---------- -------- ------- --------- -------- --------
599,277 122,374 -- (107,789) (4,441) 22,008
---------- -------- ------- --------- -------- --------
1,137,550 361,213 1 172,419 641,629 (1,737)
---------- -------- ------- --------- -------- --------
4,254 314 -- 1,839 5,820 107
---------- -------- ------- --------- -------- --------
$1,257,598 $386,531 $81,039 $ 176,482 $712,986 $184,080
========== ======== ======= ========= ======== ========
</Table>
49
HARTFORD SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
ADVISERS HLS FUND CAPITAL APPRECIATION HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss)............................. $ 194,320 $ 196,156 $ 110,029 $ 96,479
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions... 734,695 906,755 1,770,577 2,125,947
Net unrealized appreciation (depreciation) of
investments, futures, options and swap contracts and
foreign currency transactions.......................... (64,033) (420,729) 286,363 (294,622)
Payments from affiliate.................................. 6,804 -- 11,567 --
----------- ----------- ----------- -----------
Net increase in net assets resulting from operations..... 871,786 682,182 2,178,536 1,927,804
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA............................................... (166,222) (272,290) (151,317) (99,634)
Class IB............................................... (25,557) (39,286) (29,396) (15,790)
From net realized gain on investments
Class IA............................................... (516,571) (351,514) (1,436,633) (1,510,221)
Class IB............................................... (89,064) (58,538) (347,480) (373,818)
From tax-return of capital
Class IA............................................... -- (118,875) -- --
Class IB............................................... -- (19,797) -- --
----------- ----------- ----------- -----------
Total distributions.................................... (797,414) (860,300) (1,964,826) (1,999,463)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold................................................. 173,052 187,216 793,724 980,291
Issued on reinvestment of distributions.............. 682,793 742,679 1,587,950 1,609,855
Redeemed............................................. (1,869,501) (2,318,933) (2,124,483) (1,962,162)
----------- ----------- ----------- -----------
Total capital share transactions....................... (1,013,656) (1,389,038) 257,191 627,984
----------- ----------- ----------- -----------
Class IB
Sold................................................. 24,003 63,508 106,901 325,619
Issued on reinvestment of distributions.............. 114,621 117,621 376,876 389,608
Redeemed............................................. (262,691) (252,096) (508,433) (418,122)
----------- ----------- ----------- -----------
Total capital share transactions....................... (124,067) (70,967) (24,656) 297,105
----------- ----------- ----------- -----------
Net increase (decrease) from capital share
transactions.................................... (1,137,723) (1,460,005) 232,535 925,089
----------- ----------- ----------- -----------
Net increase (decrease) in net assets............. (1,063,351) (1,638,123) 446,245 853,430
NET ASSETS:
Beginning of period...................................... 9,523,570 11,161,693 14,111,173 13,257,743
----------- ----------- ----------- -----------
End of period............................................ $ 8,460,219 $ 9,523,570 $14,557,418 $14,111,173
=========== =========== =========== ===========
Accumulated undistributed (distribution in excess of) net
investment income........................................ $ 7,195 $ -- $ (2,872) $ 2,079
=========== =========== =========== ===========
SHARE ACTIVITY:
Class IA
Sold................................................. 7,509 8,100 14,540 17,986
Issued on reinvestment of distributions.............. 30,245 32,735 30,179 30,675
Redeemed............................................. (80,891) (99,678) (38,693) (36,297)
----------- ----------- ----------- -----------
Total share activity................................... (43,137) (58,843) 6,026 12,364
----------- ----------- ----------- -----------
Class IB
Sold................................................. 1,030 2,719 1,959 6,092
Issued on reinvestment of distributions.............. 5,036 5,150 7,203 7,457
Redeemed............................................. (11,296) (10,778) (9,300) (7,702)
----------- ----------- ----------- -----------
Total share activity................................... (5,230) (2,909) (138) 5,847
----------- ----------- ----------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
50
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD INTERNATIONAL OPPORTUNITIES HARTFORD
DIVIDEND AND GROWTH HLS FUND HLS FUND MONEY MARKET HLS FUND
------------------------------ ------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
$ 115,794 $ 103,335 $ 25,004 $ 16,314 $ 81,038 $ 44,998
538,273 247,944 238,839 196,600 1 3
599,277 18,268 122,374 (14,194) -- --
4,254 -- 314 -- -- --
---------- ---------- ---------- ---------- ----------- -----------
1,257,598 369,547 386,531 198,720 81,039 45,001
---------- ---------- ---------- ---------- ----------- -----------
(93,362) (91,433) (38,195) -- (67,958) (38,276)
(22,067) (23,657) (4,186) -- (13,080) (6,722)
(395,906) (211,926) (118,052) -- (1) (2)
(113,682) (64,731) (28,152) -- -- (1)
-- -- -- -- -- --
-- -- -- -- -- --
---------- ---------- ---------- ---------- ----------- -----------
(625,017) (391,747) (188,585) -- (81,039) (45,001)
---------- ---------- ---------- ---------- ----------- -----------
575,385 702,681 293,361 228,878 1,780,507 4,751,573
489,268 303,359 156,247 -- 68,099 41,530
(859,340) (729,202) (260,149) (191,381) (1,644,009) (4,733,793)
---------- ---------- ---------- ---------- ----------- -----------
205,313 276,838 189,459 37,497 204,597 59,310
---------- ---------- ---------- ---------- ----------- -----------
76,057 183,594 56,023 94,277 300,900 237,251
135,749 88,388 32,338 -- 13,111 7,288
(259,525) (154,365) (68,392) (62,078) (258,125) (233,306)
---------- ---------- ---------- ---------- ----------- -----------
(47,719) 117,617 19,969 32,199 55,886 11,233
---------- ---------- ---------- ---------- ----------- -----------
157,594 394,455 209,428 69,696 260,483 70,543
---------- ---------- ---------- ---------- ----------- -----------
790,175 372,255 407,374 268,416 260,483 70,543
6,485,329 6,113,074 1,571,052 1,302,636 1,617,876 1,547,333
---------- ---------- ---------- ---------- ----------- -----------
$7,275,504 $6,485,329 $1,978,426 $1,571,052 $ 1,878,359 $ 1,617,876
========== ========== ========== ========== =========== ===========
$ 3,359 $ 1,884 $ 476 $ 16,708 $ -- $ --
========== ========== ========== ========== =========== ===========
26,036 33,702 19,972 18,714 1,780,507 4,751,573
21,722 14,549 10,497 -- 68,099 41,530
(38,955) (34,828) (17,758) (15,599) (1,644,009) (4,733,793)
---------- ---------- ---------- ---------- ----------- -----------
8,803 13,423 12,711 3,115 204,597 59,310
---------- ---------- ---------- ---------- ----------- -----------
3,433 8,897 3,767 7,839 300,900 237,251
6,046 4,254 2,139 -- 13,111 7,288
(11,758) (7,409) (4,647) (5,150) (358,125) (233,306)
---------- ---------- ---------- ---------- ----------- -----------
(2,279) 5,742 1,259 2,689 55,886 11,233
---------- ---------- ---------- ---------- ----------- -----------
<Caption>
HARTFORD
SMALL COMPANY HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ 2,224 $ (2,447)
280,208 162,093
(107,789) 52,581
1,839 972
---------- ----------
176,482 213,199
---------- ----------
(1,995) --
(310) --
(166,251) --
(46,960) --
-- --
-- --
---------- ----------
(215,516) --
---------- ----------
351,795 472,718
168,246 --
(372,191) (535,159)
---------- ----------
147,850 (62,441)
---------- ----------
127,914 16,785
47,270 --
(77,994) (65,326)
---------- ----------
97,190 (48,541)
---------- ----------
245,040 (110,982)
---------- ----------
206,006 102,217
1,237,581 1,135,364
---------- ----------
$1,443,587 $1,237,581
========== ==========
$ -- $ 1
========== ==========
17,120 27,806
8,874 --
(17,994) (31,760)
---------- ----------
8,000 (3,954)
---------- ----------
6,160 961
2,541 --
(3,776) (3,946)
---------- ----------
4,925 (2,985)
---------- ----------
</Table>
51
HARTFORD SERIES FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
STOCK HLS FUND TOTAL RETURN BOND HLS FUND
---------------------------- ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).............................. $ 65,537 $ 69,252 $ 185,710 $ 146,946
Net realized gain (loss) on investments, futures, options
and swap contracts and foreign currency transactions.... 646,070 542,806 (23,745) 8,818
Net unrealized appreciation (depreciation) of investments,
futures, options and swap contracts and foreign currency
transactions............................................ (4,441) (91,561) 22,008 (70,299)
Payments from affiliate................................... 5,820 -- 107 --
----------- ----------- ---------- -----------
Net increase in net assets resulting from operations...... 712,986 520,497 184,080 85,465
----------- ----------- ---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (57,414) (91,246) (146,134) (197,249)
Class IB................................................ (7,809) (11,661) (46,861) (74,748)
From net realized gain on investments
Class IA................................................ (250,786) -- (400) (19,030)
Class IB................................................ (42,418) -- (149) (7,689)
From tax-return of capital
Class IA................................................ -- -- -- --
Class IB................................................ -- -- -- --
----------- ----------- ---------- -----------
Total distributions..................................... (358,427) (102,907) (193,544) (298,716)
----------- ----------- ---------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 162,487 288,047 692,110 1,473,648
Issued on reinvestment of distributions............... 308,200 91,246 146,534 216,279
Redeemed.............................................. (1,065,093) (1,611,066) (533,586) (1,298,118)
----------- ----------- ---------- -----------
Total capital share transactions........................ (594,406) (1,231,773) 305,058 391,809
----------- ----------- ---------- -----------
Class IB
Sold.................................................. 33,536 103,222 114,885 176,135
Issued on reinvestment of distributions............... 50,227 11,661 47,010 82,437
Redeemed.............................................. (144,888) (119,161) (189,475) (121,501)
----------- ----------- ---------- -----------
Total capital share transactions........................ (61,125) (4,278) (27,580) 137,071
----------- ----------- ---------- -----------
Net increase (decrease) from capital share
transactions..................................... (655,531) (1,236,051) 277,478 528,880
----------- ----------- ---------- -----------
Net increase (decrease) in net assets.............. (300,972) (818,461) 268,014 315,629
NET ASSETS:
Beginning of period....................................... 5,557,775 6,376,236 3,813,715 3,498,086
----------- ----------- ---------- -----------
End of period............................................. $ 5,256,803 $ 5,557,775 $4,081,729 $ 3,813,715
=========== =========== ========== ===========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ 4,252 $ 835 $ 4,639 $ 13,086
=========== =========== ========== ===========
SHARE ACTIVITY:
Class IA
Sold.................................................. 3,194 6,202 61,030 124,101
Issued on reinvestment of distributions............... 5,888 1,889 13,029 18,858
Redeemed.............................................. (20,812) (34,543) (47,107) (109,269)
----------- ----------- ---------- -----------
Total share activity.................................... (11,730) (26,452) 26,952 33,690
----------- ----------- ---------- -----------
Class IB
Sold.................................................. 656 2,244 10,191 14,913
Issued on reinvestment of distributions............... 962 242 4,198 7,228
Redeemed.............................................. (2,835) (2,555) (16,792) (10,349)
----------- ----------- ---------- -----------
Total share activity.................................... (1,217) (69) (2,403) 11,792
----------- ----------- ---------- -----------
</Table>
The accompanying notes are an integral part of these financial statements.
52
(This page intentionally left blank)
53
HARTFORD SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Hartford HLS Funds serve as underlying investment vehicles for certain
variable annuity and variable life insurance separate accounts of Hartford
Life Insurance Company ("HLIC") and its affiliates and certain qualified
retirement plans. Certain Hartford HLS Funds may also serve as underlying
investment options for certain variable annuity and variable life separate
accounts of other insurance companies. Owners of variable annuity contracts
and policyholders of variable life insurance contracts may choose the funds
permitted in the accompanying variable insurance contract prospectus. In
addition, participants in certain qualified retirement plans may choose the
funds permitted by their plans.
Hartford Series Fund, Inc. is comprised of twenty-six portfolios, eight are
included in these financial statements, each a "Fund" or together the
"Funds" (they are Hartford Advisers HLS Fund, Hartford Capital Appreciation
HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford International
Opportunities HLS Fund, Hartford Money Market HLS Fund, Hartford Small
Company HLS Fund, Hartford Stock HLS Fund and Hartford Total Return Bond HLS
Fund)(the "Funds"). The Funds are organized under the laws of the State of
Maryland and are registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended ("1940 Act"),
as diversified open-end management investment companies.
Each Fund is divided into Class IA and Class IB shares. Each class is
offered at net asset value without a sales charge and is subject to the same
expenses, except that the Class IB shares are subject to distribution fees
charged pursuant to Distribution and Service Plans. These Distribution and
Service Plans have been adopted in accordance with Rule 12b-1 of the 1940
Act.
Indemnifications: Under the Funds' organizational documents, their
directors and officers are indemnified against certain liabilities arising
out of the performance of their duties to the Funds. In addition, the Funds'
enter into contracts that contain a variety of indemnifications. The Funds'
maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expect
the risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost. Trade date for
senior floating rate interests purchased in the primary market is
considered the date on which the loan allocations are determined. Trade
date for senior floating rate interests purchased in the secondary
market is the date on which the transaction is entered into.
b) Security Valuation and Investment Income -- Except for Hartford Money
Market HLS Fund, the Funds generally use market prices in valuing
portfolio securities. If market quotations are not readily available or
are deemed unreliable, a Fund will use the fair value of the security as
determined in good faith under policies and procedures established by
and under the supervision of that Fund's Board of Directors. Market
prices may be deemed unreliable, for example, if a security is thinly
traded or if an event has occurred after the close of the exchange on
which a portfolio security is primarily traded but before the close of
the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. Eastern
Time, referred to as the "Valuation Time") that is expected to affect
the value of the portfolio security. The circumstances in which a Fund
may use fair value pricing include, among others: (i) the occurrence of
events that are significant to a particular issuer, such as mergers,
restructuring or defaults; (ii) the occurrence of events that are
significant to an entire market, such as natural disasters in a
particular region or governmental actions; (iii) trading restrictions on
securities; (iv) thinly traded securities and (v) market events such as
trading halts and early market closings. In addition, with respect to
the valuation of securities primarily traded on foreign markets, each
Fund uses a fair value pricing service approved by that Fund's Board of
Directors which employs quantitative models to adjust for "stale" prices
caused by the movement of other markets and other factors occurring
after the close of the foreign markets but before the close of the
Exchange. Securities that are primarily traded on foreign markets may
trade on days that are not business days of the Funds. Because the NAV
of each Fund's shares is determined only on business days of the Funds,
the value of the portfolio securities of a Fund that invests in foreign
securities may change on days when a shareholder will not be able to
purchase or redeem shares of the Fund. Fair value pricing is subjective
in nature and the use of fair value pricing by the Funds may cause the
net asset value of their respective shares to differ significantly from
the net asset value that would have been calculated using market prices
at the close of the exchange on which a portfolio security is primarily
traded but before the close of the Exchange. There can be no assurance
that any Fund could obtain the fair value assigned to a security if the
Fund were to sell the security at approximately the time at which that
Fund determines its NAV per share.
Debt securities (other than short-term investments and Senior Floating
Rate Interests), held by a Fund 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. Senior
Floating Rate Interests generally trade in over-the-counter markets and
are priced through an unaffiliated pricing service utilizing independent
market quotations from loan dealers or financial institutions.
Securities for which prices are not available from an independent
pricing service, but where an active market exists, are valued using
market quotations obtained from one or more dealers that make markets in
securities or from a widely-used quotation system in accordance with
procedures established by that Fund's Board of Directors. Generally,
each Fund may use fair valuation in regards to debt securities when a
Fund holds defaulted or distressed securities or securities in a company
in which reorganization is pending. Short term investments with a
maturity of more than 60 days when purchased are valued based on market
quotations until the remaining days to maturity become less than 61
days. The Hartford Money Market HLS Fund's investments and investments
that mature in 60 days or less are valued at amortized cost, which
approximates market value.
54
- --------------------------------------------------------------------------------
Exchange traded equity securities shall be valued at the last reported
sale price on the exchange or market on which the security is primarily
traded (the "Primary Market") at the Valuation Time. If the security did
not trade on the Primary Market, it may be valued at the Valuation Time
at the last reported sale price on another exchange where it trades. The
value of an equity security not traded on any exchange but traded on the
Nasdaq Stock Market, Inc. System ("Nasdaq") or another over-the-counter
("OTC") market shall be valued at the last reported sale price or
official closing price on the exchange or market on which the security
is primarily traded as of the Valuation Time. If it is not possible to
determine the last reported sale price or official closing price on the
relevant exchange or market at the Valuation Time, the value of the
security shall be the most recent bid quotation on such exchange or
market at the Valuation Time.
Securities of foreign issuers and non-dollar securities are translated
from the local currency into U.S. dollars using prevailing exchange
rates.
Options contracts on securities, currencies, indexes, futures contracts,
commodities and other instruments shall be valued at their most recent
sales price at the Valuation Time on the Primary Market on which the
instrument is traded. If the instrument did not trade on the Primary
Market, it may be valued at the most recent sales price at the Valuation
Time on another exchange or market where it did trade.
Futures contracts shall be valued at the final settlement price reported
by the applicable futures exchange. If there were no trades as of the
valuation day, then the contract shall be valued at the closing bid
price as of the Valuation Time.
Financial instruments for which prices are not available from an
independent pricing service, but where an active market exists, are
valued using market quotations obtained from one or more dealers that
make markets in securities or from a widely-used quotation system in
accordance with procedures established by that Fund's Board of
Directors.
A forward currency contract shall be valued based on the price of the
underlying currency at the prevailing interpolated exchange rate, which
is a combination of the spot currency rate and the forward currency
rate. Spot currency rates and forward currency rates are obtained from
an independent pricing service on a daily basis not more than one hour
before the Valuation Time. In the event that the applicable pricing
service cannot provide the spot currency rates and forward currency
rates in a timely fashion, such rates may be obtained from a widely-used
quotation system in accordance with procedures established by that
Fund's Board of Directors.
Swaps and other derivative or contractual type instruments shall be
valued using market prices if such instruments trade on an exchange or
market. If such instruments do not trade on an exchange or market, such
instruments shall be valued at a price at which the counterparty to such
contract would repurchase the instrument. In the event that the
counterparty cannot provide a price, such valuation may be determined in
accordance with procedures established by the Fund's Board of Directors.
Dividend income is accrued as of the ex-dividend date, except that
certain dividends for foreign securities where the ex-dividend date may
have passed are recorded as soon as the Fund is informed of the dividend
in the exercise of reasonable diligence. Interest income, including
amortization of premium and accretion of discounts, is accrued on a
daily basis.
c) Foreign Currency Transactions -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of portfolio security valuation
resulting from fluctuations in the foreign currency exchange rates on
portfolio securities from the fluctuations arising from changes in the
market prices of securities held. Such fluctuations are included within
the net realized and unrealized gain or loss on investments in the
accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability
amounts initially stated in foreign currencies and the U.S. dollar value
of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of other assets
and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
d) Securities Lending -- The Funds, except for the Hartford Money Market
HLS Fund, may lend their securities to certain qualified brokers who pay
these Funds negotiated lender fees. The loans are collateralized at all
times with cash, which is then invested in short-term money market
instruments or U.S. government securities with a market value at least
equal to the market value of the securities on loan. The adequacy of the
collateral for securities on loan is monitored on a daily basis. For
instances where the market value of collateral falls below the market
value of the securities out on loan, such collateral is supplemented on
the following day. As with other extensions of credit, these Funds may
bear the risk of delay in recovery of loaned securities or even loss of
rights in the collateral should the borrower of the securities fail
financially.
e) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Funds may transfer uninvested cash balances into a joint
trading account managed by Hartford Investment Management Company
(Hartford Investment Management), a wholly-owned subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford), or Wellington
Management Company LLP (Wellington). These balances may be invested in
one or more repurchase agreements and/or short-term money market
instruments.
f) Repurchase Agreements -- A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that 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 Funds or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable.
55
HARTFORD SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
Certain Funds, together with other investment management companies
having investment advisory agreements with Wellington, have an interest
in joint repurchase agreements dated 12/29/06 in the amount of
$2,097,116 due 01/02/07 with the brokers indicated in the table below.
These joint repurchase agreements are collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ---- --------- ---------- ------------------ --------------- ------------
Bank of America.......... 5.31% $475,000 $484,500 FNMA 5.00% 2034
BNP Paribas.............. 5.31% 655,000 668,100 FHLMC 5.00% - 5.50% 2035 - 2036
FNMA 5.00% - 6.00% 2020 - 2036
Deutsche Bank............ 4.80% 7,116 7,226 U.S. Treasury Bill 4.825% 2007
Deutsche Bank............ 5.30% 410,000 418,200 FHLMC 4.50% - 8.00% 2116 - 2036
Morgan Stanley........... 5.30% 140,000 142,800 FHLMC 4.00% - 6.50% 2008 - 2046
FNMA 4.50% - 7.06% 2009 - 2046
UBS Securities LLC....... 5.31% 410,000 418,203 FNLMC 4.50% - 8.00% 2007 - 2036
FNMA 4.50% - 6.00% 2018 - 2046
</Table>
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Advisers HLS Fund.................................. $ 84,691
Hartford Capital Appreciation HLS Fund...................... 369,759
Hartford Dividend and Growth HLS Fund....................... 75,643
Hartford International Opportunities HLS Fund............... 23,806
Hartford Small Company HLS Fund............................. 3,463
Hartford Stock HLS Fund..................................... 8,922
</Table>
Certain Funds, together with other investment management companies
having investment advisory agreements with Hartford Investment
Management, have an interest in joint repurchase agreements dated
12/29/06 in the amount of $697,665 due 01/02/07 with the brokers
indicated in the table below. These joint repurchase agreements are
collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ---- --------- ---------- ------------------- --------------- ------------
BNP Paribas................... 4.75% $250,000 $255,050 U.S. Treasury Bonds 5.25% - 8.50% 2020-2029
RBS Greenwich Capital
Markets..................... 4.75% 197,665 201,624 U.S. Treasury Note 12.00% 2013
UBS Securities LLC............ 4.75% 250,000 255,262 U.S. Treasury Bonds 8.125% - 8.875% 2017-2021
U.S. Treasury Note 11.75% 2014
</Table>
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Small Company HLS Fund............................. $ 21,069
Hartford Total Return Bond HLS Fund......................... 309,937
</Table>
g) Futures and Options Transactions -- Certain Funds may invest in futures
and options contracts in order to gain exposure to or protect against
changes in the market. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. When
the Funds enter into futures contracts, they are required to deposit
with a futures commission merchant an amount of initial margin of cash,
commercial paper or U.S. Treasury Bills. Subsequent payments, called
maintenance margin, to and from the broker, are made on a daily basis as
the price of the underlying security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds.
At any time prior to the expiration of the futures contract, a Fund may
close the position by taking an opposite position, which would
effectively 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 use of futures contracts involve elements of market risk, which may
exceed the amounts recognized in the Statements of Assets and
Liabilities. Changes in the value of the futures contracts may decrease
the effectiveness of the Funds' strategies and potentially result in
loss. Hartford Total Return Bond HLS Fund, as shown in the Schedule of
Investments, had outstanding futures contracts as of December 31, 2006.
The premium paid by the Funds for the purchase of a call or put option
is included in the Funds' Statements of Assets and Liabilities as an
investment and subsequently "marked-to-market" through net unrealized
appreciation (depreciation) of options to reflect the current market
value of the option as of the end of the reporting period.
56
- --------------------------------------------------------------------------------
The Funds may write covered options. "Covered" means that so long as the
Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option and an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to or greater
than the fluctuating market value of the option securities or
currencies. A Fund receives a premium for writing a call or put option,
which is recorded on the Funds' Statements of Assets and Liabilities and
subsequently "marked-to-market" through net unrealized appreciation
(depreciation) of options. There is a risk of loss from a change in the
value of such options, which may exceed the related premiums received.
Transactions involving written option contracts for the Funds during the
year ended December 31, 2006, are summarized below:
<Table>
<Caption>
HARTFORD CAPITAL APPRECIATION HLS FUND
OPTION CONTRACTS ACTIVITY
DURING THE YEAR ENDED
DECEMBER 31, 2006
---------------------------------------
CALL OPTIONS WRITTEN DURING THE PERIOD NUMBER OF CONTRACTS* PREMIUM AMOUNTS
-------------------------------------- -------------------- ---------------
Beginning of the period..................................... -- $ --
Written..................................................... 42,696 7,385
Expired..................................................... -- --
Closed...................................................... (42,696) (7,385)
Exercised................................................... -- --
------- -------
End of the period........................................... -- $ --
======= =======
</Table>
* The number of contracts does not omit 000's.
h) Forward Foreign Currency Contracts -- At December 31, 2006, certain
Funds, as shown in the Schedule of Investments, entered into forward
foreign currency contracts that obligate the Funds to repurchase/replace
or sell currencies at specified future dates. The Funds enter into
forward foreign currency contracts to hedge against adverse fluctuations
in exchange rates between currencies.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and
Liabilities. In addition, risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of the contracts and from unanticipated movements in the value of
the foreign currencies relative to the U.S. dollar.
i) Indexed Securities -- The Funds may invest in indexed securities whose
values are linked to changes in interest rates, indices, or other
underlying instruments. The Funds use these securities to increase or
decrease their exposure to different underlying instruments and to gain
exposure to markets that might be difficult to invest in using
conventional securities. Indexed securities may be more volatile than
their underlying instruments, but any loss is limited to the amount of
the original investment and there may be a limit to the potential
appreciation of the investment. Hartford Capital Appreciation HLS Fund
had investments in indexed securities, as of December 31, 2006, as shown
in the Schedule of Investments under Exchange Traded Funds.
j) (1) 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 (IRC) by distributing
substantially all of their taxable net investment income and net
realized capital gains to their shareholders and otherwise complying
with the requirements of regulated investment companies. The Funds have
distributed substantially all of their income and capital gains in prior
years and each Fund intends to distribute substantially all of its
income and gains prior to the next fiscal year end. Accordingly, no
provision for federal income taxes has been made in the accompanying
financial statements. Distributions from short-term capital gains are
treated as ordinary income distributions for federal income tax
purposes.
j) (2) The tax character of distributions paid for the periods indicated is
as follows (as adjusted for dividends payable):
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
---------------------- -----------------------------------
LONG-TERM LONG-TERM TAX
ORDINARY CAPITAL ORDINARY CAPITAL RETURN OF
FUND INCOME GAINS INCOME GAINS CAPITAL
---- -------- ---------- -------- ---------- ---------
Hartford Advisers HLS Fund................................ $515,345 $ 282,069 $471,157 $ 250,471 $138,672
Hartford Capital Appreciation HLS Fund.................... 787,497 1,177,329 340,357 1,659,106 --
Hartford Dividend and Growth HLS Fund..................... 138,240 486,777 149,221 242,526 --
Hartford International Opportunities HLS Fund............. 109,112 79,473 -- -- --
Hartford Money Market HLS Fund............................ 81,039 -- 45,001 -- --
Hartford Small Company HLS Fund........................... 32,940 182,576 -- -- --
Hartford Stock HLS Fund................................... 128,118 230,309 102,907 -- --
Hartford Total Return Bond HLS Fund....................... 192,995 549 286,964 11,752 --
</Table>
57
HARTFORD SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
As of December 31, 2006, the components of distributable earnings
(deficit) on a tax basis were as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY LONG-TERM CAPITAL GAINS APPRECIATION EARNINGS
FUND INCOME CAPITAL GAIN (LOSSES)* (DEPRECIATION)@ (DEFICIT)
---- ------------- ------------- ------------- --------------- -----------
Hartford Advisers HLS Fund............ $76,281 $ 52,423 $ -- $ 426,510 $ 555,214
Hartford Capital Appreciation HLS
Fund................................ 81,234 433,398 -- 2,462,262 2,976,894
Hartford Dividend and Growth HLS
Fund................................ 21,396 67,413 -- 1,517,063 1,605,872
Hartford International Opportunities
HLS Fund............................ 15,677 58,669 (5,720) 297,213 365,839
Hartford Small Company HLS Fund....... 26,151 33,773 -- 138,496 198,420
Hartford Stock HLS Fund............... 52,671 57,643 -- 365,274 475,588
Hartford Total Return Bond HLS Fund... 4,098 -- (40,586) (475) (36,963)
</Table>
* Certain Funds had capital loss carryforwards that are identified in Note
2 (j) (4).
@ The differences between book-basis and tax-basis unrealized appreciation
(depreciation) are attributable primarily to the tax deferral of losses
on wash sales, the mark-to-market adjustment for certain derivatives in
accordance with IRC Sec. 1256, the mark-to-market of Passive Foreign
Investment Companies and basis differences in real estate investment
trusts.
j) (3) Reclassification of Capital Accounts:
In accordance with American Institute of Certified Public Accountants
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, the Funds have recorded several
reclassifications in their capital accounts. These reclassifications had
no impact on the net asset value per share of the Funds and are designed
generally to present accumulated undistributed (distribution in excess
of) net investment income and accumulated net realized gains (losses) on
investments on a tax basis which is considered to be more informative to
a shareholder. The reclassifications are a result of permanent
differences between GAAP and tax accounting for such items as foreign
currency, distributions representing a return of capital, class action
settlements received, expiration of capital loss carryforwards,
expiration of net operating losses, and net operating losses that reduce
short-term capital gain distribution requirements. Adjustments are made
to reflect the impact these items have on current and future
distributions to shareholders. Therefore, the source of the Funds'
distributions may be shown in the accompanying Statements of Changes in
Net Assets as from net investment income, from net realized gains on
investments or from capital depending on the type of book and tax
differences that exist. For the year ended December 31, 2006, the Funds
recorded the following reclassifications to increase (decrease) the
accounts listed below.
<Table>
<Caption>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN (LOSS) ON PAID-IN-
FUND INCOME (LOSS) INVESTMENTS CAPITAL
---- -------------- -------------- --------
Hartford Advisers HLS Fund.................................. $ 2,798 $ (2,798) $ --
Hartford Capital Appreciation HLS Fund...................... 62,578 (62,578) --
Hartford Dividend and Growth HLS Fund....................... (340) 340 --
Hartford International Opportunities HLS Fund............... 1,059 (1,084) 25
Hartford Small Company HLS Fund............................. (559) 559 --
Hartford Stock HLS Fund..................................... 1,327 (1,328) 1
Hartford Total Return Bond HLS Fund......................... (1,269) 1,269 --
</Table>
j) (4) Capital Loss Carryforwards:
At December 31, 2006 (tax year-end), the following Funds had capital
loss carryforwards for U.S. Federal income tax purposes of
approximately:
<Table>
<Caption>
YEAR OF EXPIRATION
------------------------------------------
2008 2009 2010 2014 TOTAL
---- ------ ------ ------- -------
Hartford International Opportunities HLS Fund............... $826 $3,848 $1,046 $ -- $ 5,720
Hartford Total Return Bond HLS Fund......................... -- -- -- 40,586 40,586
</Table>
Based on certain provisions in the Internal Revenue Code, various
limitations regarding the future utilization of the Hartford
International Opportunities HLS Fund and Hartford Total Return Bond HLS
Fund carryforwards may apply.
k) Fund Share Valuation and Dividend Distributions to
Shareholders -- Orders for the Funds' shares are executed in accordance
with the investment instructions of the contract holders or plan
participants. The net asset value of each Fund's shares is determined as
of the close of each business day of the Exchange. The net asset value
per share is determined separately for each class of each Fund by
dividing the Fund's net assets attributable to that class by the number
of shares of the class outstanding. Orders for the purchase of a Fund's
shares received by an insurance company or plan prior to the close of
the Exchange on any day on which the Exchange 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.
58
- --------------------------------------------------------------------------------
Dividends are declared pursuant to a policy adopted by the Funds' Board
of Directors based upon the investment performance of the respective
Funds. The policy of all Funds except Hartford Money Market HLS Fund is
to pay dividends from net investment income and distribute realized
capital gains, if any, at least once a year.
Hartford Money Market HLS Fund seeks to maintain a stable net asset
value per share of $1.00 by declaring a daily dividend from net
investment income, including net short-term capital gains and losses,
and by valuing its investments using the amortized cost method.
Dividends are declared daily and distributed monthly.
Distributions from net investment income, net realized capital gains and
capital are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles with respect to character and timing. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, losses deferred due to
wash sales and excise tax regulations. Permanent book and federal income
tax basis differences relating to shareholder distributions will result
in reclassifications to certain of the Fund's capital accounts (see Note
2(j)(3)).
l) Illiquid and Restricted Securities -- Each Fund is permitted to invest
up to 15% of its net assets in illiquid securities, except for Hartford
Money Market HLS Fund, which may invest up to 10% in such securities.
"Illiquid Securities" are those that may not be sold or disposed of in
the ordinary course of business within seven days, at approximately the
price used to determine a Fund's net asset value per share. A Fund may
not be able to sell illiquid securities or other investments when its
sub-adviser considers it desirable to do so or may have to sell such
securities or investments at a price that is lower than the price that
could be obtained if the securities or investments were more liquid. A
sale of illiquid securities or other investments may require more time
and may result in higher dealer discounts and other selling expenses
than does the sale of those that are liquid. Illiquid securities and
investments also may be more difficult to value, due to the
unavailability of reliable market quotations for such securities or
investments, and investments in them may have an adverse impact on net
asset value. Each Fund may also purchase certain restricted securities,
commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by that Fund's Board of Directors.
m) Securities Purchased on a When-Issued or Delayed-Delivery
Basis -- Delivery and payment for securities that have been purchased by
the Funds on a forward commitment or when-issued or delayed-delivery
basis take place beyond the customary settlement period. During this
period, such securities are subject to market fluctuations, and the
Funds identify securities segregated in their records with value at
least equal to the amount of the commitment. As of December 31, 2006,
the Funds entered into outstanding when-issued or forward commitments as
follows:
<Table>
<Caption>
MARKET
FUND VALUE
---- --------
Hartford Total Return Bond HLS Fund......................... $370,173
</Table>
n) Credit Risk -- Credit risk depends largely on the perceived financial
health of bond issuers. In general, lower rated bonds have higher credit
risk. High yield bond prices can fall on bad news about the economy, an
industry or a company. The share price, yield and total return of a fund
which holds securities with higher credit risk may fluctuate more than
with less aggressive bond funds.
o) Senior Floating Rate Interests -- Certain Funds, as shown in the
Schedule of Investments, may invest in senior floating rate interests.
Senior floating rate interests hold the most senior position in the
capital structure of a business entity (the "Borrower"), are typically
secured by specific collateral, and have a claim on the assets and/or
stock of the Borrower that is senior to that held by subordinated
debtholders and stockholders of the Borrower. Senior floating rate
interests are typically structured and administered by a financial
institution that acts as the agent of the lenders participating in the
floating rate loan. Senior floating rate interests are rated
below-investment-grade, which suggests they are more likely to default
than investment-grade loans. A default could lead to non-payment of
income which would result in a reduction of income to the Fund and there
can be no assurance that the liquidation of any collateral would satisfy
the Borrower's obligation in the event of non-payment of scheduled
interest or principal payments, or that such collateral could be readily
liquidated.
p) Prepayment Risks -- Most senior floating rate interests rate interests
and certain debt securities allow for prepayment of principal without
penalty. Senior floating rate interests and securities subject to
prepayment risk generally offer less potential for gains when interest
rates decline, and may offer a greater potential for loss when interest
rates rise. In addition, with respect to securities, rising interest
rates may cause prepayments to occur at a slower than expected rate,
thereby effectively lengthening the maturity of the security and making
the security more sensitive to interest rate changes. Prepayment risk is
a major risk of mortgage-backed securities and certain asset-backed
securities. Accordingly, the potential for the value of senior floating
rate interests or securities to increase in response to interest rate
declines is limited. For certain asset-backed securities, the actual
maturity may be less than the stated maturity shown in the Schedule of
Investments. As a result, the timing of income recognition relating to
these securities may vary based upon actual maturity. Senior floating
rate interests or debt securities purchased to replace a prepaid loan or
a debt security may have lower yields than the yield on the prepaid loan
or debt security.
Senior floating rate interests generally are subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions
and because there may be significant economic incentives for the
Borrower to repay, prepayments of senior loans may occur. As a result,
the actual remaining maturity of senior loans held may be substantially
less than the stated maturities shown in the Schedule of Investments.
q) Use of Estimates -- The preparation of financial statements in
conformity with U.S. 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
year. Operating results in the future could vary from the amounts
derived from management's estimates.
59
HARTFORD SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
r) Credit Default Swaps -- Certain HLS Funds may enter into event linked
swaps, including credit default swaps. The credit default swap market
allows a Fund to manage credit risk through buying and selling credit
protection on a specific issuer, an index, or a basket of issuers. The
transactions are documented through swap documents. A "buyer" of credit
protection agrees to pay a counterparty to assume the credit risk of an
issuer upon the occurrence of certain events. The "seller" of the
protection receives periodic payments and agrees to assume the credit
risk of an issuer upon the occurrence of certain events. A "seller's"
exposure is limited to the total notional amount of the credit default
swap contract. A Fund will generally not buy protection on issuers that
are not currently held by such Fund. Hartford Total Return Bond HLS
Fund, as shown in the Schedule of Investments, had outstanding credit
default swaps as of December 31, 2006.
s) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Funds' tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Funds' financial statements has not yet been determined.
t) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. As of December 31, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of
certain measurements reported in the Statements of Operations for a
fiscal period.
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors), an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Funds pursuant to investment
management agreements approved by each Fund's Board of Directors and
shareholders, as applicable.
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered, a portion of which is used to compensate
the sub-advisers. Investment management and advisory fees are accrued
daily and paid monthly.
HARTFORD MONEY MARKET HLS FUND(1)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.250%
On next $3 billion................................................. 0.200%
On next $5 billion................................................. 0.180%
Over $10 billion................................................... 0.170%
</Table>
(1) Effective January 1, 2007, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until December 31,
2007.
HARTFORD STOCK HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
Over $1 billion.................................................... 0.250%
</Table>
HARTFORD CAPITAL APPRECIATION HLS FUND,
HARTFORD DIVIDEND AND GROWTH HLS FUND
AND HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
Over $1 billion.................................................... 0.425%
</Table>
HARTFORD ADVISERS HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.480%
On next $250 million............................................... 0.455%
On next $500 million............................................... 0.445%
Over $1 billion.................................................... 0.395%
</Table>
60
- --------------------------------------------------------------------------------
HARTFORD TOTAL RETURN BOND HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.325%
On next $250 million............................................... 0.300%
On next $500 million............................................... 0.275%
On next $4 billion................................................. 0.250%
On next $5 billion................................................. 0.230%
Over $10 billion................................................... 0.220%
</Table>
HARTFORD SMALL COMPANY HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
On next $500 million............................................... 0.400%
Over $1.5 billion.................................................. 0.350%
</Table>
Pursuant to sub-advisory agreements between HL Advisors and Wellington,
Wellington provides the day-to-day investment management services to
Hartford Advisers HLS Fund, Hartford Capital Appreciation HLS Fund,
Hartford Dividend and Growth HLS Fund, Hartford International
Opportunities HLS Fund, Hartford Small Company HLS Fund and Hartford
Stock HLS Fund.
Pursuant to investment services agreements between HL Advisors and
Hartford Investment Management, Hartford Investment Management provides
the day-to-day investment management services to Hartford Money Market
HLS Fund, Hartford Small Company HLS Fund and Hartford Total Return Bond
HLS Fund.
Wellington and Hartford Investment Management determine the purchase and
sale of portfolio securities and place such orders for execution in the
name of the respective Fund. In conjunction with their investment
activity, Wellington and Hartford Investment Management regularly
furnish reports to the Funds' Board of Directors concerning economic
forecasts, investment strategy, portfolio activity and performance of
the Funds.
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and each of the following Funds; Hartford
Advisers HLS Fund, Hartford Capital Appreciation HLS Fund, Hartford
Dividend and Growth HLS Fund, Hartford International Opportunities HLS
Fund, Hartford Money Market HLS Fund, Hartford Small Company HLS Fund,
Hartford Stock HLS Fund and Hartford Total Return Bond HLS Fund, HLIC
provides administrative services to the Funds and receives monthly
compensation at the annual rate of 0.20% of each Fund's average daily
net assets. The Funds assume and pay certain other expenses (including,
but not limited to, accounting, custodian, state taxes and directors'
fees). Directors' fees represent remuneration paid or accrued to
directors not affiliated with HLIC or any other related company. The
Funds' administrative services fees are accrued daily and paid monthly.
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and Hartford Advisers HLS Fund, Hartford Capital
Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford
International Opportunities HLS Fund, Hartford Money Market HLS Fund,
Hartford Small Company HLS Fund, Hartford Stock HLS Fund and Hartford
Total Return Bond HLS Fund, HLIC provides accounting services to the
Funds and receives monthly compensation at the annual rate of 0.015% of
each Fund's average daily net assets. The Funds' accounting services
fees are accrued daily and paid monthly.
d) Operating Expenses -- Allocable expenses of the Funds are charged to
each Fund based on the ratio of the average net assets of each Fund to
the combined average net assets of the Funds. Non-allocable expenses are
charged to each fund based on specific identification.
e) Fees Paid Indirectly -- The Funds have entered into agreements with
State Street Global Advisors, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Funds' expenses. In addition, the Funds'
custodian bank has also agreed to reduce its fees when the Funds
maintain cash on deposit in the non-interest-bearing custody account.
For the year ended December 31, 2006, these amounts are included in the
Statements of Operations.
The ratio of expenses to average net assets in the accompanying
financial highlights excludes the reduction in expenses related to fees
paid indirectly. Had the fees paid indirectly been included, the
annualized expense ratios for periods listed below would have been as
follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Advisers HLS
Fund...................... 0.62% 0.87% 0.64% 0.89% 0.66% 0.91%
Hartford Capital
Appreciation HLS Fund..... 0.66 0.91 0.67 0.92 0.67 0.92
Hartford Dividend and Growth
HLS Fund.................. 0.66 0.91 0.66 0.91 0.67 0.92
Hartford International
Opportunities HLS Fund.... 0.73 0.98 0.74 0.99 0.74 0.99
Hartford Money Market HLS
Fund...................... 0.48 0.73 0.49 0.74 0.48 0.73
Hartford Small Company HLS
Fund...................... 0.70 0.95 0.71 0.96 0.70 0.95
Hartford Stock HLS Fund..... 0.47 0.72 0.48 0.73 0.48 0.73
Hartford Total Return Bond
HLS Fund.................. 0.49 0.74 0.50 0.75 0.50 0.75
</Table>
f) Distribution Plan for Class IB shares -- Each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, each Fund
compensates the Distributor, Hartford Securities Distribution Company,
Inc. (a wholly owned, ultimate subsidiary of Hartford Life, Inc.) from
assets attributable to the Class IB shares for services rendered and
expenses borne in connection with activities primarily intended to
result in the sale of the Class IB shares.
61
HARTFORD SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
The Distribution Plan provides that each Fund may pay annually up to
0.25% of the average daily net assets of a Fund attributable to its
Class IB shares for activities primarily intended to result in the sale
of Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard. The Funds' distribution fees are
accrued daily and paid monthly.
g) Payments from Affiliate -- The Funds are available for purchase by the
separate accounts of different variable universal life policies,
variable annuity products, and funding agreements and they are offered
directly to certain qualified retirement plans ("Products"). Although
existing Products contain transfer restrictions, some Products,
particularly older variable annuity products, did not contain
restrictions on the frequency of transfers. In addition, as the result
of the settlement of litigation against Hartford Life (the issuers of
such variable annuity products), the Funds' ability to restrict
transfers by certain owners of older variable annuity products was
limited. During 2006, these annuity owners surrendered the older
variable annuity contracts that were the subject of prior litigation. In
February 2005, Hartford Life agreed with the Board of Directors of the
Funds to indemnify the Funds for any material harm caused to the Funds
from frequent trading by these contracts owners. Pursuant to the
agreement, the following amounts have been paid to the Funds indicated
in 2006 and 2005. Amounts are recorded as Payments from Affiliate in the
Statements of Operations:
<Table>
<Caption>
FUND 2006 2005
---- ----- ------
Hartford Dividend and Growth HLS Fund....................... $ 398 $ --
Hartford Small Company HLS Fund............................. 189 972
Hartford Stock HLS Fund..................................... 259 --
Hartford Total Return Bond HLS Fund......................... 107 --
</Table>
On November 8, 2006, the SEC issued an order setting forth the terms of
a settlement reached with three subsidiaries of The Hartford that
resolves the SEC's Division of Enforcement's investigation of aspects of
The Hartford's variable annuity and mutual fund operations related to
directed brokerage and revenue sharing. Under the terms of the
settlement, The Hartford paid a total of $39.6 million to those Funds
that were impacted. The amounts indicated below are for those Funds
being reported here. These amounts were recorded on November 8, 2006 and
paid on November 22, 2006. The Hartford settled this matter without
admitting or denying the findings of the SEC.
<Table>
<Caption>
FUND AMOUNT
---- -------
Hartford Advisers HLS Fund.................................. $ 6,804
Hartford Capital Appreciation HLS Fund...................... 11,567
Hartford Dividend and Growth HLS Fund....................... 3,856
Hartford International Opportunities HLS Fund............... 314
Hartford Small Company HLS Fund............................. 1,650
Hartford Stock HLS Fund..................................... 5,561
</Table>
The total return in the financial highlights includes the impact of the
Payments from Affiliate. The tables below show the impact of each of the
two payments from Affiliate and the total return for the years ended
December 31, 2006 and December 31, 2005, had the Payments from Affiliate
been excluded. Had the Payments from Affiliate been excluded, the total
return for the years ended December 31, 2006 and December 31, 2005,
would have been as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
-------------------- ---------------------- --------------------
IMPACT OF PAYMENT IMPACT OF PAYMENT TOTAL RETURN
FROM AFFILIATE FOR FROM AFFILIATE FOR EXCLUDING PAYMENT
SEC SETTLEMENT UNRESTRICTED TRANSFERS FROM AFFILIATE
-------------------- ---------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- --------- --------- -------- --------
Hartford Advisers HLS Fund....................... 0.09% 0.09% --% --% 10.61% 10.34%
Hartford Capital Appreciation HLS Fund........... 0.09 0.09 -- -- 16.52 16.23
Hartford Dividend and Growth HLS Fund............ 0.06 0.06 0.01 0.01 20.29 19.99
Hartford International Opportunities HLS Fund.... 0.02 0.02 -- -- 24.44 24.13
Hartford Small Company HLS Fund.................. 0.14 0.14 -- -- 14.29 14.00
Hartford Stock HLS Fund.......................... 0.11 0.12 0.01 0.01 14.53 14.24
Hartford Total Return Bond HLS Fund.............. -- -- -- -- 4.80 4.54
</Table>
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2005
---------------------- --------------------
IMPACT OF PAYMENT TOTAL RETURN
FROM AFFILIATE FOR EXCLUDING PAYMENT
UNRESTRICTED TRANSFERS FROM AFFILIATE
---------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB
---- --------- --------- -------- --------
Hartford Small Company HLS Fund............................. 0.10% 0.10% 20.91% 20.61%
</Table>
62
- --------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the cost of purchases and proceeds
from sales of securities for Hartford Money Market HLS Fund were $18,993,247
and $18,729,737, respectively. The cost of purchases and proceeds from sales
of securities (excluding short-term investments) for the other portfolios
were as follows:
<Table>
<Caption>
COST OF SALES COST OF SALES
PURCHASES PROCEEDS PURCHASES PROCEEDS
EXCLUDING EXCLUDING FOR FOR
U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT U.S. GOVERNMENT
FUND OBLIGATIONS OBLIGATIONS OBLIGATIONS OBLIGATIONS
---- --------------- --------------- --------------- ---------------
Hartford Advisers HLS Fund......................... $ 6,986,202 $ 8,318,448 $ 798,579 $ 1,349,254
Hartford Capital Appreciation HLS Fund............. 10,255,815 12,028,310 -- --
Hartford Dividend and Growth HLS Fund.............. 1,793,071 2,064,383 -- --
Hartford International Opportunities HLS Fund...... 2,073,088 2,046,904 -- --
Hartford Small Company HLS Fund.................... 2,353,214 2,342,351 -- --
Hartford Stock HLS Fund............................ 5,128,616 6,056,470 -- --
Hartford Total Return Bond HLS Fund................ 10,448,823 10,092,089 8,901,151 9,068,329
</Table>
5. LINE OF CREDIT:
The Funds, except for the Hartford Money Market HLS Fund, participate in a
$650,000 committed revolving line of credit facility. The facility is to be
used for temporary or emergency purposes. Under the arrangement, the Funds
are required to own securities having a market value in excess of 300% of
the total bank borrowings. The interest rate on borrowings varies depending
on the nature of the loan. The facility also requires a fee to be paid based
on the amount of the commitment which has not been utilized. During the year
ended December 31, 2006, the Funds did not have any borrowings under this
facility.
63
HARTFORD SERIES FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(2) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT FROM GAIN FROM FROM NET
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD ADVISERS HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $22.53 $ 0.58 $0.02 $ 1.81 $ 2.41 $(0.57)
Class IB..................... 22.70 0.51 0.02 1.83 2.36 (0.51)
For the Year Ended December
31, 2005
Class IA..................... 23.04 0.54 -- 1.12 1.66 (0.77)
Class IB..................... 23.17 0.47 -- 1.15 1.62 (0.69)
For the Year Ended December
31, 2004
Class IA..................... 22.67 0.51 -- 0.33 0.84 (0.47)
Class IB..................... 22.81 0.48 -- 0.30 0.78 (0.42)
For the Year Ended December
31, 2003
Class IA..................... 19.59 0.42 -- 3.18 3.60 (0.52)
Class IB..................... 19.72 0.41 -- 3.16 3.57 (0.48)
For the Year Ended December
31, 2002
Class IA..................... 23.44(3) 0.51(3) -- (4.10)(3) (3.59) (0.26)(3)
Class IB..................... 23.60(3) 0.46(3) -- (4.10)(3) (3.64) (0.24)(3)
HARTFORD CAPITAL APPRECIATION
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 52.99 0.50 0.04 7.88 8.42 (0.76)
Class IB..................... 52.75 0.36 0.04 7.83 8.23 (0.61)
For the Year Ended December
31, 2005
Class IA..................... 53.43 0.45 -- 7.57 8.02 (0.52)
Class IB..................... 53.18 0.25 -- 7.59 7.84 (0.33)
For the Year Ended December
31, 2004
Class IA..................... 44.91 0.35 -- 8.34 8.69 (0.17)
Class IB..................... 44.76 0.27 -- 8.26 8.53 (0.11)
For the Year Ended December
31, 2003
Class IA..................... 31.70 0.26 -- 13.17 13.43 (0.22)
Class IB..................... 31.63 0.19 -- 13.10 13.29 (0.16)
For the Year Ended December
31, 2002
Class IA..................... 39.75(3) 0.15(3) -- (8.01)(3) (7.86) (0.19)(3)
Class IB..................... 39.68(3) 0.12(3) -- (8.03)(3) (7.91) (0.14)(3)
HARTFORD DIVIDEND AND GROWTH
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 20.74 0.40 0.01 3.77 4.18 (0.41)
Class IB..................... 20.68 0.35 0.01 3.74 4.10 (0.34)
For the Year Ended December
31, 2005
Class IA..................... 20.83 0.36 -- 0.87 1.23 (0.40)
Class IB..................... 20.76 0.29 -- 0.89 1.18 (0.34)
For the Year Ended December
31, 2004
Class IA..................... 18.77 0.32 -- 2.01 2.33 (0.27)
Class IB..................... 18.72 0.27 -- 2.00 2.27 (0.23)
For the Year Ended December
31, 2003
Class IA..................... 15.09 0.24 -- 3.79 4.03 (0.25)
Class IB..................... 15.07 0.21 -- 3.76 3.97 (0.22)
For the Year Ended December
31, 2002
Class IA..................... 18.80(3) 0.25(3) -- (3.64)(3) (3.39) (0.23)(3)
Class IB..................... 18.79(3) 0.24(3) -- (3.66)(3) (3.42) (0.21)(3)
<Caption>
-- SELECTED PER-SHARE DATA(2) -- -- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------- ---------------------------------------------
NET NET
DISTRIBUTIONS INCREASE ASSET
FROM (DECREASE) VALUE
REALIZED DISTRIBUTIONS IN NET AT END NET ASSETS
CAPITAL FROM TOTAL ASSET OF TOTAL AT END OF
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN PERIOD
------------- ------------- ------------- ---------- ------ ------ -----------
HARTFORD ADVISERS HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $(1.77) $ -- $(2.34) $ 0.07 $22.60 10.70%(5) $ 7,207,926
Class IB..................... (1.77) -- (2.28) 0.08 22.78 10.43(5) 1,252,293
For the Year Ended December
31, 2005
Class IA..................... (1.04) (0.36) (2.17) (0.51) 22.53 0.07 8,157,354
Class IB..................... (1.04) (0.36) (2.09) (0.47) 22.70 6.97 1,366,216
For the Year Ended December
31, 2004
Class IA..................... -- -- (0.47) 0.37 23.04 3.74 9,699,374
Class IB..................... -- -- (0.42) 0.36 23.17 3.48 1,462,319
For the Year Ended December
31, 2003
Class IA..................... -- -- (0.52) 3.08 22.67 18.49 10,358,449
Class IB..................... -- -- (0.48) 3.09 22.81 18.20 1,263,641
For the Year Ended December
31, 2002
Class IA..................... --(3) -- (0.26) (3.85) 19.59(3) (13.79) 9,249,397
Class IB..................... --(3) -- (0.24) (3.88) 19.72(3) (13.99) 672,078
HARTFORD CAPITAL APPRECIATION
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... (7.16) -- (7.92) 0.50 53.49 16.61(5) 11,746,831
Class IB..................... (7.16) -- (7.77) 0.46 53.21 16.32(5) 2,810,587
For the Year Ended December
31, 2005
Class IA..................... (7.94) -- (8.46) (0.44) 52.99 15.55 11,317,561
Class IB..................... (7.94) -- (8.27) (0.43) 52.75 15.26 2,793,612
For the Year Ended December
31, 2004
Class IA..................... -- -- (0.17) 8.52 53.43 19.36 10,751,945
Class IB..................... -- -- (0.11) 8.42 53.18 19.07 2,505,798
For the Year Ended December
31, 2003
Class IA..................... -- -- (0.22) 13.21 44.91 42.38 8,912,749
Class IB..................... -- -- (0.16) 13.13 44.76 42.02 1,579,399
For the Year Ended December
31, 2002
Class IA..................... --(3) -- (0.19) (8.05) 31.70(3) (19.70) 6,240,859
Class IB..................... --(3) -- (0.14) (8.05) 31.63(3) (19.88) 588,013
HARTFORD DIVIDEND AND GROWTH
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... (1.72) -- (2.13) 2.05 22.79 20.36%(5) 5,671,552
Class IB..................... (1.72) -- (2.06) 2.04 22.72 20.06(5) 1,603,952
For the Year Ended December
31, 2005
Class IA..................... (0.92) -- (1.32) (0.09) 20.74 5.96 4,978,773
Class IB..................... (0.92) -- (1.26) (0.08) 20.68 5.70 1,506,556
For the Year Ended December
31, 2004
Class IA..................... -- -- (0.27) 2.06 20.83 12.42 4,719,663
Class IB..................... -- -- (0.23) 2.04 20.76 12.14 1,393,412
For the Year Ended December
31, 2003
Class IA..................... (0.10) -- (0.35) 3.68 18.77 26.80 3,927,415
Class IB..................... (0.10) -- (0.32) 3.65 18.72 26.48 902,779
For the Year Ended December
31, 2002
Class IA..................... (0.09)(3) -- (0.32) (3.71) 15.09(3) (14.23) 2,810,625
Class IB..................... (0.09)(3) -- (0.30) (3.72) 15.07(3) (14.42) 327,617
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(1) WAIVERS(1) ASSETS RATE(4)
---------- ---------- ---------- ---------
HARTFORD ADVISERS HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.64% 0.64% 2.24% 113%
Class IB..................... 0.89 0.89 1.99 --
For the Year Ended December
31, 2005
Class IA..................... 0.66 0.65 1.96 89
Class IB..................... 0.91 0.90 1.72 --
For the Year Ended December
31, 2004
Class IA..................... 0.67 0.67 2.16 36
Class IB..................... 0.92 0.92 1.91 --
For the Year Ended December
31, 2003
Class IA..................... 0.67 0.67 2.03 48
Class IB..................... 0.92 0.92 1.78 --
For the Year Ended December
31, 2002
Class IA..................... 0.67 0.67 2.29 47
Class IB..................... 0.92 0.90 2.07 --
HARTFORD CAPITAL APPRECIATION
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.67 0.67 0.82 73
Class IB..................... 0.92 0.92 0.57 --
For the Year Ended December
31, 2005
Class IA..................... 0.70 0.70 0.78 97
Class IB..................... 0.95 0.95 0.53 --
For the Year Ended December
31, 2004
Class IA..................... 0.70 0.70 0.77 89
Class IB..................... 0.95 0.95 0.52 --
For the Year Ended December
31, 2003
Class IA..................... 0.69 0.69 0.77 94
Class IB..................... 0.94 0.94 0.52 --
For the Year Ended December
31, 2002
Class IA..................... 0.69 0.69 0.64 94
Class IB..................... 0.94 0.92 0.41 --
HARTFORD DIVIDEND AND GROWTH
HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.67 0.67 1.77% 27
Class IB..................... 0.92 0.92 1.52 --
For the Year Ended December
31, 2005
Class IA..................... 0.67 0.67 1.70 26
Class IB..................... 0.92 0.92 1.45 --
For the Year Ended December
31, 2004
Class IA..................... 0.68 0.68 1.73 27
Class IB..................... 0.93 0.93 1.48 --
For the Year Ended December
31, 2003
Class IA..................... 0.69 0.69 1.61 31
Class IB..................... 0.94 0.94 1.36 --
For the Year Ended December
31, 2002
Class IA..................... 0.69 0.69 1.56 43
Class IB..................... 0.94 0.92 1.33 --
</Table>
- ---------------
(1) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(2) Information presented relates to a share outstanding throughout the
indicated period.
(3) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(4) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(5) Total return without the inclusion of the Payments from Affiliate, as noted
on the Statement of Operations, can be found in Note 3(g).
(6) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
64
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(2) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT FROM GAIN FROM FROM NET
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $13.59 $ 0.22 $ -- $ 3.05 $ 3.27 $(0.40)
Class IB..................... 13.52 0.18 -- 3.07 3.25 (0.18)
For the Year Ended December
31, 2005
Class IA..................... 11.86 0.14 -- 1.59 1.73 --
Class IB..................... 11.83 0.13 -- 1.56 1.69 --
For the Year Ended December
31, 2004
Class IA..................... 10.11 0.10 -- 1.73 1.83 (0.08)
Class IB..................... 10.09 0.08 -- 1.72 1.80 (0.06)
For the Year Ended December
31, 2003
Class IA..................... 7.66 0.09 -- 2.44 2.53 (0.08)
Class IB..................... 7.66 0.07 -- 2.43 2.50 (0.07)
For the Year Ended December
31, 2002
Class IA..................... 9.53(3) 0.17(3) -- (1.94)(3) (1.77) (0.10)(3)
Class IB..................... 9.51(3) 0.14(3) -- (1.91)(3) (1.77) (0.08)(3)
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 1.00 0.05 -- -- 0.05 (0.05)
Class IB..................... 1.00 0.04 -- -- 0.04 (0.04)
For the Year Ended December
31, 2005
Class IA..................... 1.00 0.03 -- -- 0.03 (0.03)
Class IB..................... 1.00 0.03 -- -- 0.03 (0.03)
For the Year Ended December
31, 2004
Class IA..................... 1.00 -- -- -- -- --
Class IB..................... 1.00 -- -- -- -- --
For the Year Ended December
31, 2003
Class IA..................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB..................... 1.00 -- -- -- -- --
For the Year Ended December
31, 2002
Class IA..................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB..................... 1.00 0.01 -- -- 0.01 (0.01)
HARTFORD SMALL COMPANY HLS
FUND
For the Year Ended December
31, 2006
Class IA..................... 19.66 0.05 0.02 2.75 2.82 (0.04)
Class IB..................... 19.38 -- 0.02 2.70 2.72 (0.02)
For the Year Ended December
31, 2005
Class IA..................... 16.25 (0.04) 0.02 3.43 3.41 --
Class IB..................... 16.06 (0.05) 0.02 3.35 3.32 --
For the Year Ended December
31, 2004
Class IA..................... 14.49 (0.07) -- 1.83 1.76 --
Class IB..................... 14.35 (0.09) -- 1.80 1.71 --
For the Year Ended December
31, 2003
Class IA..................... 9.29 (0.04) -- 5.24 5.20 --
Class IB..................... 9.23 (0.04) -- 5.16 5.12 --
For the Year Ended December
31, 2002
Class IA..................... 13.32(3) (0.08)(3) -- (3.95)(3) (4.03) --(3)
Class IB..................... 13.26(3) (0.06)(3) -- (3.97)(3) (4.03) --(3)
<Caption>
-- SELECTED PER-SHARE DATA(2) -- -- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------- ---------------------------------------------
NET NET
DISTRIBUTIONS INCREASE ASSET
FROM (DECREASE) VALUE
REALIZED DISTRIBUTIONS IN NET AT END NET ASSETS
CAPITAL FROM TOTAL ASSET OF TOTAL AT END OF
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN PERIOD
------------- ------------- ------------- ---------- ------ ------ -----------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $(1.23) $ -- $(1.63) $ 1.64 $15.23 24.46(5) $ 1,596,055
Class IB..................... (1.23) -- (1.41) 1.84 15.36 24.15(5) 382,371
For the Year Ended December
31, 2005
Class IA..................... -- -- -- 1.73 13.59 14.62 1,251,426
Class IB..................... -- -- -- 1.69 13.52 14.33 319,626
For the Year Ended December
31, 2004
Class IA..................... -- -- (0.08) 1.75 11.86 18.08 1,054,884
Class IB..................... -- -- (0.06) 1.74 11.83 17.79 247,752
For the Year Ended December
31, 2003
Class IA..................... -- -- (0.08) 2.45 10.11 33.10 823,760
Class IB..................... -- -- (0.07) 2.43 10.09 32.76 76,246
For the Year Ended December
31, 2002
Class IA..................... --(3) -- (0.10) (1.87) 7.66(3) (17.93) 646,903
Class IB..................... --(3) -- (0.08) (1.85) 7.66(3) (18.12) 26,641
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December
31, 2006
Class IA..................... -- -- (0.05) -- 1.00 4.69% 1,558,433
Class IB..................... -- -- (0.04) -- 1.00 4.43 319,926
For the Year Ended December
31, 2005
Class IA..................... -- -- (0.03) -- 1.00 2.84 1,353,836
Class IB..................... -- -- (0.03) -- 1.00 2.58 264,040
For the Year Ended December
31, 2004
Class IA..................... -- -- -- -- 1.00 0.94 1,294,525
Class IB..................... -- -- -- -- 1.00 0.69 252,808
For the Year Ended December
31, 2003
Class IA..................... -- -- (0.01) -- 1.00 0.75 1,609,439
Class IB..................... -- -- -- -- 1.00 0.50 240,930
For the Year Ended December
31, 2002
Class IA..................... -- -- (0.01) -- 1.00 1.47 2,319,456
Class IB..................... -- -- (0.01) -- 1.00 1.24 261,914
HARTFORD SMALL COMPANY HLS
FUND
For the Year Ended December
31, 2006
Class IA..................... (3.37) -- (3.41) (0.59) 19.07 14.43(5) 1,138,830
Class IB..................... (3.37) -- (3.39) (0.67) 18.71 14.14(5) 304,757
For the Year Ended December
31, 2005
Class IA..................... -- -- -- 3.41 19.66 21.01(5) 1,017,271
Class IB..................... -- -- -- 3.32 19.38 20.71(5) 220,310
For the Year Ended December
31, 2004
Class IA..................... -- -- -- 1.76 16.25 12.18 904,912
Class IB..................... -- -- -- 1.71 16.06 11.90 230,452
For the Year Ended December
31, 2003
Class IA..................... -- -- -- 5.20 14.49 55.87 851,283
Class IB..................... -- -- -- 5.12 14.35 55.48 190,456
For the Year Ended December
31, 2002
Class IA..................... --(3) -- -- (4.03) 9.29(3) (30.23) 495,074
Class IB..................... --(3) -- -- (4.03) 9.23(3) (30.39) 66,378
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(1) WAIVERS(1) ASSETS RATE(4)
---------- ---------- ---------- ---------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.75% 0.75% 1.47% 119%
Class IB..................... 1.00 1.00 1.24 --
For the Year Ended December
31, 2005
Class IA..................... 0.78 0.78 1.22 120
Class IB..................... 1.03 1.03 0.97 --
For the Year Ended December
31, 2004
Class IA..................... 0.80 0.80 1.13 142
Class IB..................... 1.05 1.05 0.88 --
For the Year Ended December
31, 2003
Class IA..................... 0.83 0.83 1.08 144
Class IB..................... 1.08 1.08 0.83 --
For the Year Ended December
31, 2002
Class IA..................... 0.81 0.81 1.23 161
Class IB..................... 1.06 1.04 1.00 --
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.48 0.48 4.63 --
Class IB..................... 0.73 0.73 4.38 --
For the Year Ended December
31, 2005
Class IA..................... 0.49 0.49 2.79 --
Class IB..................... 0.75 0.75 2.54 --
For the Year Ended December
31, 2004
Class IA..................... 0.48 0.48 0.93 --
Class IB..................... 0.73 0.73 0.68 --
For the Year Ended December
31, 2003
Class IA..................... 0.49 0.49 0.75 --
Class IB..................... 0.74 0.74 0.50 --
For the Year Ended December
31, 2002
Class IA..................... 0.49 0.49 1.43 --
Class IB..................... 0.74 0.72 1.20 --
HARTFORD SMALL COMPANY HLS
FUND
For the Year Ended December
31, 2006
Class IA..................... 0.73 0.73 0.21 177
Class IB..................... 0.98 0.98 (0.03) --
For the Year Ended December
31, 2005
Class IA..................... 0.75 0.75 (0.08) 106
Class IB..................... 1.00 1.00 (0.34) --
For the Year Ended December
31, 2004
Class IA..................... 0.75 0.75 (0.41) 141
Class IB..................... 1.00 1.00 (0.66) --
For the Year Ended December
31, 2003
Class IA..................... 0.76 0.76 (0.49) 171
Class IB..................... 1.01 1.01 (0.74) --
For the Year Ended December
31, 2002
Class IA..................... 0.77 0.77 (0.30) 222
Class IB..................... 1.02 1.00 (0.53) --
</Table>
- ---------------
(1) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(2) Information presented relates to a share outstanding throughout the
indicated period.
(3) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(4) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(5) Total return without the inclusion of the Payments from Affiliate, as noted
on the Statement of Operations, can be found in Note 3(g).
(6) Per share amounts have been calculated using average shares outstanding
method.
65
HARTFORD SERIES FUND, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(2) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT FROM GAIN FROM FROM NET
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD STOCK HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $49.21 $ 0.72 $0.06 $ 6.41 $ 7.19 $(0.71)
Class IB..................... 49.10 0.56 0.06 6.42 7.04 (0.57)
For the Year Ended December
31, 2005
Class IA..................... 45.72 0.66 -- 3.72 4.38 (0.89)
Class IB..................... 45.59 0.51 -- 3.74 4.25 (0.74)
For the Year Ended December
31, 2004
Class IA..................... 44.37 0.74 -- 1.10 1.84 (0.49)
Class IB..................... 44.29 0.64 -- 1.08 1.72 (0.42)
For the Year Ended December
31, 2003
Class IA..................... 35.46 0.46 -- 8.93 9.39 (0.48)
Class IB..................... 35.42 0.38 -- 8.88 9.26 (0.39)
For the Year Ended December
31, 2002
Class IA..................... 47.36(3) 0.43(3) -- (11.94)(3) (11.51) (0.39)(3)
Class IB..................... 47.31(3) 0.38(3) -- (11.95)(3) (11.57) (0.32)(3)
HARTFORD TOTAL RETURN BOND HLS
FUND
For the Year Ended December
31, 2006(6)
Class IA..................... 11.27 0.55 -- (0.01) 0.54 (0.57)
Class IB..................... 11.20 0.51 -- -- 0.51 (0.52)
For the Year Ended December
31, 2005
Class IA..................... 11.94 0.44 -- (0.14) 0.30 (0.88)
Class IB..................... 11.86 0.43 -- (0.17) 0.26 (0.83)
For the Year Ended December
31, 2004
Class IA..................... 12.32 0.40 -- 0.12 0.52 (0.58)
Class IB..................... 12.25 0.45 -- 0.04 0.49 (0.56)
For the Year Ended December
31, 2003
Class IA..................... 11.95 0.36 -- 0.57 0.93 (0.50)
Class IB..................... 11.90 0.40 -- 0.50 0.90 (0.49)
For the Year Ended December
31, 2002
Class IA..................... 11.46(3) 0.56(3) -- (0.01)(3) 0.55 (0.05)(3)
Class IB..................... 11.43(3) 0.46(3) -- 0.07(3) 0.53 (0.05)(3)
<Caption>
-- SELECTED PER-SHARE DATA(2) -- -- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------- ---------------------------------------------
NET NET
DISTRIBUTIONS INCREASE ASSET
FROM (DECREASE) VALUE
REALIZED DISTRIBUTIONS IN NET AT END NET ASSETS
CAPITAL FROM TOTAL ASSET OF TOTAL AT END OF
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN PERIOD
------------- ------------- ------------- ---------- ------ ------ -----------
HARTFORD STOCK HLS FUND
For the Year Ended December
31, 2006
Class IA..................... $(3.12) $ -- $(3.83) $ 3.36 $52.57 14.65(5) $ 4,498,001
Class IB..................... (3.12) -- (3.69) 3.35 52.45 14.37(5) 758,802
For the Year Ended December
31, 2005
Class IA..................... -- -- (0.89) 3.49 49.21 9.62 4,787,612
Class IB..................... -- -- (0.74) 3.51 49.10 9.35 770,163
For the Year Ended December
31, 2004
Class IA..................... -- -- (0.49) 1.35 45.72 4.17 5,657,942
Class IB..................... -- -- (0.42) 1.30 45.59 3.91 718,293
For the Year Ended December
31, 2003
Class IA..................... -- -- (0.48) 8.91 44.37 26.47 6,014,675
Class IB..................... -- -- (0.39) 8.87 44.29 26.16 562,979
For the Year Ended December
31, 2002
Class IA..................... --(3) -- (0.39) (11.90) 35.46(3) (24.25) 5,094,276
Class IB..................... --(3) -- (0.32) (11.89) 35.42(3) (24.42) 296,767
HARTFORD TOTAL RETURN BOND HLS
FUND
For the Year Ended December
31, 2006(6)
Class IA..................... -- -- (0.57) (0.03) 11.24 4.80(5) 3,041,321
Class IB..................... -- -- (0.52) (0.01) 11.19 4.54(5) 1,040,408
For the Year Ended December
31, 2005
Class IA..................... (0.09) -- (0.97) (0.67) 11.27 2.45 2,745,115
Class IB..................... (0.09) -- (0.92) (0.66) 11.20 2.19 1,068,600
For the Year Ended December
31, 2004
Class IA..................... (0.32) -- (0.90) (0.38) 11.94 4.62 2,507,021
Class IB..................... (0.32) -- (0.88) (0.39) 11.86 4.36 991,065
For the Year Ended December
31, 2003
Class IA..................... (0.06) -- (0.56) 0.37 12.32 7.85 2,332,343
Class IB..................... (0.06) -- (0.55) 0.35 12.25 7.58 734,768
For the Year Ended December
31, 2002
Class IA..................... (0.01)(3) -- (0.06) 0.49 11.95(3) 10.08 2,145,266
Class IB..................... (0.01)(3) -- (0.06) 0.47 11.90(3) 9.83 382,864
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(1) WAIVERS(1) ASSETS RATE(4)
---------- ---------- ---------- ---------
HARTFORD STOCK HLS FUND
For the Year Ended December
31, 2006
Class IA..................... 0.49% 0.49% 1.27% 97%
Class IB..................... 0.74 0.74 1.02 --
For the Year Ended December
31, 2005
Class IA..................... 0.50 0.50 1.21 91
Class IB..................... 0.75 0.75 0.96 --
For the Year Ended December
31, 2004
Class IA..................... 0.49 0.49 1.61 30
Class IB..................... 0.74 0.74 1.36 --
For the Year Ended December
31, 2003
Class IA..................... 0.49 0.49 1.18 37
Class IB..................... 0.74 0.74 0.93 --
For the Year Ended December
31, 2002
Class IA..................... 0.49 0.49 0.97 44
Class IB..................... 0.74 0.72 0.75 --
HARTFORD TOTAL RETURN BOND HLS
FUND
For the Year Ended December
31, 2006(6)
Class IA..................... 0.50 0.50 4.82 344
Class IB..................... 0.75 0.75 4.56 --
For the Year Ended December
31, 2005
Class IA..................... 0.50 0.50 4.09 190
Class IB..................... 0.75 0.75 3.84 --
For the Year Ended December
31, 2004
Class IA..................... 0.50 0.50 3.72 164
Class IB..................... 0.75 0.75 3.47 --
For the Year Ended December
31, 2003
Class IA..................... 0.50 0.50 3.74 215
Class IB..................... 0.75 0.75 3.49 --
For the Year Ended December
31, 2002
Class IA..................... 0.51 0.51 5.58 108
Class IB..................... 0.76 0.75 5.34 --
</Table>
- ---------------
(1) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(2) Information presented relates to a share outstanding throughout the
indicated period.
(3) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(4) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(5) Total return without the inclusion of the Payments from Affiliate, as noted
on the Statement of Operations, can be found in Note 3(g).
(6) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
66
HARTFORD SERIES FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Hartford Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Hartford Advisers HLS Fund, Hartford Capital
Appreciation HLS Fund, Hartford Dividend and Growth HLS Fund, Hartford
International Opportunities HLS Fund, Hartford Money Market HLS Fund, Hartford
Small Company HLS Fund, Hartford Stock HLS Fund, and Hartford Total Return Bond
HLS Fund (eight of the twenty-six portfolios constituting the Hartford Series
Fund, Inc.) (collectively, the "Funds") as of December 31, 2006, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian,
agent banks or brokers or by other appropriate auditing procedures where replies
from agent banks or brokers were not received. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds listed above constituting portfolios within Hartford Series Fund,
Inc. at December 31, 2006, the results of their operations for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
67
HARTFORD SERIES FUND, INC.
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Funds and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the funds
pursuant to the Investment Company Act of 1940. Each officer and three of the
Funds' directors, as noted in the chart below, are "interested" persons of the
funds. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by each Fund can
be found in the Statement of Operations herein. The Funds do not pay salaries or
compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
68
HARTFORD SERIES FUND, INC.
DIRECTORS AND OFFICERS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms.
Fleege was Counsel for Amerprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005
69
HARTFORD SERIES FUND, INC.
HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities and a record of how the Funds
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Funds file a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
70
HARTFORD SERIES FUND, INC.
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,102.32 $3.34
Class IB........... $1,000.00 $1,099.84 $4.66
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,121.09 $3.53
Class IB........... $1,000.00 $1,158.66 $4.95
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,138.54 $3.61
Class IB........... $1,000.00 $1,195.97 $5.09
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,135.15 $3.93
Class IB........... $1,000.00 $1,236.54 $5.52
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD ADVISERS HLS
FUND
Class IA........... $1,000.00 $1,022.03 $3.21 0.63% 184 365
Class IB........... $1,000.00 $1,020.77 $4.48 0.88% 184 365
HARTFORD CAPITAL
APPRECIATION HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD DIVIDEND AND
GROWTH HLS FUND
Class IA........... $1,000.00 $1,021.83 $3.41 0.67% 184 365
Class IB........... $1,000.00 $1,020.57 $4.69 0.92% 184 365
HARTFORD
INTERNATIONAL
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
</Table>
71
HARTFORD SERIES FUND, INC.
EXPENSE EXAMPLE (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.53 $2.45
Class IB........... $1,000.00 $1,040.60 $3.75
HARTFORD SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,069.12 $3.81
Class IB........... $1,000.00 $1,136.42 $5.28
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,133.32 $2.63
Class IB........... $1,000.00 $1,139.95 $3.99
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,051.37 $2.59
Class IB........... $1,000.00 $1,041.65 $3.86
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.79 $2.45 0.48% 184 365
Class IB........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
HARTFORD SMALL
COMPANY HLS FUND
Class IA........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
Class IB........... $1,000.00 $1,020.27 $4.99 0.98% 184 365
HARTFORD STOCK HLS
FUND
Class IA........... $1,000.00 $1,022.74 $2.50 0.49% 184 365
Class IB........... $1,000.00 $1,021.48 $3.77 0.74% 184 365
HARTFORD TOTAL RETURN
BOND HLS FUND
Class IA........... $1,000.00 $1,022.68 $2.55 0.50% 184 365
Class IB........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
</Table>
72
HARTFORD SERIES FUND, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
the continuation of the mutual fund's investment advisory and sub-advisory
agreements after an initial two year period.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each HLS Fund with an agreement up for
renewal with HL Investment Advisors, LLC ("HL Advisors") and the investment
sub-advisory agreements between HL Advisors and each Fund's respective
sub-adviser(s) ("sub-advisers," and together with HL Advisors,
"advisers") -- Hartford Investment Management Company ("Hartford Investment"),
Holland Capital Management, L.P. ("Holland Capital"), Lazard Asset Management
LLC ("Lazard"), Northern Capital Management, LLC ("Northern Capital"), T. Rowe
Price Associates, Inc. ("T. Rowe Price") and Wellington Management Company, LLP
("Wellington") (collectively, the "agreements"), including the Hartford Advisers
HLS Fund, the Hartford Capital Appreciation HLS Fund, the Hartford Dividend and
Growth HLS Fund, the Hartford International Opportunities HLS Fund, the Hartford
Money Market HLS Fund, the Hartford Small Company HLS Fund, the Hartford Stock
HLS Fund, and the Hartford Total Return Bond HLS Fund. The other HLS Funds with
agreements renewed at the August 1-2, 2006 meeting are not described in this
annual report. In the months preceding this meeting, the Board requested,
received, and reviewed written responses from the advisers to questions posed to
them on behalf of the Independent Directors and supporting materials relating to
those questions and responses. In addition, the Board received in-person
presentations about each Fund and the related agreements by Fund officers and
representatives of HL Advisors at the Board's meetings on June 20-21, 2006 and
August 1-2, 2006. In considering the approval of the agreements, the Board also
took into account information provided to the Board at its meetings throughout
the year, including reports on Fund performance, compliance, shareholder
services, and the other services provided to the Funds by the advisers and their
affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
Nature, Extent and Quality of Services
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as
- ---------------
1 Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life Insurance
Company ("Hartford Life"), under which Hartford Life provides certain
administrative services to those Funds. For those Funds that have separate
management and administrative agreements, the Board considered the fees
payable under both agreements in the aggregate.
73
HARTFORD SERIES FUND, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
well as its willingness to consider and implement organizational and operational
changes, including hiring additional personnel, designed to improve services to
the Funds, and its investments in infrastructure in light of increased
regulatory requirements and other developments. The Board considered the
progress that Hartford Investment has made in developing an equity management
capability. In addition, the Board considered the quality of each adviser's
communications with the Board, and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
Performance of the Funds, HL Advisors, and the Sub-Advisers
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
With respect to certain specific Funds, the Board considered actions HL Advisors
was planning to take to address performance. With respect to MidCap Stock HLS
Fund, sub-advised by Northern Capital, the Board considered HL Advisors' plan to
seek shareholder approval in December 2006 of a proposal to replace Northern
Capital as sub-adviser to the Fund with Hartford Investment. With respect to
Capital Opportunities HLS Fund and LargeCap Growth HLS Fund, each sub-advised by
Holland Capital, the Board considered HL Advisors' plan to seek shareholder
approval in January 2007 with respect to a plan of reorganization by which the
Funds would be merged into Blue Chip Stock HLS Fund. Due to the timing of these
proposed changes, the Board concluded that it would be in the best interests of
each Fund's shareholders to renew the existing sub-advisory agreements for these
Funds while HL Advisors sought shareholder approval of these proposals.
74
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, in the case of
the Funds mentioned above, that HL Advisors is addressing the Board's concerns
about investment performance, and the Board had continued confidence in HL
Advisors' and the sub-advisers' overall capabilities to manage each Fund.
Costs of the Services and Profitability of HL Advisors and the Sub-Advisers
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability of the other sub-advisers. In evaluating such sub-adviser's
profitability with respect to the Funds, the Board considered primarily HL
Advisors' and the sub-advisers' representations that HL Advisors had negotiated
the sub-advisory fees at arm's length, and the sub-advisers' representations
that the fees charged to HL Advisors were comparable to fees charged by the
sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
Comparison of Fees and Services Provided by HL Advisors and the Sub-Advisers
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer groups. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio,
75
HARTFORD SERIES FUND, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
net of these reductions. The following reductions were agreed to at the meeting,
each effective January 1, 2007, unless otherwise noted:
- - Blue Chip Stock HLS Fund -- 5 basis points ("bps") contractual fee reduction
plus 5 bps fee waiver;
- - Capital Opportunities HLS Fund -- 20 bps fee waiver;
- - High Yield HLS Fund -- 5 bps fee waiver, effective November 1, 2006;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - LargeCap Growth HLS Fund -- 10 bps fee waiver;
- - MidCap Stock HLS Fund -- 20 bps fee waiver; and
- - Money Market HLS Fund -- 5 bps fee waiver.
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
Economies of Scale
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by HL Advisors, Lipper, and the Consultant, the Board recognized that
there is no uniform methodology for establishing breakpoints, or uniform pattern
in asset levels that trigger breakpoints or the amounts of breakpoints
triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from the certain Funds for providing
certain administrative services for those Funds, and that Hartford Life also
receives fees for fund accounting and related services from each of the Funds,
and the Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds' transfer agent and an
affiliate of HL Advisors, receives transfer agency compensation from the Funds,
and the Board reviewed information on the expected profitability of the Funds'
transfer agency function to HISC. The Board considered
76
- --------------------------------------------------------------------------------
information provided by HL Advisors indicating that the fees charged by HISC to
the Funds are reasonable and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research, and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the HLS Funds of
approximately $480,000 per year.
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
* * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
77
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
Hartford Global Leaders HLS Fund inception 9/30/1998
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 9/30/98 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GLOBAL LEADERS IA MSCI WORLD GROWTH INDEX MSCI WORLD INDEX
----------------- ----------------------- ----------------
9/98 10000 10000 10000
11346 10871 10906
12212 11573 11556
12/98 13188 12419 12122
13799 12858 12389
13410 12348 12062
14140 12805 12566
14488 12784 13063
13962 12339 12587
14974 13099 13176
15199 12955 13138
15118 13115 13117
14930 13138 12991
15905 13999 13668
17087 14821 14055
12/99 19830 16518 15194
19086 15484 14326
21213 16023 14366
21161 16979 15361
20137 15840 14713
19563 14901 14342
20430 15813 14827
19746 15018 14412
20868 15552 14882
19982 14175 14093
18833 13581 13858
17723 12534 13019
12/00 18429 12299 13231
18436 12670 13488
16744 11055 12350
15624 10164 11541
16849 10987 12397
16516 10769 12243
16215 10394 11861
15819 10241 11705
14951 9612 11145
13654 8815 10165
14039 9191 10361
15284 9891 10975
12/01 15373 9941 11046
14870 9618 10712
14782 9645 10621
15250 9887 11114
14742 9467 10720
15056 9421 10745
14111 8879 10095
12961 8254 9245
12831 8254 9264
11285 7437 8247
12455 8017 8857
13558 8310 9337
12/02 12375 7992 8886
12089 7705 8617
11818 7624 8470
11656 7694 8447
12962 8247 9201
13754 8592 9731
14076 8715 9904
14418 8884 10106
14833 9064 10327
14454 9117 10392
15595 9661 11011
15972 9800 11181
12/03 16777 10272 11885
17427 10483 12078
18038 10612 12285
18358 10508 12208
17685 10302 11965
17934 10410 12073
18545 10553 12336
17124 10048 11936
17052 10020 11993
17918 10222 12224
18579 10474 12526
19598 11007 13190
12/04 19995 11423 13697
19263 11116 13391
18844 11403 13822
18183 11186 13560
17962 10947 13273
18405 11238 13519
18592 11293 13642
19236 11762 14122
19617 11870 14235
19735 12134 14609
19064 11877 14257
19923 12266 14740
12/05 20513 12535 15070
22095 13114 15746
21539 12983 15729
22011 13311 16082
22705 13623 16579
21430 13107 16027
21573 13088 16029
20936 12983 16132
21511 13331 16559
21902 13451 16762
22374 13931 17380
23322 14287 17815
12/06 23415 14475 18182
</Table>
<Table>
--- GLOBAL LEADERS IA --- MSCI WORLD INDEX -- MSCI WORLD GROWTH INDEX
$10,000 starting value $10,000 starting value $10,000 starting value
$23,415 ending value $18,182 ending value $14,475 ending value
</Table>
MSCI WORLD INDEX is a broad-based unmanaged market capitalization weighted total
return index which measures performance of 23 developed-country global stock
markets, including the United States, Canada, Europe, Australia, New Zealand and
the Far East.
MSCI WORLD GROWTH INDEX is a broad-based unmanaged market
capitalization-weighted total return index which measures the performance of
growth securities in 23 developed-country global equity markets including the
United States, Canada, Europe, Australia, New Zealand and the Far East.
The Fund has changed its benchmark from the MSCI World Index to the MSCI World
Growth Index because the Fund's investment manager believes that the MSCI World
Growth Index is better suited to the investment strategy of the Fund.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
SINCE
1 YEAR 5 YEAR INCEPTION
- --------------------------------------------------
Global Leaders
IA 14.14% 8.78% 10.86%
- --------------------------------------------------
Global Leaders
IB 13.86% 8.51% 10.61%
- --------------------------------------------------
MSCI World
Growth Index 15.48% 7.80% 4.58%
- --------------------------------------------------
MSCI World Index 20.65% 10.48% 7.51%
- --------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
ANDREW S. OFFIT, CPA JEAN-MARC BERTEAUX MATTHEW D. HUDSON, CFA
Senior Vice President, Partner Vice President Vice President
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Global Leaders HLS Fund returned 14.14% for
the twelve-month period ended December 31, 2006, underperforming the Fund's
benchmark, the MSCI World Growth Index, which returned 15.48% for the same
period. The Fund underperformed the 18.78% return of the average fund in the
Lipper VA Global Large Cap Growth Funds peer group, a group of funds with
investment strategies similar to those of the fund.
WHY DID THE FUND PERFORM THIS WAY?
Global equities rose with moderating inflation expectations in recent months,
helping to offset data suggesting a slowing global economy. The long-awaited
pause in the Federal Reserve's monetary tightening cycle finally occurred,
calming investor fears that the Fed would over tighten and tip the U.S. economy
into recession. The drop in oil and gas prices from record highs also bolstered
optimism. Within the MSCI World Growth Index, Utilities, Materials, and
Telecommunication Services led all sectors, while Health Care and Information
Technology performed well but lagged the index returns for the twelve month
period ended December 31, 2006.
Sector allocation, which is primarily a result of bottom-up stock selection, was
the main source of underperformance relative (i.e. performance of the Fund as
measured against the benchmark) to the Index for the period. Underweight (i.e.
the Fund's sector position was less than the benchmark position) positions to
outperforming Materials and Consumer Staples stocks had a negative impact on
performance. Strong security selection, primarily in the Financials and
Industrials sectors, partially offset the impact of sector allocation. However,
stock selection was weak in the Consumer Discretionary sector.
Among the top detractors on a relative and absolute (i.e. total return) basis
were Rakuten, SanDisk, and Sirius Satellite. Although there were no fundamental
disappointments within Japanese online retailer Rakuten's core business, the
stock was negatively impacted by issues in its peripheral business, rumors of
its president being arrested, and a meltdown in JASDAQ (Japan stock trading
system) stocks as retail investors fled "new Japan" companies in light of the
Livedoor and Murakami Fund scandals. Shares in flash storage
1
- --------------------------------------------------------------------------------
device maker SanDisk fell as price declines in NAND flash memory raised concerns
about an over-supplied market. We expect pricing declines to moderate, but we
reduced the position to better reflect industry competition. Despite these
changing dynamics, the company stands to benefit from innovation in cell phone
features, which drives long-term memory growth. Shares of Sirius, a US
subscription-based satellite radio broadcaster, declined on signs that
subscriber growth will be less than anticipated and, importantly, that the cost
to retain and attract new customers will be greater than anticipated. True to
our investment process, we sold our shares after meeting with management and
determining that the drivers of earnings growth were no longer in place. Among
other detractors from absolute performance was global semiconductor company
Marvell Technology, which declined on weak earnings and lowered guidance.
The leading contributors to both absolute and relative performance during the
twelve month period were Las Vegas Sands, Nintendo, and America Movil. Casino
owner and operator Las Vegas Sands was our strongest performer for the year. It
remains one of our largest holdings as good results from its Macau operations
and further planned expansion into mainland China will provide significant
opportunities for growth. Video game console and software maker Nintendo
successfully launched extremely popular Wii game consoles this holiday season.
The company also benefited from solid earnings growth coming from robust sales
of its touch-screen DS portable game player. Mexican wireless provider America
Movil reported strong earnings and benefited from robust subscriber growth in
Latin America, while cell phone companies' increased spending to support
subscriber growth and enhanced coverage. We also saw outperformance from several
global investment banks, including Goldman Sachs.
WHAT IS THE OUTLOOK?
Our focus remains on stock and sector selections that result from intense
bottom-up research, diligently meeting with the managements of leading companies
globally, and leveraging the strong research capabilities of our firm. At the
end of the year, the Fund's largest overweights relative to the MSCI World
Growth Index were to the Information Technology, Financials, and
Telecommunication Services sectors. Within the Information Technology sector we
continue to like mobile equipment makers and companies with accelerating growth
from product upgrades or new product launches. Our largest underweights continue
to be to the Health Care sector, following the elimination of several
pharmaceutical companies due to development delays in key pipeline drugs, and to
Industrials stocks at the end of the twelve month period.
DIVERSIFICATION BY COUNTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- -------------------------------------------------------------------
Australia 0.5%
- -------------------------------------------------------------------
Austria 1.3
- -------------------------------------------------------------------
Belgium 0.9
- -------------------------------------------------------------------
Brazil 1.1
- -------------------------------------------------------------------
Canada 2.7
- -------------------------------------------------------------------
Dutch Antilles 1.9
- -------------------------------------------------------------------
France 2.1
- -------------------------------------------------------------------
Germany 2.2
- -------------------------------------------------------------------
Ireland 2.0
- -------------------------------------------------------------------
Japan 11.6
- -------------------------------------------------------------------
Mexico 3.2
- -------------------------------------------------------------------
Netherlands 2.5
- -------------------------------------------------------------------
Norway 0.5
- -------------------------------------------------------------------
Russia 1.0
- -------------------------------------------------------------------
South Korea 1.3
- -------------------------------------------------------------------
Switzerland 4.2
- -------------------------------------------------------------------
Taiwan 1.4
- -------------------------------------------------------------------
United Kingdom 11.5
- -------------------------------------------------------------------
United States 46.6
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 5.7%
- -------------------------------------------------------------------
Capital Goods 1.8
- -------------------------------------------------------------------
Consumer Cyclical 8.8
- -------------------------------------------------------------------
Consumer Staples 6.6
- -------------------------------------------------------------------
Energy 3.7
- -------------------------------------------------------------------
Finance 15.8
- -------------------------------------------------------------------
Health Care 10.2
- -------------------------------------------------------------------
Services 9.7
- -------------------------------------------------------------------
Technology 34.8
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 0.4
- -------------------------------------------------------------------
Short-Term Investments 9.7
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
Total 100.0%
- -------------------------------------------------------------------
</Table>
2
Hartford Growth Opportunities HLS Fund inception 3/24/1987
(subadvised by Wellington Management Company, LLP)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
GROWTH OPPORTUNITIES IA RUSSELL 3000 GROWTH INDEX
----------------------- -------------------------
12/96 10000 10000
10435 10657
9859 10532
9222 9946
9339 10539
10296 11367
10706 11815
11727 12818
11352 12174
11924 12811
11420 12306
11317 12745
12/97 11242 12874
11094 13205
12018 14214
12608 14784
12672 14978
12371 14491
13021 15312
12387 15106
10136 12739
10933 13741
11457 14815
11888 15944
12/98 13380 17382
13796 18385
12736 17483
13432 18383
13449 18517
13081 17992
14077 19229
14056 18618
14325 18850
14388 18505
15451 19838
17278 20977
12/99 20761 23262
20490 22233
26505 23622
24053 24958
22014 23675
20679 22422
23832 24201
23094 23118
26244 25233
26276 22922
24006 21783
19450 18523
12/00 21589 18047
21231 19309
18551 16075
16547 14347
18203 16157
18050 15965
18015 15657
17605 15200
16428 13976
13905 12523
14619 13214
16085 14473
12/01 16655 14505
16496 14231
15521 13618
16338 14136
15553 13041
15358 12693
13657 11525
12326 10813
12042 10843
11090 9739
11880 10607
12964 11213
12/02 12050 10438
11903 10182
11747 10121
12081 10307
13170 11083
14175 11680
14599 11845
14744 12182
15400 12510
15211 12362
16541 13084
17082 13243
12/03 17326 13670
17865 13982
18132 14063
18291 13827
17753 13624
18431 13880
19002 14075
17434 13240
17204 13158
18127 13330
18430 13547
19322 14070
12/04 20304 14617
19611 14115
19450 14269
19094 13985
18614 13666
19797 14352
20561 14342
21747 15069
21856 14873
22351 14946
21932 14765
22937 15419
12/05 23615 15373
25176 15749
24833 15718
25303 15999
25734 15975
24301 15378
23963 15323
23260 14988
23821 15453
24266 15851
25027 16447
26213 16779
12/06 26461 16827
</Table>
<Table>
--- GROWTH OPPORTUNITIES IA --- RUSSELL 3000 GROWTH INDEX
$10,000 starting value $10,000 starting value
$26,461 ending value $16,827 ending value
</Table>
RUSSELL 3000 GROWTH INDEX is an unmanaged index that measures the performance of
those Russell 3000 Index companies with higher price-to-book ratios and higher
forecasted growth values. (The Russell 3000 Index is an unmanaged index that
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.)
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- -------------------------------------------------------
Growth Opportunities IA 12.05% 9.70% 10.22%
- -------------------------------------------------------
Growth Opportunities
IB(2) 11.79% 9.43% 9.95%
- -------------------------------------------------------
Russell 3000 Growth Index 9.46% 3.01% 5.34%
- -------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Class IB shares commenced on May 1, 2002. Class IB share
performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGERS
<Table>
MICHAEL T. CARMEN, CFA MARIO E. ABULARACH, CFA
Senior Vice President, Vice President and Equity
Partner Research Analyst
</Table>
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of The Hartford Growth Opportunities HLS Fund returned
12.05% for the twelve-month period ended December 31, 2006, outperforming its
benchmark, the Russell 3000 Growth Index, which returned 9.46% for the same
period. The Fund also outperformed the 7.70% return of the average fund in the
Lipper VA Multi-Cap Growth VA-UF peer group, a group of funds with investment
strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
As measured by the Russell 3000 Growth Index, equity markets ended higher for
the fourth fiscal year in a row. Three of the last four quarters were positive,
with the April -to- July period showing the only significant decline as
investors moved away from stocks in favor of less risky assets. Every sector in
the benchmark posted positive returns for the period, led by a disparate group
of sectors: Utilities, Telecommunication Services, and Materials. The laggards
were Health Care, Energy, and Information Technology. These positive returns
took place against a backdrop of a weakening housing market, declining energy
prices, and continued turmoil in Iraq. In addition, small cap stocks continued
to dominate large and mid cap stocks. The Russell 2000 Small Cap Index returned
18.37%, compared to the S&P 500 Large Cap Index return of 15.78% and the S&P 400
MidCap Index return of 10.32%.
The Fund outperformed by maintaining its focus on stock selection. Selection
within the Information Technology and Heath Care sectors contributed most to
relative (i.e. performance of the Fund as measured against the benchmark)
performance. Network Appliance (Information Technology), Redback Networks
(Information Technology), and Digene (Health Care) were among the top
contributors to relative and absolute (i.e. total return) performance. Network
Appliance benefited as sales of the company's mid-range storage solution,
FAS3000, remained strong. Redback Networks, a manufacturer of advanced
telecommunications networking equipment, advanced on a takeover offer from
Ericsson. Diagnostic test provider Digene rose on strong sales of its test to
detect HPV, a virus that is a known causative agent in cervical cancer. Non-
benchmark holding Melco International (Capital Goods) contributed most on a
relative basis. The Hong Kong-based conglomerate was up on news of a deal that
would positively impact the company's plans to open its first casino in Macau.
We sold our positions in Redback Networks and Melco International during the
period and continue to own Network Appliance and Digene.
The Fund's results in Financials and Consumer Discretionary stocks detracted
from relative performance. In the Consumer Discretionary sector, shares of
satellite radio providers XM Satellite and Sirius declined on concerns of rising
subscriber acquisition costs. We eliminated our positions in the stocks. Other
significant
3
- --------------------------------------------------------------------------------
detractors from relative and absolute performance included Marvell Technology
(Information Technology), St. Jude Medical (Health Care) and Cree (Information
Technology). Weakness in the disk drive industry led to an earnings miss at
Marvell, while St. Jude Medical fell on overall weakness in the implantable
cardiac defibrillator market. Cree, a semiconductor product manufacturer, fell
after management issued a profit warning reflecting weak light-emitting diode
(LED) sales, unfavorable LED mix shifts, and margin erosion from production
problems. We eliminated Marvell and Cree and continue to hold St. Jude Medical.
Cisco Systems (Information Technology) also detracted from relative performance
as we did own the stock in the second half of the year when the company's shares
rebounded. Finally, the Fund's slight underweight to Energy also hurt
benchmark-relative performance.
WHAT IS YOUR OUTLOOK?
We maintain our expectations for stable, albeit moderate global growth over the
coming years. We expect a slowdown in economic activity and easing inflationary
pressures that should keep the global central banks on "hold" over the next
year.
We continue to focus our efforts on picking stocks one-at-a-time based on
detailed fundamental research. Currently our largest exposure is to Information
Technology, followed by Health Care and Industrials. We would note that we have
reduced our exposure to the Energy sector, reflecting our recognition that our
bullish energy view has become more conservative. Our lowest weights are in the
Utilities, Telecommunication Services and Consumer Staples sectors.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 7.6%
- -------------------------------------------------------------------
Capital Goods 2.7
- -------------------------------------------------------------------
Consumer Cyclical 8.9
- -------------------------------------------------------------------
Consumer Staples 2.2
- -------------------------------------------------------------------
Energy 1.9
- -------------------------------------------------------------------
Finance 8.5
- -------------------------------------------------------------------
Health Care 18.2
- -------------------------------------------------------------------
Services 12.3
- -------------------------------------------------------------------
Technology 30.4
- -------------------------------------------------------------------
Transportation 1.0
- -------------------------------------------------------------------
Utilities 2.6
- -------------------------------------------------------------------
Short-Term Investments 11.9
- -------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
4
HARTFORD GLOBAL LEADERS HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 98.5%
BASIC MATERIALS -- 5.7%
341 Cameco Corp. ..................................... $ 13,793
472 Companhia Vale do Rio Doce ADR.................... 14,040
197 Freeport-McMoRan Copper & Gold, Inc. Class B...... 10,990
69 Vallourec (A)..................................... 20,050
218 Xstrata plc (A)................................... 10,854
----------
69,727
----------
CAPITAL GOODS -- 1.8%
248 Boeing Co. ....................................... 21,997
----------
CONSUMER CYCLICAL -- 8.8%
331 Best Buy Co., Inc. ............................... 16,289
3,121 Carphone Warehouse Group plc (A).................. 19,128
464 eBay, Inc. (D).................................... 13,943
98 Nintendo Co. Ltd. (A)............................. 25,319
4,230 Tesco plc (A)..................................... 33,426
----------
108,105
----------
CONSUMER STAPLES -- 6.6%
120 Fomento Economico Mexicano S.A. de C.V. ADR....... 13,891
4 Japan Tobacco, Inc. (A)........................... 17,869
40 Nestle S.A. (A)................................... 14,316
412 Reckitt Benckiser plc (A)......................... 18,780
294 Royal Numico N.V. (A)............................. 15,812
----------
80,668
----------
ENERGY -- 3.7%
123 Noble Corp. ...................................... 9,336
269 RAO Gazprom Class S ADR (K)....................... 12,363
378 Schlumberger Ltd. ................................ 23,862
----------
45,561
----------
FINANCE -- 15.8%
144 Deutsche Boerse AG (A)............................ 26,476
798 E*Trade Financial Corp. (D)....................... 17,889
208 Erste Bank Der Oesterreichischen Sparkassen AG
(A)............................................. 15,939
121 Goldman Sachs Group, Inc. ........................ 24,181
88 KBC Groep N.V. (A)(G)............................. 10,751
2,138 Man Group plc (A)................................. 21,822
59 ORIX Corp. (A)(G) PFIC............................ 17,052
297 Standard Chartered plc (A)........................ 8,649
1 Sumitomo Mitsui Financial Group, Inc. (A)......... 9,245
616 Sumitomo Realty & Development Co., Ltd. (A)(G).... 19,749
352 UBS AG (A)........................................ 21,295
----------
193,048
----------
HEALTH CARE -- 10.2%
132 Celgene Corp. (D)(G).............................. 7,577
401 Eisai Co., Ltd. (A)(G)............................ 22,007
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
877 Elan Corp. plc ADR (D)............................ $ 12,931
387 Monsanto Co. ..................................... 20,334
1,091 Schering-Plough Corp. ............................ 25,791
486 St. Jude Medical, Inc. (D)........................ 17,757
367 Wyeth............................................. 18,688
----------
125,085
----------
SERVICES -- 9.7%
639 Comcast Corp. Class A (D)(G)...................... 27,062
5,391 EMI Group plc (A)................................. 27,952
418 Las Vegas Sands Corp. (D)......................... 37,358
153 United Parcel Service, Inc. Class B............... 11,494
629 Warner Music Group Corp. ......................... 14,440
----------
118,306
----------
TECHNOLOGY -- 34.8%
873 ABB Ltd. (A)...................................... 15,630
703 Activision, Inc. (D).............................. 12,115
611 Adobe Systems, Inc. (D)........................... 25,133
549 America Movil S.A. de C.V. ADR.................... 24,844
757 American Tower Corp. Class A (D).................. 28,206
597 ASML Holding N.V. (D)(A).......................... 14,726
627 Brambles Ltd. (D)(A).............................. 6,329
437 Broadcom Corp. Class A (D)........................ 14,116
852 Cisco Systems, Inc. (D)........................... 23,285
883 Corning, Inc. (D)................................. 16,523
212 Danaher Corp. .................................... 15,365
1,133 EMC Corp. (D)..................................... 14,950
78 Google, Inc. (D).................................. 35,917
524 Hewlett-Packard Co. .............................. 21,579
2,370 Hon Hai Precision Industry Co., Ltd. (A).......... 16,866
683 Intel Corp. ...................................... 13,839
447 Motorola, Inc. ................................... 9,196
455 Network Appliance, Inc. (D)....................... 17,888
717 Oracle Corp. (D).................................. 12,295
33 Rakuten, Inc. (D)(A)(G)........................... 15,604
150 Research In Motion Ltd. (D)....................... 19,103
23 Samsung Electronics Co., Ltd. (A)................. 15,361
349 SanDisk Corp. (D)................................. 15,009
874 Sharp Corp. (A)(G)................................ 15,028
356 Telenor ASA (A)................................... 6,669
----------
425,576
----------
TRANSPORTATION -- 1.0%
143 Ryanair Holdings plc ADR (D)(G)................... 11,687
----------
UTILITIES -- 0.4%
67 Veolia Environment S.A. (A)....................... 5,097
----------
Total common stock
(cost $1,002,968)............................... $1,204,857
----------
</Table>
The accompanying notes are an integral part of these financial statements.
5
HARTFORD GLOBAL LEADERS HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT VALUE W
- --------- ----------
SHORT-TERM INVESTMENTS -- 9.7%
REPURCHASE AGREEMENTS -- 0.7%
$ 1,801 Banc of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 1,801
2,483 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 2,483
27 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 27
1,554 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 1,554
531 Morgan Stanley & Co., Inc. TriParty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 531
1,554 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 1,554
----------
7,950
----------
<Caption>
SHARES
- ---------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 9.0%
110,395 Navigator Prime Portfolio......................... $ 110,395
----------
Total short-term investments
(cost $118,345)................................. $ 118,345
----------
Total investments in securities
(cost $1,121,313) (C)........................... $1,323,202
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 51.88% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $487,801, which represents 39.90% of total net assets.
<Table>
PFIC -- Passive Foreign Investment Company
</Table>
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,133,658 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation................................ $200,569
Unrealized depreciation................................ (11,025)
--------
Net unrealized appreciation............................ $189,544
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(K) Securities contain some restrictions as to public resale. These
securities comply with Regulation S, rules governing offers and sales made
outside the United States without registration under the Securities Act of
1933, and are determined to be liquid. At December 31, 2006, the market
value of these securities amounted to $12,363 or 1.01% of net assets.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
DIVERSIFICATION BY COUNTRY
As of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
COUNTRY NET ASSETS
- ------------------------------------------------------------------
Australia 0.5%
- ------------------------------------------------------------------
Austria 1.3
- ------------------------------------------------------------------
Belgium 0.9
- ------------------------------------------------------------------
Brazil 1.1
- ------------------------------------------------------------------
Canada 2.7
- ------------------------------------------------------------------
Dutch Antilles 1.9
- ------------------------------------------------------------------
France 2.1
- ------------------------------------------------------------------
Germany 2.2
- ------------------------------------------------------------------
Ireland 2.0
- ------------------------------------------------------------------
Japan 11.6
- ------------------------------------------------------------------
Mexico 3.2
- ------------------------------------------------------------------
Netherlands 2.5
- ------------------------------------------------------------------
Norway 0.5
- ------------------------------------------------------------------
Russia 1.0
- ------------------------------------------------------------------
South Korea 1.3
- ------------------------------------------------------------------
Switzerland 4.2
- ------------------------------------------------------------------
Taiwan 1.4
- ------------------------------------------------------------------
United Kingdom 11.5
- ------------------------------------------------------------------
United States 46.6
- ------------------------------------------------------------------
Short-Term Investments 9.7
- ------------------------------------------------------------------
Other Assets & Liabilities (8.2)
- ------------------------------------------------------------------
TOTAL 100.0%
- ------------------------------------------------------------------
</Table>
The accompanying notes are an integral part of these financial statements.
6
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
MARKET CONTRACT DELIVERY APPRECIATION
DESCRIPTION TRANSACTION VALUE AMOUNT DATE (DEPRECIATION)
- ----------- ----------- ------ -------- -------- --------------
British Pound Sell $2,660 $2,658 1/2/2007 $ (2)
British Pound Sell 3,497 3,508 1/3/2007 11
British Pound Sell 2,756 2,755 1/4/2007 (1)
Euro Sell 3,133 3,116 1/2/2007 (17)
Euro Sell 1,584 1,579 1/3/2007 (5)
Euro Buy 306 306 1/4/2007 --
Hong Kong Dollar Sell 367 367 1/2/2007 --
Japanese Yen Buy 815 817 1/5/2007 (2)
----
$(16)
====
</Table>
The accompanying notes are an integral part of these financial statements.
7
HARTFORD GROWTH OPPORTUNITIES HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 96.3%
BASIC MATERIALS -- 7.6%
459 Cameco Corp. ..................................... $ 18,558
666 Companhia Vale do Rio Doce ADR.................... 19,810
213 Freeport-McMoRan Copper & Gold, Inc. Class B
(G)............................................. 11,865
517 Jarden Corp. (D).................................. 17,991
133 Potash Corp. of Saskatchewan...................... 19,083
55 Rio Tinto plc ADR................................. 11,772
----------
99,079
----------
CAPITAL GOODS -- 2.7%
217 Boeing Co. (G).................................... 19,314
314 Joy Global, Inc. ................................. 15,193
----------
34,507
----------
CONSUMER CYCLICAL -- 8.9%
153 Altria Group, Inc. ............................... 13,166
398 California Pizza Kitchen, Inc. (D)................ 13,264
190 Children's Place Retail Stores, Inc. (D).......... 12,062
295 Foster Wheeler Ltd. (D)........................... 16,261
383 Hot Topic, Inc. (D)............................... 5,113
364 Kohl's Corp. (D).................................. 24,888
611 Mosaic Co. (D).................................... 13,053
451 Tiffany & Co. (G)................................. 17,685
----------
115,492
----------
CONSUMER STAPLES -- 2.2%
59 Avon Products, Inc. .............................. 1,936
223 Bunge Ltd. ....................................... 16,191
625 Tyson Foods, Inc. Class A......................... 10,281
----------
28,408
----------
ENERGY -- 1.9%
408 Chesapeake Energy Corp. .......................... 11,852
426 Halliburton Co. .................................. 13,238
----------
25,090
----------
FINANCE -- 8.5%
188 Covanta Holding Corp. (D)......................... 4,148
336 Dade Behring Holdings, Inc. ...................... 13,380
717 E*Trade Financial Corp. (D)....................... 16,080
512 Nasdaq Stock Market, Inc. (D)..................... 15,768
333 Nuveen Investments, Inc. Class A.................. 17,256
243 State Street Corp. ............................... 16,374
200 UBS AG............................................ 12,090
684 Western Union Co.................................. 15,338
----------
110,434
----------
HEALTH CARE -- 18.2%
410 Alkermes, Inc. (D)................................ 5,480
339 Amylin Pharmaceuticals, Inc. (D).................. 12,231
251 Astellas Pharma, Inc. (A)......................... 11,391
270 AtheroGenics, Inc. (D)(G)......................... 2,673
458 Auxilium Pharmaceuticals, Inc. (D)(G)............. 6,729
265 Cephalon, Inc. (D)(G)............................. 18,623
228 Charles River Laboratories International, Inc.
(D)............................................. 9,852
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
HEALTH CARE -- (CONTINUED)
106 Covance, Inc. (D)................................. $ 6,256
322 Digene Corp. (D).................................. 15,413
234 Eisai Co., Ltd. (A)............................... 12,838
591 Elan Corp. plc ADR (D)(G)......................... 8,714
243 Eli Lilly & Co. .................................. 12,660
147 Encysive Pharmaceuticals, Inc. (D)(G)............. 619
252 Forest Laboratories, Inc. (D)..................... 12,756
239 Kyphon, Inc. (D)(G)............................... 9,664
209 Medicines Co. (D)................................. 6,617
290 Merck & Co., Inc. ................................ 12,649
279 Pharmaceutical Product Development, Inc. ......... 8,986
1,232 Schering-Plough Corp. ............................ 29,128
793 Shionogi & Co., Ltd. (A).......................... 15,578
366 St. Jude Medical, Inc. (D)........................ 13,377
127 Vertex Pharmaceuticals, Inc. (D).................. 4,752
----------
236,986
----------
SERVICES -- 12.3%
509 Allied Waste Industries, Inc. (D)................. 6,256
182 Corporate Executive Board Co. .................... 15,996
559 DreamWorks Animation SKG, Inc. (D)................ 16,473
352 Equifax, Inc. (D)................................. 14,303
182 Fluor Corp. ...................................... 14,819
269 Focus Media Holding Ltd. ADR (D).................. 17,839
193 Manpower, Inc. ................................... 14,491
426 MoneyGram International, Inc. .................... 13,351
184 Stericycle, Inc. (D).............................. 13,922
915 Tetra Technologies, Inc. (D)...................... 16,554
478 Walt Disney Co. .................................. 16,364
----------
160,368
----------
TECHNOLOGY -- 30.4%
1,475 Activision, Inc. (D).............................. 25,429
566 Adobe Systems, Inc. (D)........................... 23,257
296 Amdocs Ltd. (D)................................... 11,482
336 American Tower Corp. Class A (D).................. 12,534
147 Baidu.com ADR (D)(G).............................. 16,536
392 Broadcom Corp. Class A (D)........................ 12,678
1,076 Corning, Inc. (D)................................. 20,126
593 General Electric Co. ............................. 22,054
34 Google, Inc. (D).................................. 15,656
490 Hewlett-Packard Co. .............................. 20,200
295 Leap Wireless International, Inc. (D)............. 17,526
452 Medtronic, Inc. .................................. 24,198
679 Microsoft Corp. .................................. 20,276
1,880 Move, Inc. (D).................................... 10,359
968 Network Appliance, Inc. (D)....................... 38,003
262 NVIDIA Corp. (D).................................. 9,711
1,362 O2Micro International Ltd. ADR (D)................ 11,649
942 Oracle Corp. (D).................................. 16,142
372 Red Hat, Inc. (D)................................. 8,563
21 Samsung Electronics Co., Ltd. (A)................. 13,591
2,920 Tencent Holdings Ltd. (A)......................... 10,367
720 VeriFone Holdings, Inc. (D)(G).................... 25,495
289 Verint Systems, Inc. (D).......................... 9,907
----------
395,739
----------
</Table>
The accompanying notes are an integral part of these financial statements.
8
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TRANSPORTATION -- 1.0%
446 GOL Linhas Aereas Inteligentes S.A. ADR (G)....... $ 12,778
----------
UTILITIES -- 2.6%
510 Suntech Power Holdings Co. Ltd. ADR (D)(G)........ 17,342
216 Veolia Environnment S.A. (A)(G)................... 16,460
----------
33,802
----------
Total common stock
(cost $1,065,520)............................... $1,252,683
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 11.9%
REPURCHASE AGREEMENTS -- 3.1%
$ 9,245 Bank of America Securities TriParty Joint
Repurchase Agreement,
5.31%, 01/02/2007............................... $ 9,245
12,748 BNP Paribas TriParty Joint Repurchase Agreement,
5.31%, 01/02/2007............................... 12,748
138 Deutsche Bank Securities Joint Repurchase
Agreement,
4.80%, 01/02/2007............................... 138
7,980 Deutsche Bank Securities TriParty Joint Repurchase
Agreement,
5.30%, 01/02/2007............................... 7,980
2,725 Morgan Stanley & Co., Inc. Triparty Joint
Repurchase Agreement,
5.30%, 01/02/2007............................... 2,725
7,980 UBS Securities TriParty Joint Repurchase
Agreement,
5.31%, 01/02/2007............................... 7,980
----------
40,816
----------
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE W
- --------- ----------
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 8.8%
114,640 BNY Institutional Cash Reserve Fund............... $ 114,640
----------
Total short-term investments
(cost $155,456)................................. $ 155,456
----------
Total investments in securities
(cost $1,220,976) (C)........................... $1,408,139
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 15.97% of total net assets at December 31, 2006.
(A)The aggregate value of securities valued in good faith at fair value
by, or under the direction of, the Funds' Board of Directors at December
31, 2006, was $80,225, which represents 6.16% of total net assets.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,224,698 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation........................ $199,387
Unrealized depreciation........................ (15,946)
--------
Net unrealized appreciation.................... $183,441
========
</Table>
(D)Currently non-income producing.
(G) Security is partially on loan at December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
9
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- 1.3%
$25,345 Wal-Mart Stores, Inc. (L)......................... 5.26% 03/28/2007 $ 25,342
----------
CONSUMER STAPLES -- 3.7%
22,080 Alcoa, Inc. ...................................... 5.30% 01/24/2007 22,006
22,000 Alcoa, Inc. ...................................... 5.32% 02/15/2007 21,855
25,000 Stadshypotek...................................... 5.26% 01/22/2007 24,924
----------
68,785
----------
FINANCE -- 94.9%
25,000 Ab Spin Tab Swedmortgage.......................... 5.27% 01/29/2007 24,898
25,000 Ab Spin Tab Swedmortgage.......................... 5.28% 01/30/2007 24,894
25,000 Alliance & Leicester plc.......................... 5.29% 03/02/2007 24,785
21,000 Alliance & Leicester plc.......................... 5.36% 03/20/2007 20,761
25,000 American Express Credit Corp. (L)................. 5.35% 06/12/2007 25,002
24,500 American General Finance Corp. ................... 5.29% 01/10/2007 24,468
21,200 American General Finance Corp. (L)................ 5.40% 03/23/2007 21,203
22,900 American Honda Finance Corp. ..................... 5.27% 02/05/2007 22,783
26,500 American Honda Finance Corp. (I)(L)............... 5.35% 08/08/2007 26,500
30,920 Amsterdam Funding Corp. .......................... 5.27% 02/02/2007 30,776
27,210 Amsterdam Funding Corp. .......................... 5.28% 01/18/2007 27,142
21,700 Bank of America NA (L)............................ 5.32% 05/15/2007 21,851
26,500 Bank of America NA (L)............................ 5.36% 11/08/2007 26,500
32,750 Barton Capital Corp. ............................. 5.26% 01/12/2007 32,697
25,000 Barton Capital Corp. ............................. 5.27% 01/11/2007 24,963
8,600 Barton Capital Corp. ............................. 5.27% 01/17/2007 8,580
22,000 Bear Stearns & Co., Inc. (L)...................... 5.34% 01/14/2008 22,000
22,100 Bear Stearns & Co., Inc. (L)...................... 5.38% 06/29/2007 22,397
22,000 Bradford & Bingley plc............................ 5.30% 02/12/2007 21,865
21,900 Bradford & Bingley plc............................ 5.34% 02/20/2007 21,743
23,400 Britannia Building Society........................ 5.28% 01/31/2007 23,297
21,900 Britannia Building Society........................ 5.31% 02/27/2007 21,717
25,000 Cafco LLC......................................... 5.28% 01/25/2007 24,912
33,400 Cafco LLC......................................... 5.28% 01/30/2007 33,258
44,000 Caterpillar Financial Services Corp. (L).......... 5.39% 07/27/2007 44,006
25,620 Citibank NA (L)................................... 5.32% 02/14/2007 25,620
25,620 Citibank NA (L)................................... 5.32% 02/22/2007 25,620
19,200 Citigroup Funding, Inc. .......................... 5.27% 01/26/2007 19,130
21,120 Countrywide Financial Corp. ...................... 5.30% 01/16/2007 21,073
22,000 Countrywide Financial Corp. ...................... 5.31% 01/02/2007 21,997
20,000 General Electric Capital Corp. ................... 5.26% 01/26/2007 19,927
</Table>
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
FINANCE -- (CONTINUED)
$19,400 General Electric Capital Corp. (L)................ 5.31% 12/24/2007 $ 19,400
34,400 General Electric Capital Corp. (L)................ 5.45% 01/05/2007 34,400
49,580 Goldman Sachs Group, Inc. (L)..................... 5.46% 03/30/2007 49,599
24,300 HBOS Treasury Services plc........................ 5.28% 02/06/2007 24,172
26,440 HBOS Treasury Services plc (I)(L)................. 5.32% 01/09/2008 26,436
22,500 HSBC Finance Corp. (L)............................ 5.34% 01/04/2008 22,500
26,750 HSBC Finance Corp. ............................... 5.36% 03/16/2007 26,462
26,200 JP Morgan Chase & Co. (L)......................... 5.32% 01/02/2008 26,200
44,000 Lehman Brothers Holdings, Inc. (L)................ 5.40% 05/31/2007 44,015
22,000 Merrill Lynch & Co. (L)........................... 5.33% 12/24/2007 22,000
26,900 Merrill Lynch & Co. (L)........................... 5.36% 05/29/2007 26,899
25,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.43% 06/26/2007 25,011
23,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.48% 01/19/2007 23,001
25,000 Nationwide Building Society (I)................... 5.27% 01/25/2007 24,912
25,000 Nationwide Building Society (I)................... 5.28% 01/29/2007 24,898
21,700 Nordea Bank Ab (I)(L)............................. 5.33% 01/09/2008 21,700
25,000 Northern Rock plc................................. 5.28% 01/30/2007 24,894
25,000 Northern Rock plc................................. 5.30% 03/06/2007 24,766
32,500 Old Line Funding LLC.............................. 5.29% 02/08/2007 32,319
26,520 Old Line Funding LLC.............................. 5.33% 02/07/2007 26,376
33,500 Sheffield Receivables............................. 5.27% 01/18/2007 33,417
31,500 Sheffield Receivables............................. 5.30% 01/16/2007 31,431
22,030 Skandinaviska Enskilda Bank NY (I)(L)............. 5.31% 07/19/2007 22,029
21,600 Skandinaviska Enskilda Bank NY (I)(L)............. 5.34% 01/09/2008 21,600
21,700 SLM Corp. (I)(L).................................. 5.35% 01/11/2008 21,700
18,135 SLM Corp. (L)..................................... 5.50% 01/25/2007 18,137
24,600 Svenska Handelsbanken Ab.......................... 5.30% 03/19/2007 24,327
53,000 Toyota Motor Credit Corp. (L)..................... 5.21% 09/24/2007 53,000
22,000 Toyota Motor Credit Corp. ........................ 5.27% 02/07/2007 21,882
19,356 Triple A-1 Funding................................ 5.30% 01/09/2007 19,333
26,379 UBS Finance LLC................................... 5.27% 01/02/2007 26,375
23,700 UBS Finance LLC................................... 5.27% 01/05/2007 23,686
24,680 Washington Mutual Bank FA (L)..................... 5.35% 08/27/2007 24,680
21,135 Washington Mutual Bank FA (L)..................... 5.41% 02/28/2007 21,137
22,000 Wells Fargo & Co. (L)............................. 5.42% 03/23/2007 22,005
10,200 Westpac Banking Corp. ............................ 5.29% 02/06/2007 10,146
21,600 Westpac Banking Corp. (I)(L)...................... 5.32% 01/16/2008 21,600
20,700 Yorktown Capital.................................. 5.27% 01/09/2007 20,676
</Table>
The accompanying notes are an integral part of these financial statements.
10
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
FINANCE -- (CONTINUED)
$17,500 Yorktown Capital.................................. 5.31% 02/15/2007 $ 17,386
22,000 Yorktown Capital.................................. 5.33% 02/21/2007 21,836
----------
$1,782,708
----------
Total investments in securities
(cost $1,876,835) (C)........................... $1,876,835
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 6.04% of total net assets at December 31, 2006.
(C)Also represents cost for federal tax purposes.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $211,375, which represents 11.25% of total net
assets.
(L)Variable rate securities; the yield reported is the rate in effect at
December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
11
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD GROWTH HARTFORD
GLOBAL LEADERS OPPORTUNITIES MONEY MARKET
HLS FUND HLS FUND HLS FUND
-------------- ------------- ------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $1,323,202 $1,408,139 $1,876,835
Cash...................................................... -- -- 114
Foreign currency on deposit with custodian#............... 444 -- --
Unrealized appreciation on forward foreign currency
contracts............................................... 11 -- --
Receivables:
Investment securities sold.............................. 19,459 13,009 --
Fund shares sold........................................ 414 308 11,129
Dividends and interest.................................. 273 971 3,499
Other assets.............................................. 8 6 8
---------- ---------- ----------
Total assets................................................ 1,343,811 1,422,433 1,891,585
---------- ---------- ----------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts............................................... 27 -- --
Bank overdraft -- U.S. Dollars............................ -- 605 --
Payable upon return of securities loaned.................. 110,395 114,640 --
Payables:
Investment securities purchased......................... 9,743 4,086 --
Fund shares redeemed.................................... 826 1,433 12,922
Investment management and advisory fees................. 83 109 64
Administrative services fee............................. 34 -- 51
Distribution fees....................................... 10 7 11
Accrued expenses.......................................... 152 166 178
---------- ---------- ----------
Total liabilities........................................... 121,270 121,046 13,226
---------- ---------- ----------
Net assets.................................................. $1,222,541 $1,301,387 $1,878,359
========== ========== ==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $ 999,811 $1,088,607 $1,878,359
Accumulated undistributed (distribution in excess of) net
investment income......................................... (2,425) 389 --
Accumulated net realized gain (loss) on investments and
foreign currency transactions............................. 23,256 25,228 --
Unrealized appreciation (depreciation) of investments and
the translations of assets and liabilities denominated in
foreign currency.......................................... 201,899 187,163 --
---------- ---------- ----------
Net assets.................................................. $1,222,541 $1,301,387 $1,878,359
========== ========== ==========
Shares authorized........................................... 3,400,000 700,000 7,000,000
---------- ---------- ----------
Par value................................................... $ 0.001 $ 0.001 $ 0.001
---------- ---------- ----------
CLASS IA: Net asset value per share......................... $ 20.09 $ 30.13 $ 1.00
---------- ---------- ----------
Shares outstanding................................. 46,902 36,628 1,558,433
---------- ---------- ----------
Net assets......................................... $ 942,258 $1,103,590 $1,558,433
---------- ---------- ----------
CLASS IB: Net asset value per share......................... $ 20.02 $ 29.90 $ 1.00
---------- ---------- ----------
Shares outstanding................................. 14,003 6,616 319,926
---------- ---------- ----------
Net assets......................................... $ 280,283 $ 197,797 $ 319,926
---------- ---------- ----------
@ Cost of securities........................................ $1,121,313 $1,220,976 $1,876,835
---------- ---------- ----------
@ Market value of securities on loan........................ $ 106,045 $ 111,630 $ --
---------- ---------- ----------
# Cost of foreign currency on deposit with custodian........ $ 448 $ -- $ --
---------- ---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
12
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD HARTFORD
GLOBAL GROWTH HARTFORD
LEADERS OPPORTUNITIES MONEY MARKET
HLS FUND HLS FUND HLS FUND
---------- ------------- ------------
INVESTMENT INCOME:
Dividends................................................. $ 14,656 $ 14,732 $ --
Interest.................................................. 1,001 1,017 90,349
Securities lending........................................ 440 1,416 --
Less: foreign tax withheld................................ (1,287) (380) --
-------- -------- -------
Total investment income, net............................ 14,810 16,785 90,349
-------- -------- -------
EXPENSES:
Investment management and advisory fees................... 6,040 7,629 4,419
Administrative services fees.............................. 2,431 -- 3,535
Distribution fees -- Class IB............................. 697 474 747
Custodian fees............................................ 342 236 10
Accounting services....................................... 182 -- 265
Board of Directors' fees.................................. 21 18 27
Other expenses............................................ 216 291 313
-------- -------- -------
Total expenses (before waivers and fees paid
indirectly)........................................... 9,929 8,648 9,316
Commission recapture...................................... (260) (271) --
Custodian fee offset...................................... (3) (11) (5)
-------- -------- -------
Total waivers and fees paid indirectly.................. (263) (282) (5)
-------- -------- -------
Total expenses, net..................................... 9,666 8,366 9,311
-------- -------- -------
Net investment income..................................... 5,144 8,419 81,038
-------- -------- -------
NET REALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain on investments.......................... 80,825 124,772 1
Net realized gain on foreign currency transactions........ (661) 22 --
-------- -------- -------
NET REALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS.............................................. 80,164 124,794 1
-------- -------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net unrealized appreciation of investments................ 70,983 3,809 --
Net unrealized appreciation (depreciation) on translation
of other assets and liabilities in foreign currencies... 6 (4) --
-------- -------- -------
NET CHANGES IN UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS............. 70,989 3,805 --
-------- -------- -------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS... 151,153 128,599 1
-------- -------- -------
PAYMENTS FROM AFFILIATE (SEE NOTE 3G IN ACCOMPANYING NOTES
TO FINANCIAL STATEMENTS).................................. 3,344 1,098 --
-------- -------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $159,641 $138,116 $81,039
======== ======== =======
</Table>
The accompanying notes are an integral part of these financial statements.
13
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
HARTFORD GROWTH OPPORTUNITIES
GLOBAL LEADERS HLS FUND HLS FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2006 2005 2006 2005
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income..................................... $ 5,144 $ 8,291 $ 8,419 $ 2,979
Net realized gain on investments and foreign currency
transactions............................................ 80,164 77,137 124,794 131,569
Net unrealized appreciation (depreciation) of investments
and foreign currency transactions....................... 70,989 (57,471) 3,805 28,121
Payments from affiliate................................... 3,344 -- 1,098 1,140
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations...... 159,641 27,957 138,116 163,809
---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (7,210) (7,384) (8,100) (1,991)
Class IB................................................ (1,211) (1,309) (884) --
From net realized gain on investments
Class IA................................................ (50,448) -- (108,948) (62,345)
Class IB................................................ (15,059) -- (19,575) (11,118)
---------- ---------- ---------- ----------
Total distributions..................................... (73,928) (8,693) (137,507) (75,454)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 75,692 75,573 188,777 320,008
Issued on reinvestment of distributions............... 57,658 7,384 117,049 64,336
Redeemed.............................................. (192,502) (165,723) (216,061) (295,764)
---------- ---------- ---------- ----------
Total capital share transactions........................ (59,152) (82,766) 89,765 88,580
---------- ---------- ---------- ----------
Class IB
Sold.................................................. 21,219 47,667 49,911 67,825
Issued on reinvestment of distributions............... 16,270 1,309 20,458 11,118
Redeemed.............................................. (57,098) (47,937) (51,438) (25,366)
---------- ---------- ---------- ----------
Total capital share transactions........................ (19,609) 1,039 18,931 53,577
---------- ---------- ---------- ----------
Net increase (decrease) from capital share transactions... (78,761) (81,727) 108,696 142,157
---------- ---------- ---------- ----------
Net increase (decrease) in net assets..................... 6,952 (62,463) 109,305 230,512
NET ASSETS:
Beginning of period....................................... 1,215,589 1,278,052 1,192,082 961,570
---------- ---------- ---------- ----------
End of period............................................. $1,222,541 $1,215,589 $1,301,387 $1,192,082
========== ========== ========== ==========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ (2,425) $ 845 $ 389 $ 717
========== ========== ========== ==========
SHARE ACTIVITY:
Class IA
Sold.................................................. 3,866 4,330 6,073 11,178
Issued on reinvestment of distributions............... 2,895 404 3,934 2,155
Redeemed.............................................. (9,779) (9,391) (7,054) (10,378)
---------- ---------- ---------- ----------
Total share activity.................................... (3,018) (4,657) 2,953 2,955
---------- ---------- ---------- ----------
Class IB
Sold.................................................. 1,077 2,759 1,621 2,434
Issued on reinvestment of distributions............... 819 72 693 375
Redeemed.............................................. (2,902) (2,736) (1,706) (915)
---------- ---------- ---------- ----------
Total share activity.................................... (1,006) 95 608 1,894
---------- ---------- ---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
14
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
MONEY MARKET HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
$ 81,038 $ 44,998
1 3
-- --
-- --
---------- ----------
81,039 45,001
---------- ----------
(67,958) (38,276)
(13,080) (6,722)
(1) (2)
-- (1)
---------- ----------
(81,039) (45,001)
---------- ----------
1,780,507 4,751,573
68,099 41,530
(1,644,009) (4,733,793)
---------- ----------
204,597 59,310
---------- ----------
300,900 237,251
13,111 7,288
(258,125) (233,306)
---------- ----------
55,886 11,233
---------- ----------
260,483 70,543
---------- ----------
260,483 70,543
1,617,876 1,547,333
---------- ----------
$1,878,359 $1,617,876
========== ==========
$ -- $ --
========== ==========
1,780,507 4,751,573
68,099 41,530
(1,644,009) (4,733,793)
---------- ----------
204,597 59,310
---------- ----------
300,900 237,251
13,111 7,288
(258,125) (233,306)
---------- ----------
55,886 11,233
---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
15
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
The Hartford HLS Funds serve as underlying investment vehicles for certain
variable annuity and variable life insurance separate accounts of Hartford
Life Insurance Company ("HLIC") and its affiliates and certain qualified
retirement plans. Certain Hartford HLS Funds may also serve as underlying
investment options for certain variable annuity and variable life separate
accounts of other insurance companies. Owners of variable annuity contracts
and policyholders of variable life insurance contracts may choose the funds
permitted in the accompanying variable insurance contract prospectus. In
addition, participants in certain qualified retirement plans may choose the
funds permitted by their plans.
Hartford Series Fund, Inc. is comprised of twenty-six portfolios (two are
included here; they are Hartford Global Leaders HLS Fund and Hartford Money
Market HLS Fund) and Hartford HLS Series Fund II, Inc. is comprised of ten
portfolios (one is included here: it is Hartford Growth Opportunities HLS
Fund) each a "Fund" or together the "Funds" (the "Companies"). The Companies
are organized under the laws of the State of Maryland and are registered
with the Securities and Exchange Commission ("SEC") under the Investment
Company Act of 1940, as amended ("1940 Act"), as diversified open-end
management investment companies.
Each Fund is divided into Class IA and Class IB shares. Each class is
offered at net asset value without a sales charge and is subject to the same
expenses, except that the Class IB shares are subject to distribution fees
charged pursuant to Distribution and Service Plans. These Distribution and
Service Plans have been adopted in accordance with Rule 12b-1 of the 1940
Act.
Indemnifications: Under the Funds' organizational documents, their
directors and officers are indemnified against certain liabilities arising
out of the performance of their duties to the Funds. In addition, the Funds'
enter into contracts that contain a variety of indemnifications. The Funds'
maximum exposure under these arrangements is unknown. However, the Funds
have not had prior claims or losses pursuant to these contracts and expect
the risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost. Trade date for
senior floating rate interests purchased in the primary market is
considered the date on which the loan allocations are determined. Trade
date for senior floating rate interests purchased in the secondary
market is the date on which the transaction is entered into.
b) Security Valuation and Investment Income -- Except for Hartford Money
Market HLS Fund, the Funds generally use market prices in valuing
portfolio securities. If market quotations are not readily available or
are deemed unreliable, a Fund will use the fair value of the security as
determined in good faith under policies and procedures established by
and under the supervision of that Fund's Board of Directors. Market
prices may be deemed unreliable, for example, if a security is thinly
traded or if an event has occurred after the close of the exchange on
which a portfolio security is primarily traded but before the close of
the New York Stock Exchange (the "Exchange") (normally 4:00 p.m. Eastern
Time, referred to as the "Valuation Time") that is expected to affect
the value of the portfolio security. The circumstances in which a Fund
may use fair value pricing include, among others: (i) the occurrence of
events that are significant to a particular issuer, such as mergers,
restructuring or defaults; (ii) the occurrence of events that are
significant to an entire market, such as natural disasters in a
particular region or governmental actions; (iii) trading restrictions on
securities; (iv) thinly traded securities and (v) market events such as
trading halts and early market closings. In addition, with respect to
the valuation of securities primarily traded on foreign markets, each
Fund uses a fair value pricing service approved by that Fund's Board of
Directors which employs quantitative models to adjust for "stale" prices
caused by the movement of other markets and other factors occurring
after the close of the foreign markets but before the close of the
Exchange. Securities that are primarily traded on foreign markets may
trade on days that are not business days of the Funds. Because the NAV
of each Fund's shares is determined only on business days of the Funds,
the value of the portfolio securities of a Fund that invests in foreign
securities may change on days when a shareholder will not be able to
purchase or redeem shares of the Funds. Fair value pricing is subjective
in nature and the use of fair value pricing by the Funds may cause the
net asset value of their respective shares to differ significantly from
the net asset value that would have been calculated using market prices
at the close of the exchange on which a portfolio security is primarily
traded but before the close of the Exchange. There can be no assurance
that any Fund could obtain the fair value assigned to a security if the
Fund were to sell the security at approximately the time at which that
Fund determines its NAV per share.
Debt securities (other than short-term investments and Senior Floating
Rate Interests), held by a Fund 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. Senior
Floating Rate Interests generally trade in over-the-counter markets and
are priced through an unaffiliated pricing service utilizing independent
market quotations from loan dealers or financial institutions.
Securities for which prices are not available from an independent
pricing service, but where an active market exists, are valued using
market quotations obtained from one or more dealers that make markets in
securities or from a widely-used quotation system in accordance with
procedures established by that Fund's Board of Directors. Generally,
each Fund may use fair valuation in regards to debt securities when a
Fund holds defaulted or distressed securities or securities in a company
in which reorganization is pending. Short term investments with a
maturity of more than 60 days when purchased are valued based on market
quotations until the remaining days to maturity become less than 61
days. The Hartford Money Market HLS Fund's investments and investments
that mature in 60 days or less are valued at amortized cost, which
approximates market value.
Exchange traded equity securities shall be valued at the last reported
sale price on the exchange or market on which the security is primarily
traded (the "Primary Market") at the Valuation Time. If the security did
not trade on the Primary Market, it may be valued at the Valuation
16
- --------------------------------------------------------------------------------
Time at the last reported sale price on another exchange where it trades.
The value of an equity security not traded on any exchange but traded on
the Nasdaq Stock Market, Inc. System ("Nasdaq") or another
over-the-counter ("OTC") market shall be valued at the last reported sale
price or official closing price on the exchange or market on which the
security is primarily traded as of the Valuation Time. If it is not
possible to determine the last reported sale price or official closing
price on the relevant exchange or market at the Valuation Time, the value
of the security shall be the most recent bid quotation on such exchange
or market at the Valuation Time.
Securities of foreign issuers and non-dollar securities are translated
from the local currency into U.S. dollars using prevailing exchange
rates.
Options contracts on securities, currencies, indexes, futures contracts,
commodities and other instruments shall be valued at their most recent
sales price at the Valuation Time on the Primary Market on which the
instrument is traded. If the instrument did not trade on the Primary
Market, it may be valued at the most recent sales price at the Valuation
Time on another exchange or market where it did trade.
Futures contracts shall be valued at the final settlement price reported
by the applicable futures exchange. If there were no trades as of the
valuation day, then the contract shall be valued at the closing bid
price as of the Valuation Time.
Financial instruments for which prices are not available from an
independent pricing service, but where an active market exists, are
valued using market quotations obtained from one or more dealers that
make markets in securities or from a widely-used quotation system in
accordance with procedures established by that Fund's Board of
Directors.
A forward currency contract shall be valued based on the price of the
underlying currency at the prevailing interpolated exchange rate, which
is a combination of the spot currency rate and the forward currency
rate. Spot currency rates and forward currency rates are obtained from
an independent pricing service on a daily basis not more than one hour
before the Valuation Time. In the event that the applicable pricing
service cannot provide the spot currency rates and forward currency
rates in a timely fashion, such rates may be obtained from a widely-used
quotation system in accordance with procedures established by that
Fund's Board of Directors.
Swaps and other derivative or contractual type instruments shall be
valued using market prices if such instruments trade on an exchange or
market. If such instruments do not trade on an exchange or market, such
instruments shall be valued at a price at which the counterparty to such
contract would repurchase the instrument. In the event that the
counterparty cannot provide a price, such valuation may be determined in
accordance with procedures established by the Fund's Board of Directors.
Dividend income is accrued as of the ex-dividend date, except that
certain dividends for foreign securities where the ex-dividend date may
have passed are recorded as soon as the Fund is informed of the dividend
in the exercise of reasonable diligence. Interest income, including
amortization of premium and accretion of discounts, is accrued on a
daily basis.
c) Foreign Currency Transactions -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of portfolio security valuation
resulting from fluctuations in the foreign currency exchange rates on
portfolio securities from the fluctuations arising from changes in the
market prices of securities held. Such fluctuations are included within
the net realized and unrealized gain or loss on investments in the
accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability
amounts initially stated in foreign currencies and the U.S. dollar value
of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of other assets
and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
d) Securities Lending -- The Funds, except for the Hartford Money Market
HLS Fund, may lend their securities to certain qualified brokers who pay
these Funds negotiated lender fees. The loans are collateralized at all
times with cash, which is then invested in short-term money market
instruments or U.S. government securities with a market value at least
equal to the market value of the securities on loan. The adequacy of the
collateral for securities on loan is monitored on a daily basis. For
instances where the market value of collateral falls below the market
value of the securities out on loan, such collateral is supplemented on
the following day. As with other extensions of credit, these Funds may
bear the risk of delay in recovery of loaned securities or even loss of
rights in the collateral should the borrower of the securities fail
financially.
e) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Funds may transfer uninvested cash balances into a joint
trading account managed by Hartford Investment Management Company
(Hartford Investment Management), a wholly-owned subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford), or Wellington
Management Company LLP (Wellington). These balances may be invested in
one or more repurchase agreements and/or short-term money market
instruments.
f) Repurchase Agreements -- A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that 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 Funds or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable.
17
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
Certain Funds, together with other investment management companies
having investment advisory agreements with Wellington, have an interest
in joint repurchase agreements dated 12/29/06 in the amount of
$2,097,116 due 01/02/07 with the brokers indicated in the table below.
These joint repurchase agreements are collateralized as follows:
<Table>
<Caption>
COLLATERAL COLLATERAL COLLATERAL COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ---- --------- ---------- ------------------ --------------- ------------
Bank of America.......... 5.31% $475,000 $484,500 FNMA 5.00% 2034
BNP Paribas.............. 5.31% 655,000 668,100 FHLMC 5.00% - 5.50% 2035 - 2036
FNMA 5.00% - 6.00% 2020 - 2036
Deutsche Bank............ 4.80% 7,116 7,226 U.S. Treasury Bill 4.825% 2007
Deutsche Bank............ 5.30% 410,000 418,200 FHLMC 4.50% - 8.00% 2116 - 2036
Morgan Stanley........... 5.30% 140,000 142,800 FHLMC 4.00% - 6.50% 2008 - 2046
FNMA 4.50% - 7.06% 2009 - 2046
UBS Securities LLC....... 5.31% 410,000 418,203 FNLMC 4.50% - 8.00% 2007 - 2036
FNMA 4.50% - 6.00% 2018 - 2046
</Table>
The amount to be received upon maturity of each Fund's repurchase
agreement is as follows:
<Table>
<Caption>
MATURITY
FUND AMOUNT
---- --------
Hartford Global Leaders HLS Fund............................ $ 7,955
Hartford Growth Opportunities HLS Fund...................... 40,840
</Table>
g) Futures and Options Transactions -- Certain Funds may invest in futures
and options contracts in order to gain exposure to or protect against
changes in the market. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. When
the Funds enter into futures contracts, they are required to deposit
with a futures commission merchant an amount of initial margin of cash,
commercial paper or U.S. Treasury Bills. Subsequent payments, called
maintenance margin, to and from the broker, are made on a daily basis as
the price of the underlying security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds.
At any time prior to the expiration of the futures contract, a Fund may
close the position by taking an opposite position, which would
effectively 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 use of futures contracts involve elements of market risk, which may
exceed the amounts recognized in the Statements of Assets and
Liabilities. Changes in the value of the futures contracts may decrease
the effectiveness of the Funds' strategies and potentially result in
loss. The Funds had no outstanding futures contracts as of December 31,
2006.
The premium paid by the Funds for the purchase of a call or put option
is included in the Funds' Statements of Assets and Liabilities as an
investment and subsequently "marked-to-market" through net unrealized
appreciation (depreciation) of options to reflect the current market
value of the option as of the end of the reporting period.
The Funds may write covered options. "Covered" means that so long as the
Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option and an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to or greater
than the fluctuating market value of the option securities or
currencies. A Fund receives a premium for writing a call or put option,
which is recorded on the Funds' Statements of Assets and Liabilities and
subsequently "marked-to-market" through net unrealized appreciation
(depreciation) of options. There is a risk of loss from a change in the
value of such options, which may exceed the related premiums received.
These Fund's had no written option contracts during the year ended
December 31, 2006.
h) Forward Foreign Currency Contracts -- At December 31, 2006, certain
Funds, as shown in the Schedule of Investments, entered into forward
foreign currency contracts that obligate the Funds to repurchase/replace
or sell currencies at specified future dates. The Funds enter into
forward foreign currency contracts to hedge against adverse fluctuations
in exchange rates between currencies.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statement of Assets and
Liabilities. In addition, risks may arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of the contracts and from unanticipated movements in the value of
the foreign currencies relative to the U.S. dollar.
i) Indexed Securities -- The Funds may invest in indexed securities whose
values are linked to changes in interest rates, indices, or other
underlying instruments. The Funds use these securities to increase or
decrease their exposure to different underlying instruments and to gain
exposure to markets that might be difficult to invest in using
conventional securities. Indexed securities may be more volatile than
their underlying instruments, but any loss is limited to the amount of
the original investment and there may be a limit to the potential
appreciation of the investment. None of the Funds had investments in
indexed securities as of December 31, 2006.
18
- --------------------------------------------------------------------------------
j) (1) 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 (IRC) by distributing
substantially all of their taxable net investment income and net
realized capital gains to their shareholders and otherwise complying
with the requirements of regulated investment companies. The Funds have
distributed substantially all of their income and capital gains in prior
years and each Fund intends to distribute substantially all of its
income and gains prior to the next fiscal year end. Accordingly, no
provision for federal income taxes has been made in the accompanying
financial statements. Distributions from short-term capital gains are
treated as ordinary income distributions for federal income tax
purposes.
j) (2) The tax character of distributions paid for the periods indicated is
as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
--------------------- ---------------------
LONG-TERM LONG-TERM
ORDINARY CAPITAL ORDINARY CAPITAL
FUND INCOME GAINS INCOME GAINS
---- -------- --------- -------- ---------
Hartford Global Leaders HLS Fund............................ $29,720 $44,208 $ 8,693 $ --
Hartford Growth Opportunities HLS Fund...................... 48,149 89,358 1,991 73,463
Hartford Money Market HLS Fund.............................. 81,039 -- 45,001 --
</Table>
As of December 31, 2006, the components of distributable earnings
(deficit) on a tax basis were as follows:
<Table>
<Caption>
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY LONG-TERM CAPITAL GAINS APPRECIATION EARNINGS
FUND INCOME CAPITAL GAIN (LOSSES)* (DEPRECIATION)@ (DEFICIT)
---- ------------- ------------- ------------- --------------- -----------
Hartford Global Leaders HLS Fund...... $14,597 $18,965 $(389) $189,557 $222,730
Hartford Growth Opportunities HLS
Fund................................ 17,980 11,359 -- 183,441 212,780
</Table>
* Certain Funds had capital loss carryforwards that are identified in
Note 2 (j) (4).
@ The differences between book-basis and tax-basis unrealized
appreciation (depreciation) are attributable primarily to the tax
deferral of losses on wash sales, the mark-to-market adjustment for
certain derivatives in accordance with IRC Sec. 1256 and the
mark-to-market of Passive Foreign Investment Companies.
j) (3) Reclassification of Capital Accounts:
In accordance with American Institute of Certified Public Accountants
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, the Funds have recorded several
reclassifications in their capital accounts. These reclassifications had
no impact on the net asset value per share of the Funds and are designed
generally to present accumulated undistributed (distribution in excess
of) net investment income and accumulated net realized gains (losses) on
investments on a tax basis which is considered to be more informative to
a shareholder. The reclassifications are a result of permanent
differences between GAAP and tax accounting for such items as foreign
currency, distributions representing a return of capital, class action
settlements received, expiration of capital loss carryforwards,
expiration of net operating losses, and net operating losses that reduce
short-term capital gain distribution requirements. Adjustments are made
to reflect the impact these items have on current and future
distributions to shareholders. Therefore, the source of the Funds'
distributions may be shown in the accompanying Statements of Changes in
Net Assets as from net investment income, from net realized gains on
investments or from capital depending on the type of book and tax
differences that exist. For the year ended December 31, 2006, the Funds
recorded the following reclassifications to increase (decrease) the
accounts listed below.
<Table>
<Caption>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED NET REALIZED
NET INVESTMENT GAIN (LOSS) ON PAID-IN-
FUND INCOME (LOSS) INVESTMENTS CAPITAL
---- -------------- -------------- --------
Hartford Global Leaders HLS Fund............................ $(905) $905 $ --
Hartford Growth Opportunities HLS Fund...................... (249) 249 --
</Table>
j) (4) Capital Loss Carryforwards:
At December 31, 2006 (tax year-end), the following Funds had capital
loss carryforwards for U.S. Federal income tax purposes of
approximately:
<Table>
<Caption>
YEAR OF EXPIRATION
-------------------
2009 2010 TOTAL
---- ---- -----
Hartford Global Leaders HLS Fund............................ $19 $370 $389
</Table>
Based on certain provisions in the Internal Revenue Code, various
limitations regarding the future utilization of the Hartford Global
Leaders HLS Fund carryforwards may apply.
k) Fund Share Valuation and Dividend Distributions to
Shareholders -- Orders for the Funds' shares are executed in accordance
with the investment instructions of the contract holders or plan
participants. The net asset value of each Fund's shares is determined as
of the close of
19
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
each business day of the Exchange. The net asset value per share is
determined separately for each class of each Fund by dividing the Fund's
net assets attributable to that class by the number of shares of the
class outstanding. Orders for the purchase of a Fund's shares received by
an insurance company or plan prior to the close of the Exchange on any
day on which the Exchange is open for business are priced at the
per-share net asset value determined as of the close of the Exchange.
Orders received after the close of the Exchange, or on a day on which the
Exchange and/or the Fund is not open for business, are priced at the next
determined per-share net asset value.
Dividends are declared pursuant to a policy adopted by the Funds' Board
of Directors based upon the investment performance of the respective
Funds. The policy of all Funds, except Hartford Money Market HLS Fund,
is to pay dividends from net investment income and distribute realized
capital gains, if any, at least once a year.
Hartford Money Market HLS Fund seeks to maintain a stable net asset
value per share of $1.00 by declaring a daily dividend from net
investment income, including net short-term capital gains and losses,
and by valuing its investments using the amortized cost method.
Dividends are declared daily and distributed monthly.
Distributions from net investment income, net realized capital gains and
capital are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles with respect to character and timing. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, losses deferred due to
wash sales and excise tax regulations. Permanent book and federal income
tax basis differences relating to shareholder distributions will result
in reclassifications to certain of the Fund's capital accounts (see Note
2(j)(3)).
l) Illiquid and Restricted Securities -- Each Fund is permitted to invest
up to 15% of its net assets in illiquid securities, except for Hartford
Money Market HLS Fund, which may invest up to 10% in such securities.
"Illiquid Securities" are those that may not be sold or disposed of in
the ordinary course of business within seven days, at approximately the
price used to determine a Fund's net asset value per share. A Fund may
not be able to sell illiquid securities or other investments when its
sub-adviser considers it desirable to do so or may have to sell such
securities or investments at a price that is lower than the price that
could be obtained if the securities or investments were more liquid. A
sale of illiquid securities or other investments may require more time
and may result in higher dealer discounts and other selling expenses
than does the sale of those that are liquid. Illiquid securities and
investments also may be more difficult to value, due to the
unavailability of reliable market quotations for such securities or
investments, and investments in them may have an adverse impact on net
asset value. Each Fund may also purchase certain restricted securities,
commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by that Fund's Board of Directors.
m) Securities Purchased on a When-Issued or Delayed-Delivery
Basis -- Delivery and payment for securities that have been purchased by
the Funds on a forward commitment or when-issued or delayed-delivery
basis take place beyond the customary settlement period. During this
period, such securities are subject to market fluctuations, and the Funds
identify securities segregated in their records with value at least equal
to the amount of the commitment. As of December 31, 2006, the Funds had
no outstanding when-issued or forward commitments.
n) Credit Risk -- Credit risk depends largely on the perceived financial
health of bond issuers. In general, lower rated bonds have higher credit
risk. High yield bond prices can fall on bad news about the economy, an
industry or a company. The share price, yield and total return of a fund
which holds securities with higher credit risk may fluctuate more than
with less aggressive bond funds.
o) Use of Estimates -- The preparation of financial statements in
conformity with U.S. 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
year. Operating results in the future could vary from the amounts
derived from management's estimates.
s) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Funds' tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Funds' financial statements has not yet been determined.
t) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. As of December 31, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of
certain measurements reported in the Statements of Operations for a
fiscal period.
20
- --------------------------------------------------------------------------------
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors), an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Funds pursuant to investment
management agreements approved by each Fund's Board of Directors and
shareholders, as applicable.
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered, a portion of which is used to compensate
the sub-advisers. Investment management and advisory fees are accrued
daily and paid monthly.
HARTFORD MONEY MARKET HLS FUND(1)
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $2 billion................................................ 0.250%
On next $3 billion................................................. 0.200%
On next $5 billion................................................. 0.180%
Over $10 billion................................................... 0.170%
</Table>
(1) Effective January 1, 2007, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until December 31,
2007.
HARTFORD GLOBAL LEADERS HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $250 million.............................................. 0.575%
On next $250 million............................................... 0.525%
On next $500 million............................................... 0.475%
Over $1 billion.................................................... 0.425%
</Table>
HARTFORD GROWTH OPPORTUNITIES HLS FUND
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
On first $100 million.............................................. 0.700%
Over $100 million.................................................. 0.600%
</Table>
Pursuant to sub-advisory agreements between HL Advisors and Wellington,
Wellington provides the day-to-day investment management services to
Hartford Global Leaders HLS Fund and Hartford Growth Opportunities HLS
Fund.
Pursuant to investment services agreements between HL Advisors and
Hartford Investment Management, Hartford Investment Management provides
the day-to-day investment management services to Hartford Money Market
HLS Fund.
Wellington and Hartford Investment Management determine the purchase and
sale of portfolio securities and place such orders for execution in the
name of the respective Fund. In conjunction with their investment
activity, Wellington and Hartford Investment Management regularly
furnish reports to the Funds' Board of Directors concerning economic
forecasts, investment strategy, portfolio activity and performance of
the Funds.
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and each of the following Funds; Hartford Global
Leaders HLS Fund and Hartford Money Market HLS Fund, HLIC provides
administrative services to the Funds and receives monthly compensation
at the annual rate of 0.20% of each Fund's average daily net assets. The
Funds assume and pay certain other expenses (including, but not limited
to, accounting, custodian, state taxes and directors' fees). Directors'
fees represent remuneration paid or accrued to directors not affiliated
with HLIC or any other related company. The Funds' administrative
services fees are accrued daily and paid monthly.
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and Hartford Global Leaders HLS Fund and Hartford Money
Market HLS Fund, HLIC provides accounting services to the Funds and
receives monthly compensation at the annual rate of 0.015% of each
Fund's average daily net assets. The Funds' accounting services fees are
accrued daily and paid monthly.
d) Operating Expenses -- Allocable expenses of the Funds are charged to
each Fund based on the ratio of the average net assets of each Fund to
the combined average net assets of the Funds. Non-allocable expenses are
charged to each fund based on specific identification.
e) Fees Paid Indirectly -- The Funds have entered into agreements with
State Street Global Advisors, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Funds' expenses. In addition, the Funds'
custodian bank has also agreed to reduce its fees when the Funds
maintain cash on deposit in the non-interest-bearing custody account.
For the year ended December 31, 2006, these amounts are included in the
Statements of Operations.
21
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
The ratio of expenses to average net assets in the accompanying
financial highlights excludes the reduction in expenses related to fees
paid indirectly. Had the fees paid indirectly been included, the
annualized expense ratios for the years listed below would have been as
follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Global Leaders HLS
Fund...................... 0.74% 0.99% 0.68% 0.93% 0.68% 0.93%
Hartford Growth
Opportunities HLS Fund.... 0.63 0.88 0.58 0.84 0.57 0.82
Hartford Money Market HLS
Fund...................... 0.48 0.73 0.49 0.74 0.48 0.73
</Table>
f) Distribution Plan for Class IB shares -- Each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, each Fund
compensates the Distributor, Hartford Securities Distribution Company,
Inc. (a wholly owned, ultimate subsidiary of Hartford Life, Inc.) from
assets attributable to the Class IB shares for services rendered and
expenses borne in connection with activities primarily intended to
result in the sale of the Class IB shares.
The Distribution Plan provides that each Fund may pay annually up to
0.25% of the average daily net assets of a Fund attributable to its
Class IB shares for activities primarily intended to result in the sale
of Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard. The Funds' distribution fees are
accrued daily and paid monthly.
g) Payments from Affiliate -- The Funds are available for purchase by the
separate accounts of different variable universal life policies,
variable annuity products, and funding agreements and they are offered
directly to certain qualified retirement plans ("Products"). Although
existing Products contain transfer restrictions, some Products,
particularly older variable annuity products, did not contain
restrictions on the frequency of transfers. In addition, as the result
of the settlement of litigation against Hartford Life (the issuers of
such variable annuity products), the Funds' ability to restrict
transfers by certain owners of older variable annuity products was
limited. During 2006, these annuity owners surrendered the older
variable annuity contracts that were the subject of prior litigation. In
February 2005, Hartford Life agreed with the Board of Directors of the
Funds to indemnify the Funds for any material harm caused to the Funds
from frequent trading by these contracts owners. Pursuant to the
agreement, the following amounts have been paid to the Funds indicated
in 2006 and 2005. Amounts are recorded as Payments from Affiliate in the
Statements of Operations:
<Table>
<Caption>
FUND 2006 2005
---- ---- ------
Hartford Growth Opportunities HLS Fund...................... $257 $1,140
</Table>
On November 8, 2006, the SEC issued an order setting forth the terms of
a settlement reached with three subsidiaries of The Hartford that
resolves the SEC's Division of Enforcement's investigation of aspects of
The Hartford's variable annuity and mutual fund operations related to
directed brokerage and revenue sharing. Under the terms of the
settlement, The Hartford paid a total of $39.6 million to certain of the
Funds of Hartford Series, Inc. and Hartford HLS Series Fund II, Inc.
Amounts received by Fund are indicated below. These amounts were
recorded on November 8, 2006 and paid on November 22, 2006. The Hartford
settled this matter without admitting or denying the findings of the
SEC.
<Table>
<Caption>
FUND AMOUNT
---- ------
Hartford Global Leaders HLS Fund............................ $3,344
Hartford Growth Opportunities HLS Fund...................... 841
</Table>
The total return in the financial highlights includes the impact of the
Payments from Affiliate. The tables below show the impact of each of the
two Payments from Affiliate and the total return for the years ended
December 31, 2006 and December 31, 2005, had the Payments from Affiliate
been excluded.
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
-------------------- ---------------------- --------------------
IMPACT OF PAYMENT IMPACT OF PAYMENT TOTAL RETURN
FROM AFFILIATE FOR FROM AFFILIATE FOR EXCLUDING PAYMENTS
SEC SETTLEMENT UNRESTRICTED TRANSFERS FROM AFFILIATE
-------------------- ---------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- --------- --------- -------- --------
Hartford Global Leaders HLS Fund................. 0.31% 0.32% --% --% 13.83% 13.54%
Hartford Growth Opportunities HLS Fund........... 0.07 0.07 0.02 0.02 11.96 11.70
</Table>
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2005
---------------------- --------------------
IMPACT OF PAYMENT TOTAL RETURN
FROM AFFILIATE FOR EXCLUDING PAYMENT
UNRESTRICTED TRANSFERS FROM AFFILIATE
---------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB
---- --------- --------- -------- --------
Hartford Growth Opportunities HLS Fund...................... 0.11% 0.11% 16.20% 15.91%
</Table>
22
- --------------------------------------------------------------------------------
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the cost of purchases and proceeds
from sales of securities for Hartford Money Market HLS Fund were $18,993,247
and $18,729,737, respectively. The cost of purchases and proceeds from sales
of securities (excluding short-term investments) for the other Funds were as
follows:
<Table>
<Caption>
COST OF SALES
PURCHASES PROCEEDS
EXCLUDING EXCLUDING
U.S. GOVERNMENT U.S. GOVERNMENT
FUND OBLIGATIONS OBLIGATIONS
---- --------------- ---------------
Hartford Global Leaders HLS Fund............................ $1,398,412 $1,545,322
Hartford Growth Opportunities HLS Fund...................... 1,719,202 1,755,120
</Table>
5. LINE OF CREDIT:
The Funds, except for the Hartford Money Market HLS Fund, participate in a
$650,000 committed revolving line of credit facility. The facility is to be
used for temporary or emergency purposes. Under the arrangement, the Funds
are required to own securities having a market value in excess of 300% of
the total bank borrowings. The interest rate on borrowings varies depending
on the nature of the loan. The facility also requires a fee to be paid based
on the amount of the commitment which has not been utilized. During the year
ended December 31, 2006, the Funds did not have any borrowings under this
facility.
23
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(4) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT PAYMENTS GAIN FROM FROM NET
BEGINNING INCOME FROM (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... $18.74 $ 0.10 $0.05 $ 2.48 $ 2.63 $(0.16)
Class IB.......................... 18.66 0.05 0.05 2.47 2.57 (0.09)
For the Year Ended December 31,
2005
Class IA.......................... 18.41 0.14 -- 0.33 0.47 (0.14)
Class IB.......................... 18.32 0.07 -- 0.35 0.42 (0.08)
For the Year Ended December 31,
2004
Class IA.......................... 15.53 0.12 -- 2.85 2.97 (0.09)
Class IB.......................... 15.47 0.10 -- 2.82 2.92 (0.07)
For the Year Ended December 31,
2003
Class IA.......................... 11.50 0.07 -- 4.02 4.09 (0.06)
Class IB.......................... 11.47 0.04 -- 4.00 4.04 (0.04)
For the Year Ended December 31,
2002
Class IA.......................... 14.43(5) 0.13(5) -- (2.95)(5) (2.82) (0.11)(5)
Class IB.......................... 14.40(5) 0.12(5) -- (2.96)(5) (2.84) (0.09)(5)
HARTFORD GROWTH OPPORTUNITIES HLS
FUND
For the Year Ended December 31,
2006
Class IA.......................... 30.07 0.22 0.03 3.27 3.52 (0.24)
Class IB.......................... 29.85 0.14 0.03 3.25 3.42 (0.15)
For the Year Ended December 31,
2005
Class IA.......................... 27.63 0.09 0.03 4.36 4.48 (0.06)
Class IB.......................... 27.44 0.01 0.03 4.35 4.39 --
For the Year Ended December 31,
2004
Class IA.......................... 23.57 0.05 -- 4.01 4.06 --
Class IB.......................... 23.48 0.03 -- 3.93 3.96 --
For the Year Ended December 31,
2003
Class IA.......................... 16.40 (0.01) -- 7.18 7.17 --
Class IB.......................... 16.37 (0.01) -- 7.12 7.11 --
For the Year Ended December 31,
2002
Class IA.......................... 22.66 (0.03) -- (6.23) (6.26) --
From inception April, 30 2002
through December 31, 2002
Class IB.......................... 21.16 (0.01) -- (4.78) (4.79) --
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... 1.00 0.05 -- -- 0.05 (0.05)
Class IB.......................... 1.00 0.04 -- -- 0.04 (0.04)
For the Year Ended December 31,
2005
Class IA.......................... 1.00 0.03 -- -- 0.03 (0.03)
Class IB.......................... 1.00 0.03 -- -- 0.03 (0.03)
For the Year Ended December 31,
2004
Class IA.......................... 1.00 -- -- -- -- --
Class IB.......................... 1.00 -- -- -- -- --
For the Year Ended December 31,
2003
Class IA.......................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB.......................... 1.00 -- -- -- -- --
For the Year Ended December 31,
2002
Class IA.......................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB.......................... 1.00 0.01 -- -- 0.01 (0.01)
<Caption>
-- SELECTED PER-SHARE DATA(4) -- -- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------- ---------------------------------------------
NET NET
DISTRIBUTIONS INCREASE ASSET
FROM (DECREASE) VALUE
REALIZED DISTRIBUTIONS IN NET AT END NET ASSETS
CAPITAL FROM TOTAL ASSET OF TOTAL AT END OF
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN PERIOD
------------- ------------- ------------- ---------- ------ ------ -----------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... $(1.12) $ -- $(1.28) $ 1.35 $20.09 14.14(7) $ 942,258
Class IB.......................... (1.12) -- (1.21) 1.36 20.02 13.86(7) 280,283
For the Year Ended December 31,
2005
Class IA.......................... -- -- (0.14) 0.33 18.74 2.59 935,539
Class IB.......................... -- -- (0.08) 0.34 18.66 2.33 280,050
For the Year Ended December 31,
2004
Class IA.......................... -- -- (0.09) 2.88 18.41 19.19 1,004,850
Class IB.......................... -- -- (0.07) 2.85 18.32 18.89 273,202
For the Year Ended December 31,
2003
Class IA.......................... -- -- (0.06) 4.03 15.53 35.57 728,049
Class IB.......................... -- -- (0.04) 4.00 15.47 35.24 129,315
For the Year Ended December 31,
2002
Class IA.......................... --(5) -- (0.11) (2.93) 11.50(5) (19.51) 544,901
Class IB.......................... --(5) -- (0.09) (2.93) 11.47(5) (19.70) 55,421
HARTFORD GROWTH OPPORTUNITIES HLS
FUND
For the Year Ended December 31,
2006
Class IA.......................... (3.22) -- (3.46) 0.06 30.13 12.05(7) 1,103,590
Class IB.......................... (3.22) -- (3.37) 0.05 29.90 11.79(7) 197,797
For the Year Ended December 31,
2005
Class IA.......................... (1.98) -- (2.04) 2.44 30.07 16.31(7) 1,012,774
Class IB.......................... (1.98) -- (1.98) 2.41 29.85 16.02(7) 179,308
For the Year Ended December 31,
2004
Class IA.......................... -- -- -- 4.06 27.63 17.18 848,674
Class IB.......................... -- -- -- 3.96 27.44 16.89 112,896
For the Year Ended December 31,
2003
Class IA.......................... -- -- -- 7.17 23.57 43.79 696,900
Class IB.......................... -- -- -- 7.11 23.48 43.43 59,686
For the Year Ended December 31,
2002
Class IA.......................... -- -- -- (6.26) 16.40 (27.65) 478,045
From inception April, 30 2002
through December 31, 2002
Class IB.......................... -- -- -- (4.79) 16.37 (22.65)(2) 5,287
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... -- -- (0.05) -- 1.00 4.69 1,558,433
Class IB.......................... -- -- (0.04) -- 1.00 4.43 319,926
For the Year Ended December 31,
2005
Class IA.......................... -- -- (0.03) -- 1.00 2.84 1,353,836
Class IB.......................... -- -- (0.03) -- 1.00 2.58 264,040
For the Year Ended December 31,
2004
Class IA.......................... -- -- -- -- 1.00 0.94 1,294,525
Class IB.......................... -- -- -- -- 1.00 0.69 252,808
For the Year Ended December 31,
2003
Class IA.......................... -- -- (0.01) -- 1.00 0.75 1,609,439
Class IB.......................... -- -- -- -- 1.00 0.50 240,930
For the Year Ended December 31,
2002
Class IA.......................... -- -- (0.01) -- 1.00 1.47 2,319,456
Class IB.......................... -- -- (0.01) -- 1.00 1.24 261,914
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(3) WAIVERS(3) ASSETS RATE(6)
---------- ---------- ---------- ---------
HARTFORD GLOBAL LEADERS HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... 0.76% 0.76% 0.48% 116%
Class IB.......................... 1.01 1.01 0.23 --
For the Year Ended December 31,
2005
Class IA.......................... 0.77 0.77 0.74 262
Class IB.......................... 1.02 1.02 0.48 --
For the Year Ended December 31,
2004
Class IA.......................... 0.78 0.78 0.83 255
Class IB.......................... 1.03 1.03 0.58 --
For the Year Ended December 31,
2003
Class IA.......................... 0.80 0.80 0.54 292
Class IB.......................... 1.05 1.05 0.29 --
For the Year Ended December 31,
2002
Class IA.......................... 0.81 0.81 1.06 324
Class IB.......................... 1.06 1.03 0.84 --
HARTFORD GROWTH OPPORTUNITIES HLS
FUND
For the Year Ended December 31,
2006
Class IA.......................... 0.65 0.65 0.71 139
Class IB.......................... 0.90 0.90 0.46 --
For the Year Ended December 31,
2005
Class IA.......................... 0.64 0.64 0.33 140
Class IB.......................... 0.89 0.89 0.06 --
For the Year Ended December 31,
2004
Class IA.......................... 0.63 0.63 0.23 137
Class IB.......................... 0.88 0.88 (0.03) --
For the Year Ended December 31,
2003
Class IA.......................... 0.64 0.64 (0.05) 145
Class IB.......................... 0.89 0.89 (0.30) --
For the Year Ended December 31,
2002
Class IA.......................... 0.66 0.66 (0.16) 189
From inception April, 30 2002
through December 31, 2002
Class IB.......................... 0.84(1) 0.84(1) (0.10)(1) --
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... 0.48 0.48 4.63 --
Class IB.......................... 0.73 0.73 4.38 --
For the Year Ended December 31,
2005
Class IA.......................... 0.49 0.49 2.79 --
Class IB.......................... 0.75 0.75 2.54 --
For the Year Ended December 31,
2004
Class IA.......................... 0.48 0.48 0.93 --
Class IB.......................... 0.73 0.73 0.68 --
For the Year Ended December 31,
2003
Class IA.......................... 0.49 0.49 0.75 --
Class IB.......................... 0.74 0.74 0.50 --
For the Year Ended December 31,
2002
Class IA.......................... 0.49 0.49 1.43 --
Class IB.......................... 0.74 0.72 1.20 --
</Table>
- ---------------
(1) Annualized.
(2) Not annualized.
(3) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(4) Information presented relates to a share outstanding throughout the
indicated period.
(5) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(6) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(7) Total return without the inclusion of the Payments from Affiliate, as noted
on the Statement of Operations, can be found in Note 3(g).
(8) Per share amounts have been calculated using average shares outstanding
method.
See Notes to Financial Statements.
24
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Hartford Series Fund, Inc. and
Hartford HLS Series Fund II, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedule of investments, of Hartford Global Leaders HLS Fund and Hartford
Money Market HLS Fund (two of the twenty-six portfolios constituting the
Hartford Series Fund, Inc.) and Hartford Growth Opportunities HLS Fund (one of
the ten portfolios constituting the Hartford HLS Series Fund II, Inc.)
(collectively, the "Funds") as of December 31, 2006, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods indicated therein. 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Funds' internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Funds' internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian
or brokers. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds listed above constituting portfolios within Hartford Series Fund,
Inc. and Hartford HLS Series Fund II, Inc. at December 31, 2006, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with U.S. generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
25
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Funds and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the funds
pursuant to the Investment Company Act of 1940. Each officer and three of the
Funds' directors, as noted in the chart below, are "interested" persons of the
funds. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by each Fund can
be found in the Statement of Operations herein. The Funds do not pay salaries or
compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
26
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
DIRECTORS AND OFFICERS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms.
Fleege was Counsel for Amerprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005.
27
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
HOW TO OBTAIN A COPY OF THE FUNDS' PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to portfolio securities and a record of how the Funds
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Funds file a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Funds' Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
28
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,081.57 $3.94
Class IB........... $1,000.00 $1,133.56 $5.38
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,100.93 $3.50
Class IB........... $1,000.00 $1,113.35 $4.85
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.53 $2.45
Class IB........... $1,000.00 $1,040.60 $3.75
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD GLOBAL
LEADERS HLS FUND
Class IA........... $1,000.00 $1,021.42 $3.82 0.75% 184 365
Class IB........... $1,000.00 $1,020.16 $5.09 1.00% 184 365
HARTFORD GROWTH
OPPORTUNITIES HLS
FUND
Class IA........... $1,000.00 $1,021.88 $3.36 0.66% 184 365
Class IB........... $1,000.00 $1,020.62 $4.63 0.91% 184 365
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.79 $2.45 0.48% 184 365
Class IB........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
</Table>
29
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
the continuation of the mutual fund's investment advisory and sub-advisory
agreements after an initial two year period.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each HLS Fund with an agreement up for
renewal with HL Investment Advisors, LLC ("HL Advisors") and the investment
sub-advisory agreements between HL Advisors and each Fund's respective
sub-adviser(s) ("sub-advisers," and together with HL Advisors,
"advisers") -- Hartford Investment Management Company ("Hartford Investment"),
Holland Capital Management, L.P. ("Holland Capital"), Lazard Asset Management
LLC ("Lazard"), Northern Capital Management, LLC ("Northern Capital"), T. Rowe
Price Associates, Inc. ("T. Rowe Price") and Wellington Management Company, LLP
("Wellington") (collectively, the "agreements"), including the Hartford Global
Leaders HLS Fund, the Hartford Growth Opportunities HLS Fund, and the Hartford
Money Market HLS Fund. The other HLS Funds with agreements renewed at the August
1-2, 2006 meeting are not described in this annual report. In the months
preceding this meeting, the Board requested, received, and reviewed written
responses from the advisers to questions posed to them on behalf of the
Independent Directors and supporting materials relating to those questions and
responses. In addition, the Board received in-person presentations about each
Fund and the related agreements by Fund officers and representatives of HL
Advisors at the Board's meetings on June 20-21, 2006 and August 1-2, 2006. In
considering the approval of the agreements, the Board also took into account
information provided to the Board at its meetings throughout the year, including
reports on Fund performance, compliance, shareholder services, and the other
services provided to the Funds by the advisers and their affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
Nature, Extent and Quality of Services
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as well as
its willingness to consider and implement organizational and operational
changes, including hiring additional
- ---------------
1 Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life Insurance
Company ("Hartford Life"), under which Hartford Life provides certain
administrative services to those Funds. For those Funds that have separate
management and administrative agreements, the Board considered the fees
payable under both agreements in the aggregate.
30
- --------------------------------------------------------------------------------
personnel, designed to improve services to the Funds, and its investments in
infrastructure in light of increased regulatory requirements and other
developments. The Board considered the progress that Hartford Investment has
made in developing an equity management capability. In addition, the Board
considered the quality of each adviser's communications with the Board, and
responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
Performance of the Funds, HL Advisors, and the Sub-Advisers
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
With respect to certain specific Funds, the Board considered actions HL Advisors
was planning to take to address performance. With respect to MidCap Stock HLS
Fund, sub-advised by Northern Capital, the Board considered HL Advisors' plan to
seek shareholder approval in December 2006 of a proposal to replace Northern
Capital as sub-adviser to the Fund with Hartford Investment. With respect to
Capital Opportunities HLS Fund and LargeCap Growth HLS Fund, each sub-advised by
Holland Capital, the Board considered HL Advisors' plan to seek shareholder
approval in January 2007 with respect to a plan of reorganization by which the
Funds would be merged into Blue Chip Stock HLS Fund. Due to the timing of these
proposed changes, the Board concluded that it would be in the best interests of
each Fund's shareholders to renew the existing sub-advisory agreements for these
Funds while HL Advisors sought shareholder approval of these proposals.
31
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, in the case of
the Funds mentioned above, that HL Advisors is addressing the Board's concerns
about investment performance, and the Board had continued confidence in HL
Advisors' and the sub-advisers' overall capabilities to manage each Fund.
Costs of the Services and Profitability of HL Advisors and the Sub-Advisers
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability of the other sub-advisers. In evaluating such sub-adviser's
profitability with respect to the Funds, the Board considered primarily HL
Advisors' and the sub-advisers' representations that HL Advisors had negotiated
the sub-advisory fees at arm's length, and the sub-advisers' representations
that the fees charged to HL Advisors were comparable to fees charged by the
sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
Comparison of Fees and Services Provided by HL Advisors and the Sub-Advisers
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer groups. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio,
32
- --------------------------------------------------------------------------------
net of these reductions. The following reductions were agreed to at the meeting,
each effective January 1, 2007, unless otherwise noted:
- - Blue Chip Stock HLS Fund -- 5 basis points ("bps") contractual fee reduction
plus 5 bps fee waiver;
- - Capital Opportunities HLS Fund -- 20 bps fee waiver;
- - High Yield HLS Fund -- 5 bps fee waiver, effective November 1, 2006;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - LargeCap Growth HLS Fund -- 10 bps fee waiver;
- - MidCap Stock HLS Fund -- 20 bps fee waiver; and
- - Money Market HLS Fund -- 5 bps fee waiver.
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
Economies of Scale
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by HL Advisors, Lipper, and the Consultant, the Board recognized that
there is no uniform methodology for establishing breakpoints, or uniform pattern
in asset levels that trigger breakpoints or the amounts of breakpoints
triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from certain Funds for providing certain
administrative services for those Funds, and that Hartford Life also receives
fees for fund accounting and related services from each of the Funds, and the
Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds' transfer agent and an
affiliate of HL Advisors, receives transfer agency compensation from the Funds,
and the Board reviewed information on the expected profitability of the Funds'
transfer agency function to HISC. The Board considered
33
HARTFORD SERIES FUND, INC. AND HARTFORD HLS SERIES FUND II, INC.
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
information provided by HL Advisors indicating that the fees charged by HISC to
the Funds are reasonable and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research, and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the HLS Funds of
approximately $480,000 per year.
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
* * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
34
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
Hartford Index HLS Fund inception 5/1/1987
(subadvised by Hartford Investment Management Company)
PERFORMANCE OVERVIEW 12/31/96 - 12/31/06
Growth of a $10,000 investment(1)
(LINE GRAPH)
<Table>
<Caption>
INDEX IA S&P 500 INDEX
-------- -------------
12/96 10000 10000
10615 10624
10695 10708
10246 10269
10857 10881
11516 11543
12022 12060
12973 13019
12243 12290
12909 12963
12474 12531
13041 13110
12/97 13261 13335
13404 13482
14364 14454
15093 15194
15241 15347
14970 15083
15577 15695
15405 15529
13172 13283
14014 14135
15148 15284
16056 16210
12/98 16982 17143
17680 17860
17124 17305
17803 17997
18482 18694
18034 18253
19035 19266
18431 18665
18338 18572
17832 18062
18951 19205
19329 19595
12/99 20461 20750
19427 19707
19052 19335
20902 21225
20267 20586
19843 20164
20326 20661
20001 20338
21235 21601
20108 20461
20016 20374
18433 18769
12/00 18518 18861
19166 19530
17412 17750
16304 16626
17564 17916
17674 18036
17236 17598
17060 17425
15986 16335
14683 15017
14960 15303
16102 16477
12/01 16237 16622
15992 16380
15678 16064
16263 16668
15271 15658
15150 15543
14069 14436
12967 13312
13047 13398
11625 11943
12646 12993
13383 13757
12/02 12592 12949
12258 12611
12070 12422
12183 12543
13188 13575
13875 14290
14045 14472
14288 14728
14560 15014
14400 14855
15209 15695
15337 15833
12/03 16135 16662
16423 16968
16647 17204
16390 16945
16128 16679
16341 16907
16649 17236
16096 16666
16158 16732
16326 16914
16570 17172
17233 17867
12/04 17812 18474
17373 18024
17730 18403
17413 18078
17073 17735
17613 18299
17633 18325
18281 19006
18111 18833
18251 18985
17940 18669
18611 19374
12/05 18614 19381
19106 19894
19152 19948
19387 20196
19639 20467
19069 19879
19091 19905
19204 20028
19657 20504
20159 21032
20809 21716
21201 22129
12/06 21491 22439
</Table>
<Table>
--- INDEX IA --- S&P 500 INDEX
$10,000 starting value $10,000 starting value
$21,491 ending value $22,439 ending value
</Table>
S&P 500 INDEX is a market capitalization weighted price index composed of 500
widely held common stocks.
You cannot invest directly in an index.
The chart represents a hypothetical investment in the Fund. Performance data
represents past performance and current performance could be higher or lower.
AVERAGE ANNUAL RETURNS(2) (as of 12/31/06)
<Table>
<Caption>
1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------
Index IA 15.46% 5.77% 7.95%
- ------------------------------------------------------
Index IB(3) 15.17% 5.51% 7.70%
- ------------------------------------------------------
S&P 500 Index 15.78% 6.19% 8.42%
- ------------------------------------------------------
</Table>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
(1) Growth of a $10,000 investment in Class IB shares will vary
from the results seen on this page due to differences in the
expense charged to this share class.
(2) Performance for periods when fee waivers were in place would
have been lower in the absence of the waivers.
(3) Class IB shares commenced on November 9, 1999. Class IB
share performance prior to that date reflects Class IA share
performance adjusted to reflect the 12b-1 fee of 0.25%
applicable to Class IB shares. The performance after such
date reflects actual Class IB share performance.
The value of the contract will fluctuate so that when redeemed,
it may be worth more or less than the original investment. The
chart and table do not reflect the deduction of taxes that a
shareholder would pay on portfolio distributions or the
redemption of portfolio shares. The figures do not include sales
charges or other fees which may be applied at the variable life
insurance, variable annuity or qualified retirement plan product
level. Any such additional sales charges or other fees would
lower the Fund's performance.
PORTFOLIO MANAGER
DEANE GYLLENHAAL
Vice President
- --------------------------------------------------------------------------------
HOW DID THE FUND PERFORM?
The Class IA shares of the Hartford Index HLS Fund returned 15.46% on a net
basis for the year, underperforming its benchmark, the S&P 500 Index, which
returned 15.78%. The Fund outperformed the 15.35% return of the average fund in
the Lipper VA S&P 500 Index Objective Funds peer group, a group of funds with
investment strategies similar to those of the Fund.
WHY DID THE FUND PERFORM THIS WAY?
Although economic data was mixed during the last quarter of 2006, the U.S.
economy appeared to be growing at a healthy pace. By year end, many were
forecasting that fourth quarter gross domestic product (GDP) growth would
ultimately be at or above the third-quarter growth rate of 2.2%. These
expectations were fueled by stronger-than-expected manufacturing, housing, and
consumer confidence reports released in the last week of December, which also
served to temper ongoing speculation that weakness in the housing and auto
sectors would exert a considerable drag on the economy and perhaps lead to an
ease in monetary policy by the Federal Open Market Committee (the "Fed").
Although the Fed maintained its target federal funds rate at 5.25% for the
second consecutive quarter, it continued to reiterate that although inflation
pressures had subsided somewhat, the rate of core inflation still remained
outside their comfort zone and any future actions regarding interest rates would
rely heavily on economic data.
The broad domestic stock market, as measured by the S&P 500 Index, increased for
the fourth consecutive year since the end of the bear market in 2002, returning
15.78% during 2006. The largest individual contributors to the benchmark's
performance were Exxon and Cisco Systems. Driven by the rise in oil prices,
Exxon returned 39.1%, which comprised 3.3% of the benchmark and added 1.2% to
the overall benchmark return. Cisco Systems returned 59.6%, was 1.1% of the
benchmark, and contributed 0.6% for the year. The two biggest detractors to the
benchmark's performance were Intel and Yahoo. Intel dropped 17.2% dragging
overall performance by 0.3%. Yahoo, the internet giant, lost 34.8% for the year,
detracting 0.2%.
By design, the Fund is managed to mimic the performance of the S&P 500 Index.
Due to this approach, the Fund is expected to perform in line with the Index.
The Fund may engage in futures trading to more efficiently maintain exposure to
the Index and also to offset brokerage commissions. This period these results
were insignificant. Early in the year, corporate action decisions had a positive
impact upon the Fund. The largest corporate action contribution came from the
Jefferson-Pilot/Lincoln National Corp. deal. The S&P 500 Index reflected Lincoln
National Corp.'s
1
- --------------------------------------------------------------------------------
acquisition of Jefferson-Pilot by removing Jefferson-Pilot from the Index at its
closing price on its last day of trading. Rather than selling the stock, the
Fund received a mix of stock and cash because it was a better value.
WHAT IS YOUR OUTLOOK?
Economic data continues to deliver mixed messages about the direction of the
U.S. economy. Employment and consumer spending data has been positive, helping
to offset some of the weakness seen in other sectors of the market. While there
are signs of improvement in the housing sector, the market will continue to be
highly sensitive to future housing data. Although some economists are
forecasting monetary easing, the Fed continues to acknowledge the potential for
inflation risks that may justify additional rate hikes. We believe current
market pricing reflects an overly pessimistic view about the underlying strength
of the economy and, while economic fundamentals warrant higher interest rates,
monetary policy is likely to remain steady through the first quarter of 2007.
DIVERSIFICATION BY INDUSTRY
as of December 31, 2006
<Table>
<Caption>
PERCENTAGE OF
INDUSTRY NET ASSETS
- -------------------------------------------------------------------
Basic Materials 3.1%
- -------------------------------------------------------------------
Capital Goods 4.4
- -------------------------------------------------------------------
Consumer Cyclical 9.0
- -------------------------------------------------------------------
Consumer Staples 5.5
- -------------------------------------------------------------------
Energy 9.3
- -------------------------------------------------------------------
Finance 23.6
- -------------------------------------------------------------------
Health Care 10.4
- -------------------------------------------------------------------
Services 6.9
- -------------------------------------------------------------------
Technology 22.2
- -------------------------------------------------------------------
Transportation 1.3
- -------------------------------------------------------------------
Utilities 3.5
- -------------------------------------------------------------------
Short-Term Investments 7.6
- -------------------------------------------------------------------
Other Assets & Liabilities (6.8)
- -------------------------------------------------------------------
TOTAL 100.0%
- -------------------------------------------------------------------
</Table>
2
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- 99.2%
BASIC MATERIALS -- 3.1%
32 Air Products and Chemicals, Inc. ................. $ 2,264
127 Alcoa, Inc. (G)................................... 3,804
15 Allegheny Technologies, Inc. ..................... 1,333
8 Ashland, Inc. .................................... 581
15 Ball Corp. ....................................... 663
15 Bemis Co., Inc. .................................. 520
27 Consol Energy, Inc. .............................. 858
140 Dow Chemical Co. ................................. 5,577
134 E.I. DuPont de Nemours & Co. (G).................. 6,549
12 Eastman Chemical Co. (G).......................... 712
42 Eastman Kodak Co. ................................ 1,086
22 Fortune Brands, Inc. ............................. 1,891
29 Freeport-McMoRan Copper & Gold, Inc. Class B...... 1,605
26 Goodyear Tire & Rubber Co. (D).................... 544
17 Hercules, Inc. (D)(G)............................. 322
11 International Flavors & Fragrances, Inc. (G)...... 560
67 International Paper Co. .......................... 2,269
67 Kimberly-Clark Corp. ............................. 4,554
27 MeadWestvaco Corp. ............................... 800
66 Newmont Mining Corp. ............................. 2,972
44 Nucor Corp. ...................................... 2,415
11 OfficeMax, Inc. (G)............................... 541
19 Pactiv Corp. (D).................................. 692
39 Peabody Energy Corp. ............................. 1,560
30 Phelps Dodge Corp. ............................... 3,570
24 PPG Industries, Inc. ............................. 1,554
47 Praxair, Inc. .................................... 2,799
21 Rohm & Haas Co. .................................. 1,063
12 Sealed Air Corp. ................................. 766
9 Snap-On, Inc. .................................... 405
12 Stanley Works (G)................................. 598
16 Temple-Inland, Inc. .............................. 718
17 United States Steel Corp. ........................ 1,265
14 Vulcan Materials Co. ............................. 1,240
----------
58,650
----------
CAPITAL GOODS -- 4.4%
108 3M Co. ........................................... 8,386
25 American Standard Cos., Inc. ..................... 1,165
203 Applied Materials, Inc. .......................... 3,745
47 Baker Hughes, Inc. (G)............................ 3,499
10 Black & Decker Corp. ............................. 792
116 Boeing Co. ....................................... 10,269
95 Caterpillar, Inc. ................................ 5,829
8 Cummins, Inc. .................................... 910
34 Deere & Co. ...................................... 3,214
22 Eaton Corp. ...................................... 1,638
18 Goodrich Corp. ................................... 829
23 Hasbro, Inc. ..................................... 635
119 Honeywell International, Inc. .................... 5,401
61 Illinois Tool Works, Inc. ........................ 2,833
45 Ingersoll-Rand Co. Class A........................ 1,752
50 International Game Technology..................... 2,290
27 ITT Corp. ........................................ 1,534
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CAPITAL GOODS -- (CONTINUED)
29 KLA-Tencor Corp. ................................. $ 1,448
26 National Oilwell Varco, Inc. (D).................. 1,572
50 Northrop Grumman Corp. ........................... 3,417
18 Novellus Systems, Inc. (D)(G)..................... 623
18 Pall Corp. ....................................... 618
17 Parker-Hannifin Corp. ............................ 1,322
32 Pitney Bowes, Inc. ............................... 1,497
25 Rockwell Automation, Inc. ........................ 1,521
29 Smith International, Inc. ........................ 1,195
28 Teradyne, Inc. (D)(G)............................. 416
15 Terex Corp. (D)................................... 962
18 Textron, Inc. .................................... 1,716
147 United Technologies Corp. ........................ 9,172
141 Xerox Corp. (D)................................... 2,392
----------
82,592
----------
CONSUMER CYCLICAL -- 9.0%
306 Altria Group, Inc. ............................... 26,294
45 Amazon.com, Inc. (D).............................. 1,784
22 AutoNation, Inc. (D).............................. 467
7 AutoZone, Inc. (D)................................ 855
14 Avery Dennison Corp. ............................. 937
41 Bed Bath & Beyond, Inc. (D)....................... 1,574
59 Best Buy Co., Inc. ............................... 2,899
16 Big Lots, Inc. (D)................................ 369
12 Brown-Forman Corp. ............................... 762
14 Brunswick Corp. .................................. 431
17 Centex Corp. ..................................... 973
21 Circuit City Stores, Inc. (G)..................... 395
54 Coach, Inc. (D)................................... 2,309
67 Costco Wholesale Corp. ........................... 3,543
40 D.R. Horton, Inc. (G)............................. 1,068
22 Darden Restaurants, Inc. ......................... 864
9 Dillard's, Inc. .................................. 311
46 Dollar General Corp. ............................. 732
169 eBay, Inc. (D)#................................... 5,086
22 Family Dollar Stores, Inc. ....................... 651
77 Federated Department Stores, Inc. ................ 2,928
276 Ford Motor Co. ................................... 2,073
77 Gap, Inc. ........................................ 1,502
83 General Motors Corp. (G).......................... 2,540
25 Genuine Parts Co. ................................ 1,181
298 Home Depot, Inc. (G).............................. 11,980
33 J. C. Penney Co., Inc. (G)........................ 2,546
29 Johnson Controls, Inc. (G)........................ 2,459
16 Jones Apparel Group, Inc. ........................ 538
12 KB Home (G)....................................... 590
48 Kohl's Corp. (D).................................. 3,269
105 Kroger Co. ....................................... 2,418
26 Leggett & Platt, Inc. (G)......................... 629
20 Lennar Corp. (G).................................. 1,060
15 Liz Claiborne, Inc. .............................. 652
223 Lowe's Cos., Inc. ................................ 6,934
50 Ltd. Brands, Inc. ................................ 1,447
58 Masco Corp. (G)................................... 1,721
56 Mattel, Inc. ..................................... 1,264
</Table>
The accompanying notes are an integral part of these financial statements.
3
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
CONSUMER CYCLICAL -- (CONTINUED)
181 McDonald's Corp. ................................. $ 8,011
41 Newell Rubbermaid, Inc. .......................... 1,172
28 NIKE, Inc. Class B (G)............................ 2,726
33 Nordstrom, Inc. (G)............................... 1,648
41 Office Depot, Inc. (D)(G)......................... 1,554
36 PACCAR, Inc. ..................................... 2,353
20 Patterson Cos., Inc. (D).......................... 721
31 Pulte Homes, Inc. ................................ 1,027
20 RadioShack Corp. ................................. 336
65 Safeway, Inc. .................................... 2,240
12 Sears Holdings Corp. (D).......................... 2,043
16 Sherwin-Williams Co. (G).......................... 1,043
106 Staples, Inc. .................................... 2,820
111 Starbucks Corp. (D)............................... 3,914
30 Supervalu, Inc. .................................. 1,076
90 Sysco Corp. (G)................................... 3,322
126 Target Corp. ..................................... 7,164
20 Tiffany & Co. .................................... 777
67 TJX Cos., Inc. #.................................. 1,895
13 V.F. Corp. ....................................... 1,075
11 W.W. Grainger, Inc. .............................. 748
359 Wal-Mart Stores, Inc. ............................ 16,599
14 Wendy's International, Inc. ...................... 463
21 Whole Foods Market, Inc. (G)...................... 981
39 Yum! Brands, Inc. ................................ 2,281
----------
168,024
----------
CONSUMER STAPLES -- 5.5%
112 Anheuser-Busch Cos., Inc. #....................... 5,530
96 Archer Daniels Midland Co. ....................... 3,070
65 Avon Products, Inc. .............................. 2,148
32 Campbell Soup Co. (G)............................. 1,237
22 Clorox Co. ....................................... 1,424
298 Coca-Cola Co. .................................... 14,379
41 Coca-Cola Enterprises, Inc. ...................... 827
75 Colgate-Palmolive Co. ............................ 4,906
75 ConAgra Foods, Inc. .............................. 2,012
31 Constellation Brands, Inc. Class A (D)............ 894
20 Dean Foods Co. (D)................................ 824
19 Estee Lauder Cos., Inc. .......................... 759
50 General Mills, Inc. .............................. 2,889
48 H.J. Heinz Co. ................................... 2,168
25 Hershey Co. ...................................... 1,265
37 Kellogg Co. (G)................................... 1,837
19 McCormick & Co., Inc. ............................ 740
7 Molson Coors Brewing Co. ......................... 512
20 Pepsi Bottling Group, Inc. ....................... 621
240 PepsiCo, Inc. .................................... 15,016
463 Procter & Gamble Co. ............................. 29,767
25 Reynolds American, Inc. (G)....................... 1,643
109 Sara Lee Corp. ................................... 1,860
37 Tyson Foods, Inc. Class A......................... 605
24 UST, Inc. (G)..................................... 1,368
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
CONSUMER STAPLES -- (CONTINUED)
35 Weyerhaeuser Co. ................................. $ 2,445
32 Wm. Wrigley Jr. Co. (G)........................... 1,660
----------
102,406
----------
ENERGY -- 9.3%
67 Anadarko Petroleum Corp. ......................... 2,925
48 Apache Corp. ..................................... 3,204
43 BJ Services Co. .................................. 1,255
61 Chesapeake Energy Corp. .......................... 1,765
319 Chevron Corp. .................................... 23,430
241 ConocoPhillips.................................... 17,308
65 Devon Energy Corp. ............................... 4,335
36 EOG Resources, Inc. (G)........................... 2,224
852 ExxonMobil Corp. ................................. 65,326
147 Halliburton Co. .................................. 4,564
40 Hess Corp. (G).................................... 1,963
26 KeySpan Corp. .................................... 1,054
51 Marathon Oil Corp. ............................... 4,751
27 Murphy Oil Corp. ................................. 1,388
44 Nabors Industries Ltd. (D)........................ 1,307
7 Nicor, Inc. ...................................... 304
20 Noble Corp. ...................................... 1,508
126 Occidental Petroleum Corp. ....................... 6,151
6 Peoples Energy Corp. ............................. 250
16 Rowan Companies, Inc. ............................ 535
172 Schlumberger Ltd. ................................ 10,879
38 Sempra Energy..................................... 2,144
18 Sunoco, Inc. ..................................... 1,122
43 Transocean, Inc. (D)(G)........................... 3,461
88 Valero Energy Corp. .............................. 4,521
50 Weatherford International Ltd. (D)................ 2,076
87 Williams Cos., Inc. .............................. 2,277
53 XTO Energy, Inc. #................................ 2,515
----------
174,542
----------
FINANCE -- 23.6%
49 ACE Ltd. ......................................... 2,966
76 Aetna, Inc. ...................................... 3,294
79 Aflac, Inc. ...................................... 3,652
94 Allstate Corp. ................................... 6,123
16 AMBAC Financial Group, Inc. ...................... 1,425
176 American Express Co. ............................. 10,686
391 American International Group, Inc. #.............. 28,037
35 Ameriprise Financial, Inc. ....................... 1,930
45 AON Corp. ........................................ 1,601
14 Apartment Investment & Management Co. ............ 790
32 Archstone-Smith Trust (G)......................... 1,858
656 Bank of America Corp. ............................ 35,042
112 Bank of New York Co., Inc. ....................... 4,398
79 BB&T Corp. ....................................... 3,474
17 Bear Stearns & Co., Inc. ......................... 2,792
17 Boston Properties, Inc. .......................... 1,908
60 Capital One Financial Corp. ...................... 4,581
27 CB Richard Ellis Group, Inc. Class A (D).......... 900
149 Charles Schwab Corp. ............................. 2,891
5 Chicago Mercantile Exchange Holdings, Inc. ....... 2,593
</Table>
The accompanying notes are an integral part of these financial statements.
4
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
FINANCE -- (CONTINUED)
62 Chubb Corp. ...................................... $ 3,277
15 CIGNA Corp. ...................................... 1,968
26 Cincinnati Financial Corp. ....................... 1,183
29 CIT Group, Inc. .................................. 1,617
718 Citigroup, Inc. .................................. 40,002
23 Comerica, Inc. (G)................................ 1,361
27 Commerce Bancorp, Inc. (G)........................ 966
19 Compass Bancshares, Inc. (G)...................... 1,133
30 Comverse Technology, Inc. (D)(G).................. 623
91 Countrywide Financial Corp. ...................... 3,853
62 E*Trade Financial Corp. (D)....................... 1,399
51 Equity Office Properties Trust (G)................ 2,474
43 Equity Residential Properties Trust............... 2,166
101 Federal Home Loan Mortgage Corp. ................. 6,880
143 Federal National Mortgage Association............. 8,464
13 Federated Investors, Inc. ........................ 446
82 Fifth Third Bancorp (G)........................... 3,339
18 First Horizon National Corp. ..................... 760
24 Franklin Resources, Inc. ......................... 2,681
71 Genworth Financial, Inc. ......................... 2,433
62 Goldman Sachs Group, Inc. ........................ 12,406
24 Humana, Inc. (D).................................. 1,344
35 Huntington Bancshares, Inc. ...................... 824
29 Janus Capital Group, Inc. ........................ 628
507 JP Morgan Chase & Co. ............................ 24,490
59 Keycorp........................................... 2,234
33 Kimco Realty Corp. ............................... 1,483
19 Legg Mason, Inc. (G).............................. 1,830
77 Lehman Brothers Holdings, Inc. ................... 6,054
46 Lincoln National Corp. ........................... 3,060
69 Loews Corp. ...................................... 2,854
11 M&T Bank Corp. ................................... 1,380
81 Marsh & McLennan Cos., Inc. ...................... 2,471
37 Marshall & Ilsley Corp. .......................... 1,795
20 MBIA, Inc. (G).................................... 1,483
43 Medco Health Solutions, Inc. (D).................. 2,292
60 Mellon Financial Corp. ........................... 2,539
129 Merrill Lynch & Co., Inc. ........................ 12,024
122 Metlife, Inc. .................................... 7,204
13 MGIC Investment Corp. (G)......................... 782
155 Morgan Stanley.................................... 12,596
92 National City Corp. (G)........................... 3,373
27 Northern Trust Corp. (G).......................... 1,663
26 Plum Creek Timber Co., Inc. (G)................... 1,032
43 PNC Financial Services Group, Inc. ............... 3,183
43 Principal Financial Group, Inc. .................. 2,541
115 Progressive Corp. ................................ 2,775
36 ProLogis.......................................... 2,200
77 Prudential Financial, Inc. ....................... 6,577
18 Public Storage, Inc. ............................. 1,745
31 Realogy Corp. (D)................................. 949
107 Regions Financial Corp. .......................... 3,985
9 Ryder System, Inc. ............................... 454
16 SAFECO Corp. ..................................... 988
32 Simon Property Group, Inc. ....................... 3,273
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
FINANCE -- (CONTINUED)
60 SLM Corp. ........................................ $ 2,914
53 Sovereign Bancorp, Inc. #......................... 1,333
104 St. Paul Travelers Cos., Inc. .................... 5,574
49 State Street Corp. ............................... 3,276
52 SunTrust Banks, Inc. ............................. 4,371
48 Synovus Financial Corp. .......................... 1,464
39 T. Rowe Price Group, Inc. ........................ 1,685
16 Torchmark Corp. .................................. 1,001
197 UnitedHealth Group, Inc. ......................... 10,578
55 UnumProvident Corp. .............................. 1,139
257 US Bancorp (G).................................... 9,298
19 Vornado Realty Trust.............................. 2,291
279 Wachovia Corp. ................................... 15,864
138 Washington Mutual, Inc. .......................... 6,283
91 Wellpoint, Inc. (D)............................... 7,134
493 Wells Fargo & Co. (G)............................. 17,548
112 Western Union Co.................................. 2,511
27 XL Capital Ltd. Class A........................... 1,961
16 Zions Bancorporation #............................ 1,286
----------
441,988
----------
HEALTH CARE -- 10.4%
224 Abbott Laboratories............................... 10,926
22 Allergan, Inc. (G)................................ 2,687
28 Amerisource Bergen Corp. ......................... 1,263
171 Amgen, Inc. (D)................................... 11,650
15 Bard (C.R.), Inc. ................................ 1,253
16 Barr Pharmaceuticals, Inc. (D).................... 777
8 Bausch & Lomb, Inc. .............................. 411
96 Baxter International, Inc. ....................... 4,437
36 Becton, Dickinson & Co. .......................... 2,526
49 Biogen Idec, Inc. (D)#............................ 2,423
36 Biomet, Inc. ..................................... 1,477
172 Boston Scientific Corp. (D)....................... 2,961
287 Bristol-Myers Squibb Co. ......................... 7,565
59 Cardinal Health, Inc. ............................ 3,817
62 Caremark Rx, Inc. ................................ 3,560
54 Celgene Corp. (D)................................. 3,133
23 Coventry Health Care, Inc. (D).................... 1,166
120 CVS Corp. ........................................ 3,721
144 Eli Lilly & Co. .................................. 7,498
46 Forest Laboratories, Inc. (D)..................... 2,342
38 Genzyme Corp. (D)................................. 2,365
67 Gilead Sciences, Inc. (D)......................... 4,365
35 Health Management Associates, Inc. Class A........ 743
23 Hospira, Inc. (D)................................. 766
424 Johnson & Johnson................................. 27,977
36 King Pharmaceuticals, Inc. (D).................... 565
18 Laboratory Corp. of America Holdings (D).......... 1,345
11 Manor Care, Inc. ................................. 507
43 McKesson Corp. ................................... 2,194
35 MedImmune, Inc. (D)(G)............................ 1,136
317 Merck & Co., Inc. #............................... 13,837
79 Monsanto Co. ..................................... 4,170
31 Mylan Laboratories, Inc. (G)...................... 621
1,054 Pfizer, Inc. ..................................... 27,295
</Table>
The accompanying notes are an integral part of these financial statements.
5
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
23 Quest Diagnostics, Inc. .......................... $ 1,240
217 Schering-Plough Corp. ............................ 5,123
10 Sigma-Aldrich Corp. .............................. 746
52 St. Jude Medical, Inc. (D)........................ 1,889
43 Stryker Corp. (G)................................. 2,396
69 Tenet Healthcare Corp. (D)........................ 480
147 Walgreen Co. ..................................... 6,732
15 Watson Pharmaceuticals, Inc. (D).................. 393
197 Wyeth............................................. 10,025
35 Zimmer Holdings, Inc. (D)......................... 2,736
----------
195,239
----------
SERVICES -- 6.9%
37 Allied Waste Industries, Inc. (D)................. 456
21 Apollo Group, Inc. Class A (D)(G)................. 799
34 Autodesk, Inc. (D)................................ 1,372
80 Automatic Data Processing, Inc. #................. 3,964
67 Avaya, Inc. (D)................................... 931
114 CBS Corp. Class B................................. 3,561
20 Cintas Corp. ..................................... 790
72 Clear Channel Communications, Inc. ............... 2,566
21 Cognizant Technology Solutions Corp. (D).......... 1,597
304 Comcast Corp. Class A (D)(G)...................... 12,876
25 Computer Sciences Corp. (D)....................... 1,340
20 Convergys Corp. (D)............................... 480
113 DirecTV Group, Inc. (D)........................... 2,811
10 Dow Jones & Co., Inc. ............................ 361
12 E.W. Scripps Co. ................................. 609
26 Ecolab, Inc. ..................................... 1,180
76 Electronic Data Systems Corp. .................... 2,083
18 Equifax, Inc. (D)................................. 743
20 Express Scripts, Inc. (D)(G)...................... 1,418
45 FedEx Corp. ...................................... 4,864
13 Fluor Corp. ...................................... 1,053
34 Gannett Co., Inc. ................................ 2,068
47 H & R Block, Inc. ................................ 1,085
27 Harrah's Entertainment, Inc. ..................... 2,252
57 Hilton Hotels Corp. .............................. 1,974
29 IMS Health, Inc. ................................. 800
65 Interpublic Group of Cos., Inc. (D)(G)............ 789
49 Marriott International, Inc. Class A.............. 2,346
52 McGraw-Hill Cos., Inc. ........................... 3,521
6 Meredith Corp. (G)................................ 321
19 Monster Worldwide, Inc. (D)....................... 877
34 Moody's Corp. .................................... 2,369
21 New York Times Co. Class A (G).................... 512
342 News Corp. Class A................................ 7,348
50 Novell, Inc. (D).................................. 311
25 Omnicom Group, Inc. .............................. 2,606
49 Paychex, Inc. .................................... 1,956
32 R.R. Donnelley & Sons Co. ........................ 1,127
25 Robert Half International, Inc. .................. 909
19 Sabre Holdings Corp. ............................. 615
31 Starwood Hotels & Resorts......................... 1,938
514 Sun Microsystems, Inc. (D)........................ 2,788
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SERVICES -- (CONTINUED)
584 Time Warner, Inc. ................................ $ 12,709
28 Tribune Co. (G)................................... 862
51 Unisys Corp. (D).................................. 398
157 United Parcel Service, Inc. Class B............... 11,763
37 Univision Communications, Inc. Class A (D)(G)..... 1,307
102 Viacom, Inc. Class B (D).......................... 4,194
302 Walt Disney Co. .................................. 10,359
78 Waste Management, Inc. ........................... 2,875
29 Wyndham Worldwide Corp. (D)....................... 929
----------
129,762
----------
TECHNOLOGY -- 22.2%
17 ADC Telecommunications, Inc. (D).................. 251
85 Adobe Systems, Inc. (D)#.......................... 3,507
80 Advanced Micro Devices, Inc. (D)(G)............... 1,632
17 Affiliated Computer Services, Inc. Class A (D)#... 845
60 Agilent Technologies, Inc. (D).................... 2,082
55 Alltel Corp. ..................................... 3,305
53 Altera Corp. (D).................................. 1,041
25 American Power Conversion Corp. .................. 759
50 Analog Devices, Inc. ............................. 1,644
124 Apple Computer, Inc. (D)(G)....................... 10,543
27 Applera Corp. -- Applied Biosystems Group......... 983
562 AT&T, Inc. #...................................... 20,080
267 BellSouth Corp. .................................. 12,559
30 BMC Software, Inc. (D)............................ 966
69 Broadcom Corp. Class A (D)........................ 2,214
60 CA, Inc. ......................................... 1,359
17 CenturyTel, Inc. ................................. 733
12 Ciena Corp. (D)................................... 341
888 Cisco Systems, Inc. (D)........................... 24,259
47 Citizens Communications Co. ...................... 675
27 Citrix Systems, Inc. (D).......................... 717
52 Compuware Corp. (D)............................... 431
13 Cooper Industries Ltd. ........................... 1,203
229 Corning, Inc. (D)................................. 4,279
35 Danaher Corp. (G)................................. 2,507
332 Dell, Inc. (D)#................................... 8,330
30 Dover Corp. ...................................... 1,461
45 Electronic Arts, Inc. (D)......................... 2,270
22 Embarq Corp. ..................................... 1,146
322 EMC Corp. (D)#.................................... 4,249
117 Emerson Electric Co. ............................. 5,167
24 Fidelity National Information Services, Inc. ..... 950
112 First Data Corp. ................................. 2,856
25 Fiserv, Inc. (D).................................. 1,326
1,507 General Electric Co. ............................. 56,064
31 Google, Inc. (D).................................. 14,421
10 Harman International Industries, Inc. ............ 949
400 Hewlett-Packard Co. .............................. 16,490
33 IAC/Interactive Corp. (D)(G)...................... 1,211
843 Intel Corp. ...................................... 17,066
220 International Business Machines Corp. #........... 21,393
51 Intuit, Inc. (D).................................. 1,559
27 Jabil Circuit, Inc. .............................. 665
</Table>
The accompanying notes are an integral part of these financial statements.
6
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
31 JDS Uniphase Corp. (D)............................ $ 515
83 Juniper Networks, Inc. (D)........................ 1,566
18 L-3 Communications Holdings, Inc. ................ 1,497
14 Lexmark International, Inc. ADR (D)............... 1,047
44 Linear Technology Corp. .......................... 1,325
52 Lockheed Martin Corp. ............................ 4,793
59 LSI Logic Corp. (D)............................... 527
47 Maxim Integrated Products, Inc. .................. 1,439
168 Medtronic, Inc. .................................. 9,003
110 Micron Technology, Inc. (D)(G).................... 1,540
1,264 Microsoft Corp. .................................. 37,756
8 Millipore Corp. (D)............................... 519
21 Molex, Inc. ...................................... 655
353 Motorola, Inc. ................................... 7,265
42 National Semiconductor Corp. (G).................. 960
26 NCR Corp. (D)..................................... 1,112
55 Network Appliance, Inc. (D)....................... 2,147
52 NVIDIA Corp. (D).................................. 1,923
585 Oracle Corp. (D).................................. 10,022
18 PerkinElmer, Inc. ................................ 400
31 PMC-Sierra, Inc. (D)(G)........................... 207
23 QLogic Corp. (D).................................. 506
242 Qualcomm, Inc. ................................... 9,128
235 Qwest Communications International, Inc. (D)(G)... 1,967
65 Raytheon Co. ..................................... 3,433
24 Rockwell Collins, Inc. ........................... 1,544
33 SanDisk Corp. (D)................................. 1,416
79 Sanmina-SCI Corp. (D)............................. 272
134 Solectron Corp. (D)............................... 431
423 Sprint Nextel Corp. .............................. 7,993
137 Symantec Corp. (D)(G)............................. 2,859
37 Symbol Technologies, Inc. ........................ 556
12 Tektronix, Inc. (G)............................... 353
65 Tellabs, Inc. (D)................................. 665
217 Texas Instruments, Inc. .......................... 6,247
60 Thermo Fisher Scientific Inc. (D)................. 2,701
291 Tyco International Ltd. .......................... 8,838
36 VeriSign, Inc. (D)................................ 861
427 Verizon Communications, Inc. ..................... 15,893
15 Waters Corp. (D)#................................. 725
12 Whirlpool Corp. (G)............................... 955
70 Windstream Corp. ................................. 991
49 Xilinx, Inc. ..................................... 1,169
179 Yahoo!, Inc. (D).................................. 4,570
----------
416,779
----------
TRANSPORTATION -- 1.3%
52 Burlington Northern Santa Fe Corp. ............... 3,872
65 Carnival Corp. ................................... 3,190
64 CSX Corp. (G)..................................... 2,191
59 General Dynamics Corp. ........................... 4,397
38 Harley-Davidson, Inc. (G)......................... 2,671
58 Norfolk Southern Corp. ........................... 2,919
</Table>
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
TRANSPORTATION -- (CONTINUED)
116 Southwest Airlines Co. ........................... $ 1,772
39 Union Pacific Corp. .............................. 3,625
----------
24,637
----------
UTILITIES -- 3.5%
97 AES Corp. (D)..................................... 2,139
24 Allegheny Energy, Inc. (D)........................ 1,111
30 Ameren Corp. (G).................................. 1,617
58 American Electric Power Co., Inc. ................ 2,463
46 CenterPoint Energy, Inc. (G)...................... 758
33 CMS Energy Corp. (D).............................. 543
38 Consolidated Edison, Inc. (G)..................... 1,803
26 Constellation Energy Group, Inc. ................. 1,811
52 Dominion Resources, Inc. ......................... 4,331
26 DTE Energy Co. (G)................................ 1,259
184 Duke Energy Corp. ................................ 6,094
55 Dynegy, Inc. (D).................................. 400
48 Edison International.............................. 2,164
103 El Paso Corp. .................................... 1,575
30 Entergy Corp. .................................... 2,790
98 Exelon Corp. ..................................... 6,068
47 FirstEnergy Corp. ................................ 2,810
59 FPL Group, Inc. .................................. 3,213
16 Kinder Morgan, Inc. .............................. 1,660
40 NiSource, Inc. ................................... 964
51 PG&E Corp. (G).................................... 2,412
15 Pinnacle West Capital Corp. ...................... 739
56 PPL Corp. ........................................ 1,998
37 Progress Energy, Inc. ............................ 1,826
37 Public Service Enterprise Group, Inc. ............ 2,450
13 Questar Corp. .................................... 1,046
109 Southern Co. ..................................... 4,003
31 TECO Energy, Inc. ................................ 527
67 TXU Corp. ........................................ 3,639
60 Xcel Energy, Inc. ................................ 1,372
----------
65,585
----------
Total common stock
(cost $1,484,804)............................... $1,860,204
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENTS -- 7.6%
REPURCHASE AGREEMENTS -- 0.7%
$ 4,919 BNP Paribas Joint Repurchase Agreement,
4.75%, 01/02/2007............................... $ 4,919
3,889 RBS Greenwich Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 3,889
4,919 UBS Securities LLC Joint Repurchase Agreement,
4.75%, 01/02/2007............................... 4,919
----------
13,727
----------
</Table>
The accompanying notes are an integral part of these financial statements.
7
HARTFORD INDEX HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MARKET
SHARES VALUE (W)
- --------- ----------
SHORT-TERM INVESTMENTS -- (CONTINUED)
SECURITIES PURCHASED WITH PROCEEDS FROM SECURITY
LENDING -- 6.9%
128,688 Mellon GSL DBTII Collateral Fund.................. $ 128,688
----------
<Caption>
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT SECURITIES -- 0.1%
$ 2,000 U.S. Treasury Bill,
4.87%, 03/15/2007 (M)(S)........................ $ 1,981
----------
Total short-term investments
(cost $144,396)................................. $ 144,396
----------
Total investments in securities
(cost $1,629,200) (C)........................... $2,004,600
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 0.75% of total net assets at December 31, 2006.
(C)At December 31, 2006, the cost of securities for federal income tax
purposes was $1,650,067 and the aggregate gross unrealized appreciation and
depreciation based on that cost were:
<Table>
Unrealized appreciation....................... $ 508,279
Unrealized depreciation....................... (153,746)
---------
Net unrealized appreciation................... $ 354,533
=========
</Table>
(D)Currently non-income producing.
# This security, or a portion of this security, has been segregated to
cover funding requirements on investment transactions settling in the
future.
(G) Security is partially on loan at December 31, 2006.
(M) The interest rate disclosed for these securities represents the
effective yield on the date of acquisition.
(S)Security pledged as initial margin deposit for open futures contracts
at December 31, 2006.
FUTURES CONTRACTS OUTSTANDING AT DECEMBER 31, 2006
<Table>
<Caption>
UNREALIZED
NUMBER OF APPRECIATION
DESCRIPTION CONTRACTS* POSITION EXPIRATION (DEPRECIATION)
----------- ---------- -------- ---------- --------------
Standard & Poor's
500.................. 51 Long March 2007 $(66)
====
</Table>
* The number of contracts does not omit 000's.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
The accompanying notes are an integral part of these financial statements.
8
HARTFORD INDEX HLS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
INDEX
HLS FUND
----------
ASSETS:
Investments in securities, at value;...................... $2,004,600
Receivables:
Investment securities sold.............................. 345
Fund shares sold........................................ 415
Dividends and interest.................................. 2,557
Other assets.............................................. 7
----------
Total assets................................................ 2,007,924
----------
LIABILITIES:
Bank overdraft -- U.S. Dollars............................ 28
Payable upon return of securities loaned.................. 128,688
Payables:
Fund shares redeemed.................................... 3,843
Variation margin........................................ 69
Investment management and advisory fees................. 26
Administrative services fee............................. 52
Distribution fees....................................... 10
Accrued expenses.......................................... 182
----------
Total liabilities........................................... 132,898
----------
Net assets.................................................. $1,875,026
==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $1,512,515
Accumulated undistributed net investment income............. 647
Accumulated net realized loss on investments................ (13,470)
Unrealized appreciation of investments...................... 375,334
----------
Net assets.................................................. $1,875,026
==========
Shares authorized........................................... 4,000,000
----------
Par value................................................... $ 0.001
----------
CLASS IA: Net asset value per share......................... $ 32.36
----------
Shares outstanding................................. 49,382
----------
Net assets......................................... $1,598,176
----------
CLASS IB: Net asset value per share......................... $ 32.22
----------
Shares outstanding................................. 8,592
----------
Net assets......................................... $ 276,850
----------
@ Cost of securities........................................ $1,629,200
----------
@ Market value of securities on loan........................ $ 124,678
----------
</Table>
The accompanying notes are an integral part of these financial statements.
9
HARTFORD INDEX HLS FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
INDEX
HLS FUND
--------
INVESTMENT INCOME:
Dividends................................................. $ 35,810
Interest.................................................. 535
Securities lending........................................ 198
--------
Total investment income, net............................ 36,543
--------
EXPENSES:
Investment management and advisory fees................... 3,456
Administrative services fees.............................. 3,770
Distribution fees -- Class IB............................. 661
Custodian fees............................................ 80
Accounting services....................................... 283
Board of Directors' fees.................................. 31
Other expenses............................................ 266
--------
Total expenses (before waivers and fees paid
indirectly)............................................ 8,547
Expense waivers........................................... (1,572)
Custodian fee offset...................................... (5)
--------
Total waivers and fees paid indirectly.................. (1,577)
--------
Total expenses, net..................................... 6,970
--------
Net investment income..................................... 29,573
--------
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
CONTRACTS:
Net realized gain on investments.......................... 86,852
Net realized gain on futures contracts.................... 2,005
--------
NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES
CONTRACTS................................................. 88,857
--------
NET CHANGES IN UNREALIZED APPRECIATION OF INVESTMENTS AND
FUTURES CONTRACTS:
Net unrealized appreciation of investments................ 149,275
Net unrealized appreciation of futures contracts.......... 94
--------
NET CHANGES IN UNREALIZED APPRECIATION OF INVESTMENTS AND
FUTURES CONTRACTS......................................... 149,369
--------
NET GAIN ON INVESTMENTS AND FUTURES CONTRACTS............... 238,226
--------
PAYMENTS FROM AFFILIATE (SEE NOTE 3G IN ACCOMPANYING NOTES
TO FINANCIAL STATEMENTS).................................. 90
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $267,889
========
</Table>
The accompanying notes are an integral part of these financial statements.
10
HARTFORD INDEX HLS FUND
STATEMENTS OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
INDEX HLS FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
OPERATIONS:
Net investment income..................................... $ 29,573 $ 29,486
Net realized gain on investments and futures contracts.... 88,857 112,925
Net unrealized appreciation of investments and futures
contracts............................................... 149,369 (55,752)
Payments from affiliate................................... 90 --
---------- ----------
Net increase in net assets resulting from operations...... 267,889 86,659
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (26,105) (32,716)
Class IB................................................ (3,766) (4,176)
From net realized gain on investments
Class IA................................................ (174,313) (56,659)
Class IB................................................ (29,239) (8,074)
---------- ----------
Total distributions..................................... (233,423) (101,625)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 109,735 207,714
Issued on reinvestment of distributions............... 200,417 89,375
Redeemed.............................................. (443,564) (555,228)
---------- ----------
Total capital share transactions........................ (133,412) (258,139)
---------- ----------
Class IB
Sold.................................................. 52,154 57,766
Issued on reinvestment of distributions............... 33,006 12,250
Redeemed.............................................. (76,191) (58,337)
---------- ----------
Total capital share transactions........................ 8,969 11,679
---------- ----------
Net decrease from capital share transactions.............. (124,443) (246,460)
---------- ----------
Net decrease in net assets................................ (89,977) (261,426)
NET ASSETS:
Beginning of period....................................... 1,965,003 2,226,429
---------- ----------
End of period............................................. $1,875,026 $1,965,003
========== ==========
Accumulated undistributed net investment income............. $ 647 $ 1,153
========== ==========
SHARE ACTIVITY:
Class IA
Sold.................................................. 3,386 6,556
Issued on reinvestment of distributions............... 6,466 2,832
Redeemed.............................................. (13,684) (17,524)
---------- ----------
Total share activity.................................... (3,832) (8,136)
---------- ----------
Class IB
Sold.................................................. 1,605 1,840
Issued on reinvestment of distributions............... 1,069 390
Redeemed.............................................. (2,360) (1,852)
---------- ----------
Total share activity.................................... 314 378
---------- ----------
</Table>
The accompanying notes are an integral part of these financial statements.
11
HARTFORD INDEX HLS FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
Hartford Index HLS Fund (the "Fund") serves as an underlying investment
option for certain variable annuity and variable life insurance separate
accounts of Hartford Life Insurance Company ("HLIC") and its affiliates and
certain qualified retirement plans. Certain Hartford HLS Funds may also
serve as underlying investment options for certain variable annuity and
variable life insurance separate accounts of other insurance companies.
Owners of variable annuity contracts and policyholders of variable life
insurance contracts may choose the funds permitted in the accompanying
variable insurance contract prospectus. In addition, participants in certain
qualified retirement plans may choose the funds permitted by their plans.
The Fund is organized under the laws of the State of Maryland and is
registered with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940 as amended, ("1940 Act"), as a diversified
open-end management investment company. The Fund is a series of Hartford
Series Fund, Inc. (the "HLS Funds").
The Fund is divided into Class IA and IB shares. Each class is offered at
net asset value without a sales charge and is subject to the same expenses
except that the Class IB shares are subject to distribution fees charged
pursuant to Distribution and Service Plans. These Distribution and Service
Plans have been adopted in accordance with Rule 12b-1 of the 1940 Act.
Indemnifications: Under the Fund's organizational documents, its directors
and officers are indemnified against certain liabilities arising out of the
performance of their duties to the Fund. In addition, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these contracts and expects the risk of
loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Fund,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
loses are determined on the basis of identified cost.
b) Security Valuation and Investment Income -- The Fund generally uses
market prices in valuing portfolio securities. If market quotations are
not readily available or are deemed unreliable, the Fund will use the
fair value of the security as determined in good faith under policies
and procedures established by and under the supervision of the Fund's
Board of Directors. Market prices may be deemed unreliable, for example,
if a security is thinly traded or if an event has occurred after the
close of the exchange on which a portfolio security is primarily traded
but before the close of the New York Stock Exchange (the "Exchange")
(normally 4:00 p.m. Eastern Time, referred to as the "Valuation Time")
that is expected to affect the value of the portfolio security. The
circumstances in which the Fund may use fair value pricing include,
among others: (i) the occurrence of events that are significant to a
particular issuer, such as mergers, restructuring or defaults; (ii) the
occurrence of events that are significant to an entire market, such as
natural disasters in a particular region or governmental actions; (iii)
trading restrictions on securities; (iv) thinly traded securities and
(v) market events such as trading halts and early market closings. In
addition, with respect to the valuation of securities principally traded
on foreign markets, the Fund uses a fair value pricing service approved
by the Fund's Board of Directors which employs quantitative models to
adjust for "stale" prices caused by the movement of other markets and
other factors occurring after the close of the foreign markets but
before the close of the Exchange. Securities that are primarily traded
on foreign markets may trade on days that are not business days of the
Fund. Because the NAV of the Fund's shares is determined only on
business days of the Fund, the value of the portfolio securities of the
Fund that invests in foreign securities may change on days when a
shareholder will not be able to purchase or redeem shares of the Fund.
Fair value pricing is subjective in nature and the use of fair value
pricing by the Fund may cause the net asset value of their shares to
differ significantly from the net asset value that would have been
calculated using market prices at the close of the exchange on which a
portfolio security is primarily traded but before the close of the
Exchange. There can be no assurance that the Fund could obtain the fair
value assigned to a security if the Fund were to sell the security at
approximately the time at which the Fund determines its NAV per share.
Exchange traded equity securities shall be valued at the last reported
sale price on the exchange or market on which the security is primarily
traded (the "Primary Market") at the Valuation Time. If the security did
not trade on the Primary Market, it may be valued at the Valuation Time
at the last reported sale price on another exchange where it trades. The
value of an equity security not traded on any exchange but traded on the
Nasdaq Stock Market, Inc. System ("Nasdaq") or another over-the-counter
("OTC") market shall be valued at the last reported sale price or
official closing price on the exchange or market on which the security
is primarily traded as of the Valuation Time. If it is not possible to
determine the last reported sale price or official closing price on the
relevant exchange or market at the Valuation Time, the value of the
security shall be taken to be the most recent bid quotation on such
exchange or market at the Valuation Time.
Short term investments with a maturity of more than 60 days when
purchased are valued based on market quotations until the remaining days
to maturity become less than 61 days. Investments that mature in 60 days
or less are valued at amortized cost, which approximates market value.
Securities of foreign issuers and non-dollar securities are translated
from the local currency into U.S. dollars using prevailing exchange
rates.
Options contracts on securities, currencies, indexes, futures contracts,
commodities and other instruments shall be valued at their most recent
sales price at the Valuation Time on the Primary Market on which the
instrument is traded. If the instrument did not trade on the Primary
Market, it may be valued at the most recent sales price at the Valuation
Time on another exchange or market where it did trade.
Futures contracts shall be valued at the final settlement price reported
by the applicable futures exchange. If there were no trades as of the
valuation day, then the contract shall be valued at the closing bid
price as of the Valuation Time.
12
- --------------------------------------------------------------------------------
Financial instruments for which prices are not available from an
independent pricing service, but where an active market exists, are
valued using market quotations obtained from one or more dealers that
make markets in securities or from a widely-used quotation system in
accordance with procedures established by the Fund's Board of Directors.
A foreign currency contract shall be valued based on the price of
underlying currency at the prevailing interpolated exchange rate, which
is a combination of the spot currency rate and the forward currency
rate. Spot currency rates and forward currency rates are obtained from
an independent pricing service on a daily basis not more than one hour
before the Valuation Time. In the event that the applicable pricing
service cannot provide the spot currency rates and forward currency
rates in a timely fashion, such rates may be obtained from a widely-used
quotation system in accordance with procedures established by the Fund's
Board of Directors.
Dividend income is accrued as of the ex-dividend date, except that
certain dividends for foreign securities where the ex-dividend date may
have passed are recorded as soon as the Fund is informed of the dividend
in the exercise of reasonable diligence. Interest income, including
amortization of premium and accretion of discounts, is accrued on a
daily basis.
d) Securities Lending -- The Fund may lend its securities to certain
qualified brokers who pay the Fund negotiated lender fees. The loans are
collateralized at all times with cash, which is then invested in
short-term money market instruments or U.S. government securities with a
market value at least equal to the market value of the securities on
loan. The adequacy of the collateral for securities on loan is monitored
on a daily basis. For instances where the market value of collateral
falls below the market value of the securities out on loan, such
collateral is supplemented on the following day. As with other
extensions of credit, the Fund may bear the risk of delay in recovery of
loaned securities or even loss of rights in the collateral should the
borrower of the securities fail financially.
e) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Fund may transfer uninvested cash balances into a joint trading
account managed by Hartford Investment Management Company (Hartford
Investment Management), a wholly-owned subsidiary of The Hartford
Financial Services Group, Inc. (The Hartford). These balances may be
invested in one or more repurchase agreements and/or short-term money
market instruments.
f) 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 Fund enters into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that serve to
collateralize the repurchase agreement are held by the Fund's custodian
in book entry or physical form in the custodial account of the Fund or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable.
The Fund, together with other investment management companies having
investment advisory agreements with Hartford Investment Management, have
an interest in joint repurchase agreements in the amount of $697,665
dated 12/29/2006 with the brokers indicated on the table below due
01/02/07. These joint repurchase agreements are collateralized as
follows:
<Table>
<Caption>
COLLATERAL
BROKER RATE PRINCIPAL VALUE SECURITY TYPE COUPON RATE MATURITY
------ ----- --------- ---------- ------------------- --------------- ------------
BNP Paribas.............. 4.75% $250,000 $255,050 U.S. Treasury Bonds 5.25% - 8.50% 2020 - 2029
RBS Greenwich Capital
Markets................ 4.75% 197,665 201,624 U.S. Treasury Note 12.00% 2013
UBS Securities LLC....... 4.75% 250,000 255,262 U.S. Treasury Bonds 8.125% - 8.875% 2017 - 2021
U.S. Treasury Note 11.75% 2014
</Table>
The amount to be received upon maturity of the Fund's repurchase
agreement is $13,734.
g) Futures and Options Transactions -- The Fund may invest in futures and
options contracts in order to gain exposure to or protect against
changes in the market. A futures contract is an agreement between two
parties to buy and sell a security at a set price on a future date. When
the Fund enters into futures contracts, the Fund is required to deposit
with a futures commission merchant an amount of "initial margin" of
cash, commercial paper or U.S. Treasury Bills. Subsequent payments,
called maintenance margin, to and from the broker, are made on a daily
basis as the price of the underlying security fluctuates, making the
long and short positions in the futures contract more or less valuable
(i.e., mark-to-market), which results in an unrealized gain or loss to
the Fund.
At any time prior to the expiration of the futures contract, the Fund
may close the position by taking an opposite position, which would
effectively 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 Fund and the Fund realizes a
gain or loss.
The use of futures contracts involve elements of market risk, which may
exceed the amounts recognized in the Statement of Assets and
Liabilities. Changes in the value of the futures contracts may decrease
the effectiveness of the Fund's strategies and potentially result in
loss. The Fund, as shown in the Schedule of Investments, had outstanding
futures contracts as of December 31, 2006.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Assets and Liabilities as an
investment and subsequently "marked-to-market" through net unrealized
appreciation (depreciation) of options to reflect the current market
value of the option as of the end of the reporting period.
The Funds may write covered options. "Covered" means that so long as the
Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option and an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to or greater
than the
13
HARTFORD INDEX HLS FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
fluctuating market value of the option securities of currencies. A Fund
receives a premium for writing a call or put option, which is recorded on
the Fund's Statement of Assets and Liabilities and subsequently
"marked-to-market" through net unrealized appreciation (depreciation) of
options. There is a risk of loss from a change in the value of such
options, which may exceed the related premiums received. The Fund had no
written option activity during the year ended December 31, 2006.
h) Indexed Securities -- The Fund may invest in indexed securities whose
values are linked to changes in interest rates, indices, or other
underlying instruments. The Fund uses these securities to increase or
decrease their exposure to different underlying instruments and to gain
exposure to markets that might be difficult to invest in using
conventional securities. Indexed securities may be more volatile than
their underlying instruments, but any loss is limited to the amount of
the original investment and there may be a limit to the potential
appreciation of the investment. The Fund had no investments in indexed
securities as of December 31, 2006.
i) Federal Income Taxes -- For federal income tax purposes, the Fund
intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (IRC) by distributing
substantially all of its taxable net investment income and net realized
capital gains to their shareholders or otherwise complying with the
requirements of regulated investment companies. The Fund has distributed
substantially all of its income and capital gains in prior years and
intends to distribute substantially all of its income and gains prior to
the next fiscal year end. Accordingly, no provision for federal income
taxes has been made in the accompanying financial statements.
Distributions from short-term capital gains are treated as ordinary
income distributions for federal income tax purposes.
The tax character of distributions paid by the Fund from ordinary income
were $30,059 and $37,778 and the distributions from long-term capital
gains were $203,364 and $63,847, for the years ended December 31, 2006
and December 31, 2005, respectively.
As of December 31, 2006, the Fund's components of distributable earnings
on a tax basis were undistributed ordinary income of $1,537,
undistributed long-term capital gain of $6,441, and unrealized
appreciation of $354,533.
The differences between book-basis and tax-basis unrealized appreciation
are attributable primarily to the tax deferral of losses on wash sales
losses, mark-to-market adjustment for certain derivatives in accordance
with IRC Sec. 1256, the mark-to-market Passive Foreign Investment
Companies and basis differences in real estate investment trusts.
In accordance with American Institute of Certified Public Accountants
Statement of Position 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, the Fund has recorded a
reclassification of its capital account. This reclassification had no
impact on the net asset value per share of the Fund and is designed
generally to present accumulated undistributed net investment income and
realized losses on investments on a tax basis, which is considered to be
more informative to the shareholder. Reclassifications are a result of
permanent differences between GAAP and tax accounting for such items as
foreign currency, distributions representing a return of capital,
investments in mortgage-backed securities, class action settlements
received, expiration of capital loss carryforwards and net operating
losses that reduce capital gain distribution requirements. Adjustments
are made to reflect the impact these items have on current and future
distributions to shareholders. Therefore, the source of the Fund's
distributions may be shown in the accompanying Statements of Changes in
Net Assets as from net investment income, from net realized gains on
investments or from capital depending on the type of book and tax
differences that exist. As of December 31, 2006, the Fund recorded a
reclassification of $(298) to accumulated net investment income and a
reclassification of $298 to accumulated net realized loss on
investments.
The Fund had no capital loss carryforwards for U.S. Federal Tax purposes
as of December 31, 2006.
j) Fund Share Valuation and Distributions to Shareholders -- Orders for the
Fund's shares are executed in accordance with the investment
instructions of the contract holders or plan participants. The net asset
value of the Fund's shares is determined as of the close of each
business day of the Exchange. The net asset value per share is
determined separately for each class of the Fund by dividing the Fund's
net assets attributable to that class by number of shares of the class
outstanding. Orders for the purchase of the Fund's shares received by an
insurance company or plan prior to the close of the Exchange on any day
on which the Exchange is open for business are priced at the per-share
net asset value determined as of the close of the Exchange. Orders
received after the close of the Exchange, or on a day on which the
Exchange and/or the Fund is not open for business, are priced at the
next determined per-share net asset value.
Dividends are declared pursuant to a policy by the Fund's Board of
Directors based upon the investment performance of the Fund. The policy
of the Fund is to pay dividends from net investment income and
distribute realized capital gains, if any, at least once a year.
Distributions from net investment income, net realized capital gains and
capital are determined in accordance with federal income tax
regulations, which may differ from U.S. generally accepted accounting
principles with respect to character and timing. These differences
include the treatment of non-taxable dividends, expiring capital loss
carryforwards, foreign currency gains and losses, deferred due to wash
sales and excise tax regulations. Permanent book and tax basis
differences relating to shareholder distributions result in
reclassifications to capital accounts (see Note 2(i)).
k) Illiquid and Restricted Securities -- The Fund is permitted to invest up
to 15% of its net assets in illiquid securities. "Illiquid Securities"
are those that may not be sold or disposed of in the ordinary course of
business within seven days, at approximately the price used to determine
the Fund's net asset value per share. The Fund may not be able to sell
illiquid securities or other investments when its sub-adviser considers
it desirable to do so or may have to sell such securities or investments
at a price that is lower than the price that could be obtained if the
securities or investments were more liquid. A sale of illiquid
securities or other investments may require more time and may result in
higher dealer discounts and other selling expenses than does the sale of
those that are liquid. Illiquid securities and investments also may be
more difficult to value, due to the unavailability of reliable market
quotations for such securities or investments, and investments in them
may have an adverse
14
- --------------------------------------------------------------------------------
impact on net asset value. The Fund may also purchase certain restricted
securities, commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by the Fund's Board of Directors.
l) Securities Purchased on a When-Issued or Delayed-Delivery
Basis -- Delivery and payment for securities that have been purchased by
the Fund on a forward commitment or when-issued or delayed-delivery
basis take place beyond the customary settlement period. During this
period, such securities are subject to market fluctuations, and the Fund
identifies securities segregated in their records with value at least
equal to the amount of the commitment. As of December 31, 2006, the Fund
had no outstanding when-issued or forward commitments.
m) Use of Estimates -- The preparation of financial statements in conformity
with U.S. 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.
n) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006, but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Fund's financial statements has not yet been determined.
o) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those
fiscal years. As of December 31, 2006, the Funds do not believe the
adoption of FAS 157 will impact the amounts reported in the financial
statements, however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of
certain measurements reported in the Statement of Operations for a
fiscal period.
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors) an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Fund pursuant to investment
management agreements approved by the Fund's Board of Directors and
shareholders. Investment management and advisory fees are accrued daily
and paid monthly.
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
On first $2 billion................................................ 0.20%
On next $3 billion................................................. 0.10%
On next $5 billion................................................. 0.08%
Over $10 billion................................................... 0.07%
</Table>
Effective November 1, 2005, HL Advisors voluntarily agreed to waive
management fees of 0.10% of average total net assets until October 31,
2006. Effective November 1, 2006, HL Advisors has permanently reduced
its management fees for this fund. The new schedule is as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
On first $2 billion................................................ 0.100%
Over $3 billion.................................................... 0.000%
</Table>
Pursuant to sub-advisory agreements between HL Advisors and Hartford
Investment Management, Hartford Investment Management provides the
day-to-day investment management services to the Fund. Hartford
Investment Management determines the purchase and sale of portfolio
securities and places such orders for execution in the name of the Fund.
In conjunction with their investment activity, Hartford Investment
Management regularly furnishes reports to the Fund's Board of Directors
concerning economic forecasts, investment strategy, portfolio activity
and performance of the Fund.
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and the Fund, HLIC provides administrative
services to the Fund and receives monthly compensation at the annual
rate of 0.20% of the Fund's average daily net assets. Effective November
1, 2006, the Fund pays an administrative service fee of 0.20% for the
first $5 billion in average net assets, 0.18% of average net assets for
the next $5 billion and 0.17% for average net assets over $10 billion.
The Fund assumes and pays certain other expenses (including, but not
limited to, accounting, custodian, state taxes and directors' fees).
Directors' fees represent remuneration paid or accrued to directors not
affiliated with HLIC or any other related company. The Fund's
administrative fees are accrued daily and paid monthly.
15
HARTFORD INDEX HLS FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
($000'S OMITTED)
- --------------------------------------------------------------------------------
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and the Fund, Hartford Life provides accounting services to
the Fund and received monthly compensation at the annual rate of 0.015%
of the Fund's average daily net assets. The Fund's accounting services
fees are accrued daily and paid monthly.
d) Operating Expenses -- Allocable expenses of the Fund are charged to the
Fund based on the ratio of the net assets of the Fund to the combined
net assets of the HLS Funds. Non-allocable expenses are charged to the
Fund based on specific identification.
e) Fees Paid Indirectly -- The Fund has entered into agreements with State
Street Global Advisors, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Fund's expenses. The Fund's custodian bank
has also agreed to reduce its fees when the Fund maintains cash on
deposit in the non-interest-bearing custody account. For the year ended
December 31, 2006, these amounts are included in the Statement of
Operations.
The ratio of expenses to average net assets excludes fees paid
indirectly in the financial highlights. Had the fees paid indirectly
been included, the annualized expense ratios for the years listed below,
would have been as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Index HLS Fund..... 0.33% 0.58% 0.42% 0.67% 0.44% 0.69%
</Table>
f) Distribution Plan for Class IB shares -- The Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, the Fund compensates
the Distributor, Hartford Security Distribution Company, Inc. (a wholly
owned, ultimate subsidiary of Hartford Life, Inc.) from assets
attributable to the Class IB shares for services rendered and expenses
borne in connection with activities primarily intended to result in the
sale of the Class IB shares.
The Distribution Plan provides that the Fund may pay annually up to
0.25% of the average daily net assets of the Fund attributable to its
Class IB shares for activities primarily intended to result in the sale
of Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, the Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard.
g) Payment from Affiliate -- The Fund is available for purchase by the
separate accounts of different variable universal life policies,
variable annuity products, and funding agreements and they are offered
directly to certain qualified retirement plans ("Products"). Although
existing Products contain transfer restrictions, some Products,
particularly older variable annuity products, do not contain
restrictions on the frequency of transfers. In addition, as the result
of the settlement of litigation against Hartford Life, the issuers of
such variable annuity products, the Fund's ability to restrict transfers
by certain owners of older variable annuity products is limited. In
February 2005, Hartford Life agreed with the Board of Directors of the
Fund to indemnify the Fund for any material harm caused to the Fund from
frequent trading by these contracts owners. Pursuant to the agreement,
$90 has been recorded for the year ended December 31, 2006 as Payment
from Affiliate in the Statement of Operations.
The total return in the financial highlights includes payment from
affiliate. Had the payment from affiliate for unrestricted transfers
been excluded, the impact on total return for the year ended December
31, 2006, would have been 0.01% for Class IA and Class IB.
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the Fund's aggregate purchases and
sales of investment securities (excluding short-term investments and U.S.
government obligations) amounted to $75,531 and $406,235, respectively.
5. LINE OF CREDIT:
The Fund participates in a $650,000 committed revolving line of credit
facility. The facility is to be used for temporary or emergency purposes.
Under the arrangement, the Fund is required to own securities having a
market value in excess of 300% of the total bank borrowings. The interest
rate on borrowings varies depending on the nature of the loan. The facility
also requires a fee to be paid based on the amount of the commitment. For
the year ended December 31, 2006, the Fund did not have any borrowings under
this facility.
16
HARTFORD INDEX HLS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(2) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET PAYMENTS UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT FROM GAIN FROM FROM NET
BEGINNING INCOME (TO) (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD INDEX HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... $31.97 $ 0.56 $ -- $ 4.05 $ 4.61 $(0.56)
Class IB.......................... 31.84 0.44 -- 4.06 4.50 (0.46)
For the Year Ended December 31,
2005
Class IA.......................... 32.17 0.51 -- 0.90 1.41 (0.61)
Class IB.......................... 32.02 0.40 -- 0.93 1.33 (0.51)
For the Year Ended December 31,
2004
Class IA.......................... 29.60 0.50 -- 2.56 3.06 (0.39)
Class IB.......................... 29.49 0.44 -- 2.53 2.97 (0.34)
For the Year Ended December 31,
2003
Class IA.......................... 23.46 0.36 -- 6.23 6.59 (0.37)
Class IB.......................... 23.39 0.31 -- 6.19 6.50 (0.32)
For the Year Ended December 31,
2002
Class IA.......................... 31.81(3) 0.32(3) -- (8.29)(3) (7.97) (0.28)(3)
Class IB.......................... 31.75(3) 0.28(3) -- (8.30)(3) (8.02) (0.24)(3)
<Caption>
-- SELECTED PER-SHARE DATA(2) -- -- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------- ---------------------------------------------
NET NET
DISTRIBUTIONS INCREASE ASSET
FROM (DECREASE) VALUE
REALIZED DISTRIBUTIONS IN NET AT END NET ASSETS
CAPITAL FROM TOTAL ASSET OF TOTAL AT END OF
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN PERIOD
------------- ------------- ------------- ---------- ------ ------ -----------
HARTFORD INDEX HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... $(3.66) $ -- $(4.22) $ 0.39 $32.36 15.46%(5) $ 1,598,176
Class IB.......................... (3.66) -- (4.12) 0.38 32.22 15.17(5) 276,850
For the Year Ended December 31,
2005
Class IA.......................... (1.00) -- (1.61) (0.20) 31.97 4.50 1,701,424
Class IB.......................... (1.00) -- (1.51) (0.18) 31.84 4.24 263,579
For the Year Ended December 31,
2004
Class IA.......................... (0.10) -- (0.49) 2.57 32.17 10.39 1,973,470
Class IB.......................... (0.10) -- (0.44) 2.53 32.02 10.12 252,959
For the Year Ended December 31,
2003
Class IA.......................... (0.08) -- (0.45) 6.14 29.60 28.13 1,934,490
Class IB.......................... (0.08) -- (0.40) 6.10 29.49 27.81 195,900
For the Year Ended December 31,
2002
Class IA.......................... (0.10)(3) -- (0.38) (8.35) 23.46(3) (22.45) 1,553,260
Class IB.......................... (0.10)(3) -- (0.34) (8.36) 23.39(3) (22.63) 68,832
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS TO AVERAGE PORTFOLIO
BEFORE AFTER NET TURNOVER
WAIVERS(1) WAIVERS(1) ASSETS RATE(4)
---------- ---------- ---------- ---------
HARTFORD INDEX HLS FUND
For the Year Ended December 31,
2006
Class IA.......................... 0.42% 0.33% 1.60% 4%
Class IB.......................... 0.67 0.58 1.36 --
For the Year Ended December 31,
2005
Class IA.......................... 0.42 0.42 1.46 5
Class IB.......................... 0.67 0.67 1.21 --
For the Year Ended December 31,
2004
Class IA.......................... 0.44 0.44 1.60 5
Class IB.......................... 0.69 0.69 1.35 --
For the Year Ended December 31,
2003
Class IA.......................... 0.44 0.44 1.40 3
Class IB.......................... 0.69 0.69 1.15 --
For the Year Ended December 31,
2002
Class IA.......................... 0.44 0.44 1.18 15
Class IB.......................... 0.69 0.67 0.95 --
</Table>
- ---------------
(1) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(2) Information presented relates to a share outstanding throughout the
indicated period.
(3) Per share amounts have been restated to reflect a reverse stock split for
Classes IA and IB shares effective November 22, 2002.
(4) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(5) Total return without the inclusion of the Payments from Affiliate, as noted
on the Statement of Operations, can be found in Note 3(g).
See Notes to Financial Statements.
17
HARTFORD INDEX HLS FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of
Hartford Series Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Hartford Index HLS Fund (one of the twenty-six
portfolios constituting the Hartford Series Fund, Inc.) (the "Fund") as of
December 31, 2006, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian
or brokers. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Hartford Index HLS Fund of Hartford Series Fund, Inc. at December 31, 2006, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
18
HARTFORD INDEX HLS FUND
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Fund and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the Fund
pursuant to the Investment Company Act of 1940. Each officer and three of the
Fund's directors, as noted in the chart below, are "interested" persons of the
Fund. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by the Fund can
be found in the Statement of Operations herein. The Fund does not pay salaries
or compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
19
HARTFORD INDEX HLS FUND
DIRECTORS AND OFFICERS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms,
Fleege was Counsel for Amerprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005
20
HARTFORD INDEX HLS FUND
HOW TO OBTAIN A COPY OF THE FUND'S PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities and a record of how the Fund
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Fund's Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
21
HARTFORD INDEX HLS FUND
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,123.98 $1.82
Class IB........... $1,000.00 $1,148.71 $3.20
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- ----------- -----------
HARTFORD INDEX HLS
FUND
Class IA........... $1,000.00 $1,023.49 $1.73 0.34% 184 365
Class IB........... $1,000.00 $1,022.23 $3.01 0.59% 184 365
</Table>
22
HARTFORD INDEX HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
the continuation of the mutual fund's investment advisory and sub-advisory
agreements after an initial two year period.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each HLS Fund with an agreement up for
renewal with HL Investment Advisors, LLC ("HL Advisors") and the investment
sub-advisory agreements between HL Advisors and each Fund's respective
sub-adviser(s) ("sub-advisers," and together with HL Advisors,
"advisers") -- Hartford Investment Management Company ("Hartford Investment"),
Holland Capital Management, L.P. ("Holland Capital"), Lazard Asset Management
LLC ("Lazard"), Northern Capital Management, LLC ("Northern Capital"), T. Rowe
Price Associates, Inc. ("T. Rowe Price") and Wellington Management Company, LLP
("Wellington") (collectively, the "agreements"), including the Hartford Index
HLS Fund. The other HLS Funds with agreements renewed at the August 1-2, 2006
meeting are not described in this annual report. In the months preceding this
meeting, the Board requested, received, and reviewed written responses from the
advisers to questions posed to them on behalf of the Independent Directors and
supporting materials relating to those questions and responses. In addition, the
Board received in-person presentations about each Fund and the related
agreements by Fund officers and representatives of HL Advisors at the Board's
meetings on June 20-21, 2006 and August 1-2, 2006. In considering the approval
of the agreements, the Board also took into account information provided to the
Board at its meetings throughout the year, including reports on Fund
performance, compliance, shareholder services, and the other services provided
to the Funds by the advisers and their affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
Nature, Extent and Quality of Services
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as well as
its willingness to consider and implement organizational and operational
changes, including hiring additional personnel, designed to improve services to
the Funds, and its investments in infrastructure in light of increased
regulatory
- ---------------
1 Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life Insurance
Company ("Hartford Life"), under which Hartford Life provides certain
administrative services to those Funds. For those Funds that have separate
management and administrative agreements, the Board considered the fees
payable under both agreements in the aggregate.
23
HARTFORD INDEX HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
requirements and other developments. The Board considered the progress that
Hartford Investment has made in developing an equity management capability. In
addition, the Board considered the quality of each adviser's communications with
the Board, and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
Performance of the Funds, HL Advisors, and the Sub-Advisers
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
With respect to certain specific Funds, the Board considered actions HL Advisors
was planning to take to address performance. With respect to MidCap Stock HLS
Fund, sub-advised by Northern Capital, the Board considered HL Advisors' plan to
seek shareholder approval in December 2006 of a proposal to replace Northern
Capital as sub-adviser to the Fund with Hartford Investment. With respect to
Capital Opportunities HLS Fund and LargeCap Growth HLS Fund, each sub-advised by
Holland Capital, the Board considered HL Advisors' plan to seek shareholder
approval in January 2007 with respect to a plan of reorganization by which the
Funds would be merged into Blue Chip Stock HLS Fund. Due to the timing of these
proposed changes, the Board concluded that it would be in the best interests of
each Fund's shareholders to renew the existing sub-advisory agreements for these
Funds while HL Advisors sought shareholder approval of these proposals.
24
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, in the case of
the Funds mentioned above, that HL Advisors is addressing the Board's concerns
about investment performance, and the Board had continued confidence in HL
Advisors' and the sub-advisers' overall capabilities to manage each Fund.
Costs of the Services and Profitability of HL Advisors and the Sub-Advisers
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability of the other sub-advisers. In evaluating such sub-adviser's
profitability with respect to the Funds, the Board considered primarily HL
Advisors' and the sub-advisers' representations that HL Advisors had negotiated
the sub-advisory fees at arm's length, and the sub-advisers' representations
that the fees charged to HL Advisors were comparable to fees charged by the
sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
Comparison of Fees and Services Provided by HL Advisors and the Sub-Advisers
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer groups. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
25
HARTFORD INDEX HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio, net of these reductions. The following reductions were agreed to at the
meeting, each effective January 1, 2007, unless otherwise noted:
- - Blue Chip Stock HLS Fund -- 5 basis points ("bps") contractual fee reduction
plus 5 bps fee waiver;
- - Capital Opportunities HLS Fund -- 20 bps fee waiver;
- - High Yield HLS Fund -- 5 bps fee waiver, effective November 1, 2006;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - LargeCap Growth HLS Fund -- 10 bps fee waiver;
- - MidCap Stock HLS Fund -- 20 bps fee waiver; and
- - Money Market HLS Fund -- 5 bps fee waiver.
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
Economies of Scale
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by HL Advisors, Lipper, and the Consultant, the Board recognized that
there is no uniform methodology for establishing breakpoints, or uniform pattern
in asset levels that trigger breakpoints or the amounts of breakpoints
triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from certain Funds for providing certain
administrative services for those Funds, and that Hartford Life also receives
fees for fund accounting and related services from each of the Funds, and the
Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds'
26
- --------------------------------------------------------------------------------
transfer agent and an affiliate of HL Advisors, receives transfer agency
compensation from the Funds, and the Board reviewed information on the expected
profitability of the Funds' transfer agency function to HISC. The Board
considered information provided by HL Advisors indicating that the fees charged
by HISC to the Funds are reasonable and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research, and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the HLS Funds of
approximately $480,000 per year.
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
* * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
27
<Table>
Annual Report
December 31, 2006 (STAG PHOTO)
</Table>
- Manager Discussions
- Financials
(THE HARTFORD LOGO)
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- 1.3%
$25,345 Wal-Mart Stores, Inc. (L)......................... 5.26% 03/28/2007 $ 25,342
----------
CONSUMER STAPLES -- 3.7%
22,080 Alcoa, Inc. ...................................... 5.30% 01/24/2007 22,006
22,000 Alcoa, Inc. ...................................... 5.32% 02/15/2007 21,855
25,000 Stadshypotek...................................... 5.26% 01/22/2007 24,924
----------
68,785
----------
FINANCE -- 94.9%
25,000 Ab Spin Tab Swedmortgage.......................... 5.27% 01/29/2007 24,898
25,000 Ab Spin Tab Swedmortgage.......................... 5.28% 01/30/2007 24,894
25,000 Alliance & Leicester plc.......................... 5.29% 03/02/2007 24,785
21,000 Alliance & Leicester plc.......................... 5.36% 03/20/2007 20,761
25,000 American Express Credit Corp. (L)................. 5.35% 06/12/2007 25,002
24,500 American General Finance Corp. ................... 5.29% 01/10/2007 24,468
21,200 American General Finance Corp. (L)................ 5.40% 03/23/2007 21,203
22,900 American Honda Finance Corp. ..................... 5.27% 02/05/2007 22,783
26,500 American Honda Finance Corp. (I)(L)............... 5.35% 08/08/2007 26,500
30,920 Amsterdam Funding Corp. .......................... 5.27% 02/02/2007 30,776
27,210 Amsterdam Funding Corp. .......................... 5.28% 01/18/2007 27,142
21,700 Bank of America NA (L)............................ 5.32% 05/15/2007 21,851
26,500 Bank of America NA (L)............................ 5.36% 11/08/2007 26,500
32,750 Barton Capital Corp. ............................. 5.26% 01/12/2007 32,697
25,000 Barton Capital Corp. ............................. 5.27% 01/11/2007 24,963
8,600 Barton Capital Corp. ............................. 5.27% 01/17/2007 8,580
22,000 Bear Stearns & Co., Inc. (L)...................... 5.34% 01/14/2008 22,000
22,100 Bear Stearns & Co., Inc. (L)...................... 5.38% 06/29/2007 22,397
22,000 Bradford & Bingley plc............................ 5.30% 02/12/2007 21,865
21,900 Bradford & Bingley plc............................ 5.34% 02/20/2007 21,743
23,400 Britannia Building Society........................ 5.28% 01/31/2007 23,297
21,900 Britannia Building Society........................ 5.31% 02/27/2007 21,717
25,000 Cafco LLC......................................... 5.28% 01/25/2007 24,912
33,400 Cafco LLC......................................... 5.28% 01/30/2007 33,258
44,000 Caterpillar Financial Services Corp. (L).......... 5.39% 07/27/2007 44,006
25,620 Citibank NA (L)................................... 5.32% 02/14/2007 25,620
25,620 Citibank NA (L)................................... 5.32% 02/22/2007 25,620
19,200 Citigroup Funding, Inc. .......................... 5.27% 01/26/2007 19,130
21,120 Countrywide Financial Corp. ...................... 5.30% 01/16/2007 21,073
22,000 Countrywide Financial Corp. ...................... 5.31% 01/02/2007 21,997
20,000 General Electric Capital Corp. ................... 5.26% 01/26/2007 19,927
</Table>
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
FINANCE -- (CONTINUED)
$19,400 General Electric Capital Corp. (L)................ 5.31% 12/24/2007 $ 19,400
34,400 General Electric Capital Corp. (L)................ 5.45% 01/05/2007 34,400
49,580 Goldman Sachs Group, Inc. (L)..................... 5.46% 03/30/2007 49,599
24,300 HBOS Treasury Services plc........................ 5.28% 02/06/2007 24,172
26,440 HBOS Treasury Services plc (I)(L)................. 5.32% 01/09/2008 26,436
22,500 HSBC Finance Corp. (L)............................ 5.34% 01/04/2008 22,500
26,750 HSBC Finance Corp. ............................... 5.36% 03/16/2007 26,462
26,200 JP Morgan Chase & Co. (L)......................... 5.32% 01/02/2008 26,200
44,000 Lehman Brothers Holdings, Inc. (L)................ 5.40% 05/31/2007 44,015
22,000 Merrill Lynch & Co. (L)........................... 5.33% 12/24/2007 22,000
26,900 Merrill Lynch & Co. (L)........................... 5.36% 05/29/2007 26,899
25,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.43% 06/26/2007 25,011
23,000 Morgan Stanley Dean Witter, Inc. (L).............. 5.48% 01/19/2007 23,001
25,000 Nationwide Building Society (I)................... 5.27% 01/25/2007 24,912
25,000 Nationwide Building Society (I)................... 5.28% 01/29/2007 24,898
21,700 Nordea Bank Ab (I)(L)............................. 5.33% 01/09/2008 21,700
25,000 Northern Rock plc................................. 5.28% 01/30/2007 24,894
25,000 Northern Rock plc................................. 5.30% 03/06/2007 24,766
32,500 Old Line Funding LLC.............................. 5.29% 02/08/2007 32,319
26,520 Old Line Funding LLC.............................. 5.33% 02/07/2007 26,376
33,500 Sheffield Receivables............................. 5.27% 01/18/2007 33,417
31,500 Sheffield Receivables............................. 5.30% 01/16/2007 31,431
22,030 Skandinaviska Enskilda Bank NY (I)(L)............. 5.31% 07/19/2007 22,029
21,600 Skandinaviska Enskilda Bank NY (I)(L)............. 5.34% 01/09/2008 21,600
21,700 SLM Corp. (I)(L).................................. 5.35% 01/11/2008 21,700
18,135 SLM Corp. (L)..................................... 5.50% 01/25/2007 18,137
24,600 Svenska Handelsbanken Ab.......................... 5.30% 03/19/2007 24,327
53,000 Toyota Motor Credit Corp. (L)..................... 5.21% 09/24/2007 53,000
22,000 Toyota Motor Credit Corp. ........................ 5.27% 02/07/2007 21,882
19,356 Triple A-1 Funding................................ 5.30% 01/09/2007 19,333
26,379 UBS Finance LLC................................... 5.27% 01/02/2007 26,375
23,700 UBS Finance LLC................................... 5.27% 01/05/2007 23,686
24,680 Washington Mutual Bank FA (L)..................... 5.35% 08/27/2007 24,680
21,135 Washington Mutual Bank FA (L)..................... 5.41% 02/28/2007 21,137
22,000 Wells Fargo & Co. (L)............................. 5.42% 03/23/2007 22,005
10,200 Westpac Banking Corp. ............................ 5.29% 02/06/2007 10,146
21,600 Westpac Banking Corp. (I)(L)...................... 5.32% 01/16/2008 21,600
20,700 Yorktown Capital.................................. 5.27% 01/09/2007 20,676
</Table>
1
HARTFORD MONEY MARKET HLS FUND
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
PRINCIPAL MATURITY MARKET
AMOUNT YIELD DATE VALUE (W)
- --------- ----- ---------- ----------
CONSUMER CYCLICAL -- (CONTINUED)
FINANCE -- (CONTINUED)
$17,500 Yorktown Capital.................................. 5.31% 02/15/2007 $ 17,386
22,000 Yorktown Capital.................................. 5.33% 02/21/2007 21,836
----------
$1,782,708
----------
Total investments in securities
(cost $1,876,835) (C)........................... $1,876,835
==========
</Table>
Note: Percentage of investments as shown is the ratio of the total market value
to total net assets. Market value of investments in foreign securities
represents 6.04% of total net assets at December 31, 2006.
(C)Also represents cost for federal tax purposes.
(I)Securities issued within terms of a private placement
memorandum, exempt from registration under Section 144A of the Securities Act of
1933, as amended, and may be sold only to qualified institutional buyers.
Pursuant to guidelines adopted by the Board of Directors, these issues are
determined to be liquid. The aggregate value of these securities at
December 31, 2006, was $211,375, which represents 11.25% of total net
assets.
(L)Variable rate securities; the yield reported is the rate in effect at
December 31, 2006.
(W)See Note 2b of accompanying Notes to Financial Statements
regarding valuation of securities.
2
HARTFORD MONEY MARKET HLS FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
MONEY MARKET
HLS FUND
------------
ASSETS:
Investments in securities, at value; (amortized cost for
Money Market)@.......................................... $1,876,835
Cash...................................................... 114
Receivables:
Fund shares sold........................................ 11,129
Dividends and interest.................................. 3,499
Other assets.............................................. 8
----------
Total assets................................................ 1,891,585
----------
LIABILITIES:
Payables:
Fund shares redeemed.................................... 12,922
Investment management and advisory fees................. 64
Administrative services fee............................. 51
Distribution fees....................................... 11
Accrued expenses.......................................... 178
----------
Total liabilities........................................... 13,226
----------
Net assets.................................................. $1,878,359
==========
SUMMARY OF NET ASSETS:
Capital stock and paid-in capital........................... $1,878,359
----------
Net assets.................................................. $1,878,359
==========
Shares authorized........................................... 7,000,000
----------
Par value................................................... $ 0.001
----------
CLASS IA: Net asset value per share......................... $ 1.00
----------
Shares outstanding................................ 1,558,433
----------
Net assets........................................ $1,558,433
----------
CLASS IB: Net asset value per share......................... $ 1.00
----------
Shares outstanding................................ 319,926
----------
Net assets........................................ $ 319,926
----------
@ Cost of securities........................................ $1,876,835
----------
</Table>
3
HARTFORD MONEY MARKET HLS FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
MONEY MARKET
HLS FUND
------------
INVESTMENT INCOME:
Interest.................................................. $90,349
-------
Total investment income................................. 90,349
-------
EXPENSES:
Investment management and advisory fees................... 4,419
Administrative services fees.............................. 3,535
Distribution fees -- Class IB............................. 747
Custodian fees............................................ 10
Accounting services....................................... 265
Board of Directors' fees.................................. 27
Other expenses............................................ 313
-------
Total expenses (before waivers and fees paid
indirectly)............................................ 9,316
Custodian fee offset...................................... (5)
-------
Total expenses, net..................................... 9,311
-------
Net investment income..................................... 81,038
-------
NET REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.......................... 1
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $81,039
=======
</Table>
4
HARTFORD MONEY MARKET HLS FUND
STATEMENT OF CHANGES IN NET ASSETS
(000'S OMITTED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
HARTFORD
MONEY MARKET
HLS FUND
---------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2006 2005
------------ ------------
OPERATIONS:
Net investment income..................................... $ 81,038 $ 44,998
Net realized gain on investments.......................... 1 3
----------- -----------
Net increase in net assets resulting from operations...... 81,039 45,001
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA................................................ (67,958) (38,276)
Class IB................................................ (13,080) (6,722)
From net realized gain on investments
Class IA................................................ (1) 2
Class IB................................................ -- (1)
----------- -----------
Total distributions..................................... (81,039) (45,001)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Class IA
Sold.................................................. 1,780,507 4,751,573
Issued on reinvestment of distributions............... 68,099 41,530
Redeemed.............................................. (1,644,009) (4,733,793)
----------- -----------
Total capital share transactions........................ 204,597 59,310
----------- -----------
Class IB
Sold.................................................. 300,900 237,251
Issued on reinvestment of distributions............... 13,111 7,288
Redeemed.............................................. (258,125) (233,306)
----------- -----------
Total capital share transactions........................ 55,886 11,233
----------- -----------
Net increase from capital share transactions.......... 260,483 70,543
----------- -----------
Net increase in net assets............................ 260,483 70,543
NET ASSETS:
Beginning of period....................................... 1,617,876 1,547,333
----------- -----------
End of period............................................. $ 1,878,359 $ 1,617,876
=========== ===========
Accumulated undistributed (distribution in excess of) net
investment income......................................... $ -- $ --
=========== ===========
SHARE ACTIVITY:
Class IA
Sold.................................................. 1,780,507 4,751,573
Issued on reinvestment of distributions............... 68,099 41,530
Redeemed.............................................. (1,644,009) (4,733,793)
----------- -----------
Total share activity.................................... 204,597 59,310
----------- -----------
Class IB
Sold.................................................. 300,900 237,251
Issued on reinvestment of distributions............... 13,111 7,288
Redeemed.............................................. (258,125) (233,306)
----------- -----------
Total share activity.................................... 55,886 11,233
----------- -----------
</Table>
5
HARTFORD MONEY MARKET HLS FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
1. ORGANIZATION:
Hartford Money Market HLS Fund (the "Fund") serves as an underlying
investment option for certain variable annuity and variable life insurance
separate accounts of Hartford Life Insurance Company ("HLIC") and its
affiliates and certain qualified retirement plans. Certain Hartford HLS
Funds may also serve as underlying investment options for certain variable
annuity and variable life insurance separate accounts of other insurance
companies. Owners of variable annuity contracts and policy holders of
variable life insurance contracts may choose the funds permitted in the
accompanying variable insurance contract prospectus. In addition,
participants in certain qualified retirement plans may choose the funds
permitted by their plans.
The Fund is organized under the laws of the State of Maryland and is
registered with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940 ("1940 Act"), as amended, as a diversified
open-end management investment company. The Fund is a series of Hartford
Series Fund, Inc.
The Fund is divided into Class IA and IB shares. Each class is offered at
net asset value without a sales charge and is subject to the same expenses
except that the Class IB shares are subject to distribution fees charged
pursuant to Distribution and Service Plans. Distribution and Service Plans
have been adopted in accordance with Rule 12b-1 of the Investment Company
Act of 1940.
Indemnifications -- Under the Fund's organizational documents, its directors
and officers are indemnified against certain liabilities arising out of the
performance of their duties to the Fund. In addition, the Fund enters into
contracts that contain a variety of indemnifications. The Fund's maximum
exposure under these arrangements is unknown. However, the Fund has not had
prior claims or losses pursuant to these contracts and expects the risk of
loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Fund,
which are in accordance with U.S. generally accepted accounting principles
in the investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (the date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.
b) Security Valuation -- The Hartford Money Market HLS Fund's assets are
valued at amortized cost, which approximates market value.
c) Joint Trading Account -- Pursuant to an exemptive order issued by the
SEC, the Fund may transfer uninvested cash balances into a joint trading
account managed by Hartford Investment Management Company (Hartford
Investment Management), a wholly-owned subsidiary of The Hartford
Financial Services Group, Inc. (The Hartford). These balances may be
invested in one or more repurchase agreements and/or short-term money
market instruments.
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 Fund enters into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed
the value of the repurchase agreement. Securities that serve to
collateralize the repurchase agreement are held by the Fund's custodian
in book entry or physical form in the custodial account of the Funds or
in a third party custodial account. Repurchase agreements are valued at
cost plus accrued interest receivable. The Fund held no repurchase
agreements as of December 31, 2006.
e) (1) Federal Income Taxes -- For federal income tax purposes, the Fund
intends to continue to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code (IRC) by distributing
substantially all of its taxable net investment income and net realized
capital gains to its shareholders or otherwise complying with the
requirements of a regulated investment company. The Fund has distributed
substantially all of their income and capital gains in prior years and
the Fund intends to distribute substantially all of its income and gains
prior to the next fiscal year end. Accordingly, no provision for federal
income taxes has been made in the accompanying financial statements.
Distributions from short-term capital gains are treated as ordinary
income distributions for federal income tax purposes.
e) (2) The tax character of distributions paid for the periods indicated is
as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005
------------------------- -------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
FUND INCOME CAPITAL GAIN INCOME CAPITAL GAINS
---- -------- ------------- -------- -------------
Hartford Money Market HLS Fund.............................. $ 81,039 $ -- $ 45,001 $ --
</Table>
f) Fund Share Valuation and Distributions to Shareholders -- Orders for the
Fund's shares are executed in accordance with the investment
instructions of the contract holders or plan participants. The net asset
value of each Fund's shares is determined as of the close of each
business day of the Exchange. The net asset value per share is
determined separately for each class of the Fund by dividing the Fund's
net assets attributable to that class by the number of shares of the
class outstanding. Orders for the purchase of the Fund's shares received
by an insurance company or plan prior to the close of the Exchange on
any day on which the Exchange 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.
6
- --------------------------------------------------------------------------------
The Fund seeks to maintain a stable net asset value per share of $1.00
by declaring a daily dividend from net investment income, including net
short-term capital gains and losses, and by valuing its investments
using the amortized cost method. Dividends are declared daily and
distributed monthly.
g) Illiquid and Restricted Securities -- Hartford Money Market HLS Fund may
invest up to 10% in illiquid securities. "Illiquid Securities" are those
that may not be sold or disposed of in the ordinary course of business
within seven days, at approximately the price used to determine a Fund's
net asset value per share. A Fund may not be able to sell illiquid
securities or other investments when its sub-adviser considers it
desirable to do so or may have to sell such securities or investments at
a price that is lower than the price that could be obtained if the
securities or investments were more liquid. A sale of illiquid
securities or other investments may require more time and may result in
higher dealer discounts and other selling expenses than does the sale of
those that are liquid. Illiquid securities and investments also may be
more difficult to value, due to the unavailability of reliable market
quotations for such securities or investments, and investment in them
may have an adverse impact on net asset value. Each Fund may also
purchase certain restricted securities, commonly known as Rule 144A
securities, that can be resold to institutions and which may be
determined to be liquid pursuant to policies and guidelines established
by the Fund's Board of Directors.
h) Credit Risk -- Credit risk depends largely on the perceived financial
health of bond issuers. In general, lower rated bonds have higher credit
risk. High yield bond prices can fall on bad news about the economy, an
industry or a company. The share price, yield and total return of a fund
which holds securities with higher credit risk may fluctuate more than
with less aggressive bond funds.
i) Use of Estimates -- The preparation of financial statements in
conformity with U.S. 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
year. Operating results in the future could vary from the amounts
derived from management's estimates.
j) Financial Accounting Standards Board Interpretation No. 48 -- On July
13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing a Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to
meet the more-likely-than-not threshold would be recorded as a tax
benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006, but not before its
last NAV calculation in the first required financial statement reporting
period for its fiscal year beginning after December 15, 2006, and is to
be applied to all open tax years as of no later than June 29, 2007. At
this time, management is evaluating the implications of FIN 48 and its
impact in the Fund's financial statements has not yet been determined.
k) Financial Accounting Standards Board Financial Accounting Standard No.
157 -- In September 2006, FASB Issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting,
establishes a framework for measuring fair value and requires additional
disclosures about the use of fair value measurements. FAS 157 is
effective for the Funds' financial statements issued after December 31,
2007. As of December 31, 2006, the Funds do not believe the adoption of
FAS 157 will impact the amounts reported in the financial statements,
however, additional disclosures will be required about the inputs used
to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal
period.
3. EXPENSES:
a) Investment Management and Advisory Agreements -- HL Investment Advisors,
LLC (HL Advisors) an indirect wholly-owned subsidiary of The Hartford,
serves as investment manager to the Fund pursuant to an investment
management agreements approved by the Fund's Board of Directors and
shareholders, as applicable.
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered, a portion of which is used to compensate
the sub-adviser. Investment management and advisory fees are accrued
daily and paid monthly.
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
On first $2 billion......................................... 0.250%
On next $3 billion.......................................... 0.200%
On next $5 billion.......................................... 0.180%
Over $10 billion............................................ 0.170%
</Table>
Effective January 1, 2007, HL Advisors voluntarily agreed to waive
management fees of 0.05% of average total net assets until December 31,
2007.
Pursuant to investment services agreements between HL Advisors and
Hartford Investment Management, Hartford Investment Management provides
the day-to-day investment management services to the Fund.
Hartford Investment Management determines the purchase and sale of
portfolio securities and place such orders for execution in the name of
the Fund. In conjunction with their investment activity, Hartford
Investment Management regularly furnishes reports to the Fund's Board of
Directors concerning economic forecasts, investment strategy, portfolio
activity and performance of the Fund.
7
HARTFORD MONEY MARKET HLS FUND
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006
(000'S OMITTED)
- --------------------------------------------------------------------------------
b) Administrative Services Agreement -- Under the Administrative Services
Agreement between HLIC and the Fund, HLIC provides administrative
services to the Fund and receives monthly compensation at the annual
rate of 0.20% of the Fund's average daily net assets. The Fund assumes
and pays certain other expenses (including, but not limited to,
accounting, custodian, state taxes and directors' fees). Directors' fees
represent remuneration paid or accrued to directors not affiliated with
HLIC or any other related company. The Fund's administrative services
fees are accrued daily and paid monthly.
c) Accounting Services Agreement -- Under the Fund Accounting Agreement
between HLIC and Hartford Money Market HLS Fund, HLIC provides
accounting services to the Fund and receives monthly compensation at the
annual rate of 0.015% of the Fund's average daily net assets. The Fund's
accounting services fees are accrued daily and paid monthly.
d) Operating Expenses -- Allocable expenses of the Fund are charged to the
Fund based on the ratio of the net assets of the Fund to the combined
net assets of the HLS Funds. Non-allocable expenses are charged to the
Fund based on specific identification.
e) Fees Paid Indirectly -- The Fund has entered into agreements with the
State Street Global Markets, LLC and Frank Russell Securities, Inc. to
partially recapture non-discounted trade commissions. Such rebates are
used to pay a portion of the Fund's expenses. In addition, the Fund's
custodian bank has also agreed to reduce its fees when the Fund
maintains cash on deposit in the non-interest-bearing custody account.
For the year ended December 31, 2006, these amounts are included in the
Statement of Operations. The ratio of expenses to average net assets in
the accompanying financial highlights excludes the reduction in expenses
related to fees paid indirectly. Had the fees paid indirectly been
included, the annualized expense ratios for the years listed below would
have been as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 2006 DECEMBER 31, 2005 DECEMBER 31, 2004
-------------------- -------------------- --------------------
FUND CLASS IA CLASS IB CLASS IA CLASS IB CLASS IA CLASS IB
---- -------- -------- -------- -------- -------- --------
Hartford Money Market HLS Fund..................... 0.48% 0.73% 0.49% 0.74% 0.48% 0.73%
</Table>
f) Distribution Plan for Class IB shares -- The Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, the Fund compensates
the Distributor, Hartford Securities Distribution Company, Inc. (a
wholly owned, ultimate subsidiary of Hartford Life, Inc.) from assets
attributable to the Class IB shares for services rendered and expenses
borne in connection with activities primarily intended to result in the
sale of the Class IB shares.
The Distribution Plan provides that each Fund may pay annually up to
0.25% of the average daily net assets of a Fund attributable to its
Class IB shares for activities primarily intended to result in the sale
of Class IB shares. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard. The Fund's distribution fees are
accrued daily and paid monthly.
4. INVESTMENT TRANSACTIONS:
For the year ended December 31, 2006, the cost of proceeds from sales of
securities for Hartford Money Market HLS Fund was $18,993,247 and
$18,729,737, respectively.
8
HARTFORD MONEY MARKET HLS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(2) --
--------------------------------------------------------------------------
NET
REALIZED
AND
NET ASSET NET UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT PAYMENTS GAIN FROM FROM NET
BEGINNING INCOME FROM (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) AFFILIATE INVESTMENTS OPERATIONS INCOME
--------- ---------- --------- ----------- ---------- ----------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1.00 $ 0.05 $ -- $ -- $ 0.05 $(0.05)
Class IB............................... 1.00 0.04 -- -- 0.04 (0.04)
For the Year Ended December 31, 2005
Class IA............................... 1.00 0.03 -- -- 0.03 (0.03)
Class IB............................... 1.00 0.03 -- -- 0.03 (0.03)
For the Year Ended December 31, 2004
Class IA............................... 1.00 -- -- -- -- --
Class IB............................... 1.00 -- -- -- -- --
For the Year Ended December 31, 2003
Class IA............................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB............................... 1.00 -- -- -- -- --
For the Year Ended December 31, 2002
Class IA............................... 1.00 0.01 -- -- 0.01 (0.01)
Class IB............................... 1.00 0.01 -- -- 0.01 (0.01)
<Caption>
-- SELECTED PER-SHARE DATA(2) -- -- RATIOS AND SUPPLEMENTAL DATA --
-------------------------------------------- -----------------------------
NET
NET ASSET
DISTRIBUTIONS INCREASE VALUE
FROM (DECREASE) AT
REALIZED DISTRIBUTION IN NET END
CAPITAL FROM TOTAL ASSET OF TOTAL
GAINS CAPITAL DISTRIBUTIONS VALUE PERIOD RETURN
------------- ------------ ------------- ---------- ------ -------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ -- $ -- $(0.05) $ -- $ 1.00 4.69%
Class IB............................... -- -- (0.04) -- 1.00 4.43
For the Year Ended December 31, 2005
Class IA............................... -- -- (0.03) -- 1.00 2.84
Class IB............................... -- -- (0.03) -- 1.00 2.58
For the Year Ended December 31, 2004
Class IA............................... -- -- -- -- 1.00 0.94
Class IB............................... -- -- -- -- 1.00 0.69
For the Year Ended December 31, 2003
Class IA............................... -- -- (0.01) -- 1.00 0.75
Class IB............................... -- -- -- -- 1.00 0.50
For the Year Ended December 31, 2002
Class IA............................... -- -- (0.01) -- 1.00 1.47
Class IB............................... -- -- (0.01) -- 1.00 1.24
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
--------------------------------------------------
RATIO OF
RATIO OF RATIO OF NET
EXPENSES EXPENSES INVESTMENT
TO AVERAGE TO AVERAGE INCOME
NET ASSETS NET ASSETS NET ASSETS TO AVERAGE
AT END OF BEFORE AFTER NET
PERIOD WAIVERS(1) WAIVERS(1) ASSETS
----------- ---------- ---------- ----------
HARTFORD MONEY MARKET HLS FUND
For the Year Ended December 31, 2006
Class IA............................... $ 1,558,433 0.48% 0.48% 4.63%
Class IB............................... 319,926 0.73 0.73 4.38
For the Year Ended December 31, 2005
Class IA............................... 1,353,836 0.49 0.49 2.79
Class IB............................... 264,040 0.75 0.75 2.54
For the Year Ended December 31, 2004
Class IA............................... 1,294,525 0.48 0.48 0.93
Class IB............................... 252,808 0.73 0.73 0.68
For the Year Ended December 31, 2003
Class IA............................... 1,609,439 0.49 0.49 0.75
Class IB............................... 240,930 0.74 0.74 0.50
For the Year Ended December 31, 2002
Class IA............................... 2,319,456 0.49 0.49 1.43
Class IB............................... 261,914 0.74 0.72 1.20
</Table>
- ---------------
(1) Ratios do not reflect reductions for fees paid indirectly. Please see Note
3(e).
(2) Information presented relates to a share outstanding throughout the
indicated period.
9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
HARTFORD SERIES FUND, INC.
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Hartford Money Market HLS Fund (one of the
twenty-six portfolios constituting the Hartford Series Fund, Inc.) (the "Fund")
as of December 31, 2006, and the related statement of operations for the year
then ended, the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the five years
in the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
investments owned as of December 31, 2006, by correspondence with the custodian.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Hartford Money Market HLS Fund of Hartford Series Fund, Inc. at December 31,
2006, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Minneapolis, Minnesota
February 9, 2007
10
HARTFORD MONEY MARKET HLS FUND
DIRECTORS AND OFFICERS (UNAUDITED)
- --------------------------------------------------------------------------------
The Boards of Directors elect officers who are responsible for the day-to-day
operations of the Fund and who execute policies formulated by the Directors.
Each Director serves until his or her death, resignation, or retirement or until
the next annual meeting of shareholders is held, or until his or her successor
is elected and qualifies.
Directors and officers who are employed by or who have a substantial financial
interest in The Hartford are considered "interested" persons of the Fund
pursuant to the Investment Company Act of 1940. Each officer and three of the
Fund's directors, as noted in the chart below, are "interested" persons of the
Fund. Each director serves as a director for The Hartford Mutual Funds, Inc.,
The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc.,
Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc., which
collectively consist of 88 funds. Correspondence may be sent to directors and
officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, CT 06104-2999,
except that correspondence to Ms. Fagely and Ms. Settimi may be sent to 500
Bielenberg Dr., Woodbury, MN 55125.
The table below sets forth, for each director and officer, his or her name, age,
current position with the funds, date first elected or appointed to Hartford
Series Fund, Inc. ("SF") and Hartford HLS Series Fund II, Inc. ("SF2"),
principal occupation, and, for directors, other directorships held.
The Statement of Additional Information ("SAI") includes additional information
about Fund directors and is available upon request without charge by calling
1-800-862-6668 or writing to Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085.
Information on the aggregate remuneration paid to the directors by the Fund can
be found in the Statement of Operations herein. The Fund does not pay salaries
or compensation to any of their officers or directors who are employed by The
Hartford.
NON-INTERESTED DIRECTORS
LYNN S. BIRDSONG (age 60) Director since 2003, Chairman of the Litigation
Committee; Co-Chairman of the Investment Committee
Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an
advertising specialty firm. Since 2003, Mr. Birdsong has been an
independent Director of The Japan Fund. From 2003 to March 2005, Mr.
Birdsong was an independent director of the Atlantic Whitehall Funds. From
1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder
Investments, an investment management firm. During his employment with
Scudder, Mr. Birdsong was an interested Director of The Japan Fund.
ROBERT M. GAVIN, JR. (age 66) Director since 2002 (SF) and 1986 (SF2), Chairman
of the Board since 2004
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was
President of Cranbrook Education Community; and prior to July 1996, he was
President of Macalester College, St. Paul, Minnesota.
DUANE E. HILL (age 61) Director since 2001 (SF) and 2002 (SF2), Chairman of the
Nominating Committee
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment
company. Mr. Hill is a former Partner of TSG Capital Group, a private
equity investment firm that serves as sponsor and lead investor in
leveraged buyouts of middle market companies.
SANDRA S. JAFFEE (age 65) Director since 2005
Ms. Jaffee is Chief Executive Officer of Fortent (formerly Searchspace
Group), a leading provider of compliance/regulatory technology to financial
institutions. Ms. Jaffee served as an Entrepreneur in Residence with
Warburg Pincus, a private equity firm, from August 2004 to August 2005.
From September 1995 to July 2004, Ms. Jaffee served as Executive Vice
President at Citigroup, where she was President and Chief Executive Officer
of Citibank's Global Securities Services (1995-2003).
WILLIAM P. JOHNSTON (age 62) Director since 2005, Chairman of the Compliance
Committee
In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle
Group, a global private equity investment firm. In May 2006, Mr. Johnston
was elected to the Supervisory Board of Fresenius Medical Care AG & Co.
KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr.
Johnston joined Renal Care Group in November 2002 as a member of the Board
of Directors and served as Chairman of the Board from March 2003 through
March 2006. From September 1987 to December 2002, Mr. Johnston was with
Equitable Securities Corporation (and its successors, SunTrust Equitable
Securities and SunTrust Robinson Humphrey) serving in various investment
banking and managerial positions, including Managing Director and Head of
Investment Banking, Chief Executive Officer and Vice Chairman.
PHILLIP O. PETERSON (age 62) Director since 2002 (SF) 2000 (SF2), Chairman of
the Audit Committee
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG
LLP until July 1999. Mr. Peterson joined William Blair Funds in February
2007 as a member of the Board of Directors. From January 2004 to April
2005, Mr. Peterson served as Independent President of the Strong Mutual
Funds.
LEMMA W. SENBET (age 60) Director since 2005
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the
University of Maryland, Robert H. Smith School of Business. He was chair of
the Finance Department during 1998-2006. Previously he was an endowed
professor of finance at the University of Wisconsin-Madison. Also, he was
director of the Fortis Funds from March 2000-July 2002. Professor Senbet
served the finance profession in various capacities, including as director
of the American Finance Association and President of the Western Finance
Association.
11
HARTFORD MONEY MARKET HLS FUND
DIRECTORS AND OFFICERS (UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
INTERESTED DIRECTORS AND OFFICERS
THOMAS M. MARRA (age 48) Director since 2002
Mr. Marra is President and Chief Operating Officer of Hartford Life, Inc.
He is also a member of the Board of Directors and a member of the Office of
the Chairman for The Hartford Financial Services Group, Inc. ("The
Hartford"), the parent company of Hartford Life. Mr. Marra was named
President of Hartford Life in 2001. He was named COO in 2000, and served as
Director of Hartford Life's Investment Products Division from 1998 to 2000.
Mr. Marra is also a Managing Member and President of Hartford Investment
Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL
Advisors").
LOWNDES A. SMITH (age 67) Director since 1996 (SF) 2002 (SF2), Co-Chairman of
the Investment Committee
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to
January 2002, as President and Chief Executive Officer of Hartford Life,
Inc. from February 1997 to January 2002, and as President and Chief
Operating Officer of The Hartford Life Insurance Companies from January
1989 to January 2002. Mr. Smith has served as a Director of White Mountains
Insurance Group since November 2003.
DAVID M. ZNAMIEROWSKI (age 46) Director since 1999 (SF) 2005 (SF2), President
since 1999 (SF) 2001 (SF2)
Mr. Znamierowski currently serves as President of Hartford Investment
Management Company ("Hartford Investment Management") and as Executive Vice
President and Chief Investment Officer for The Hartford, Hartford Life,
Inc. and Hartford Life Insurance Company. Mr. Znamierowski is also a
Managing Member, Executive Vice President and Chief Investment Officer of
HIFSCO and HL Advisors.
OTHER OFFICERS
ROBERT M. ARENA (age 38) Vice President since 2006
Mr. Arena is Senior Vice President of Hartford Life and heads its Retail
Products Group in the US Wealth Management Division. Prior to joining The
Hartford in 2004, he was Senior Vice President in charge of Product
Management for American Skandia/Prudential in the individual annuities
division. Mr. Arena had joined American Skandia in 1996.
TAMARA L. FAGELY (age 48) Vice President, Controller and Treasurer since 2002
(SF) 1993 (SF2)
Ms. Fagely has been Vice President of HASCO since 1998 and Chief Financial
Officer of HASCO since 2006. Currently, Ms. Fagely is a Vice President of
Hartford Life Insurance Company. She served as Assistant Vice President of
Hartford Life Insurance Company from December 2001 through March 2005.
SUSAN FLEEGE (age 47) AML Officer since 2005
Ms. Fleege has served as Chief Compliance Officer for Hartford
Administrative Services Company (2005) and Hartford Investor Services
Company, LLC since (2006). Prior to joining Hartford Life in 2005, Ms.
Fleege was Counsel for Amerprise Financial Corporation from 2000 to 2005.
THOMAS D. JONES III (age 41) Vice President and Chief Compliance Officer since
2006
Mr. Jones joined Hartford Life as Vice President and Director of Securities
Compliance in 2006 from SEI Investments ("SEI"), where he served as Chief
Compliance Officer for its mutual funds and investment advisers. Prior to
joining SEI, Mr. Jones was First Vice President and Compliance Director for
Merrill Lynch Investment Managers (Americas) ("MLIM"), where he worked from
1992-2004.
EDWARD P. MACDONALD (age 40) Vice President and Secretary since 2005
Mr. Macdonald serves as Assistant General Counsel of The Hartford. Prior to
joining The Hartford in 2005, Mr. Macdonald was Chief Counsel Investment
Management for Prudential Financial (formerly American Skandia Investment
Services, Inc.). Mr. Macdonald joined Prudential in April 1999.
VERNON J. MEYER (age 42) Vice President since 2006
Mr. Meyer serves as Vice President of Hartford Life and Director of its
Investment Advisory Group in the Investment Products Division. Prior to
joining the Hartford in 2004, Mr. Meyer served as Vice President and
Managing Director of Mass Mutual, which he joined in 1987.
DENISE A. SETTIMI (age 46) Vice President since 2005
Ms. Settimi currently serves as Operations Officer of HASCO. Previously,
Ms. Settimi was with American Express Financial Advisors, where she was
Director of Retirement Plan Services from 1997 to 2003.
JOHN C. WALTERS (age 45) Vice President since 2001
Mr. Walters serves as Executive Vice President and Director of the US
Wealth Management Division of Hartford Life Insurance Company. Mr. Walters
is also a Managing Member and Executive Vice President of HIFSCO and HL
Advisors. Previously, Mr. Walters was with First Union Securities.(1)
(1) Served as President of the Hartford Mutual Funds, Inc. and The Hartford
Mutual Funds II, Inc. between February 1, 2005 and March 27, 2005.
12
- --------------------------------------------------------------------------------
HOW TO OBTAIN A COPY OF THE FUND'S PROXY VOTING POLICIES AND PROXY VOTING
RECORDS
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities and a record of how the Fund
voted any proxies for the twelve month period ended June 30, 2006 is available
(1) without charge, upon request, by calling 800-862-6668 and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION
The Fund files a complete schedule of portfolio holdings with the Commission for
the first and third quarters of each fiscal year on Form N-Q. The Fund's Form
N-Q will be available (1) without charge, upon request, by calling 800-862-6668
and (2) on the Securities and Exchange Commission's website at www.sec.gov. The
Forms N-Q may be reviewed and copied at the Securities and Exchange Commission's
Public Reference Room in Washington, DC. Information on the operation of the
Public Reference Room may be obtained by calling 1-202-551-8090.
13
HARTFORD MONEY MARKET HLS FUND
EXPENSE EXAMPLE (UNAUDITED)
- --------------------------------------------------------------------------------
YOUR FUND'S EXPENSES
As a shareholder of the Fund, you may incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; (2) ongoing costs,
including advisory and management fees; distribution fees; and other fund
expenses. This example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the period of June 30, 2006 through December 31, 2006.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period. The example
does not take into account fees and expenses that are applied to variable life
insurance or variable annuity contract level or by a qualified retirement plan.
Overall the ending account value would be lower and expenses would be higher if
the fees applied at the separate account level were reflected.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSE
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. The example does not take into account fees and expenses
that are applied to variable life insurance or variable annuity contract level
or by a qualified retirement plan. Overall the ending account value would be
lower and expenses would be higher if the fees applied at the separate account
level were reflected.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and deferred sales charges. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would be higher.
Expenses are equal to the Fund's annualized expense ratios multiplied by average
account value over the period, multiplied by 184/365 (to reflect the one-half
year period).
<Table>
<Caption>
ACTUAL RETURN
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD
ACCOUNT ACCOUNT JUNE 30, 2006
VALUE VALUE THROUGH
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006
------------- ----------------- -----------------
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.53 $2.45
Class IB........... $1,000.00 $1,040.60 $3.75
<Caption>
HYPOTHETICAL (5% RETURN BEFORE EXPENSES)
-----------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD DAYS
ACCOUNT ACCOUNT JUNE 30, 2006 ANNUALIZED IN THE DAYS
VALUE VALUE THROUGH EXPENSE CURRENT IN THE
JUNE 30, 2006 DECEMBER 31, 2006 DECEMBER 31, 2006 RATIO 1/2 YEAR FULL YEAR
------------- ----------------- ----------------- ---------- -------- ---------
HARTFORD MONEY MARKET
HLS FUND
Class IA........... $1,000.00 $1,022.79 $2.45 0.48% 184 365
Class IB........... $1,000.00 $1,021.53 $3.72 0.73% 184 365
</Table>
14
HARTFORD MONEY MARKET HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), annually review and consider
the continuation of the mutual fund's investment advisory and sub-advisory
agreements after an initial two year period.
At a meeting held on August 1-2, 2006, the Board of Directors of the Funds,
including each of the Independent Directors, unanimously voted to approve the
investment management agreement for each HLS Fund with an agreement up for
renewal with HL Investment Advisors, LLC ("HL Advisors") and the investment
sub-advisory agreements between HL Advisors and each Fund's respective
sub-adviser(s) ("sub-advisers," and together with HL Advisors,
"advisers") -- Hartford Investment Management Company ("Hartford Investment"),
Holland Capital Management, L.P. ("Holland Capital"), Lazard Asset Management
LLC ("Lazard"), Northern Capital Management, LLC ("Northern Capital"), T. Rowe
Price Associates, Inc. ("T. Rowe Price") and Wellington Management Company, LLP
("Wellington") (collectively, the "agreements"), including the Hartford Money
Market HLS Fund. The other HLS Funds with agreements renewed at the August 1-2,
2006 meeting are not described in this annual report. In the months preceding
this meeting, the Board requested, received, and reviewed written responses from
the advisers to questions posed to them on behalf of the Independent Directors
and supporting materials relating to those questions and responses. In addition,
the Board received in-person presentations about each Fund and the related
agreements by Fund officers and representatives of HL Advisors at the Board's
meetings on June 20-21, 2006 and August 1-2, 2006. In considering the approval
of the agreements, the Board also took into account information provided to the
Board at its meetings throughout the year, including reports on Fund
performance, compliance, shareholder services, and the other services provided
to the Funds by the advisers and their affiliates.
The Independent Directors, advised by their independent legal counsel, engaged
two service providers to assist them with evaluating the agreements with respect
to each Fund. Lipper, Inc. ("Lipper"), an independent provider of investment
company data, was retained to provide the Board with reports on how each Fund's
management, administrative fees (for certain Funds), sub-advisory fees, overall
expense ratios, and investment performance compared to those of mutual funds
with similar investment objectives in various peer groups ("peer funds"). The
Independent Directors also engaged an independent financial services consulting
firm (the "Consultant") to assist them in evaluating each Fund's management
fees, administrative fees (for certain Funds), sub-advisory fees and overall
expense ratios and investment performance.
The Board considered the agreements for each Fund at the June and August
meetings. In connection with these deliberations, HL Advisors agreed to reduce
fees and shareholder expenses for a number of the Funds. In determining to
continue the agreements for each Fund, the Board determined that the proposed
management fee structure, taking into account these reductions, was fair and
reasonable and that continuation of the agreements was in the best interests of
each Fund and its shareholders. In determining to re-approve the agreements, the
Board considered the following categories of material factors, among others,
relating to the agreements.
Nature, Extent and Quality of Services
The Board requested and considered information concerning the nature, extent,
and quality of the services provided to the Funds by the advisers. The Board
considered, among other things, the terms of the agreements, the range of
services provided, and each adviser's organizational structure, systems and
personnel.(1) The Board received information on the experience of senior
management and relevant investment and other personnel of advisers, and the
adequacy of the time and attention devoted by them to the Funds. The Board
considered each adviser's reputation and overall financial strength, as well as
its willingness to consider and implement organizational and operational
changes, including hiring additional personnel, designed to improve services to
the Funds, and its investments in infrastructure in light of increased
regulatory
- ---------------
1 Certain Funds have entered into investment management agreements with HL
Advisors under which HL Advisors provides investment advisory and certain
administrative services to those Funds. Other Funds have entered into
investment management agreements with HL Advisors for investment advisory
services, and a separate administrative agreement with Hartford Life Insurance
Company ("Hartford Life"), under which Hartford Life provides certain
administrative services to those Funds. For those Funds that have separate
management and administrative agreements, the Board considered the fees
payable under both agreements in the aggregate.
15
HARTFORD MONEY MARKET HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
requirements and other developments. The Board considered the progress that
Hartford Investment has made in developing an equity management capability. In
addition, the Board considered the quality of each adviser's communications with
the Board, and responsiveness to Board inquiries.
The Board also requested and evaluated information concerning each adviser's
regulatory and compliance environment. In this regard, the Board requested and
reviewed information on each adviser's compliance policies and procedures, their
compliance history, and a report from the Funds' Chief Compliance Officer on
each adviser's compliance with applicable laws and regulations, including their
responses to regulatory developments and compliance issues raised by regulators.
The Board also noted the advisers' support of the Funds' compliance control
structure, particularly the resources devoted by the advisers in support of the
Funds' obligations pursuant to Rule 38a-1 under the 1940 Act.
With respect to HL Advisors, the Board noted that under the agreements, HL
Advisors is responsible for the management of each Fund, including overseeing
fund operations and service providers, and it or Hartford Life provides
administrative services to the Funds as well as the investment advisory services
in connection with selecting, monitoring and supervising sub-advisers. The Board
considered its experiences with HL Advisors and, for certain Funds, Hartford
Life, with respect to each of these services. The Board considered that HL
Advisors or its affiliates is responsible for providing the Funds' officers and
paying their salaries and expenses. In addition, the Board considered the nature
and quality of the services provided to the Funds and their shareholders by HL
Advisors' affiliates.
With respect to the sub-advisers, who provide day-to-day portfolio management
services, the Board considered the quality of each sub-adviser's investment
personnel, their ability to attract and retain qualified investment
professionals, their investment philosophy and process, investment research
capabilities and resources, performance record, trade execution capabilities and
experience.
Based on these considerations, the Board concluded that it was satisfied with
the nature, extent and quality of the services provided to the Funds by HL
Advisors and each of the sub-advisers.
Performance of the Funds, HL Advisors, and the Sub-Advisers
The Board considered the investment performance of each Fund. In this regard,
the Board considered information and materials provided to the Board from HL
Advisors and Lipper comparing each fund's short-term and long-term and recent
investment performance over various periods of time with appropriate benchmark
indices, and with a performance universe of funds selected by Lipper. This
information included performance reports (provided by Lipper, HL Advisors and
the sub-advisers) and discussions with portfolio managers and other
representatives of the sub-advisers at board meetings throughout the year, as
well as the information provided especially for the annual contract review. The
Board also considered the analysis provided by the Consultant relating to each
Fund's performance track record.
The Board considered HL Advisors' cooperation with the Investment Committee,
which assists the Board in evaluating the performance of the Funds at periodic
meetings throughout the year. The Board reviewed the performance of each Fund
over the different time periods presented in the materials and evaluated each
adviser's analysis of the Funds' performance for these time periods, with
specific attention to information indicating underperformance of certain Funds
for specific time periods relative to a peer group or benchmark, and the causes
for such underperformance. In evaluating the performance of each Fund, the Board
also considered whether the Fund had been in operation for a sufficient time
period to establish a meaningful performance track record.
With respect to certain specific Funds, the Board considered actions HL Advisors
was planning to take to address performance. With respect to MidCap Stock HLS
Fund, sub-advised by Northern Capital, the Board considered HL Advisors' plan to
seek shareholder approval in December 2006 of a proposal to replace Northern
Capital as sub-adviser to the Fund with Hartford Investment. With respect to
Capital Opportunities HLS Fund and LargeCap Growth HLS Fund, each sub-advised by
Holland Capital, the Board considered HL Advisors' plan to seek shareholder
approval in January 2007 with respect to a plan of reorganization by which the
Funds would be merged into Blue Chip Stock HLS Fund. Due to the timing of these
proposed changes, the Board concluded that it would be in the best interests of
each Fund's shareholders to renew the existing sub-advisory agreements for these
Funds while HL Advisors sought shareholder approval of these proposals.
16
HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded with respect to each Fund
that the Fund's performance over time has been satisfactory or, in the case of
the Funds mentioned above, that HL Advisors is addressing the Board's concerns
about investment performance, and the Board had continued confidence in HL
Advisors' and the sub-advisers' overall capabilities to manage each Fund.
Costs of the Services and Profitability of HL Advisors and the Sub-Advisers
The Board reviewed information regarding HL Advisors' cost to provide investment
management and related services to the Funds and HL Advisors' profitability,
both overall and for each Fund, on a pre-tax basis without regard to
distribution expenses. In this regard, the Board noted that HL Advisors had
worked with PriceWaterhouseCoopers to refine its methodology for calculating
profitability. The Board considered the fact that HL Advisors has subsidized
certain of the Funds' fees and total operating expenses through voluntary
management fee waivers or permanent reductions in management fee schedules,
included fee waivers and reductions negotiated by the Board in connection with
the renewal of the agreements. The Board also requested and reviewed information
about the profitability to HL Advisors and its affiliates from all services
provided to the Funds and all aspects of their relationship with the Funds.
With respect to those Funds which are sub-advised by Hartford Investment, which
is an affiliate of HL Advisors, the Board considered the costs and profitability
information for HL Advisors and Hartford Investment in the aggregate. The Board
also requested and received information relating to the operations and
profitability of the other sub-advisers. In evaluating such sub-adviser's
profitability with respect to the Funds, the Board considered primarily HL
Advisors' and the sub-advisers' representations that HL Advisors had negotiated
the sub-advisory fees at arm's length, and the sub-advisers' representations
that the fees charged to HL Advisors were comparable to fees charged by the
sub-advisers to similar clients.
Based on these considerations, the Board concluded that the profits anticipated
to be realized by the advisers and their affiliates from their relationships
with the Funds would not be excessive.
Comparison of Fees and Services Provided by HL Advisors and the Sub-Advisers
The Board considered comparative information with respect to the investment
management fees and administrative fees (for certain Funds) to be paid by the
Funds to HL Advisors and its affiliates, the investment sub-advisory fees to be
paid to the sub-advisers, and the total expense ratios of the Funds. In this
regard, the Board requested and reviewed information from HL Advisors and each
sub-adviser relating to the management fees, administrative fees (for certain
Funds), sub-advisory fees, and total operating expenses for each Fund. The Board
also reviewed written materials from Lipper providing comparative information
about each Fund's management fees, administrative fees (for certain Funds),
sub-advisory fees, and total expense ratios and the components thereof, relative
to those of peer groups. While the Board recognized that comparisons between the
Funds and peer funds are imprecise, given the differing service levels and
characteristics of mutual funds, and the different business models and cost
structures of advisers, the comparative information provided by Lipper assisted
the Board in evaluating the reasonableness of each Fund's management and
sub-advisory fees and total operating expenses.
The Board particularly considered the agreement of HL Advisors to lower certain
Funds' fees and expenses in connection with the contract renewal process. In its
deliberations, the Board gave significant weight to each Fund's overall expense
ratio, net of these reductions. The following reductions were agreed to at the
meeting, each effective January 1, 2007, unless otherwise noted:
- - Blue Chip Stock HLS Fund -- 5 basis points ("bps") contractual fee reduction
plus 5 bps fee waiver;
- - Capital Opportunities HLS Fund -- 20 bps fee waiver;
- - High Yield HLS Fund -- 5 bps fee waiver, effective November 1, 2006;
- - Hartford Index HLS Fund -- 10 bps contractual fee reduction, effective
November 1, 2006;
- - LargeCap Growth HLS Fund -- 10 bps fee waiver;
- - MidCap Stock HLS Fund -- 20 bps fee waiver; and
- - Money Market HLS Fund -- 5 bps fee waiver.
17
HARTFORD MONEY MARKET HLS FUND
APPROVAL OF INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
(UNAUDITED) -- (CONTINUED)
- --------------------------------------------------------------------------------
Based on these considerations, the Board concluded that each Fund's fees and
total operating expenses are within a range that is competitive with fees and
total operating expenses charged by peer funds, and, in conjunction with the
information about quality of services, profitability, economies of scale, and
other matters discussed, are reasonable.
Economies of Scale
The Board requested and considered information regarding the advisers'
realization of economies of scale with respect to the Funds, and whether the fee
levels reflect these economies of scale for the benefit of each Fund's
investors. With respect to HL Advisors, the Board considered representations
from HL Advisors that it is difficult to anticipate whether and to what extent
economies may be realized by HL Advisors as assets grow over time. The Board
reviewed the breakpoints in the advisory fee schedule for each Fund (and
administrative fee schedule for certain Funds), which reduce fees as Fund assets
grow over time. The Board recognized that Funds with assets beyond the last
breakpoint level continue to benefit from economies of scale, because additional
assets are charged the lowest breakpoint fee, resulting in lower overall
effective management fee rates. The Board considered that certain Funds may
achieve some economies as certain fixed expenses are spread over a larger asset
base, noting that there is no precise way to measure such economies, and that
certain expenses do not necessarily decrease as assets increase. The Board also
considered that expense limitations and fee waivers that reduce Fund expenses at
all asset levels can have the same effect as breakpoints in sharing economies of
scale with shareholders, and that a schedule that reaches a lower breakpoint
quickly provides shareholders with the benefit of anticipated or potential
economies of scale.
The Board reviewed and evaluated materials from Lipper showing how the fee
schedules of peer funds reflect economies of scale for the benefit of investors
as a peer fund's assets hypothetically increase over time. Based on information
provided by HL Advisors, Lipper, and the Consultant, the Board recognized that
there is no uniform methodology for establishing breakpoints, or uniform pattern
in asset levels that trigger breakpoints or the amounts of breakpoints
triggered.
After considering all of the information available to it, the Board concluded
that it was satisfied with the extent to which economies of scale would be
shared for the benefit of each Fund's investors, based on currently available
information and the effective advisory fees and expense ratios for the Funds at
their current and reasonably anticipated asset levels. The Board noted, however,
that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
Other Benefits
The Board considered other benefits to the advisers and their affiliates from
their relationships with the Funds, including the role of the Funds in
supporting the variable life insurance and variable annuity products offered by
The Hartford. The Board reviewed information noting that Hartford Life, an
affiliate of HL Advisors, receives fees from certain Funds for providing certain
administrative services for those Funds, and that Hartford Life also receives
fees for fund accounting and related services from each of the Funds, and the
Board considered information on expected profits to Hartford Life or its
affiliates for such services. The Board also reviewed the fact that Hartford
Investor Services Company, LLC ("HISC"), the Funds' transfer agent and an
affiliate of HL Advisors, receives transfer agency compensation from the Funds,
and the Board reviewed information on the expected profitability of the Funds'
transfer agency function to HISC. The Board considered information provided by
HL Advisors indicating that the fees charged by HISC to the Funds are reasonable
and in line with industry standards.
The Board also considered that Hartford Securities Distribution Company, Inc.
("HSDC"), as principal underwriter of the Funds receives 12b-1 fees from the
Funds. The Board also noted that certain affiliates of HL Advisors distribute
shares of the Funds and receive compensation in that connection.
The Board considered benefits to the sub-advisers from their proposed use of the
Funds' brokerage commissions to obtain soft dollar research, and representations
from HL Advisors and the sub-advisers that the sub-advisers would not be making
revenue-sharing or other payments to HL Advisors or its affiliates in connection
with the distribution of the Funds.
The Board also considered the fact that Hartford Life had agreed, effective
January 1, 2007, to no longer charge the Funds for legal services provided to
the Funds by personnel of Hartford Life. Based upon expense information for the
prior calendar year, this change will result in savings to the HLS Funds of
approximately $480,000 per year.
18
HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
The Board considered the benefits to shareholders of being part of the Hartford
family of funds. The Board considered HL Advisors' efforts to provide investors
in the family with a broad range of investment styles and asset classes, and its
entrepreneurial risk in initiating new funds to expand these opportunities for
shareholders.
* * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Funds and their shareholders
for the Board to approve the agreements for an additional year. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors and the full
Board met separately in executive session on several occasions, with independent
legal counsel, to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
19
ITEM 2. CODE OF ETHICS.
Registrant has adopted a code of ethics that applies to Registrant's
principal executive officer, principal financial officer and controller which is
attached as an exhibit.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the Registrant has designated Phillip O.
Peterson as an Audit Committee Financial Expert. Mr. Peterson is considered by
the Board to be an independent director.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees: $443,100 for the fiscal year ended December 31, 2006
and $431,900 for the fiscal year ended December 31, 2005, including
fees associated with the annual audit and filings of the Fund's Form
N-1A and Form N-SAR.
(b) Audit-Related Fees: $108,189 for the fiscal year ended December 31,
2006 and $61,389 for the fiscal year ended December 31, 2005.
Audit-related services principally in connection with the SAS 70 report
and the SEC Rule 17Ad-13 report
(c) Tax Fees: $93,456 for tax compliance services for the fiscal year
ended December 31, 2006 and $107,467 for the fiscal year ended December
31, 2005.
(d) All Other Fees: $0 for the fiscal year ended December 31, 2006 and
$0 for the fiscal year ended December 31, 2005.
(e) (1) A copy of the Audit Committee's pre-approval policies and
procedures is attached as an exhibit.
(e) (2) One Hundred percent of the services described in items 4(b)
through 4(d) were approved in accordance with the Audit Committee's
Pre-Approval Policy. As a result, none of such services was approved
pursuant to paragraph (c) (7) (i) (c) of Rule 2-01 of Regulation S-X.
(f) None of the hours expended on the principal accountant's engagement
to audit the Registrant's financial statements for the year ended
December 31, 2006, were attributed to work performed by persons other
than the principal accountant's full-time employees.
(g) Non-Audit Fees: $670,757 for the fiscal year ended December 31,
2006 and $1,078,545 for the fiscal year ended December 31, 2005.
(h) The registrant's audit committee of the board of directors has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser), and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Registrant has a separately designated standing Audit Committee comprised
of the independent directors listed below:
Robert M. Gavin
Sandra S. Jaffee
William P. Johnston
Phillip O. Peterson
ITEM 6. SCHEDULE OF INVESTMENTS
The Schedule of Investments is included as part of the annual report
filed under Item 1 of this form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrants' board of directors since the policy was
last filed in response to this requirement.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the Registrant's Disclosure Controls
and Procedures as of a date within 90 days of the filing date
of this report, the Disclosure Controls and Procedures are
effectively designed to ensure that information required to be
disclosed by the Registrant is recorded, processed, summarized
and reported by the date of this report, including ensuring
that information required to be disclosed in the report is
accumulated and communicated to the Registrant's management,
including the Registrant's officers, as appropriate, to allow
timely decisions regarding required disclosure.
(b) There was no change in the Registrant's internal control over
financial reporting that occurred during the Registrant's
second fiscal half year that has materially affected, or is
reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
4(e)(1) Audit Committee's Pre-approval and Procedures Policies
12(a)(1) Code of Ethics
12(a)(2) Section 302 certifications of the principal executive officer
and principal financial officer of Registrant.
12(b) Section 906 certification.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HARTFORD SERIES FUND, INC.
Date: February 12, 2007 By: /s/ David M. Znamierowski
------------------------------------
David M. Znamierowski
Its: President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date: February 12, 2007 By: /s/ David M. Znamierowski
------------------------------------
David M. Znamierowski
Its: President
Date: February 12, 2007 By: /s/ Tamara L. Fagely
------------------------------------
Tamara L. Fagely
Its: Vice President, Controller and
Treasurer
EXHIBIT LIST
4(e)(1) Audit Committee's pre-approval policies and
procedures.
12(a)(1) Code of Ethics
99.CERT 12(a)(2) Certifications
(i) Section 302 certification of principal executive
officer
(ii) Section 302 certification of principal financial
officer
99.906CERT 12(b) Section 906 certification of principal executive
officer and principal financial officer