[LOGO] 1997
ANNUAL
REPORT
- MANAGER DISCUSSIONS
- FINANCIALS
THE HARTFORD
SMALL COMPANY FUND
PORTFOLIO MANAGER Q. HOW DID THE FUND PERFORM?
For the year ended 12/31/97, the
Hartford Small Company Fund returned
19.3% versus 20.8% for the Lipper Small
Company Mutual Fund Average.
Q. WHY DID THE FUND PERFORM THIS WAY?
MARK WATERHOUSE While providing strong double-digit
Vice President returns for the year, small stocks, as
Wellington Management Company, LLP measured by the Russell 2000,
underperformed larger stocks. Just
when the tide appeared to be turning
for small stocks, concerns stemming
from the deepening currency and
economic crisis in Asia shook the US
equity market and once again caused a
flight to quality and large company
stocks. The most significant
contributor to our relative
performance, both positive and
negative, during the year was the
Fund's overweighing in the technology
sector (37% the Fund versus 14% in
Russell 2000 as of 12/31/97). During
much of the first half of the year, the
Fund benefited from the strong earnings
growth trends in this sector. However,
during the second half of the year, the
technology sector was particularly hard
hit, as volatility in the US equity
market increased due to concerns over
the difficulties in Asia.
PERFORMANCE OVERVIEW
7/22/96 - 12/31/97
GROWTH OF A $10,000 INVESTMENT IN
CLASS A WHICH INCLUDES SALES CHARGE Q. WHAT IS YOUR OUTLOOK FOR 1998?
$14,072 Despite recent difficulties in the
technology sector, we continue to
$12,862 believe that a number of stocks in
this sector represent excellent
long-term value, and that technology
stocks will ultimately rebound given
their importance to the overall US
economy. Our strategy continues to
look for quality high-growth companies
whose stocks represent good upside
potential with limited downside risk.
We continue to canvass the smaller
stock universe to "upgrade" the
portfolio and take advantage of any
high quality names that have been
oversold. While the market has been
experiencing an extended period of
large cap outperformance, we are
confident that small cap investors with
longer investment horizons will be
rewarded with very attractive returns
as the small cap sector retakes its
performance leadership position.
- -- SMALL COMPANY FUND -- RUSSELL 2000
$9,450 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)(3)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Small Co "A" 19.28% 23.80% 12.72% 19.04%
Small Co "B" 18.49% 23.00% 13.49% 20.46%
Russell 2000 22.36% 26.69%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE SMALL COMPANY FUND.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
(3) THE HARTFORD MUTUAL FUNDS WERE SEEDED ON 7/1/96 AND BECAME EFFECTIVE AND
OPEN FOR INVESTMENT ON 7/22/96. PERFORMANCE RESULTS AND DISCUSSIONS
REFLECT INVESTMENT ACTIVITY SINCE THE FUNDS BECAME OPEN FOR INVESTMENT ON
7/22/96.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $13,484 ON 12/31/97 ($13,084 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD
CAPITAL APPRECIATION FUND
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
The Hartford Capital Appreciation Fund
had an exceptionally strong year,
placing the Fund as the third best
performing fund in its Lipper category
and the top performing fund from
7/31/96. For the year, the Capital
Appreciation Fund returned 55.1% versus
20.4% for the Lipper Capital
Appreciation Mutual Fund Average.
SAUL J. PANNELL, CFA Q. WHY DID THE FUND PERFORM THIS WAY?
Senior Vice President and Partner
Wellington Management Company, LLP Much of the Fund's success during the
year can be attributed to stock
selection, which was particularly
challenging given our emphasis on
smaller companies. Despite our bias
towards smaller companies, which
underperformed larger companies for
much of the year, the Fund was able to
provide investors very strong returns.
With help from our proprietary research
analysts and diligent company-specific
research we were able to identify
companies across all sectors and market
capitalizations that significantly
outperformed the market such as
PHILLIPS ELECTRONICS, a Dutch
electronics conglomerate, MULTICARE
COMPANIES, an operator of nursing
homes, and DIME BANCORP, savings & loan
institution.
PERFORMANCE OVERVIEW
7/22/96 - 12/31/97
GROWTH OF A $10,000 INVESTMENT IN Q. WHAT IS YOUR OUTLOOK FOR 1998?
CLASS A WHICH INCLUDES SALES CHARGE
$20,192 In an environment of lower projected
interest rates, we have increased our
finance sector weighting by adding to
$15,743 holdings as they came under pressure.
In light of our long-term positive view
of the technology sector we are
maintaining a significant weighting in
this sector. We continue to find good
investment ideas outside the US, and
foreign investment levels were
approximately 11% at year end. The
Fund's market cap (asset-weighted) was
$5.0B at year end, reflecting our
continued belief that more value
resides in the lessor well-known,
smaller companies. Our overall strategy
for the Fund remains dual faceted. We
maintain an emphasis on smaller
companies with dynamic earnings growth
prospects, and couple that with an
opportunistic trading approach to
larger cap stocks where we typically
see a catalyst for outperformance.
- -- CAPITAL APPRECIATION FUND -- S&P 500
$9,450 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Cap Ap "A" 55.11% 69.19% 46.58% 62.69%
Cap Ap "B" 54.15% 68.12% 49.15% 65.91%
S&P 500 33.35% 36.93%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE CAPITAL APPRECIATION
FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES
WILL FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $21,172 ON 12/31/97 ($20,772 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD
INTERNATIONAL OPPORTUNITIES FUND
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
For the year ended 12/31/97, The
Hartford International Opportunities
Fund returned 0.8% versus 5.4% for the
Lipper International Mutual Fund
Average.
TROND SKRAMSTAD Q. WHY DID THE FUND PERFORM THIS WAY?
Senior Vice President and Partner
Wellington Management Company, LLP While the broadly diversified approach
of the Fund limited some of the
volatility experienced in the Asian
markets, our significant position in
Japan negatively impacted performance.
Our view that the Japanese economy
would experience a slow recovery in
1997 hurt performance as the problems
within the Japanese economy continued.
On a positive note, with 67% of assets
invested in Europe, the Fund
benefited from the strong performance
in this region during much of the year.
We find European managements
increasingly focused on profitability
and earnings growth, with global
competition and the move to a monetary
union accelerating this process.
PERFORMANCE OVERVIEW
7/22/96 - 12/31/97 Q. WHAT IS YOUR OUTLOOK FOR 1998?
GROWTH OF A $10,000 INVESTMENT IN
CLASS A WHICH INCLUDES SALES CHARGE Given the continued weakness in the
Japanese market and our view that it
will take considerable time and effort
to work out its problems, we have
further reduced the Fund's weight in
Japan and have taken a more defensive
$11,193 posture. While growth in Europe in
1998 will likely feel the impact of the
Asian crisis, we believe that low
inflation, solid profit growth and the
$10,305 impending monetary union will support
the European equity markets. Given
this outlook, we believe that larger
and stronger companies are likely to do
relatively better and we are currently
adding to more defensive, larger
capitalization stocks.
- -- INTERNATIONAL OPPORTUNITIES -- EAFE GDP
$9,450 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Int'l Opp "A" 0.84% 6.18% -4.71% 2.10%
Int'l Opp "B" 0.12% 5.47% -4.88% 2.75%
EAFE GDP* 5.77% 8.12%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE INTERNATIONAL
OPPORTUNITIES FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF SHARES WILL FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $10,799 ON 12/31/97 ($10,399 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
* THE MORGAN STANLEY EUROPE AUSTRALIA FAR EAST GDP - NET INDEX
THE HARTFORD
STOCK FUND
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
The Hartford Stock Fund outperformed
its Lipper peer group during the year
ended 12/31/97. The Stock Fund
provided a total return of 31.8% versus
25.3% for the Lipper Growth Mutual Fund
Average, placing the Fund in the first
quartile of performance for funds in
the group.
Q. WHY DID THE FUND PERFORM THIS WAY?
RAND L. ALEXANDER, CFA
Senior Vice President and Partner The performance of the Portfolio was
Wellington Management Company, LLP once again helped by our emphasis on
large, high quality growth companies
and our overweights in the health care,
retail, financial, and energy sectors.
The Portfolio also benefited from
strong performance by several of our
top 10 holdings, including GENERAL
ELECTRIC, TRAVELERS, MERRILL LYNCH,
GANNETT, PROCTOR & GAMBLE, WAL-MART and
IBM. We also had our share of
disappointments in BOEING, COLUMBIA/HCA
and PHARMACIA & UPJOHN.
PERFORMANCE OVERVIEW Q. WHAT IS YOUR OUTLOOK FOR 1998?
7/22/96 - 12/31/97 Turning to 1998, it is difficult to
GROWTH OF A $10,000 INVESTMENT IN predict a fourth straight year of
CLASS A WHICH INCLUDES SALES CHARGE record returns for the US equity
$15,743 market, but we continue to see reasons
for optimism. The economy continues to
grow and the problems in Asia and the
Pacific Rim should help keep a lid on
$14,384 inflation. Money continues to flow
into mutual funds at what we believe to
be sustainable levels based on
demographics, and corporate America is
in sound financial shape. So, unless
interest rates rise substantially or
corporate profits fall precipitously
over the next six months, we see no
reason to alter our view. We continue
to look for companies with great brand
franchises, large market shares, high
returns on equity, low debt to total
capital, and strong managements selling
at reasonable multiples. While
price-to-earnings multiples have
certainly expanded in the last five
years, that expansion has been
supported by falling inflation and
declining interest rates, a trend we
expect to continue.
- -- Stock Fund -- S&P 500
$9,450 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Stock "A" 31.78% 33.77% 24.53% 28.63%
Stock "B" 30.82% 32.86% 25.82% 30.40%
S&P 500 33.35% 36.93%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK FUND. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $15,071 ON 12/31/97 ($14,671 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD
DIVIDEND AND GROWTH FUND
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
The Hartford Dividend and Growth Fund
outperformed its Lipper peer group for
the year ended 12/31/97. The Dividend
and Growth Fund provided a total return
of 31.0% versus 27.5% for the Lipper
Equity Income Mutual Fund Average.
Q. WHY DID THE FUND PERFORM THIS WAY?
LAURIE A. GABRIEL, CFA The Fund's performance during the year
Senior Vice President and Partner benefited from its overweighting of the
Wellington Management Company, LLP utility sector which experienced a
particularly strong year. This
sector's performance picked up during
the last half of the year as the
turmoil in Asia led investors to seek
companies with predictable earnings.
The Fund also benefited from its
underweighting versus the competition
in technology stocks. For the same
reasons that investors shifted assets
into sectors like utilities, they took
money out of the technology sector
which tends to have more volatile
earnings. Because of the Fund's
mandate for a higher-than-average
dividend yield, it is consistently
underweighted in this sector, which has
served us well in the recent
environment. Lastly, the financial
sector was the best performing sector
in the S&P 500 and the Portfolio's
holdings in this sector, such as
CITICORP, FIRST BANK SYSTEMS and FANNIE
MAE were significant contributors to
performance.
PERFORMANCE OVERVIEW
7/22/96 - 12/31/97
GROWTH OF A $10,000 INVESTMENT IN
CLASS A WHICH INCLUDES SALES CHARGE
$15,743 Q. WHAT IS YOUR OUTLOOK FOR 1998?
Looking forward, our expectations for
$14,272 the US equity market are somewhat
subdued. The deteriorating economic
conditions in Asia have caused us to
lower our growth expectations for the
US economy. Sharply reduced exports to
Asia combined with a rising US Dollar
exchange rate, intense pricing pressure
and continued upward pressure on wages
have caused us to reduce our 1998
corporate profits outlook. On a
positive note, this competitive pricing
environment will also ensure a very low
inflation rate for the year. As a
result of this outlook, we believe the
Fund is well-positioned given its
emphasis on companies with an
above-average yield, a below average
price-to-earnings ratio and risk.
- -- DIVIDEND AND GROWTH FUND -- S&P 500
$9,450 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Div & Grow "A" 30.99% 33.05% 23.79% 27.94%
Div & Grow "B" 30.20% 32.12% 25.20% 29.66%
S&P 500 33.35% 36.93%
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND AND GROWTH
FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES
WILL FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $14,951 ON 12/31/97 ($14,551 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD
ADVISERS FUND
PORTFOLIO MANAGERS
Q. HOW DID THE FUND PERFORM?
RAND L. ALEXANDER, CFA The Hartford Advisers Fund outperformed
Senior Vice President and Partner its Lipper peer group during the year
Wellington Management Company, LLP ended 12/31/97. The Advisers Fund
provided a total return of 23.3% versus
18.7% for the Lipper Flexible Mutual
Fund Average, placing the Fund in the
first quartile of performance for funds
in the group.
Q. WHY DID THE FUND PERFORM THIS WAY?
The outperformance of the Fund during
the year can be largely attributed to
our high relative weighting in
equities. During 1997, the equity
portion of the Fund benefited from our
emphasis on large, high quality growth
companies and our overweights in the
health care, retail, financial, and
energy sectors. The bond market
provided a favorable environment for
the fixed income portion of the Fund.
In light of our view that interest
rates may decline further, we have
reduced our holdings of mortgage-backed
securities which can suffer in a
falling interest rate environment as a
PAUL D. KAPLAN result of refinancing. Corporate bonds
Senior Vice President and Partner remain unattractive, particularly if
Wellington Management Company, LLP the economy slows.
PERFORMANCE OVERVIEW
7/22/96 - 12/31/97
GROWTH OF A $10,000 INVESTMENT IN
CLASS A WHICH INCLUDES SALES CHARGE Q. WHAT IS YOUR OUTLOOK FOR 1998?
$15,743 The asset allocation at the end of the
year was 58% stocks, 39% bonds and 3%
cash. We recently reduced the equity
$13,000 weighting of the Portfolio from a high
of nearly 70% due to our belief that
the relative value of stocks versus
$11,529 bonds is narrowing. While we continue
to believe that in the longer-term
equities deserve to be emphasized,
bonds have become more attractive in
today's market environment. We believe
strongly that inflation remains on a
downward path. The world-wide
competitive environment, the
strengthening US dollar, falling
commodity prices, and a general slowing
in the world's economies make the
likelihood of an upward move in the
inflation rate remote. We continue to
keep cash balances at a minimum.
- -- Advisers Fund -- S&P 500 -- Lehman Govt/Corp
$9,450 starting value $10,000 $10,000
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Advisers "A" 23.30% 24.72% 16.52% 19.92%
Advisers "B" 22.44% 23.90% 17.44% 21.37%
S&P 500 33.35% 36.93%
Lehman 9.76% 10.36%
Govt/Corp
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE ADVISERS FUND. PAST
PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $13,626 ON 12/31/97 ($13,226 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD
BOND INCOME STRATEGY FUND
PORTFOLIO MANAGER
Q. HOW DID THE FUND PERFORM?
The Hartford Bond Income Strategy Fund
outperformed its Lipper peer group
average for the year ended December 31,
1997, producing a total return of 10.8%
versus 10.1% for the Lipper Corporate
Debt "BBB" Rated Mutual Fund average.
Q. WHY DID THE FUND PERFORM THIS WAY?
- Longer portfolio average maturity and
ALISON D. GRANGER, CFA duration position for most of 1997.
Senior Vice President Since mid-April, the Fund's duration
The Hartford Investment ranged between 10% and 20% longer than
Management Company (HIMCO) the benchmark index. Long-term
Treasury yields declined more than 100
basis points from then through
year-end, resulting in a price rally
which benefited the fund.
- A higher average credit quality than
our peers. At mid-year we increased
the Fund's allocation to Treasuries, Aa
and Aaa-rated corporates, discount
mortgages and cash to a combined 50% of
the total portfolio due to our concerns
that credit risk was inadequately
priced. This contributed to the Fund's
outperformance during the second half
of the year.
- A reallocation of some of the Fund's
high yield holdings to non-Asian
Emerging Market debt during the fourth
quarter. When Emerging Market fixed
income debt experienced extreme
volatility beginning in October and
November, we viewed this repricing of
credit risk as a buying opportunity,
especially relative to the valuation of
domestic high-yield debt. We sold some
of the Fund's most fully- valued
high-yield holdings and used the
proceeds to purchase Brady bonds and
PERFORMANCE OVERVIEW Emerging Market sovereign global debt.
7/22/96 - 12/31/97 This reallocation yielded
GROWTH OF A $10,000 INVESTMENT IN outperformance from mid-November
CLASS A WHICH INCLUDES SALES CHARGE through year-end.
$11,529 Q. WHAT IS YOUR OUTLOOK FOR 1998?
$11,187 High inflation-adjusted Treasury
yields, the perceived safety of US
investments amidst recent global
volatility, and the continually
improving deficit situation, all
contribute to our expectation that over
the course of 1998, Treasury yields
will continue to decline. As such, the
duration of the Fund remains longer
than that of our benchmark index. We
continue to hold a higher-than-average
percentage of The Hartford Bond Income
Strategy Fund in Treasury securities,
as we believe that the corporate
market, on average, will continue to be
threatened with underperformance
throughout 1998 due to changing global
economic and individual company
fundamentals, as well as increased
supply. Having said this,
opportunities in the corporate market
remain in carefully chosen credits
which we will work closely with our
analysts to identify. We believe that
opportunities remain in certain areas
of the mortgage market, such as
discount 15-year passthroughs, and have
maintained an overweight in these
securities. Finally, we view the total
return potential of Emerging Market
debt to be attractive, recognizing that
significant volatility could be
experienced over the near-term.
- -- BOND INCOME STRATEGY -- LEHMAN GOVT/CORP
$9,550 starting value $10,000 starting value
ANNUALIZED RETURNS (INCEPTION 7/22/96)
NON SALES CHARGE ADJUSTED SALES CHARGE ADJUSTED
1 YEAR(1) SINCE INCEPT.(1) 1 YEAR(2) SINCE INCEPT.(2)
Bond "A" 10.80% 11.58% 5.81% 8.08%
Bond "B" 9.96% 10.75% 4.96% 8.09%
Lehman 9.76% 10.36%
Govt/Corp
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE BOND INCOME STRATEGY.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS THE MAXIMUM
SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION ON 7/22/96
WOULD HAVE BEEN VALUED AT $11,588 ON 12/31/97 ($11,188 WITH A REDEMPTION AT
THE END OF THE PERIOD.)
THE HARTFORD MONEY MARKET FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
PRINCIPAL
AMOUNT VALUE
--------- ------------
COMMERCIAL PAPER -- 80.5%
A.H. Robbins Company, Inc.
$ 750,000 5.60% due 02/12/98 $ 745,100
Abbey National, North America
800,000 5.60% due 01/22/98............... 797,387
Bankers Trust Corp.
750,000 5.72% due 06/17/98............... 730,099
Bradford & Bingley Building Society
750,000 5.57% due 01/09/98............... 749,072
Cafco
750,000 5.65% due 02/17/98............... 744,468
Caterpillar Financial Services
800,000 5.55% due 02/27/98............... 792,970
Countrywide Home Loan
750,000 5.75% due 03/06/98............... 742,333
du Pont (E.I.) de Nemours & Co.
750,000 5.67% due 03/05/98............... 742,558
Eaton Corp.
750,000 5.76% due 03/26/98............... 739,920
Electronic Data Systems Corp.
750,000 5.53% due 01/27/98............... 747,005
Finova Capital Corp.
800,000 5.72% due 01/14/98............... 798,348
Ford Motor Credit Corp.
590,000 5.59% due 01/27/98............... 587,618
General Electric Capital Corp.
750,000 5.70% due 02/02/98............... 746,200
Goldman Sachs Group, L.P. (The)
750,000 5.68% due 04/06/98............... 738,758
Merrill Lynch & Co., Inc.
750,000 5.54% due 01/05/98............... 749,538
J.P. Morgan & Co., Inc.
750,000 5.67% due 03/23/98............... 740,432
National Rural Utilities
750,000 5.65% due 03/13/98............... 741,643
Nationwide Building Society
750,000 5.67% due 02/13/98............... 744,921
Old Line Funding Corp.
750,000 5.82% due 02/05/98............... 745,756
PHH Corp.
750,000 5.75% due 03/16/98............... 741,135
Procter & Gamble Company (The)
750,000 5.63% due 03/09/98............... 742,141
Provence de Quebec
750,000 5.65% due 02/26/98............... 743,408
Sears, Roebuck Acceptance Corp.
750,000 5.53% due 01/15/98............... 748,387
Sharp Electronics Corp.
750,000 5.82% due 01/30/98............... 746,483
Smith Barney Holdings, Inc.
800,000 5.53% due 01/13/98............... 798,525
Stanley Works (The)
750,000 5.58% due 02/12/98............... 745,118
Sumitomo Bank, Ltd., NY Branch
750,000 5.68% due 02/09/98............... 745,385
Svenska Handelsbanken, Inc.
750,000 5.52% due 01/07/98............... 749,310
Toronto-Dominion Holdings USA, Inc.
750,000 5.59% due 01/26/98............... 747,089
Westpac Capital Corp.
750,000 5.58% due 01/12/98............... 748,721
Wood Street Funding Corp.
750,000 5.58% due 01/20/98............... 747,791
Xerox Credit Corp.
750,000 5.65% due 03/19/98............... 740,937
------------
Total commercial paper............. $ 23,868,556
------------
------------
PRINCIPAL
AMOUNT VALUE
--------- ------------
NON-CONVERTIBLE CORPORATE NOTES -- 17.0%
Associates Corporation of North
America
$ 250,000 7.25% due 05/15/98............... $ 251,203
First USA Bank
750,000 6.158% due 10/22/98.............. 752,414
General Motors Acceptance Corp.
780,000 5.753% due 04/17/98.............. 780,063
IBM Credit Corp.
750,000 5.812% due 06/05/98.............. 749,799
Lehman Brothers Holdings
750,000 5.916% 01/13/99.................. 750,000
Morgan Stanley Group, Inc.
500,000 5.825% due 05/18/98.............. 500,000
NationsBank Corp.
500,000 6.066% due 06/02/98.............. 500,416
Triangle Funding Ltd.
750,000 5.75% due 11/15/98............... 750,000
------------
Total non-convertible corporate
notes............................ $ 5,033,895
------------
------------
REPURCHASE AGREEMENT -- 2.3%
701,000 Interest in $86,953,000 joint
repurchase agreement with State
Street Bank dated 12/31/97 at
6.50%, to be repurchased at
$701,253 on 01/02/98
(Collateralized by $86,953,000
U.S. Treasury Bonds 8.375% -
11.625% due 02/11/01 -
08/08/15)........................ $ 701,000
------------
------------
DIVERSIFICATION OF NET ASSETS:
Total commercial paper (cost $23,868,556).... 80.5 % $ 23,868,556
Total non-convertible corporate notes (cost
$5,033,895)................................ 17.0 5,033,895
Total repurchase agreement (cost $701,000)... 2.3 701,000
------ ------------
Total investment in securities
(total cost $29,603,451*).................. 99.8 29,603,451
Cash, receivables and other assets........... 1.4 408,887
Payable for Fund shares redeemed............. (1.1) (314,190)
Other liabilities............................ (0.1) (32,931)
------ ------------
Net assets (applicable to $1.00 per share
based on 29,665,217 shares outstanding).... 100.0 % $ 29,665,217
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 800,000,000
shares authorized; 29,665,217 shares outstanding... $ 29,665
Paid-in surplus...................................... 29,635,552
------------
Net assets at value.................................. $ 29,665,217
------------
------------
Class A
Shares of beneficial interest outstanding, $0.001
par value; 500,000,000 shares authorized (Net
assets $22,578,404)................................ 22,578,404
------------
------------
Net asset value and offering price per
share..................................... $ 1.00
-----
-----
Class B
Shares of beneficial interest outstanding, $0.001
par value; 200,000,000 shares authorized (Net
assets $4,448,938)................................. 4,448,938
------------
------------
Net asset value and offering price per
share..................................... $ 1.00
-----
-----
Class Y
Shares of beneficial interest outstanding, $0.001
par value; 100,000,000 shares authorized (Net
assets $2,637,875)................................. 2,637,875
------------
------------
Net asset value and offering price per
share.................................... $ 1.00
-----
-----
* Aggregate cost for federal income tax purposes.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
9
THE HARTFORD BOND INCOME STRATEGY FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
ASSET-BACKED SECURITIES -- 1.7%
California Infrastructure
Pacific Gas & Electric, Series
1997-1 Class A6
$ 400,000 6.32% due 09/25/05.......... $ 401,875
California Infrastructure
Southern California Edison
Series, 1997-1 Class A5
250,000 6.28% due 09/25/05.......... 251,178
-------------
Total asset-backed
securities.................. $ 653,053
-------------
-------------
COMMERCIAL MORTGAGE-BACKED SECURITIES -- 0.2%
NationsBank Corp., Series
1997-CTL1, Class A1
81,664 7.421% due 06/22/24......... $ 83,910
-------------
-------------
NON-CONVERTIBLE CORPORATE BONDS
& NOTES -- 47.0%
AEROSPACE -- 0.6%
Wyman-Gordon Company Senior
Notes
250,000 8.00% due 12/15/07.......... $ 251,875
-------------
CABLE -- 3.8%
Bell Cablemedia PLC
750,000 0.00% due 09/15/05.......... 666,094
Cablevision Systems Senior
Notes
200,000 7.875% due 12/15/07......... 204,000
Lenfest Communications, Inc.
100,000 8.375% due 11/01/05......... 103,125
Tele-Communications, Inc.
Medium-Term Note
500,000 6.58% due 02/15/05.......... 535,237
-------------
1,508,456
-------------
CHEMICALS -- 1.5%
du Pont (E.I.) de Nemours &
Co............................
300,000 6.75% due 09/01/07.......... 310,026
Terra Industries, Inc.
250,000 10.50% due 06/15/05......... 268,750
-------------
578,776
-------------
COLLEGES -- 2.3%
Massachusetts Institute of
Technology
800,000 7.25% due 11/02/96.......... 901,746
-------------
ENERGY & SERVICES -- 0.9%
Gulf Canada Resources Ltd.
100,000 9.625% due 07/01/05......... 108,500
Lasmo (USA), Inc.
250,000 6.75% due 12/15/07.......... 251,698
-------------
360,198
-------------
FINANCIAL SERVICES -- 12.6%
Abbey National PLC
500,000 6.69% due 10/17/05.......... 503,954
Bayerische Landesbank (NY)
500,000 6.375% due 10/15/05......... 502,521
Citicorp
500,000 7.125% due 05/15/06......... 518,691
Ford Motor Credit Corp.
500,000 6.125% due 01/09/06......... 488,265
Landeskreditbank
Baden-Wurttemberg
750,000 7.625% due 02/01/23......... 850,594
Lehman Brothers Holdings, Inc.
150,000 8.875% due 03/01/02......... 162,640
Massachusetts Mutual Life
Insurance Co.*
500,000 7.625% due 11/15/23......... 545,947
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
NON-CONVERTIBLE CORPORATE BONDS
& NOTES -- (CONTINUED)
FINANCIAL SERVICES --
(CONTINUED)
Phoenix Home Life Insurance
Co.*
$ 500,000 6.95% due 12/01/06.......... $ 509,415
Societe Generale (NY)
250,000 9.875% due 07/15/03......... 289,657
Swiss Bank Corporation (NY)
200,000 7.375% due 06/15/17......... 214,482
Westinghouse Credit Corp.
300,000 8.875% due 06/14/14......... 328,097
-------------
4,914,263
-------------
FOOD, BEVERAGE & TOBACCO --
0.7%
Ralcorp Holdings, Inc.
250,000 8.75% due 09/15/04.......... 283,570
-------------
FUNERAL/CEMETERY SERVICES --
0.3%
Loewen Group International,
Inc.
100,000 8.25% due 10/15/03.......... 106,422
-------------
HEALTH CARE -- 0.3%
Tenet Healthcare Corp.
100,000 8.00% due 01/15/05.......... 102,000
-------------
HOME BUILDING -- 0.4%
U.S. Home Corp.
150,000 7.95% due 03/01/01.......... 152,218
-------------
MEDIA & SERVICES -- 0.3%
Turner Broadcasting System,
Inc.
100,000 7.40% due 02/01/04.......... 103,309
-------------
PACKAGING & CONTAINERS -- 0.6%
Domtar, Inc.
125,000 9.50% due 08/01/16.......... 138,559
Owens-Illinois, Inc. Senior
Note
100,000 8.10% due 05/15/07.......... 106,389
-------------
244,948
-------------
REAL ESTATE -- 0.7%
Duke Realty LP
250,000 7.25% due 09/22/02.......... 257,763
-------------
RETAIL -- 4.4%
K Mart Corp.
100,000 7.55% due 07/27/04.......... 100,504
K Mart Corp.
100,000 7.75% due 10/01/12.......... 96,000
K Mart Corp.
275,000 7.95% due 02/01/23.......... 263,313
K Mart Corp.
100,000 7.84% due 01/02/02.......... 101,776
Profitt's Inc.
200,000 8.125% due 05/15/04......... 208,000
Specialty Retailers, Inc.
250,000 8.50% due 07/15/05.......... 255,000
Stop & Shop Companies, Inc.
625,000 9.75% due 02/01/02.......... 698,004
-------------
1,722,597
-------------
SHIPBUILDING -- 0.3%
Newport News Shipbuilding Co.*
100,000 8.625% due 12/01/06......... 105,125
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
10
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
NON-CONVERTIBLE CORPORATE BONDS
& NOTES -- (CONTINUED)
TECHNOLOGY -- 0.3%
Advanced Micro Devices
$ 125,000 11.00% due 08/01/03......... $ 133,750
-------------
TELECOMMUNICATIONS -- 3.6%
BellSouth Capital Funding
500,000 7.12% due 07/15/97.......... 524,399
Rogers Cantel, Inc.
100,000 9.375% due 06/01/08......... 105,000
Rogers Cantel, Inc.
200,000 8.30% due 10/01/07.......... 198,500
TCI Communications, Inc.
200,000 7.875% due 02/15/26......... 214,629
USW-1, Series A2 1997*
50,000 0.00% due 02/01/17.......... 13,960
Viacom, Inc.
250,000 7.75% due 06/01/05.......... 255,046
Viacom, Inc.
100,000 6.75% due 01/15/03.......... 98,087
-------------
1,409,621
-------------
TRANSPORTATION -- 6.4%
CSX Corp.*
200,000 7.25% due 05/01/04.......... 207,478
Continental Airlines, Inc.
300,000 9.50% due 12/15/01.......... 315,000
Continental Airlines, Inc.
1997-1*
750,000 7.461% due 04/01/13......... 790,665
Interpool, Inc.*
300,000 7.35% due 08/01/07.......... 300,161
Norfolk Southern Corp.
200,000 7.80% due 05/15/27.......... 225,619
United Air Lines, Inc.
500,000 9.75% due 08/15/21.......... 646,777
-------------
2,485,700
-------------
UTILITIES -- 7.0%
AES Corp. Senior Subordinated
Note
200,000 8.375% due 08/15/07......... 199,500
CMS Energy Corp.
200,000 8.125% due 05/15/02......... 205,887
Calpine Corp.
100,000 8.75% due 07/15/07.......... 102,000
Cleveland Electric
Illuminating Co.
200,000 7.88% due 11/01/17.......... 210,093
Cleveland Electric
Illuminating Co.
250,000 7.13% due 07/01/07.......... 264,009
El Paso Electric Co.
200,000 9.40% due 05/01/11.......... 225,000
El Paso Electric Co.
100,000 8.25% due 02/01/03.......... 105,250
Long Island Lighting Co.
200,000 8.90% due 07/15/19.......... 213,009
Pacific Gas & Electric Co.
300,000 7.05% due 03/01/24.......... 317,778
Pacific Gas & Electric Co.
250,000 7.25% due 03/01/26.......... 260,038
Public Service Electric & Gas
Co.,
MBIA-Insured
125,000 7.00% due 09/01/24.......... 128,043
Public Service Electric & Gas
Co.,
MBIA-Insured
250,000 6.75% due 01/01/16.......... 253,422
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
UTILITIES -- (CONTINUED)
Southern Investments UK PLC
$ 250,000 6.80% due 12/01/06.......... $ 251,967
-------------
2,735,996
-------------
Total non-convertible
corporate bonds & notes..... $ 18,358,333
-------------
-------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 0.6%
Norwest Airlines Corp. Trust
Series 2
92,615 11.30% due 06/21/14......... 120,179
NWA Trust Series D
100,000 13.875% due 06/21/08........ 121,251
-------------
Total enhanced equipment trust
certificates................ $ 241,430
-------------
-------------
FOREIGN/YANKEE BONDS & NOTES -- 11.3%
FOREIGN CORPORATIONS -- 1.7%
Industrial Finance Corp.
(Thailand)
700,000 7.75% due 08/04/07.......... $ 665,000
-------------
FOREIGN GOVERNMENTS -- 9.6%
Banco Nacional de Comercio
Exterior SNC
100,000 7.25% due 02/02/04.......... 92,812
KFW International Finance,
Inc.
250,000 7.00% due 03/01/13.......... 266,140
Provence de Quebec
300,000 7.125% due 02/09/24......... 310,050
Republic de Argentina Par
Bonds
1,325,000 4.25% due 03/31/23.......... 968,078
Republic of Columbia
200,000 7.625% due 02/15/07......... 188,068
Republic of Panama
200,000 8.875% due 09/30/27......... 188,000
Republic of Venezuela
500,000 9.25% due 09/15/27.......... 448,125
The Russian Federation*
600,000 10.00% due 06/26/07......... 554,625
United Mexican States Discount
Bond
300,000 6.6172% due 12/31/19........ 277,125
United Mexican States Discount
Bond
500,000 6.6925% due 12/31/19........ 461,875
-------------
3,754,898
-------------
Total foreign/yankee bonds &
notes....................... $ 4,419,898
-------------
-------------
U.S. TREASURIES & FEDERAL AGENCIES -- 36.1%
U.S. TREASURY BONDS -- 2.5%
430,000 6.375% due 08/15/27......... 453,381
435,000 6.625% due 02/15/27......... 472,111
30,000 7.875% due 02/15/21......... 36,834
-------------
962,326
-------------
U.S. TREASURY
INFLATION-INDEXED SECURITIES
-- 0.9%
351,071 3.625% due 07/15/02......... 352,570
-------------
U.S. TREASURY NOTES -- 17.1%
940,000 5.625% due 11/30/98 -
02/15/06.................... 938,129
530,000 5.875% due 10/31/98 -
09/30/02.................... 531,247
200,000 6.125% due 11/15/27......... 205,500
1,200,000 6.25% due 06/30/98 -
07/31/98.................... 1,204,876
170,000 6.375% due 03/31/01......... 173,187
700,000 6.50% due 05/31/01 -
05/15/05.................... 720,938
120,000 6.625% due 07/31/01......... 123,413
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
11
THE HARTFORD BOND INCOME STRATEGY FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
U.S. TREASURIES & FEDERAL AGENCIES -- (CONTINUED)
U.S. TREASURY NOTES --
(CONTINUED)
$ 750,000 6.875% due 08/31/99......... $ 764,062
340,000 7.00% due 07/15/06......... 367,094
250,000 7.25% due 05/15/04......... 269,844
650,000 7.50% due 10/31/99 -
11/15/24.................... 686,610
610,000 7.875% due 11/15/04......... 681,866
-------------
6,666,766
-------------
U.S. TREASURY STRIPS -- 0.4%
300,000 0.00% due 02/15/08.......... 166,071
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 12.2%
4,600,000 6.00% due 01/01/12......... 4,525,250
248,750 6.50% due 12/01/27......... 245,485
-------------
4,770,735
-------------
U.S. GOVERNMENT AGENCIES --
3.0%
Israel Aid (State of)
1,200,000 4.875% due 09/15/98......... 1,191,761
-------------
Total U.S. treasuries &
federal agencies............ $ 14,110,229
-------------
-------------
SHORT-TERM SECURITIES -- 13.2%
COMMERCIAL PAPER -- 0.3%
Lucent Technologies, Inc.
100,000 5.76% due 01/20/98.......... $ 99,696
-------------
REPURCHASE AGREEMENTS -- 12.9%
1,500,000 Interest in $86,953,000 joint
repurchase agreement with
State Street Bank dated
12/31/97 at 5.85%, to be
repurchased at $1,500,488 on
01/02/98; (Collateralized by
$86,953,000 U.S. Treasury
Bonds 8.375%-11.625% due
02/11/01-08/08/15).......... 1,500,000
1,754,000 Interest in $86,953,000
repurchase agreement with
State Street Bank dated
12/31/97 at 6.50%, to be
repurchased at $1,754,633 on
01/02/98; (Collateralized by
$86,953,000 U.S. Treasury
Bonds 8.375%-11.625% due
02/11/01-08/08/15).......... 1,754,000
1,800,000 Interest in $86,953,000 joint
repurchase agreement with
State Street Bank dated
12/31/97 at 5.70%, to be
repurchased at $1,800,570 on
01/02/98; (Collateralized by
$86,953,000 U.S. Treasury
Bonds 8.375%-11.625% due
02/11/01-08/08/15).......... 1,800,000
-------------
5,054,000
-------------
Total short-term securities... $ 5,153,696
-------------
-------------
MARKET
VALUE
------------
DIVERSIFICATION OF NET ASSETS:
Total asset-backed securities (cost
$649,777).................................. 1.7% $ 653,053
Total commercial mortgage-backed securities
(cost $83,278)............................. 0.2 83,910
Total non-convertible corporate bonds & notes
(cost $17,572,756)......................... 47.0 18,358,333
Total enhanced equipment trust certificates
(cost $231,918)............................ 0.6 241,430
Total foreign/yankee bonds & notes (cost
$4,295,722)................................ 11.3 4,419,898
Total U.S. treasuries & federal agencies
(cost $14,016,135)......................... 36.1 14,110,229
Total short-term securities (cost
$5,153,696)................................ 13.2] 5,153,696
------ ------------
Total investment in securities
(total cost $42,003,282)................... 110.1 43,020,549
Cash, receivables and other assets........... 2.1 845,855
Payable for securities purchased............. (12.1) (4,730,243)
Payable for Fund shares redeemed............. 0.0 (10,584)
Other liabilities............................ (0.1) (35,495)
------ ------------
Net assets................................... 100.0% $ 39,090,082
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 300,000,000
shares authorized; 3,684,476 shares outstanding.... $ 3,684
Paid-in surplus...................................... 37,927,952
Accumulated undistributed net investment income...... 50,902
Accumulated undistributed net realized gain on
investments........................................ 90,277
Unrealized appreciation of investments............... 1,017,267
------------
Net assets........................................... $ 39,090,082
------------
------------
Class A
Net asset value per share ($28,589,201
DIVIDED BY 2,694,475 shares outstanding)
(175,000,000 shares authorized)............ $ 10.61
------
------
Maximum offering price per share ($10.61
DIVIDED BY 95.5%)......................... $ 11.11
------
------
Class B
Net asset value per share ($5,745,252
DIVIDED BY 542,978 shares outstanding)
(75,000,000 shares authorized)............. $ 10.58
------
------
Class Y
Net asset value per share ($4,755,629
DIVIDED BY 447,023 shares outstanding)
(50,000,000 shares authorized)............. $ 10.64
------
------
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. As of December 31, 1997, the
market value of these securities amounted to $3,027,376, or 7.7% of net
assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
12
THE HARTFORD ADVISERS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
----------- -------------
COMMON STOCKS -- 57.3%
AEROSPACE & DEFENSE -- 0.8%
20,000 Boeing Co. (The).............. $ 978,750
*8,155 Raytheon Co. Class A.......... 402,134
-------------
1,380,884
-------------
COMMUNICATIONS EQUIPMENT --
1.8%
*27,450 Cisco Systems, Inc............ 1,530,338
20,000 Ericsson (L.M.) Telephone
ADR......................... 746,250
11,000 Lucent Technologies, Inc...... 878,625
-------------
3,155,213
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.0%
*14,000 Adaptec, Inc.................. 519,750
*41,400 EMC Corp...................... 1,135,912
21,000 International Business
Machines Corp............... 2,195,813
20,500 Xerox Corp.................... 1,513,156
-------------
5,364,631
-------------
CONSUMER DURABLES -- 0.3%
14,500 General Motors Corp. Class
H........................... 535,594
-------------
CONSUMER NON-DURABLES -- 3.4%
17,000 Estee Lauder Companies Class
A........................... 874,437
17,000 Gillette Co. (The)............ 1,707,438
31,000 Kimberly-Clark Corp........... 1,528,687
24,800 Procter & Gamble Co. (The).... 1,979,350
-------------
6,089,912
-------------
CONSUMER SERVICES -- 2.3%
28,000 Hertz Corp. (The) Class A..... 1,127,000
40,800 McDonald's Corporation........ 1,948,200
*43,000 Mirage Resorts, Inc........... 978,250
-------------
4,053,450
-------------
ELECTRONICS -- 3.7%
*29,000 Analog Devices, Inc........... 802,937
61,000 General Electric Co........... 4,475,875
18,200 Intel Corp.................... 1,278,550
-------------
6,557,362
-------------
ENERGY & SERVICES -- 3.9%
14,500 Chevron Corp.................. 1,116,500
19,200 Exxon Corp.................... 1,174,800
35,800 Royal Dutch Petroleum Co.
ADR......................... 1,939,913
28,000 Santa Fe International
Corporation................. 1,139,250
18,600 Schlumberger Ltd.............. 1,497,300
-------------
6,867,763
-------------
FINANCIAL SERVICES -- 11.5%
23,000 Allstate Corporation (The).... 2,090,125
22,200 American Express Co........... 1,963,500
12,500 American International Group,
Inc......................... 1,359,375
15,000 Associates First Capital
Corp........................ 1,066,875
18,000 BankAmerica Corporation....... 1,314,000
16,500 Citicorp...................... 2,086,219
23,000 First Union Corporation....... 1,178,750
22,900 Marsh & McLennan Companies,
Inc......................... 1,707,481
31,200 Merrill Lynch & Co., Inc...... 2,275,650
27,000 State Street Corp............. 1,571,063
42,000 Travelers Group Inc........... 2,262,750
13,500 U.S. Bancorp.................. 1,511,156
-------------
20,386,944
-------------
MARKET
SHARES VALUE
----------- -------------
FOOD, BEVERAGE & TOBACCO --
2.9%
22,000 Coca-Cola Company (The)....... $ 1,465,750
30,000 Nabisco Holdings
Corporation................. 1,453,125
27,000 PepsiCo, Inc.................. 983,813
20,800 Unilever NV-New York Shares... 1,298,700
-------------
5,201,388
-------------
HEALTH CARE -- 8.8%
17,500 Abbott Laboratories........... 1,147,344
20,500 American Home Products
Corporation and
Subsidiaries................ 1,568,250
*35,000 Bergen Brunswig Corporation... 1,474,375
25,000 Columbia/HCA Healthcare
Corp........................ 740,625
25,000 Johnson & Johnson............. 1,646,875
12,500 Merck & Co., Inc.............. 1,328,125
23,000 Pfizer, Inc................... 1,714,937
35,900 Pharmacia & Upjohn, Inc....... 1,314,837
*50,000 Phycor, Inc................... 1,350,000
30,000 Service Corporation
International............... 1,108,125
*22,000 Tenet Healthcare Corp......... 728,750
12,000 Warner-Lambert Co............. 1,488,000
-------------
15,610,243
-------------
MANUFACTURING -- 1.0%
15,400 Caterpillar, Inc.............. 747,862
15,000 Perkin-Elmer Corporation
(The)....................... 1,065,938
-------------
1,813,800
-------------
MEDIA & SERVICES -- 2.6%
*11,800 Clear Channel Communications,
Inc......................... 937,362
45,000 Gannett Co., Inc.............. 2,781,563
10,000 Walt Disney Company (The)..... 990,625
-------------
4,709,550
-------------
RETAIL -- 4.2%
27,400 CVS Corporation............... 1,755,312
33,000 Gap, Inc. (The)............... 1,169,438
30,000 Home Depot, Inc. (The)........ 1,766,250
70,000 Wal-Mart Stores, Inc.......... 2,760,625
-------------
7,451,625
-------------
SOFTWARE & SERVICES -- 3.2%
13,000 Automatic Data Processing,
Inc......................... 797,875
*16,000 Computer Sciences Corp........ 1,336,000
34,500 First Data Corp............... 1,009,125
*10,000 Microsoft Corp................ 1,292,500
*32,000 PeopleSoft, Inc............... 1,248,000
-------------
5,683,500
-------------
TRANSPORTATION -- 1.4%
52,500 Southwest Airlines Co......... 1,292,812
20,800 Union Pacific Corp............ 1,298,700
-------------
2,591,512
-------------
UTILITIES -- 2.5%
20,000 Duke Energy Corporation....... 1,107,500
33,000 SBC Communications, Inc....... 2,417,250
*31,000 WorldCom, Inc................. 937,750
-------------
4,462,500
-------------
Total common stocks........... $ 101,915,871
-------------
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
13
THE HARTFORD ADVISERS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
NON-CONVERTIBLE CORPORATE BONDS -- 1.7%
FINANCIAL SERVICES -- 0.9%
BankAmerica Corp.
$ 500,000 7.875% due 12/01/02......... $ 533,571
Finova Capital Corp.
500,000 6.39% due 10/08/02.......... 501,879
Heller Financial
500,000 6.382% due 11/10/00......... 500,037
-------------
1,535,487
-------------
INDUSTRIAL -- 0.8%
E.W. Scripps Company
500,000 6.375% due 10/15/02......... 502,407
ICI Wilmington
500,000 6.95% due 09/15/04.......... 514,053
Williams Companies, Inc.
500,000 6.50% due 11/15/02.......... 502,340
-------------
1,518,800
-------------
Total non-convertible
corporate bonds............. $ 3,054,287
-------------
-------------
U.S. TREASURIES & FEDERAL AGENCIES -- 36.4%
U.S. TREASURY BONDS -- 7.2%
10,300,000 6.25% due 08/15/23......... 10,615,438
1,950,000 7.25% due 05/15/16......... 2,219,954
-------------
12,835,392
-------------
U.S. TREASURY NOTES -- 28.1%
12,950,000 5.75% due 09/30/99 -
08/15/03.................... 12,964,253
4,650,000 6.25% due 05/31/00......... 4,708,125
8,550,000 6.375% due 08/15/02......... 8,771,770
7,000,000 6.50% due 08/15/05......... 7,304,066
6,000,000 7.25% due 05/15/04......... 6,476,250
6,000,000 7.50% due 02/15/05......... 6,592,500
3,000,000 7.75% due 12/31/99......... 3,117,189
-------------
49,934,153
-------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.1%
Pass-Throughs
220,215 6.50% due 05/01/26......... 217,600
-------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 1.0%
Pass-Throughs
216,321 6.50% due 04/15/26......... 213,954
1,485,771 7.00% due 07/15/23 -
04/15/26.................... 1,500,238
-------------
1,714,192
-------------
Total U.S. treasuries &
federal agencies............ $ 64,701,337
-------------
-------------
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
SHORT-TERM SECURITIES -- 5.1%
REPURCHASE AGREEMENT
$ 8,988,000 Interest in $1,102,287,000
joint repurchase agreement
with State Street Bank dated
12/31/97 at 6.6119%, to be
repurchased at $8,991,302 on
01/02/98; (Collateralized by
$629,353,000 U.S. Treasury
Notes 5.625%-7.50% due
03/31/98-02/15/05,
$204,399,000 U.S. Treasury
Bills 0.00% due
05/21/98-06/04/98,
$159,248,000 U.S. Treasury
Bonds 8.50%-11.25% due
08/15/01-02/15/20 and
$109,287,000 U.S. Treasury
Strips (principal) 0.00% due
02/15/09)................... $ 8,988,000
-------------
-------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $86,733,641)....... 57.3% $ 101,915,871
Total non-convertible corporate bonds (cost
$3,026,441)................................ 1.7 3,054,287
Total U.S. treasuries & federal agencies
(cost $63,400,801)......................... 36.4 64,701,337
Total short-term securities (cost
$8,988,000)................................ 5.1 8,988,000
------ -------------
Total investment in securities
(total cost $162,148,883).................. 100.5 178,659,495
Cash, receivables and other assets........... 2.0 3,502,053
Payable for securities purchased............. (2.4) (4,274,538)
Payable for Fund shares redeemed............. (0.1) (82,370)
Other liabilities............................ 0.0 (64,166)
------ -------------
Net assets................................... 100.0% $ 177,740,474
------ -------------
------ -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 400,000,000
shares authorized; 13,258,302 shares outstanding... $ 13,258
Paid-in surplus...................................... 161,724,774
Accumulated undistributed net investment income...... 74,337
Distribution in excess of net realized gain on
investments........................................ (582,507)
Unrealized appreciation of investments............... 16,510,612
-------------
Net assets........................................... $ 177,740,474
-------------
-------------
Class A
Net asset value per share ($98,633,468
DIVIDED BY 7,352,918 shares outstanding)
(200,000,000 shares authorized)............ $ 13.41
------
------
Maximum offering price ($13.41 DIVIDED BY
94.5%)..................................... $ 14.19
------
------
Class B
Net asset value per share ($39,333,958
DIVIDED BY 2,951,097 shares outstanding)
(100,000,000 shares authorized)............ $ 13.33
------
------
Class Y
Net asset value per share ($39,773,048
DIVIDED BY 2,954,287 shares outstanding)
(100,000,000 shares authorized)............ $ 13.46
------
------
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
14
THE HARTFORD DIVIDEND AND GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
----------- -------------
COMMON STOCKS -- 95.0%
AEROSPACE & DEFENSE -- 2.6%
15,100 Northrop Grumman Corp......... $ 1,736,500
*523 Raytheon Co. Class A.......... 25,786
17,400 United Technologies
Corporation................. 1,266,938
-------------
3,029,224
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.1%
17,200 Xerox Corp.................... 1,269,575
-------------
CONSUMER DURABLES -- 1.4%
11,800 General Motors Corporation.... 715,375
10,100 Genuine Parts Company......... 342,769
9,500 TRW, Inc...................... 507,062
-------------
1,565,206
-------------
CONSUMER NON-DURABLES -- 4.0%
18,500 Clorox Company (The).......... 1,462,656
79,800 Dial Corp..................... 1,660,838
30,300 Kimberly-Clark Corp........... 1,494,169
-------------
4,617,663
-------------
CONSUMER SERVICES -- 1.5%
27,400 Eastman Kodak Company......... 1,666,263
-------------
ELECTRONICS -- 5.3%
22,400 AMP, Inc...................... 940,800
60,800 General Electric Co........... 4,461,200
15,200 Johnson Controls, Inc......... 725,800
-------------
6,127,800
-------------
ENERGY & SERVICES -- 7.3%
18,200 Ashland, Inc.................. 977,113
25,300 Chevron Corp.................. 1,948,100
5,800 Exxon Corp.................... 354,887
9,300 Pennzoil Co................... 621,356
19,000 Phillips Petroleum Co......... 923,875
39,500 Royal Dutch Petroleum Co.
ADR......................... 2,140,406
43,500 USX-Marathon Group............ 1,468,125
-------------
8,433,862
-------------
FINANCIAL SERVICES -- 18.0%
27,600 Allstate Corporation (The).... 2,508,150
35,000 Citicorp...................... 4,425,312
48,700 Federal National Mortgage
Association................. 2,778,944
19,900 Marsh & McLennan Companies,
Inc......................... 1,483,794
38,700 Pacific Century Financial
Corp........................ 957,825
40,300 Peoples Heritage Financial
Group Inc................... 1,853,800
9,500 Pinnacle West Capital Corp.... 402,562
42,000 U.S. Bancorp.................. 4,701,375
19,000 Wachovia Corporation.......... 1,541,375
-------------
20,653,137
-------------
FOOD, BEVERAGE & TOBACCO --
7.0%
29,250 Flowers Industries, Inc....... 601,453
30,600 General Mills, Inc............ 2,191,725
44,300 Interstate Bakeries........... 1,655,713
46,500 McCormick & Company, Inc...... 1,302,000
51,000 Philip Morris Companies,
Inc......................... 2,310,937
-------------
8,061,828
-------------
HEALTH CARE -- 11.1%
19,900 Abbott Laboratories........... 1,304,694
SHARES MARKET
----------- VALUE
-------------
HEALTH CARE -- (CONTINUED)
23,200 American Home Products Corp.
and Subsidiaries............ $ 1,774,800
28,800 Bard (C.R.), Inc.............. 901,800
14,200 Bristol-Myers Squibb Co....... 1,343,675
15,200 Merck & Co., Inc.............. 1,615,000
74,900 Pharmacia & Upjohn, Inc....... 2,743,212
24,600 Warner-Lambert Co............. 3,050,400
-------------
12,733,581
-------------
INDUSTRIAL MATERIALS -- 5.5%
10,300 Aluminum Company of America... 724,863
12,700 BOC Group PLC SA ADR.......... 418,306
8,200 BetzDearborn, Inc............. 500,713
11,600 Calgon Carbon Corp............ 124,700
23,300 du Pont (E.I.) de Nemours &
Co.......................... 1,399,456
4,300 Eastman Chemical Co........... 256,119
*8,500 Georgia-Pacific (Timber
Group)...................... 192,844
8,500 Georgia-Pacific Corporation... 516,375
22,800 International Paper Co........ 983,250
2,500 Nalco Chemical Co............. 98,906
20,000 RPM, Inc. (Ohio).............. 305,000
15,000 Temple-Inland, Inc............ 784,687
-------------
6,305,219
-------------
MANUFACTURING -- 2.2%
13,800 Cooper Industries, Inc........ 676,200
10,200 Deere & Company............... 594,787
16,000 Minnesota Mining &
Manufacturing Co............ 1,313,000
-------------
2,583,987
-------------
MEDIA & SERVICES -- 1.6%
1,400 Cognizant Corp................ 62,388
28,900 Gannett Co., Inc.............. 1,786,381
-------------
1,848,769
-------------
REAL ESTATE -- 2.8%
*6,400 AMB Property Corporation...... 160,800
*11,900 Kimco Realty Corporation
(REIT)...................... 419,475
18,600 Liberty Property Trust (SBI)
(REIT)...................... 531,263
12,800 Nationwide Health Properties,
Inc. (REIT)................. 326,400
*27,700 Security Capital Pacific Inc.
(REIT)...................... 671,725
900 Charles E. Smith Residential
Realty, Inc................. 31,950
22,700 Spieker Properties, Inc.
(REIT)...................... 973,262
6,800 Sunstone Hotel Investors, Inc.
(REIT)...................... 117,300
-------------
3,232,175
-------------
RETAIL -- 3.1%
21,200 May Department Stores Company
(The)....................... 1,116,975
40,000 J.C. Penney Company, Inc...... 2,412,500
-------------
3,529,475
-------------
TRANSPORTATION -- 1.0%
17,600 Union Pacific Corp............ 1,098,900
-------------
UTILITIES -- 18.8%
3,900 AT&T Corp..................... 238,875
18,800 Ameritech Corp................ 1,513,400
22,967 Bell Atlantic Corp............ 2,089,997
34,700 BellSouth Corp................ 1,954,044
9,500 CINergy Corp.................. 363,969
19,300 DPL, Inc...................... 554,875
25,900 Duke Energy Corporation....... 1,434,213
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
15
THE HARTFORD DIVIDEND AND GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
SHARES MARKET
----------- VALUE
-------------
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
10,800 Endesa SA ADR................. $ 196,425
11,800 GPU, Inc...................... 497,075
34,700 MCN Energy Group, Inc......... 1,401,012
15,500 NIPSCO Industries, Inc........ 766,281
25,300 National Power PLC SA ADR..... 1,002,512
10,100 New Century Energies, Inc..... 484,169
18,500 New England Electric System... 790,875
17,500 Northern States Power
Company..................... 1,019,375
4,700 Pacific Enterprises........... 176,837
15,600 PowerGen PLC SA ADR........... 828,750
24,900 SBC Communications, Inc....... 1,823,925
16,500 SCANA Corp.................... 493,969
49,900 Southern Company (The)........ 1,291,162
23,300 Sprint Corp................... 1,365,963
31,500 Texas Utilities Co............ 1,309,219
-------------
21,596,922
-------------
WASTE MANAGEMENT -- 0.7%
5,500 Browning-Ferris Industries,
Inc......................... 203,500
20,300 Waste Management, Inc......... 558,250
-------------
761,750
-------------
Total common stocks........... $ 109,115,336
-------------
-------------
CONVERTIBLE PREFERRED STOCKS -- 3.6%
AEROSPACE & DEFENSE -- 1.0%
19,700 Loral Space & Communications,
Ltd.**...................... 1,204,163
-------------
COMMUNICATIONS EQUIPMENT --
0.5%
6,000 WorldCom, Inc. Depository
Shares...................... 630,000
-------------
ENERGY & SERVICES -- 1.7%
29,700 Sun Company................... 1,065,487
15,700 Unocal Corporation............ 873,313
-------------
1,938,800
-------------
MEDIA & SERVICES -- 0.3%
5,400 American Radio Systems
Corporation**............... 346,275
-------------
SOFTWARE & SERVICES -- 0.1%
800 Microsoft Corporation......... 71,900
-------------
Total convertible preferred
stocks...................... $ 4,191,138
-------------
-------------
NO. OF
WARRANTS
-----------
WARRANTS
REAL ESTATE -- 0.0%
984 Security Capital Corp.
Warrants,
expire September 18, 1998... $ 5,166
-------------
-------------
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
SHORT-TERM SECURITIES -- 1.7%
REPURCHASE AGREEMENT
$ 1,940,000 Interest in $1,102,287,000
joint repurchase agreement
with State Street Bank dated
12/31/97 at 6.6119%, to be
repurchased at $1,940,713 on
01/02/98; (Collateralized by
$629,353,000 U.S. Treasury
Notes 5.625% - 7.50% due
03/31/98 - 02/15/05,
$204,399,000 U.S. Treasury
Bills 0.00% due 05/21/98 -
06/04/98, $159,248,000 U.S.
Treasury Bonds 8.50% -
11.25% due 08/15/01 -
02/15/20 and $109,287,000
U.S. Treasury Strips
(principal) 0.00% due
02/15/09)................... $ 1,940,000
-------------
-------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $100,135,030)...... 95.0% $ 109,115,336
Total convertible preferred stocks (cost
$4,037,361)................................ 3.6 4,191,138
Total warrants (cost $0)..................... 0.0 5,166
Total short-term securities (cost
$1,940,000)................................ 1.7 1,940,000
-------- -------------
Total investment in securities
(total cost $106,112,391).................. 100.3 115,251,640
Cash, receivables and other assets........... 1.9 2,151,699
Payable for securities purchased............. (2.1) (2,456,736)
Payable for Fund shares redeemed............. 0.0 (36,312)
Other liabilities............................ (0.1) (66,670)
-------- -------------
Net assets................................... 100.0% $ 114,843,621
-------- -------------
-------- -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital Stock, par value $.001 per share; 300,000,000
shares authorized; 7,814,635 shares outstanding...... $ 7,815
Paid-in surplus........................................ 105,713,654
Accumulated undistributed net investment income........ 45,193
Distribution in excess of net realized gain on
investments.......................................... (62,290)
Unrealized appreciation of investments................. 9,139,249
-------------
Net assets............................................. $ 114,843,621
-------------
-------------
Class A
Net asset value per share ($67,861,201
DIVIDED BY 4,608,573 shares outstanding)
(175,000,000 shares authorized)............ $ 14.72
-----------
-----------
Maximum offering price ($14.72 DIVIDED BY
94.5%)..................................... $ 15.58
-----------
-----------
Class B
Net asset value per share ($33,741,207
DIVIDED BY 2,309,603 shares outstanding)
(75,000,000 shares authorized)............. $ 14.61
-----------
-----------
Class Y
Net asset value per share ($13,241,213
DIVIDED BY 896,459 shares outstanding)
(50,000,000 shares authorized)............. $ 14.77
-----------
-----------
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. As of December 31,
1997, the market value of these securities amounted to $1,550,438, or 1.4% of
net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
16
THE HARTFORD STOCK FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
----------- -------------
COMMON STOCKS -- 89.4%
AEROSPACE & DEFENSE -- 1.0%
15,000 Boeing Co. (The).............. $ 734,063
*6,749 Raytheon Co. Class A.......... 332,800
-------------
1,066,863
-------------
COMMUNICATIONS EQUIPMENT --
2.8%
*19,500 Cisco Systems, Inc............ 1,087,125
18,000 Ericsson (L.M.) Telephone
ADR......................... 671,625
15,000 Lucent Technologies, Inc...... 1,198,125
-------------
2,956,875
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.3%
*16,000 Adaptec, Inc.................. 594,000
*28,000 EMC Corporation............... 768,250
16,000 International Business
Machines Corp............... 1,673,000
20,600 Xerox Corp.................... 1,520,538
-------------
4,555,788
-------------
CONSUMER DURABLES -- 0.4%
12,000 General Motors Corporation
Class H..................... 443,250
-------------
CONSUMER NON-DURABLES -- 4.7%
12,000 Estee Lauder Companies Class
A........................... 617,250
14,000 Gillette Co. (The)............ 1,406,125
31,000 Kimberly-Clark Corp........... 1,528,688
18,000 Procter & Gamble Company
(The)....................... 1,436,625
-------------
4,988,688
-------------
CONSUMER SERVICES -- 3.7%
26,000 Hertz Corporation (The) Class
A........................... 1,046,500
36,000 McDonald's Corporation........ 1,719,000
*50,000 Mirage Resorts, Inc........... 1,137,500
-------------
3,903,000
-------------
ELECTRONICS -- 5.3%
*22,000 Analog Devices, Inc........... 609,125
50,000 General Electric Co........... 3,668,750
20,000 Intel Corp.................... 1,405,000
-------------
5,682,875
-------------
ENERGY & SERVICES -- 5.2%
10,300 Chevron Corp.................. 793,100
14,000 Exxon Corp.................... 856,625
32,000 Royal Dutch Petroleum Co.
ADR......................... 1,734,000
27,000 Santa Fe International
Corporation................. 1,098,562
13,000 Schlumberger Ltd.............. 1,046,500
-------------
5,528,787
-------------
FINANCIAL SERVICES -- 18.6%
21,000 Allstate Corporation (The).... 1,908,375
20,000 American Express Co........... 1,785,000
12,500 American International Group,
Inc......................... 1,359,375
14,000 Associates First Capital Corp.
Class A..................... 995,750
20,000 BankAmerica Corporation....... 1,460,000
18,000 Citicorp...................... 2,275,875
30,000 First Union Corporation....... 1,537,500
21,000 Marsh & McLennan Companies,
Inc......................... 1,565,813
30,000 Merrill Lynch & Co., Inc...... 2,188,125
26,000 State Street Corp............. 1,512,875
38,849 Travelers Group Inc........... 2,092,989
10,000 U.S. Bancorp.................. 1,119,375
-------------
19,801,052
-------------
SHARES MARKET
----------- VALUE
-------------
FOOD, BEVERAGE & TOBACCO --
4.5%
22,000 Coca-Cola Company (The)....... $ 1,465,750
25,000 Nabisco Holdings
Corporation................. 1,210,938
31,000 PepsiCo, Inc.................. 1,129,562
16,000 Unilever NV-New York Shares... 999,000
-------------
4,805,250
-------------
HEALTH CARE -- 14.8%
22,000 Abbott Laboratories........... 1,442,375
18,000 American Home Products
Corporation and
Subsidiaries................ 1,377,000
*22,000 Bergen Brunswig Corporation
Class A..................... 926,750
30,000 Columbia/HCA Healthcare
Corp........................ 888,750
25,000 Johnson & Johnson............. 1,646,875
19,000 Merck & Co., Inc.............. 2,018,750
27,000 Pfizer, Inc................... 2,013,188
37,000 Pharmacia & Upjohn, Inc....... 1,355,125
*40,000 Phycor, Inc................... 1,080,000
25,000 Service Corporation
International............... 923,438
*18,000 Tenet Healthcare Corp......... 596,250
12,100 Warner-Lambert Co............. 1,500,400
-------------
15,768,901
-------------
MANUFACTURING -- 1.4%
12,800 Caterpillar, Inc.............. 621,600
13,000 Perkin-Elmer Corporation
(The)....................... 923,812
-------------
1,545,412
-------------
MEDIA & SERVICES -- 4.5%
*13,200 Clear Channel Communications,
Inc......................... 1,048,575
45,000 Gannett Co., Inc.............. 2,781,562
10,000 Walt Disney Company (The)..... 990,625
-------------
4,820,762
-------------
RETAIL -- 7.3%
26,000 CVS Corporation............... 1,665,625
38,000 Gap, Inc. (The)............... 1,346,625
40,000 Home Depot, Inc. (The)........ 2,355,000
60,000 Wal-Mart Stores, Inc.......... 2,366,250
-------------
7,733,500
-------------
SOFTWARE & SERVICES -- 5.3%
11,000 Automatic Data Processing,
Inc......................... 675,125
*12,300 Computer Sciences Corp........ 1,027,050
35,000 First Data Corp............... 1,023,750
*15,000 Microsoft Corp................ 1,938,750
*24,000 PeopleSoft, Inc............... 936,000
-------------
5,600,675
-------------
TRANSPORTATION -- 2.1%
40,500 Southwest Airlines Co......... 997,312
20,000 Union Pacific Corp............ 1,248,750
-------------
2,246,062
-------------
UTILITIES -- 3.5%
20,000 Duke Energy Corporation....... 1,107,500
25,000 SBC Communications, Inc....... 1,831,250
*28,000 WorldCom, Inc................. 847,000
-------------
3,785,750
-------------
Total common stocks........... $ 95,233,490
-------------
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
17
THE HARTFORD STOCK FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
SHORT-TERM SECURITIES -- 13.7%
REPURCHASE AGREEMENT
$14,668,000 Interest in $1,102,287,000
joint repurchase agreement
with State Street Bank dated
12/31/97 at 6.6119%, to be
repurchased at $14,673,388
on 01/02/98; (Collateralized
by $629,353,000 U.S.
Treasury Notes 5.625% -
7.50% due 03/31/98 -
02/15/05, $204,399,000 U.S.
Treasury Bills 0.00% due
05/21/98 - 06/04/98,
$159,248,000 U.S. Treasury
Bonds 8.50% - 11.25% due
08/15/01 - 02/15/20 and
$109,287,000 U.S. Treasury
Strips (principal) 0.00% due
02/15/09)................... $ 14,668,000
-------------
-------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $86,509,370)....... 89.4% $ 95,233,490
Total short-term securities (cost
$14,668,000)............................... 13.7 14,668,000
------ ------------
Total investment in securities
(total cost $101,177,370).................. 103.1 109,901,490
Cash, receivables and other assets........... 2.5 2,637,126
Payable for securities purchased............. (5.5) (5,831,318)
Payable for Fund shares redeemed............. (0.1) (82,438)
Other liabilities............................ 0.0 (57,730)
------ ------------
Net assets................................... 100.0% $106,567,130
------ ------------
------ ------------
MARKET
VALUE
------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 300,000,000
shares authorized; 7,051,298 shares outstanding.... $ 7,051
Paid-in surplus...................................... 98,453,497
Distribution in excess of net realized gain on
investments........................................ (617,538)
Unrealized appreciation of investments............... 8,724,120
------------
Net assets........................................... $106,567,130
------------
------------
Class A
Net asset value per share ($65,762,930
DIVIDED BY 4,337,980 shares outstanding)
(175,000,000 shares authorized)............ $ 15.16
---------
---------
Maximum offering price per share ($15.16
DIVIDED BY 94.5%)......................... $ 16.04
---------
---------
Class B
Net asset value per share ($35,294,083
DIVIDED BY 2,351,930 shares outstanding)
(75,000,000 shares authorized)............. $ 15.01
---------
---------
Class Y
Net asset value per share ($5,510,117
DIVIDED BY 361,388 shares outstanding)
(50,000,000 shares authorized)............. $ 15.25
---------
---------
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
18
THE HARTFORD CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
------- ------------
COMMON STOCKS -- 94.2%
AEROSPACE & DEFENSE -- 4.1%
130,000 Boeing Company (The).......... $ 6,361,875
120,000 Precision Castparts Corp...... 7,237,500
*150,000 Tracor, Inc................... 4,556,250
------------
18,155,625
------------
BUSINESS SERVICES -- 6.8%
*195,000 Cendant Corporation........... 6,703,125
70,000 Chicago Bridge & Iron Company
NV.......................... 1,137,500
*180,000 Chicago Miniature Lamp,
Inc......................... 6,075,000
*325,000 Euronet Services, Inc......... 2,518,750
*28,900 Howmet International, Inc..... 431,693
*155,000 ImageMAX...................... 1,569,375
*200,000 Kent Electronics Corp......... 5,025,000
*316,200 U.S. Office Products
Company..................... 6,205,425
------------
29,665,868
------------
CLOSED END INVESTMENT
COMPANY -- 0.4%
245,000 Morgan Stanley Asia-Pacific
Fund........................ 1,822,187
------------
COMMUNICATIONS EQUIPMENT --
1.9%
10,000 ECI Telecommunications........ 255,000
*155,000 Elsag Bailey Process Auto
NV.......................... 2,557,500
*35,000 Scitex Corp., Ltd............. 422,187
*308,700 Videoserver, Inc.............. 4,900,613
------------
8,135,300
------------
COMPUTERS & OFFICE
EQUIPMENT -- 5.5%
*34,200 Adaptec, Inc.................. 1,269,675
*247,600 Discreet Logic, Inc........... 5,431,725
*120,000 Eidos PLC SA.................. 1,470,000
*78,800 Electronics for Imaging,
Inc......................... 1,310,050
*110,000 Security Dynamics
Technologies, Inc........... 3,932,500
100,000 Sensormatic Electronic........ 1,643,750
*249,700 Splash Technology Holdings,
Inc......................... 5,618,250
*255,200 Titan Corporation (The)....... 1,595,000
*120,000 Western Digital Corporation... 1,927,500
------------
24,198,450
------------
CONSUMER SERVICES -- 5.5%
*145,300 Cheesecake Factory, Inc.
(The)....................... 4,431,650
150,000 International Game
Technology.................. 3,787,500
*150,000 Papa John's International,
Inc......................... 5,231,250
*160,000 Sun International Hotels
Ltd......................... 6,020,000
*83,000 Ugly Duckling Corporation..... 705,500
*182,500 WMS Industries, Inc........... 3,855,313
------------
24,031,213
------------
ELECTRONICS -- 9.2%
*107,200 Applied Micro Circuits
Corporation................. 1,326,600
*285,000 Clare (C.P.) Corporation...... 3,705,000
*115,000 Cable Design Technologies
Corporation................. 4,470,625
*220,000 CMF Technologies, Inc......... 3,382,500
*182,900 Credence Systems
Corporation................. 5,418,413
*230,000 Komag, Inc.................... 3,421,250
*111,500 Lattice Semiconductor
Corporation................. 5,282,313
130,000 Philips Electronics NV NY
Shares...................... 7,865,000
*140,000 Silicon Valley Group, Inc..... 3,167,500
*110,000 Taiwan Semiconductor ADR...... 2,000,625
------------
40,039,826
------------
ENERGY & SERVICES -- 4.2%
90,000 Anadarko Petroleum
Corporation................. 5,461,875
*486,000 Arakis Energy Corporation..... 1,002,375
80,000 ENSCO International, Inc...... 2,680,000
*150,000 J Ray McDermott SA............ 6,450,000
60,000 Transocean Offshore, Inc...... 2,891,250
------------
18,485,500
------------
SHARES MARKET
------- VALUE
------------
FINANCIAL SERVICES -- 6.7%
235,900 Commercial Banks Latin America
ADR......................... $ 3,302,600
*278,200 FIRSTPLUS Financial Group,
Inc......................... 10,675,925
32,000 Legg Mason Inc................ 1,790,000
*100,000 Local Finance Corporation**... 1,162,500
102,400 NAC Re Corp................... 4,998,400
39,700 Pioneer Group, Inc. (The)..... 1,116,563
40,000 Providian Financial
Corporation................. 1,807,500
*140,000 Unibanco GDR.................. 4,506,250
------------
29,359,738
------------
FOOD, BEVERAGE & TOBACCO --
0.5%
*100,000 General Cigar Holdings,
Inc......................... 2,131,250
------------
FOREIGN SECURITIES -- 2.5%
204,000 Ace Koeki Co.................. 392,244
*450,000 Corporation Geo Sa de C.V.
Class B..................... 2,767,514
*218,600 Hurricane Hydrocarbons Class
A........................... 1,695,617
*296,700 Research In Motion............ 1,451,343
3,200 Union Bank of Switzerland..... 4,633,639
------------
10,940,357
------------
HEALTH CARE -- 15.4%
90,000 Allergan, Inc................. 3,020,625
*215,000 Atria Communities, Inc........ 3,681,875
*208,000 Biogen, Inc................... 7,566,000
*99,000 Boston Scientific
Corporation................. 4,541,625
170,000 Columbia/HCA Healthcare
Corporation................. 5,036,250
*230,000 Endosonics Corporation........ 2,472,500
*220,000 FPA Medical Management,
Inc......................... 4,097,500
*80,000 Genzyme Corp.................. 2,220,000
*29,900 Heska Corporation............. 370,013
170,000 ICN Pharmaceuticals, Inc...... 8,298,125
*115,000 IDX Systems Corporation....... 4,255,000
*326,900 PerSeptive Biosystems, Inc.... 4,127,113
174,600 Pharmacia & Upjohn, Inc....... 6,394,725
*224,500 Phycor, Inc................... 6,061,500
*210,000 Vencor, Inc................... 5,131,875
------------
67,274,726
------------
INDUSTRIAL MATERIALS -- 3.8%
*250,000 American Pad & Paper Company
of Delaware, Inc............ 2,406,250
*250,000 Gaylord Container
Corporation................. 1,437,500
88,300 IMC Global, Inc............... 2,891,825
*210,000 Oregon Metallurgical
Corporation................. 7,008,750
*105,000 Titanium Metals Corp.......... 3,031,875
------------
16,776,200
------------
MEDIA & SERVICES -- 3.8%
*70,000 America Online, Inc........... 6,243,125
125,000 Comcast Corporation Class A... 3,945,313
*160,000 Hearst-Argyle Television,
Inc......................... 4,760,000
*107,000 Playboy Enterprises, Inc.
Class B..................... 1,678,563
------------
16,627,001
------------
REAL ESTATE -- 1.5%
*195,800 Imperial Credit Commercial.... 2,863,575
*150,000 Security Capital Pacific Inc.
(REIT)...................... 3,637,500
------------
6,501,075
------------
RETAIL -- 4.9%
*195,000 Finish Line, Inc. (The)....... 2,559,375
135,000 Gap, Inc. (The)............... 4,784,063
*206,300 Hot Topic, Inc................ 4,693,325
*750,000 PETsMART, Inc................. 5,437,500
*85,800 Saks Holdings, Inc............ 1,774,988
*250,000 Track'n Trail, Inc............ 2,218,750
------------
21,468,001
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
19
THE HARTFORD CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
SHARES MARKET
------- VALUE
------------
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- 8.8%
*237,100 Award Software International,
Inc......................... $ 1,778,250
*56,000 Ceridian Corporation.......... 2,565,500
100,000 Computer Task Group, Inc...... 3,556,250
*32,300 DST Systems, Inc.............. 1,378,806
*495,000 Learning Company, Inc.
(The)....................... 7,950,937
*100,000 Paymentech, Inc............... 1,475,000
*190,000 Peerless Systems Corp......... 2,446,250
*180,000 Pegasystems, Inc.............. 3,633,750
*550,000 Rational Software
Corporation................. 6,256,250
*175,000 Simulation Sciences, Inc...... 2,800,000
*50,000 Smallworldwide PLC ADR........ 1,093,750
*387,000 System Software Associates,
Inc......................... 3,386,250
------------
38,320,993
------------
TRANSPORTATION -- 2.8%
*210,000 C.H. Robinson Worldwide,
Inc......................... 4,698,750
*270,000 Jevic Transportation, Inc..... 4,353,750
155,000 Werner Enterprises, Inc....... 3,177,500
------------
12,230,000
------------
UTILITIES -- 3.5%
*135,500 Calpine Corp.................. 2,015,563
220,000 MCI Communications
Corporation................. 9,418,750
*130,600 WorldCom, Inc................. 3,950,650
------------
15,384,963
------------
WASTE MANAGEMENT -- 2.4%
*135,000 Republic Industries, Inc...... 3,147,187
270,000 Waste Management, Inc......... 7,425,000
------------
10,572,187
------------
Total common stocks........... $412,120,460
------------
------------
CONVERTIBLE PREFERRED STOCK -- 0.4%
CONSUMER SERVICES -- 0.4%
*193,536 SGW Holdings Corporation***... $ 1,700,000
------------
------------
PRINCIPAL
AMOUNT
-------
SHORT-TERM SECURITIES -- 5.4%
REPURCHASE AGREEMENT -- 5.3%
$23,227,000 Interest in $1,102,287,000
joint repurchase agreement
with State Street Bank dated
12/31/97 at 6.6119%, to be
repurchased at $23,235,532
on 01/02/98; (Collateralized
by $629,353,000 U.S.
Treasury Notes 5.625% -
7.50% due 03/31/98 -
02/15/05, $204,399,000 U.S.
Treasury Bills 0.00% due
05/21/98 - 06/04/98,
$159,248,000 U.S. Treasury
Bonds 8.50% - 11.25% due
08/15/01 - 02/15/20 and
$109,287,000 U.S. Treasury
Strips (principal) 0.00% due
02/15/09)................... $ 23,227,000
------------
PRINCIPAL MARKET
AMOUNT VALUE
------- ------------
U.S. TREASURY BILLS -- 0.1%
$400,000 5.13% due 02/19/98............ $ 397,207
175,000 5.13% due 03/12/98............ 173,259
------------
570,466
------------
Total short-term securities... $ 23,797,466
------------
------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $408,549,487)...... 94.2 % $ 412,120,460
Total convertible preferred stock (cost
$2,000,001)................................ 0.4 1,700,000
Total short-term securities (cost
$23,797,467)............................... 5.4 23,797,466
------ -------------
Total investment in securities
(total cost $434,346,955).................. 100.0 437,617,926
Cash, receivables and other assets........... 2.3 10,243,296
Payable for securities purchased............. (2.1) (9,110,946)
Payable for Fund shares redeemed............. (0.2) (828,063)
Other liabilities............................ 0.0 (236,297)
------ -------------
Net assets................................... 100.0 % $ 437,685,916
------ -------------
------ -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 300,000,000
shares authorized; 22,062,844 shares outstanding... $ 22,063
Paid-in surplus...................................... 430,260,619
Undistributed net investment income.................. 64,234
Accumulated undistributed net realized gain on
investments........................................ 4,132,264
Unrealized appreciation of investments............... 3,270,971
Unrealized depreciation of forward foreign currency
contracts (see Note 2)............................. (35,449)
Unrealized depreciation on translation of other
assets and liabilities in foreign currencies....... (28,786)
-------------
Net assets........................................... $ 437,685,916
-------------
-------------
Class A
Net asset value per share ($233,600,759
DIVIDED BY 11,736,073 shares outstanding)
(175,000,000 shares authorized)............ $ 19.90
------
------
Maximum offering price ($19.90 DIVIDED BY
94.5%)..................................... $ 21.06
------
------
Class B
Net asset value per share ($174,392,269
DIVIDED BY 8,845,951 shares outstanding)
(75,000,000 shares authorized)............. $ 19.71
------
------
Class Y
Net asset value per share ($29,692,888
DIVIDED BY 1,480,820 shares outstanding)
(50,000,000 shares authorized)............. $ 20.05
------
------
* Non-income producing during period.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. As of December 31,
1997, the market value of these securities amounted to $1,162,500, or .3% of
net assets.
*** Restricted security (see Note 2).
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 1997
TOTAL AGGREGATE DELIVERY UNREALIZED
DESCRIPTION MARKET VALUE FACE VALUE DATE DEPRECIATION
- ------------------------------ ------------ ---------- --------- -------------
Brazilian Real (Sell) $27,035,449 $27,000,000 03/20/98 $ (35,449)
-------------
$ (35,449)
-------------
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
20
THE HARTFORD SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
---------- ------------
COMMON STOCKS -- 92.2%
AEROSPACE & DEFENSE -- 1.5%
9,200 Precision Castparts Corporation.... $ 554,875
------------
BUSINESS SERVICES -- 6.2%
*17,600 Chicago Miniature Lamp, Inc........ 594,000
*66,700 Howmet International, Inc.......... 996,331
*39,100 US Office Products Company......... 767,338
------------
2,357,669
------------
COMMUNICATIONS EQUIPMENT -- 9.8%
*34,800 Corsair Communications, Inc........ 565,500
39,200 ECI Telecommunications............. 999,600
*71,100 EIS International, Inc............. 391,050
*36,700 Excel Switching Corp............... 656,013
*5,670 Gilat Satellite Network............ 162,303
*2,100 MMC Networks, Inc.................. 35,700
*5,000 Natural MicroSystems Corp.......... 232,500
*16,700 RCN Corporation.................... 571,975
*15,990 Transwitch Corporation............. 119,925
------------
3,734,566
------------
COMPUTERS & OFFICE EQUIPMENT --
1.9%
*14,500 Electronics for Imaging, Inc....... 241,063
9,100 Symbol Technologies, Inc........... 343,525
*8,000 Western Digital Corp............... 128,500
------------
713,088
------------
CONSUMER SERVICES -- 0.8%
*10,400 Cheesecake Factory, Inc. (The)..... 317,200
------------
ELECTRONICS -- 7.5%
*35,000 Cypress Semiconductor
Corporation...................... 297,500
*11,200 International Manufacturing
Services, Inc. Class A........... 81,200
*7,000 LAM Research Corporation........... 204,750
*9,200 Lattice Semiconductor
Corporation...................... 435,850
7,000 Philips Electronics NV NY Shares... 423,500
*15,000 PMC-Sierra, Inc.................... 465,000
*4,000 QLogic Corp........................ 118,000
*6,000 SCI Systems, Inc................... 261,375
*26,000 Unitrode Corp...................... 559,000
------------
2,846,175
------------
ENERGY & SERVICES -- 4.0%
11,900 Coflexip ADR....................... 660,450
*19,000 Noble Drilling Corporation......... 581,875
10,000 Pogo Producing Co.................. 295,000
------------
1,537,325
------------
FINANCIAL SERVICES -- 18.9%
20,000 Ambac Financial Group, Inc......... 920,000
11,400 Finova Group, Inc. (The)........... 566,438
*46,500 FIRSTPLUS Financial Group, Inc..... 1,784,438
*9,300 ITLA Capital Corporation........... 179,025
*35,200 Imperial Credit Industries, Inc.... 721,600
*4,590 Investment Technology Group,
Inc.............................. 128,520
13,000 Jefferies Group, Inc............... 532,188
15,866 Legg Mason Inc..................... 887,504
*38,300 Long Beach Financial Corporation... 445,237
*9,200 Long Island Bancorp, Inc........... 456,550
7,455 Reinsurance Group of America,
Inc.............................. 317,303
17,315 Resource Bancshares Mortgage Group,
Inc.............................. 282,442
------------
7,221,245
------------
SHARES MARKET
---------- VALUE
------------
FOOD, BEVERAGE & TOBACCO -- 1.8%
*20,400 General Cigar Holdings, Inc. Class
A................................ $ 434,775
*4,000 Il Fornaio America Corp............ 59,500
*3,670 Robert Mondavi Corporation (The)
Class A.......................... 178,913
------------
673,188
------------
HEALTH CARE -- 11.2%
20,500 Allergan, Inc...................... 688,031
*18,000 Covance, Inc....................... 357,750
*31,500 Endosonics Corporation............. 338,625
*10,800 Heska Corporation.................. 133,650
8,500 ICN Pharmaceuticals, Inc........... 414,906
*18,490 IDX Systems Corporation............ 684,130
13,200 Pharmacia & Upjohn, Inc............ 483,450
*26,500 Phycor, Inc........................ 715,500
*49,500 Roberts Pharmaceutical
Corporation...................... 473,344
------------
4,289,386
------------
INDUSTRIAL MATERIALS -- 2.8%
*42,000 American Pad & Paper Company of
Delaware, Inc.................... 404,250
*20,000 Oregon Metallurgical Corporation... 667,500
------------
1,071,750
------------
MANUFACTURING -- 1.4%
*49,000 Miller Industries, Inc............. 526,750
------------
MEDIA & SERVICES -- 1.3%
*12,200 ADC Telecommunications, Inc........ 509,350
------------
RETAIL -- 5.0%
*5,500 CompUSA, Inc....................... 170,500
*19,000 Eagle Hardware & Garden, Inc....... 368,125
*21,600 Finish Line, Inc. (The) Class A.... 283,500
*14,100 Gadzooks, Inc...................... 296,100
*8,600 International Home Foods, Inc...... 240,800
*76,100 PETsMART, Inc...................... 551,725
------------
1,910,750
------------
SOFTWARE & SERVICES -- 14.6%
*23,000 Award Software International,
Inc.............................. 172,500
*5,800 Ceridian Corporation............... 265,712
*22,000 Cognos Corporation................. 506,000
*14,500 Electronic Arts Inc................ 548,281
*13,000 Geotel Communications Corp......... 203,125
*47,000 Learning Company, Inc. (The)....... 754,938
*19,000 Peerless Systems Corp.............. 244,625
*10,000 Safeguard Scientifics, Inc......... 313,750
*25,100 Security Dynamics Technologies,
Inc.............................. 897,325
*39,600 Simulation Sciences, Inc........... 633,600
*10,900 Splash Technology Holdings, Inc.... 245,250
*48,500 System Software Associates, Inc.... 424,375
*24,500 Xylan Corporation.................. 370,563
------------
5,580,044
------------
TRANSPORTATION -- 2.6%
*8,000 Jevic Transportation, Inc.......... 129,000
*20,100 M.S. Carriers, Inc................. 499,988
*900 Robinson (C.H.) Worldwide, Inc..... 20,138
4,000 Teekay Shipping Corporation........ 134,250
10,100 Werner Enterprises, Inc............ 207,050
------------
990,426
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
21
THE HARTFORD SMALL COMPANY FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
SHARES MARKET
---------- VALUE
------------
COMMON STOCKS -- (CONTINUED)
UTILITIES -- 0.9%
*16,000 Calpine Corporation................ $ 238,000
*6,000 Tel-Save Holdings, Inc............. 119,250
------------
357,250
------------
Total common stocks................ $ 35,191,037
------------
------------
CONVERTIBLE PREFERRED STOCK -- 0.2%
CONSUMER SERVICES -- 0.2%
*8,612 SGW Holdings Corporation**......... $ 75,646
------------
------------
PRINCIPAL
AMOUNT
----------
SHORT-TERM SECURITIES -- 6.0%
U.S. TREASURY BILLS -- 0.1%
$ 20,000 4.97% due 01/08/98................. $ 19,981
30,000 5.84% due 05/28/98................. 29,324
------------
49,305
------------
REPURCHASE AGREEMENT -- 5.9%
2,239,000 Interest in $1,102,287,000 joint
repurchase agreement with State
Street Bank dated 12/31/97 at
6.6119%, to be repurchased at
$2,239,822 on 01/02/98;
(Collateralized by $629,353,000
U.S. Treasury Notes 5.625% -
7.50% due 03/31/98 - 02/15/05,
$204,399,000 U.S. Treasury Bills
0.00% due 05/21/98 - 06/04/98,
$159,248,000 U.S. Treasury Bonds
8.50% - 11.25% due 08/15/01 -
02/15/20 and $109,287,000 U.S.
Treasury Strips (principal) 0.00%
due 02/15/09).................... 2,239,000
------------
Total short-term securities........ $ 2,288,305
------------
------------
MARKET
VALUE
-----------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $35,277,878)....... 92.2 % $35,191,037
Total convertible preferred stock (cost
$88,997)................................... 0.2 75,646
Total short-term securities (cost
$2,288,305)................................ 6.0 2,288,305
------ -----------
Total investment in securities
(total cost $37,655,180)................... 98.4 37,554,988
Cash, receivables and other assets........... 4.1 1,563,372
Payable for securities purchased............. (1.6) (615,950)
Payable for Fund shares redeemed............. (0.8) (312,636)
Other liabilities............................ (0.1) (42,543)
------ -----------
Net assets................................... 100.0% $38,147,231
------ -----------
------ -----------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 300,000,000
shares authorized; 3,140,637 shares outstanding.... $ 3,141
Paid-in surplus...................................... 37,844,770
Accumulated undistributed net realized gain on
investments........................................ 399,512
Unrealized depreciation of investments............... (100,192)
-----------
Net assets........................................... $38,147,231
-----------
-----------
Class A
Net asset value per share ($19,390,641
DIVIDED BY 1,595,140 shares outstanding)
(175,000,000 shares authorized)............ $ 12.16
------
------
Maximum offering price ($12.16 DIVIDED BY
94.5%)..................................... $ 12.87
------
------
Class B
Net asset value per share ($9,694,186
DIVIDED BY 805,383 shares outstanding)
(75,000,000 shares authorized)............. $ 12.04
------
------
Class Y
Net asset value per share ($9,062,404
DIVIDED BY 740,114 shares outstanding)
(50,000,000 shares authorized)............. $ 12.24
------
------
* Non-income producing during period.
** Restricted security (see Note 2).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
22
THE HARTFORD INTERNATIONAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
MARKET
SHARES VALUE
-------- ------------
COMMON STOCKS -- 84.0%
ARGENTINA -- 0.8%
15,000 Banco Galicia y Buenos Aires
SA de CV.................... $ 96,018
3,800 Telefonica de Argentina SA
ADR......................... 141,550
------------
237,568
------------
AUSTRALIA -- 2.4%
7,500 Amcor Ltd..................... 32,985
29,000 Australia & New Zealand
Banking Group Ltd........... 191,600
23,666 Boral Ltd..................... 59,829
12,283 Broken Hill Proprietary Co.
Ltd......................... 114,045
28,000 CSR Ltd....................... 94,868
52,501 Goodman Fielder Ltd........... 83,467
*5,099 ICI Australia Ltd.***......... 35,715
19,000 News Corporation Ltd.......... 104,857
------------
717,366
------------
AUSTRIA -- 0.3%
610 OMV AG........................ 84,382
------------
BRAZIL -- 2.0%
3,900 Aracruz Celulose SA........... 56,063
400 Cemig SA...................... 17,380
1,341,900 Cia Energetica de Brazilia.... 58,304
*30,700 Cia Riograndese Mineracao..... 37,824
700 Electrobras On ADR............ 17,406
548,000 Petroleo Brasileiro........... 128,159
380 Telebras SA ADR............... 44,246
219,000 Tele de Sao Paulo SA.......... 58,279
1,641,000 Telecomunicacoes Brasileiras
SA.......................... 166,891
------------
584,552
------------
CANADA -- 2.4%
4,300 Alcan Aluminum Ltd............ 118,391
6,600 Canadian Imperial Bank of
Commerce.................... 205,700
1,900 Canadian National Railway
Co.......................... 89,775
8,600 Canadian Pacific Ltd.......... 234,350
2,500 Canwest Global Communications
Corp.
Class A (non-voting)........ 45,000
------------
693,216
------------
CHILE -- 0.2%
2,500 Embotelladora Andina ADR Class
B........................... 48,594
------------
CHINA -- 0.1%
*1,800 China Southern Airlines ADR... 23,738
------------
DENMARK -- 1.7%
6,800 Unidanmark AS A Shares
(Reg.)...................... 499,532
------------
FINLAND -- 2.2%
12,400 Kesko......................... 196,287
21,000 Metsa-Serla OYJ Class B
Shares...................... 163,897
1,600 Nokia OYJ Class A Shares...... 113,709
2,146 Nokia Corp. SA ADR............ 150,220
1,900 Rauma OYJ..................... 29,658
------------
653,771
------------
FRANCE -- 8.5%
4,690 Assurance Generale de
France...................... 248,616
5,365 Banque Nationale de
Paris***.................... 285,290
1,450 Compagnie de Saint Gobain..... 206,080
1,400 Credit Commerciale de
France...................... 95,996
5,161 Havas SA...................... 371,470
SHARES MARKET
-------- VALUE
------------
FRANCE -- (CONTINUED)
1,460 Peugeot Citroen SA............ $ 184,203
9,051 Rhone-Poulenc SA Class A...... 405,619
1,412 Societe Generale Class A...... 192,465
2,750 Societe Nationale Elf
Acquitaine.................. 319,987
1,620 Total SA Class B Shares....... 176,384
------------
2,486,110
------------
GERMANY -- 6.0%
14,300 Bayer AG...................... 530,869
3,850 Degussa AG.................... 190,568
4,050 Deutsche Lufthansa AG
(Reg.)...................... 76,133
790 Karstadt AG................... 273,286
830 M.A.N. AG..................... 239,808
720 Mannesmann AG................. 361,593
*4,350 Metallgesellschaft AG......... 79,595
------------
1,751,852
------------
HONG KONG -- 1.1%
29,000 Hutchison Whampoa Ltd......... 181,899
21,000 Hysan Development Co. Ltd..... 41,874
22,000 New World Development Co.
Ltd......................... 76,094
2,000 Sun Hung Kai Properties
Ltd......................... 13,939
138,000 Tingyi (Cayman Islands)
Holding Corp................ 17,989
------------
331,795
------------
INDIA -- 0.4%
1,600 Ranbaxy Laboratories Ltd.
ADR***...................... 43,200
500 Ranbaxy Laboratories Ltd.
GDR......................... 12,813
3,000 State Bank of India GDR***.... 52,125
------------
108,138
------------
INDONESIA -- 0.1%
135,000 PT Kalbe Farma (Foreign
Reg.)....................... 23,954
------------
ITALY -- 2.7%
9,250 Arnoldo Mondadori Editore
S.p.A....................... 72,724
12,300 Instituto Banco San Paolo
Tori........................ 117,574
5,500 Instituto Banco San Paolo
Tori***..................... 52,573
84,489 Telecom Italia S.p.A.......... 540,004
------------
782,875
------------
JAPAN -- 15.7%
23,000 Aisin Seiki Co. Ltd........... 238,807
15,000 Bank of Toyko-Mitsubishi
Ltd......................... 207,659
15,000 Daiwa Securities Co. Ltd...... 51,915
17,000 Eisai Co. Ltd................. 260,188
20,000 Exedy Corporation............. 152,129
5,000 Fuji Machine Manufacturing
Co.......................... 121,134
15,000 Fujisawa Pharmaceutical Co.
Ltd......................... 131,517
7,000 Fukuda Denshi................. 71,604
14,000 Hitachi Ltd................... 100,138
58,000 JGC Corp...................... 122,672
5,300 Mabuchi Motor Co. Ltd......... 270,256
11,000 Maruichi Steel Tube Ltd....... 134,517
2,700 Matsumotokiyoshi.............. 103,829
17,000 Matsushita Electric Industrial
Co.......................... 249,729
*100,000 Mazda Motor Corporation....... 238,423
1,000 Meiwa Estate Co. Ltd.......... 7,529
5,000 Murata Manufacturing Co.
Ltd......................... 126,133
20,000 NGK Spark Plug Co. Ltd........ 113,828
7,500 Namco Ltd..................... 218,618
4,000 Nomura Securities Co. Ltd..... 53,530
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
23
THE HARTFORD INTERNATIONAL OPPORTUNITIES FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1997
SHARES MARKET
-------- VALUE
------------
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
40,000 Okumura Corp.................. $ 95,369
1,400 Otsuka Kago Ltd............... 50,607
1,000 Rohm Company Ltd.............. 102,291
47,000 Sakura Bank Ltd............... 134,832
10,000 Sanwa Bank Ltd................ 101,521
100 Sawako Corporation............ 661
5,800 Shimachu Co. Ltd.............. 91,447
2,000 Sony Corporation.............. 178,433
8,400 Sony Music Entertainment
(Japan) Inc................. 310,104
5,700 Square Co. Ltd................ 158,697
46,000 Sumitomo Rubber Industries
Ltd......................... 194,938
20,000 Toyo Ink Manfacturing Co.
Ltd......................... 35,379
28,000 Yamato Kogyo Co. Ltd.......... 169,050
------------
4,597,484
------------
MALAYSIA -- 0.0%
10,000 Renong Berhad................. 4,624
9,000 Sime Darby Berhad............. 8,648
------------
13,272
------------
MEXICO -- 1.3%
6,100 Grupo Televisa SA Series
CPO......................... 118,672
44,000 Kimberly-Clark de Mexico SA de
CV Class A.................. 208,407
1,600 Panamerican Beverages Inc.
Class A..................... 52,200
------------
379,279
------------
NETHERLANDS -- 3.1%
720 AKZO Nobel NV................. 124,166
9,766 ING Groep NV.................. 411,408
4,767 Polygram NV................... 228,094
2,400 Unilever NV-CVA............... 147,985
------------
911,653
------------
NEW ZEALAND -- 0.6%
7,964 Air New Zealand Ltd. Class
B........................... 15,954
34,765 Brierley Investment Ltd....... 24,829
25,000 Carter Holt Harvey Ltd........ 38,614
2,200 Telecom Corp. New Zealand
ADR......................... 85,250
------------
164,647
------------
NORWAY -- 1.1%
19,350 Saga Petroleum AS A Shares.... 333,341
------------
PHILIPPINES -- 0.5%
27,000 Manila Electric Co. Class B... 90,679
10,000 Metropolitan Bank & Trust..... 68,298
------------
158,977
------------
SINGAPORE -- 1.1%
18,500 Keppel Corp. Ltd.............. 53,141
37,000 Keppel Fels Ltd............... 103,208
26,000 Keppel Land Ltd............... 35,800
34,000 Overseas Union Bank Ltd.
(Foreign Reg.).............. 130,153
------------
322,302
------------
SPAIN -- 2.4%
3,885 Banco Popular Espanol......... 271,464
2,800 Banco de Santander SA......... 93,508
SHARES MARKET
-------- VALUE
------------
SPAIN -- (CONTINUED)
13,000 Endesa SA ADR................. $ 230,718
1,300 Telefonica de Espana SA....... 118,381
------------
714,071
------------
SWEDEN -- 3.9%
*95,900 Nordbanken Holding AB......... 542,691
13,060 Pharmacia & Upjohn, Inc.
SDR......................... 480,633
4,800 Sparbanken Sverige AB A
Shares...................... 109,196
------------
1,132,520
------------
SWITZERLAND -- 4.8%
*1,040 CIBA Speciality Chemicals
AG.......................... 124,068
500 Holderbank Finanical Glarus
B........................... 408,625
229 Nestle SA (Reg.).............. 343,684
54 Roche Holdings AG Genuss...... 537,019
------------
1,413,396
------------
THAILAND -- 0.1%
20,662 Land & House Co., Ltd.
(Foreign Reg.).............. 4,120
930 Siam City Cement Co. (Foreign
Reg.)....................... 966
400 Siam Commercial Bank (Foreign
Reg.)....................... 457
11,700 Thai Farmers Bank (Foreign
Reg.)....................... 21,262
------------
26,805
------------
UNITED KINGDOM -- 18.5%
3,626 Allied Irish Bank PLC......... 35,052
25,750 Associated British Foods
PLC......................... 306,469
58,000 BTR PLC....................... 177,983
9,000 Bank of Scotland.............. 81,595
20,100 Bass PLC...................... 309,559
*15,000 Billiton PLC.................. 38,317
*24,800 Billiton PLC***............... 63,352
19,299 BOC Group PLC................. 319,610
24,100 British Petroleum Co. PLC..... 317,432
19,200 Burmah Castrol PLC............ 333,925
36,600 Carlton Communications PLC.... 281,837
78,565 Cookson Group PLC............. 252,724
32,000 Diageo PLC.................... 294,066
13,300 HSBC Holdings PLC............. 343,795
16,000 Johnson Matthey PLC........... 142,558
19,111 PowerGen PLC.................. 249,990
47,730 Rank Group PLC................ 273,891
18,722 Reckitt & Colman PLC.......... 294,344
21,538 Royal & Sun Alliance Insurance
Group....................... 216,176
20,100 Royal Bank of Scotland Group
PLC......................... 257,305
114,539 Smurfit (Jefferson) Group
PLC......................... 318,502
14,600 Zeneca Group PLC.............. 514,090
------------
5,422,572
------------
Total common stocks........... $ 24,617,762
------------
------------
NON-CONVERTIBLE PREFERRED STOCKS -- 1.0%
GERMANY -- 1.0%
1,520 Hornbach Holding AG
(non-voting)................ $ 104,825
*4,020 Prosieben Media AG............ 184,451
------------
Total non-convertible
preferred stocks............ $ 289,276
------------
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
24
NOMINAL MARKET
AMOUNT VALUE
-------- ------------
PURCHASED OPTIONS -- 0.0%
150,000 Brazilian Real Foreign
Currency (Put),
strike price $1.17, expire
January 16, 1998............ $ 300
------------
------------
PRINCIPAL
AMOUNT
--------
SHORT-TERM SECURITIES -- 17.7%
U.S. TREASURY BILLS -- 1.1%
$ 75,000 5.29% due 03/05/98.......... $ 74,324
100,000 5.14% due 02/26/98.......... 99,200
60,000 4.94% due 01/02/98.......... 59,992
100,000 5.15% due 02/12/98.......... 99,400
------------
332,916
------------
REPURCHASE AGREEMENT -- 16.6%
4,862,000 Interest in $1,102,287,000
joint repurchase agreement
with State Street Bank dated
12/31/97 at 6.6119%, to be
repurchased at $4,863,786 on
01/02/98; (Collateralized by
$629,353,000 U.S. Treasury
Notes 5.625% - 7.50% due
03/31/98 - 02/15/05,
$204,399,000 U.S. Treasury
Bills 0.00% due 05/21/98 -
06/04/98, $159,248,000 U.S.
Treasury Bonds 8.50% -
11.25% due 08/15/01 -
02/15/20 and $109,287,000
U.S. Treasury Strips
(principal) 0.00% due
02/15/09)................... 4,862,000
------------
Total short-term securities... $ 5,194,916
------------
------------
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $25,368,958)....... 84.0 % $ 24,617,762
Total non-convertible preferred stocks
(cost $305,827)............................ 1.0 289,276
Total purchased options (cost $885) 0.0 300
Total short-term securities (cost
$5,194,916)................................ 17.7 5,194,916
------ ------------
Total investment in securities
(total cost $30,870,586)................... 102.7 30,102,254
Cash, receivables and other assets........... 2.0 603,864
Payable for securities purchased............. (4.5) (1,322,888)
Payable for Fund shares redeemed............. (0.0) (5,256)
Other liabilities............................ (0.2) (66,901)
------ ------------
Net assets................................... 100.0 % $ 29,311,073
------ ------------
------ ------------
MARKET
VALUE
------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; 300,000,000
shares authorized; 2,774,446 shares outstanding.... $ 2,774
Paid-in surplus...................................... 30,801,492
Distribution in excess of net investment income...... (107,688)
Distribution in excess of net realized gain on
investments........................................ (631,644)
Unrealized depreciation of investments............... (767,747)
Unrealized appreciation of futures contracts**....... 42,532
Unrealized depreciation of forward foreign currency
contracts (see Note 2)............................. (24,762)
Unrealized depreciation of purchased options......... (585)
Unrealized depreciation on translation of other
assets and liabilities in foreign currencies....... (3,299)
------------
Net assets........................................... $ 29,311,073
------------
------------
Class A
Net asset value per share ($15,701,031
DIVIDED BY 1,484,383 shares outstanding)
(175,000,000 shares authorized)............ $10.58
------
------
Maximum offering price ($10.58 DIVIDED BY
94.5%)..................................... $11.20
------
------
Class B
Net asset value per share ($7,188,021
DIVIDED BY 685,217 shares outstanding)
(75,000,000 shares authorized)............. $10.49
------
------
Class Y
Net asset value per share ($6,422,021
DIVIDED BY 604,846 shares outstanding)
(50,000,000 shares authorized)............. $10.62
------
------
* Non-income producing during period.
** The Fund had 2 March TSE 35 Index futures contracts, 4 March ALL ORDS Index
futures contracts, 5 January IBEX Index futures contracts, 4 January OMX
Stock Index futures contracts, 2 March MIB 30 Index futures contracts, 1
March DTB DAX Index futures contract, 2 March LIF FTSE 100 Index futures
contracts, 3 March MATIF CAC 40 Index futures contracts, and 2 January
HKFE-HSI Index futures contracts open as of December 31, 1997. These
contracts had a value of $40,500 as of December 31, 1997.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. As of December 31,
1997, the market value of these securities amounted to $532,255, or 1.8% of
net assets.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT DECEMBER 31, 1997
UNREALIZED
TOTAL AGGREGATE DELIVERY APPRECIATION
DESCRIPTION MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ------------- ----------- --------- -------------
Australian Dollar (Buy) $ 165,177 $ 165,783 03/31/98 $ (606)
British Pounds (Buy) 859,611 864,691 03/20/98 (5,080)
British Pounds (Sell) 429,805 430,588 03/20/98 783
Canadian Dollar (Buy) 252,837 255,035 03/19/98 (2,198)
French Franc (Buy) 296,533 298,249 03/31/98 (1,716)
German Deutschemark (Buy) 468,781 477,067 03/19/98 (8,286)
German Deutschemark (Sell) 241,343 244,387 03/19/98 3,044
Italian Lira (Buy) 269,703 274,134 03/20/98 (4,431)
Spanish Peseta (Buy) 233,769 237,590 01/16/98 (3,821)
Swedish Krona (Buy) 122,044 124,495 01/23/98 (2,451)
-------------
$ (24,762)
-------------
-------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
25
The Hartford Mutual Funds, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
THE HARTFORD
THE HARTFORD BOND INCOME
MONEY STRATEGY
MARKET FUND FUND
------------- ------------
INVESTMENT INCOME:
Dividends.............. $ -- $ --
Interest............... 1,227,574 1,617,763
Less: foreign tax
withheld.............. -- --
------------- ------------
Total investment
income.............. 1,227,574 1,617,763
------------- ------------
EXPENSES:
Investment advisory
fees.................. 108,150 153,486
Transfer agent fees.... 47,592 47,683
Distribution fees
Class A.............. 56,637 61,999
Class B.............. 11,455 14,074
Custodian fees......... 5,600 6,200
Accounting fees........ 12,501 13,505
Registration and filing
fees.................. 15,547 17,792
Board of directors
fees.................. 1,829 1,829
Audit fees............. 7,316 7,318
Legal fees............. 7,960 7,962
Amortization of
deferred
organizational
costs................. 7,535 7,535
Other expenses......... 5,872 5,873
------------- ------------
Total expenses
(before waivers and
reimbursements)..... 287,994 345,256
Expense waivers and
reimbursements........ (70,901) (47,166)
------------- ------------
Total expenses, net.... 217,093 298,090
------------- ------------
Net investment income
(loss)................ 1,010,481 1,319,673
------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on
investments........... -- 533,521
Net realized loss on
forward foreign
currency contracts.... -- --
Net realized (loss)
gain on futures
contracts............. -- --
Net realized (loss)
gain on foreign
currency
transactions.......... -- --
Net unrealized
appreciation
(depreciation) of
investments........... -- 857,991
Net unrealized
appreciation of
futures contracts..... -- --
Net unrealized
depreciation of foward
foreign currency
contracts............. -- --
Net unrealized
depreciation of
purchased options..... -- --
Net unrealized
depreciation on
translation of other
assets and liabilities
in foreign
currencies............ -- --
------------- ------------
Net realized and
unrealized gain (loss)
on investments........ -- 1,391,512
------------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 1,010,481 $ 2,711,185
------------- ------------
------------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
26
THE HARTFORD THE HARTFORD
THE HARTFORD CAPITAL SMALL THE HARTFORD
THE HARTFORD DIVIDEND AND THE HARTFORD APPRECIATION COMPANY INTERNATIONAL
ADVISERS FUND GROWTH FUND STOCK FUND FUND COMPANY FUND OPPORTUNITIES FUND
-------------- ------------- ------------- ---------------- ------------ --------------------
INVESTMENT INCOME:
Dividends.............. $ 747,707 $ 1,160,643 $ 468,274 $ 444,910 $ 46,278 $ 260,482
Interest............... 1,941,715 70,488 130,993 527,518 99,300 167,046
Less: foreign tax
withheld.............. (6,791) (2,621) (3,940) (6,626) (265) (34,713)
-------------- ------------- ------------- ---------------- ------------ -----------
Total investment
income.............. 2,682,631 1,228,510 595,327 965,802 145,313 392,815
-------------- ------------- ------------- ---------------- ------------ -----------
EXPENSES:
Investment advisory
fees.................. 675,902 326,978 316,618 1,183,411 146,564 133,737
Transfer agent fees.... 140,520 85,367 82,788 298,681 29,800 28,169
Distribution fees
Class A.............. 127,828 77,517 77,250 255,204 30,404 29,226
Class B.............. 143,093 128,600 128,466 515,814 26,356 25,922
Custodian fees......... 10,300 12,000 11,000 12,000 16,500 88,000
Accounting fees........ 48,842 23,225 21,082 78,932 9,166 11,347
Registration and filing
fees.................. 100,697 68,391 62,180 288,320 23,878 20,618
Board of directors
fees.................. 6,999 3,398 3,084 11,548 1,341 1,221
Audit fees............. 27,998 13,591 12,337 46,191 5,364 4,885
Legal fees............. 30,461 14,787 13,426 50,257 5,836 5,315
Amortization of
deferred
organizational
costs................. 7,535 7,535 7,535 7,535 7,535 7,535
Other expenses......... 20,348 10,264 9,387 33,085 4,504 4,170
-------------- ------------- ------------- ---------------- ------------ -----------
Total expenses
(before waivers and
reimbursements)..... 1,340,523 771,653 745,153 2,780,978 307,248 360,145
Expense waivers and
reimbursements........ (128,081) (93,290) (85,728) (325,718) (58,906) (97,686)
-------------- ------------- ------------- ---------------- ------------ -----------
Total expenses, net.... 1,212,442 678,363 659,425 2,455,260 248,342 262,459
-------------- ------------- ------------- ---------------- ------------ -----------
Net investment income
(loss)................ 1,470,189 550,147 (64,098) (1,489,458) (103,029) 130,356
-------------- ------------- ------------- ---------------- ------------ -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on
investments........... 258,915 916,848 (354,110) 19,463,919 2,029,539 (332,106)
Net realized loss on
forward foreign
currency contracts.... -- -- -- -- -- (81,598)
Net realized (loss)
gain on futures
contracts............. -- -- -- (101,919) 36,145 116,069
Net realized (loss)
gain on foreign
currency
transactions.......... -- -- -- (4,918) 1,130 (13,258)
Net unrealized
appreciation
(depreciation) of
investments........... 15,479,132 8,681,047 8,234,272 2,427,937 (252,464) (988,744)
Net unrealized
appreciation of
futures contracts..... -- -- -- -- -- 36,459
Net unrealized
depreciation of foward
foreign currency
contracts............. -- -- -- (35,449) -- (25,300)
Net unrealized
depreciation of
purchased options..... -- -- -- -- -- (585)
Net unrealized
depreciation on
translation of other
assets and liabilities
in foreign
currencies............ -- -- -- (28,970) -- (3,235)
-------------- ------------- ------------- ---------------- ------------ -----------
Net realized and
unrealized gain (loss)
on investments........ 15,738,047 9,597,895 7,880,162 21,720,600 1,814,350 (1,292,298)
-------------- ------------- ------------- ---------------- ------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ $17,208,236 $ 10,148,042 $ 7,816,064 $20,231,142 $ 1,711,321 $ (1,161,942)
-------------- ------------- ------------- ---------------- ------------ -----------
-------------- ------------- ------------- ---------------- ------------ -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
27
The Hartford Mutual Funds, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
THE HARTFORD
THE HARTFORD BOND INCOME
MONEY STRATEGY
MARKET FUND FUND
------------- ------------
OPERATIONS:
Net investment income
(loss)................ $ 1,010,481 $ 1,319,673
Net realized gain
(loss) on
investments........... -- 533,521
Net unrealized
appreciation
(depreciation) of
investments........... -- 857,991
------------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... 1,010,481 2,711,185
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (883,567) (1,122,490)
Class B.............. (45,518) (71,146)
Class Y.............. (81,396) (89,767)
From net realized gain
on investments
Class A.............. -- (412,671)
Class B.............. -- (67,122)
Class Y.............. -- (56,419)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 11,824,783 16,849,692
Class B.............. 4,448,938 5,587,371
Class Y.............. 2,637,595 4,707,315
------------- ------------
Total increase in net
assets................ 18,911,316 28,035,948
NET ASSETS:
Beginning of year...... 10,753,901 11,054,134
------------- ------------
End of year............ $ 29,665,217 $ 39,090,082
------------- ------------
------------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
28
THE HARTFORD
THE HARTFORD CAPITAL THE HARTFORD THE HARTFORD
THE HARTFORD DIVIDEND AND THE HARTFORD APPRECIATION SMALL INTERNATIONAL
ADVISERS FUND GROWTH FUND STOCK FUND FUND COMPANY FUND OPPORTUNITIES FUND
------------- ------------- ------------- --------------- ------------ ------------------
OPERATIONS:
Net investment income
(loss)................ $ 1,470,189 $ 550,147 $ (64,098) $ (1,489,458) $ (103,029) $ 130,356
Net realized gain
(loss) on
investments........... 258,915 916,848 (354,110) 19,357,082 2,066,814 (310,893)
Net unrealized
appreciation
(depreciation) of
investments........... 15,479,132 8,681,047 8,234,272 2,363,518 (252,464) (981,405)
------------- ------------- ------------- --------------- ------------ ------------------
Net increase
(decrease) in net
assets resulting
from operations..... 17,208,236 10,148,042 7,816,064 20,231,142 1,711,321 (1,161,942)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (691,617) (320,941) -- -- -- (75,930)
Class B.............. (165,238) (96,584) -- -- -- (24,517)
Class Y.............. (544,413) (79,474) -- -- -- (43,020)
From net realized gain
on investments
Class A.............. (472,440) (590,306) (127,319) (7,591,824) (776,601) (232,598)
Class B.............. (191,894) (301,354) (69,023) (5,559,834) (409,953) (104,930)
Class Y.............. (207,612) (119,013) (10,592) (945,726) (378,670) (96,796)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 77,673,780 56,433,030 54,239,596 218,285,331 14,144,489 12,377,118
Class B.............. 35,889,333 30,624,501 31,831,398 175,024,238 10,086,337 7,530,956
Class Y.............. 33,363,110 12,297,437 5,315,662 28,218,005 8,783,283 6,622,568
------------- ------------- ------------- --------------- ------------ ------------------
Total increase in net
assets................ 161,861,245 107,995,338 98,995,786 427,661,332 33,160,206 24,790,909
NET ASSETS:
Beginning of year...... 15,879,229 6,848,283 7,571,344 10,024,584 4,987,025 4,520,164
------------- ------------- ------------- --------------- ------------ ------------------
End of year............ $ 177,740,474 $ 114,843,621 $ 106,567,130 $437,685,916 $38,147,231 $ 29,311,073
------------- ------------- ------------- --------------- ------------ ------------------
------------- ------------- ------------- --------------- ------------ ------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
29
The Hartford Mutual Funds, Inc.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO DECEMBER 31, 1996
THE HARTFORD THE HARTFORD
MONEY BOND INCOME
MARKET FUND STRATEGY FUND
----------------- ---------------
OPERATIONS:
Net investment income
(loss)................ $ 206,204 $ 265,341
Net realized gain on
investments........... -- 159,623
Net unrealized
appreciation of
investments........... -- 159,276
----------------- ---------------
Net increase in net
assets resulting from
operations............ 206,204 584,240
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (206,198) (255,221)
Class B.............. -- (1,518)
Class Y.............. (6) (129)
From net realized gain
on investments
Class A.............. -- (59,781)
Class B.............. -- (686)
Class Y.............. -- (29)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 10,753,621 10,658,828
Class B.............. -- 123,373
Class Y.............. 280 5,057
----------------- ---------------
Total increase in net
assets................ 10,753,901 11,054,134
NET ASSETS:
Beginning of period.... -- --
----------------- ---------------
End of period.......... $10,753,901 $11,054,134
----------------- ---------------
----------------- ---------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
30
THE HARTFORD
THE HARTFORD CAPITAL THE HARTFORD
THE HARTFORD DIVIDEND AND THE HARTFORD APPRECIATION THE HARTFORD SMALL INTERNATIONAL
ADVISERS FUND GROWTH FUND STOCK FUND FUND COMPANY FUND OPPORTUNITIES FUND
------------- ------------ ------------ --------------- ------------------ ------------------
OPERATIONS:
Net investment income
(loss)................ $ 109,562 $ 35,337 $ 12,598 $ (18,413) $ (10,563) $ 7,547
Net realized gain on
investments........... 34,690 34,697 8,296 734,669 323,041 50,234
Net unrealized
appreciation of
investments........... 1,031,480 458,202 489,848 843,218 152,272 227,544
------------- ------------ ------------ --------------- ------------------ ------------------
Net increase in net
assets resulting from
operations............ 1,175,732 528,236 510,742 1,559,474 464,750 285,325
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (98,048) (32,275) (10,931) -- -- (25,685)
Class B.............. (9,994) (3,872) (2,242) -- -- (963)
Class Y.............. (270) (226) (117) -- -- (446)
From net realized gain
on investments
Class A.............. -- (9,096) -- (261,732) (292,131) (11,118)
Class B.............. -- (1,043) -- (25,075) (14,827) (408)
Class Y.............. -- (55) -- (3,191) (4,569) (165)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 13,268,744 5,603,131 5,779,861 7,789,947 4,503,579 4,049,578
Class B.............. 1,509,188 727,849 1,249,897 858,773 255,112 160,933
Class Y.............. 33,877 35,634 44,134 106,388 75,111 63,113
------------- ------------ ------------ --------------- ------------------ ------------------
Total increase in net
assets................ 15,879,229 6,848,283 7,571,344 10,024,584 4,987,025 4,520,164
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
------------- ------------ ------------ --------------- ------------------ ------------------
End of period.......... $15,879,229 $6,848,283 $7,571,344 $10,024,584 $4,987,025 $4,520,164
------------- ------------ ------------ --------------- ------------------ ------------------
------------- ------------ ------------ --------------- ------------------ ------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
31
The Hartford Mutual Funds, Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION:
The Hartford Mutual Funds, Inc. (the Company) is an open-end management
investment company comprised of eight diversified portfolios (each a "Fund"
or together the "Funds"). The Funds are The Hartford Money Market Fund, The
Hartford Bond Income Strategy Fund, The Hartford Advisers Fund, The Hartford
Dividend and Growth Fund, The Hartford Stock Fund, The Hartford Capital
Appreciation Fund, The Hartford Small Company Fund, and The Hartford
International Opportunities Fund. The Company is organized under the laws of
the State of Maryland and is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company.
The Funds and their investment objectives are listed below:
The Hartford Money Market Fund -- Seeks maximum current income consistent with liquidity and
(Money Market Fund) preservation of capital.
The Hartford Bond Income Strategy Fund -- Seeks a high level of current income consistent with a
(Bond Income Strategy Fund) competitive total return, as compared to bond funds with
similar investment objectives and policies, by investing
primarily in debt securities.
The Hartford Advisers Fund -- Seeks maximum long-term total rate of return by investing in
(Advisers Fund) common stocks and other equity securities, bonds and other
debt securities and money market instruments.
The Hartford Dividend and Growth Fund -- Seeks a high level of current income consistent with growth
(Dividend and Growth Fund) of capital by investing primarily in equity securities.
The Hartford Stock Fund -- Seeks long-term growth of capital, with income as a secondary
(Stock Fund) consideration, by investing primarily in equity securities.
The Hartford Capital Appreciation Fund -- Seeks growth of capital by investing primarily in equity
(Capital Appreciation Fund) securities selected on the basis of potential for capital
appreciation.
The Hartford Small Company Fund -- Seeks growth of capital by investing primarily in equity
(Small Company Fund) securities selected on the basis of potential for capital
appreciation.
The Hartford International -- Seeks growth of capital by investing primarily in equity
Opportunities Fund (International securities issued by non-U.S. companies.
Opportunities Fund)
The Company consists of eight series of portfolios, each of which is divided
into Class A, Class B, and Class Y shares. Class A shares are sold with a
front-end load sales charge of up to 5.50%. Class B shares are sold with a
contingent deferred sales charge which is assessed on the lesser of the net
asset value of the shares at the time of redemption or the original purchase
price, and declines from 5.00% to zero depending on the period of time the
shares are held. Class Y shares are sold to eligible institutional investors
without a sales charge. All classes of shares have identical voting,
redemption, dividend, liquidation and other rights and the same terms and
conditions, except that each class may have different expenses which may
affect performance.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.
b) SECURITY VALUATION--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by an unaffiliated
pricing service which determines valuations for normal institutional size
trading units of debt securities. Mortgage securities are valued at the
bid price. Short-term securities held in the Money Market Fund are valued
at amortized cost or original cost plus accrued interest receivable, both
of which approximate market value. In the Bond Income Strategy, Advisers,
Dividend and Growth, Stock, Capital Appreciation, Small Company and
International Opportunities Funds, short-term investments purchased with
a maturity of 60 days or less are valued at
32
amortized cost, which approximates market value. Short-term investments
purchased with a maturity of more than 60 days are valued based on market
quotations until the remaining days to maturity become less than 61 days.
From that time until maturity, the investments are valued at amortized
cost.
Equity securities are valued at the last sales price reported on the
principal securities exchanges on which such securities are traded
(domestic or foreign), or on the principal over-the-counter market on
which such securities are traded, as of the close of business on the day
the securities are being valued. If no sale occurred on a particular day,
then such securities are valued at the mean between the bid and asked
prices. Securities quoted in foreign currencies are translated into U.S.
dollars at the prevailing exchange rates at the end of each business day.
Options are valued at the last sales price; if no sale occurred on such
day, then options are valued at the mean between the bid and asked
prices. Securities for which market quotations are not readily available
and all other assets are valued in good faith at their fair values as
determined by, or under the direction of, the Funds' Board of Directors.
c) FOREIGN CURRENCY TRANSLATION--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss on investments in the accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference
between asset and liability amounts initially stated in foreign
currencies and the U.S. dollar value of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes
in the value of other assets and liabilities at the end of the reporting
period, resulting from changes in the exchange rates.
d) REPURCHASE AGREEMENTS--A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed the
value of the repurchase agreement and, in the case of repurchase
agreements exceeding one day, the value of the underlying security(ies),
including accrued interest, is required during the term of the agreement
to be equal to or exceed the value of the repurchase agreement.
Securities which serve to collateralize the repurchase agreement are held
by each Fund's custodian in book entry or physical form in the custodial
account of the Fund. Repurchase agreements are valued at cost plus
accrued interest receivable.
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 125, ACCOUNTING
FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
LIABILITIES. This Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. Under the provisions of SFAS No.
125, transfers of certain financial assets, such as repurchase
agreements, are required to be accounted for as sales if control, as
defined, over those assets has been surrendered by the transferor. The
Statement also requires collateral under repurchase agreements and
securities lending transactions to be separately classified by the debtor
and recognized as an asset by the creditor in the respective financial
statements if certain conditions are met. SFAS No. 125 is effective for
transfers of financial assets occurring after December 31, 1996, except
for certain transfers for which the effective date has been delayed to
January 1, 1998 by SFAS No. 127, DEFERRAL OF THE EFFECTIVE DATE OF
CERTAIN PROVISIONS OF FASB STATEMENT NO. 125, issued by the FASB in
December 1996. Management does not believe the adoption of this new
accounting standard will have a material impact on the financial position
or future results of operations of the Funds.
e) JOINT TRADING ACCOUNT--Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds may transfer uninvested
cash balances into a joint trading account managed by The Hartford
Investment Management Company (HIMCO) or Wellington Management Company,
LLP (Wellington). These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.
33
THE HARTFORD MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
f) FUTURES, OPTIONS ON FUTURES AND OPTIONS TRANSACTIONS--The Funds enter
into futures contracts to retain their cash balance and yet be exposed to
the market, thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders with the
investment return of a fully invested portfolio. A futures contract is an
agreement between two parties to buy and sell a security for a set price
on a future date. When the Funds enter into such contracts, they are
required to deposit with their custodian an amount of "initial margin" of
cash or U.S. Treasury Bills. Subsequent payments, called maintenance
margin, to and from the broker-dealer, are made on a daily basis as the
price of the underlying debt security fluctuates, making the long and
short positions in the futures contract more or less valuable (i.e.,
mark-to-market), which results in an unrealized gain or loss to the
Funds. The market value of a traded futures contract is the last sale
price. In the absence of a last sale price, the last offering price is
used. In the absence of either of these prices, fair value is determined
according to procedures established by the Funds' Board of Directors. The
variation margin on futures contracts is included in cash, receivables
and other assets or other liabilities, as applicable, in each Fund's
Statement of Net Assets.
At any time prior to the expiration of the futures contract, the Funds
may close the position by taking an opposite position which would operate
to terminate the position in the futures contract. A final determination
of maintenance margin is then made, additional cash is required to be
paid by or released to the Funds and the Funds realize a gain or loss.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as an investment and
subsequently "marked-to-market" to reflect the current market value of
the option as of the end of the reporting period. If an option which the
Fund has purchased expires on its stipulated expiration date, the Fund
realizes a loss in the amount of the cost of the option. If the Fund
enters into a closing transaction, it realizes a gain or loss, depending
on whether the proceeds from the closing sale are greater or less than
the cost of the option. If the Fund exercises a put option, it realizes a
gain or loss from the sale of the underlying security, and the proceeds
from such sale will be decreased by the premium originally paid. If the
Fund exercises a call option, the cost of the security which the Fund
purchases upon exercise will be increased by the premium originally paid
to buy the call.
g) FEDERAL INCOME TAXES--For federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter
M of the Internal Revenue Code by distributing substantially all of their
taxable net investment income and net realized capital gains to their
shareholders or otherwise complying with the requirements for regulated
investment companies. Accordingly, no provision for federal income taxes
has been made in the accompanying financial statements.
h) FUND SHARE VALUATION AND DISTRIBUTIONS TO SHAREHOLDERS--Orders for the
Fund's shares are executed in accordance with the investment instructions
of the shareholders. Dividend income is accrued as of the ex-dividend
date. Interest income and expenses are accrued on a daily basis. The net
asset value of each Fund's shares is determined as of the close of each
business day of the New York Stock Exchange (the Exchange). 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 prior to the close of the Exchange on any day on which
the Fund is open for business are priced at the per-share net asset value
determined as of the close of the Exchange. Orders received after the
close of the Exchange, or on a day on which the Exchange and/or the Fund
is not open for business, are priced at the next-determined per-share net
asset value.
Each Fund intends to distribute substantially all of its net investment
income and net realized capital gains to shareholders no less frequently
than once a year. Normally, dividends from net investment income of the
Stock, Capital Appreciation, Small Company and International
Opportunities Funds will be declared and paid annually; dividends from
net investment income of the Advisers and the Dividend and Growth Funds
will be declared and paid quarterly; dividends from net investment income
of the Bond Income Strategy Fund will be declared and paid monthly and
dividends from net investment income of the Money Market Fund will be
declared daily and paid monthly. Dividends from the Money Market Fund are
not paid on shares until the day following the date on which the shares
are issued. Unless shareholders specify otherwise, all distributions will
be automatically reinvested in additional full or fractional shares of
each Fund.
34
Distributions from net investment income and net realized capital gains
are determined in accordance with federal income tax regulations which
may differ from generally accepted accounting principles. These
differences include the treatment of non-taxable dividends, expiring
capital loss carryforwards, foreign currency gains and losses, 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 Funds'
capital accounts (see Note 8).
i) FORWARD FOREIGN CURRENCY CONTRACTS--As of December 31, 1997, the Capital
Appreciation and International Opportunities Funds had 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 Net Assets. In
addition, risks may arise upon entering into these contracts from the
potential inability of counterparties to meet the terms of the contract
and from unanticipated movement in the value of foreign currencies
relative to the U.S. dollar.
j) DEFERRED ORGANIZATIONAL COSTS--Costs incurred by the Funds in connection
with their organization have been deferred and are being amortized on a
straight-line basis over five years. The unamortized deferred
organizational costs of each Fund as of December 31, 1997 are included in
cash, receivables and other assets in each Fund's Statement of Net
Assets.
k) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
l) RESTRICTED SECURITIES--Each Fund is permitted to invest up to 15% of its
net assets in illiquid securities, except for the Money Market 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, at approximately the price used to determine a Fund's net asset
value per share. Each Fund may also purchase certain restricted
securities, commonly known as Rule 144A securities, that can be resold to
institutions and which may be determined to be liquid pursuant to
policies and guidelines established by the Funds' Board of Directors.
As of December 31, 1997, the Funds held the following restricted
securities (excluding 144A issues):
PERCENTAGE
ACQUISITION ACQUISITION OF FUND'S
FUND SECURITY DATE COST MARKET VALUE NET ASSETS
- ------------------------------ ---------------------------------------- ---------- ------------ ------------ ----------
Capital Appreciation Fund SGW Holdings Corporation................ 8/14/97 $ 2,000,001 $ 1,700,000 0.4%
Small Company Fund SGW Holdings Corporation................ 8/14/97 $88,996 $75,646 0.2%
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--Hartford Investment
Financial Services Company (HIFSCO), an indirect majority-owned
subsidiary of The Hartford Financial Services Group, Inc. (The Hartford),
serves as investment manager to each Fund pursuant to an Investment
Management Agreement dated March 3, 1997. As investment manager, HIFSCO
has overall investment supervisory responsibility for each Fund. In
addition HIFSCO provides administrative personnel, services, equipment
and facilities and office space for the proper operation of the Company.
HIFSCO has contracted with Wellington for the provision of day-to-day
investment management services to the Advisers, Dividend and Growth,
Stock, Capital Appreciation, Small Company and International
Opportunities Funds in accordance with each Fund's investment objective
and policies. In addition, HIFSCO has contracted with The Hartford
Investment Management Company (HIMCO), a wholly-owned subsidiary of The
Hartford, for the provision of day-to-day investment management and other
services to the Money Market and Bond Income Strategy Funds. Each Fund
pays a fee to HIFSCO, a portion of which may be used to compensate
Wellington or HIMCO.
35
THE HARTFORD MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
The schedule below reflects the rates of compensation paid to HIFSCO for
services rendered:
MONEY MARKET FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .50%
On next $500 million .45%
Over $1 billion .40%
BOND INCOME STRATEGY FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .65%
On next $500 million .55%
Over $1 billion .50%
ADVISERS AND
DIVIDEND AND GROWTH FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .75%
On next $500 million .65%
Over $1 billion .60%
STOCK AND
CAPITAL APPRECIATION FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .80%
On next $500 million .70%
Over $1 billion .65%
SMALL COMPANY AND
INTERNATIONAL OPPORTUNITIES FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .85%
On next $500 million .75%
Over $1 billion .70%
b) DISTRIBUTION AND SERVICE PLAN FOR CLASS A AND B SHARES--Hartford
Securities Distribution Company, Inc. (HSD, or the Distributor), an
indirect majority-owned subsidiary of The Hartford, is the principal
underwriter and distributor of the Funds. HSD is solely engaged in
distribution activities which include marketing, distribution and
clearing of shares through broker-dealers, financing distribution costs,
supervising the activities of the transfer agent and maintaining
financial books and records. During the year ended December 31, 1997, HSD
earned $18,438,468 in front-end load sales charges on the sale of fund
shares and received $90,860 from the proceeds of imposed contingent
deferred sales charges.
The Funds have adopted Distribution and Service Plans in accordance with
Rule 12b-1 of the Investment Company Act of 1940, as amended, to
compensate the Distributor for the distribution of Class A and Class B
shares and servicing the accounts of Class A and Class B shareholders.
The Class A plan provides for periodic payments to broker-dealers who
provide services to accounts that hold Class A shares and for promotional
and other sales related costs. The Distributor is compensated at an
annual rate that may not exceed 0.35% of the average daily net asset
value of Class A shares of each Fund, some or all of which may be
remitted to broker-dealers. Up to 0.25% of the fee may be used for
shareholder servicing expenses with the remainder used for distribution
expenses. The Class A Rule 12b-1 fee for each Fund has been voluntarily
capped at 0.30% through December 31, 1997. The cap may be removed at any
time after this date. Some or all of the 12b-1 fee for Class B shares may
be paid to broker-dealers for distribution and/or shareholder
36
account services. Under the Plan, the Fund pays the Distributor 1.00% of
the average daily net assets of Class B shares that are outstanding for 8
years or less, 0.25% of which is intended as a fee for services provided
to existing shareholders with the remainder used for distribution
expenses.
c) OPERATING EXPENSES--Allocable expenses incurred by the Funds are
allocated to each Fund in proportion to the average daily net assets of
each Fund, except where allocation of certain expenses is more fairly
made directly to the Fund. The Hartford has voluntarily agreed to limit
the total operating expenses of the Class A, B and Y shares of all the
Funds, exclusive of taxes, interest, brokerage commissions, certain
distribution expenses and extraordinary expenses as follows:
FUND CLASS A CLASS B CLASS Y
----------------------------------------- ------- ------- -------
Money Market Fund........................ 1.00% 1.70% 0.55%
Bond Income Strategy Fund................ 1.25% 1.95% 0.80%
Advisers Fund............................ 1.40% 2.10% 0.95%
Dividend and Growth Fund................. 1.40% 2.10% 0.95%
Stock Fund............................... 1.45% 2.15% 1.00%
Capital Appreciation Fund................ 1.45% 2.15% 1.00%
Small Company Fund....................... 1.45% 2.15% 1.00%
International Opportunities Fund......... 1.65% 2.35% 1.20%
Such voluntary and temporary fee waivers and expense limitation
arrangements may be terminated by The Hartford at any time without
notice.
d) OTHER RELATED PARTY TRANSACTIONS--The Hartford and its subsidiaries
provide facilities and office equipment, as well as perform certain other
services, including fund accounting and financial reporting, to the
Funds. Certain officers of the Funds are directors and/or officers of
HIFSCO, HIMCO, HSD and/or The Hartford or its subsidiaries. No officer of
the Fund receives any compensation directly from the Funds.
4. AFFILIATE HOLDINGS:
a) As of December 31, 1997, affiliates of the Hartford had ownership of
shares in the Funds as follows:
FUND CLASS A CLASS B CLASS Y
- ---------------------------------------------------------------------------------------- ------------ ---------- ---------
Money Market Fund....................................................................... 8,650,500 2,029,058 135
Bond Income Strategy Fund............................................................... 2,142,021 289,732 192,639
Advisers Fund........................................................................... 1,026,316 486 489
Dividend and Growth Fund................................................................ 2,440 10,257 294,849
Stock Fund.............................................................................. 3,726 1,972 294,988
Capital Appreciation Fund............................................................... 1,536 510 319,451
Small Company Fund...................................................................... 6,580 294,419 38,610
International Opportunities Fund........................................................ 0 127,349 183,810
5. INVESTMENT TRANSACTIONS:
For the year ended December 31, 1997, aggregate purchases and sales of
investment securities (excluding short-term investments) were as follows:
COST OF PROCEEDS FROM
FUND PURCHASES SALES
- -------------------------------------------------------------------------------------- ---------------- ------------------
Bond Income Strategy Fund............................................................. $ 76,048,476 $ 50,155,096
Advisers Fund......................................................................... 172,269,340 32,985,829
Dividend and Growth Fund.............................................................. 109,587,943 12,545,365
Stock Fund............................................................................ 96,997,931 16,395,017
Capital Appreciation Fund............................................................. 553,872,662 171,781,925
Small Company Fund.................................................................... 69,680,124 40,885,567
International Opportunities Fund...................................................... 30,044,525 7,654,713
37
THE HARTFORD MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
6. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS:
As of December 31, 1997, the aggregate gross unrealized appreciation and
depreciation of all investments, based on cost for federal income tax
purposes, was as follows:
AGGREGATE GROSS AGGREGATE GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
FUND TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ----------------------------------------------------- -------------- ----------------- ----------------- --------------
Bond Income Strategy Fund............................ $ 42,023,051 $ 1,075,460 $ (77,962) $ 997,498
Advisers Fund........................................ 162,323,415 17,847,687 (1,511,607) 16,336,080
Dividend and Growth Fund............................. 106,130,851 10,923,121 (1,802,332) 9,120,789
Stock Fund........................................... 101,288,230 10,476,612 (1,863,352) 8,613,260
Capital Appreciation Fund............................ 434,364,574 36,564,824 (33,311,472) 3,253,352
Small Company Fund................................... 37,762,080 2,500,743 (2,707,835) (207,092)
International Opportunities Fund..................... 30,946,016 1,722,347 (2,566,109) (843,762)
7. CAPITAL SHARE TRANSACTIONS:
The following information is for the year ending December 31, 1997:
MONEY MARKET BOND INCOME DIVIDEND AND
FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS A
Shares sold............. 38,230,951 $38,230,951 2,153,365 $ 22,403,019 6,154,830 $78,925,158 4,527,342
Shares issued on
reinvestment of
distributions.......... 872,366 872,366 145,580 1,522,249 87,579 1,135,044 62,376
Shares redeemed......... (27,278,534) (27,278,534) (668,900) (7,075,576) (184,092) (2,386,422) (512,573)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 11,824,783 $11,824,783 1,630,045 $ 16,849,692 6,058,317 $77,673,780 4,077,145
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
INTERNATIONAL
CAPITAL OPPORTUNITIES
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS A
Shares sold............. 4,284,826 $61,336,237 11,903,386 $236,230,545 1,563,737 $19,638,094 1,404,244
Shares issued on
reinvestment of
distributions.......... 8,399 122,981 387,629 7,293,278 66,524 768,836 28,770
Shares redeemed......... (499,124) (7,219,622) (1,230,817) (25,238,492) (472,607) (6,262,441) (349,105)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 3,794,101 $54,239,596 11,060,198 $218,285,331 1,157,654 $14,144,489 1,083,909
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
MONEY MARKET BOND INCOME DIVIDEND AND
FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS B
Shares sold............. 5,870,708 $ 5,870,708 612,657 $ 6,438,050 2,882,743 $36,730,437 2,538,636
Shares issued on
reinvestment of
distributions.......... 44,356 44,356 11,668 122,715 26,867 346,972 27,298
Shares redeemed......... (1,466,126) (1,466,126) (93,401) (973,394) (94,146) (1,188,076) (320,322)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 4,448,938 $ 4,448,938 530,924 $ 5,587,371 2,815,464 $35,889,333 2,245,612
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
AMOUNT
------------
CLASS A
Shares sold............. $ 62,564,218
Shares issued on
reinvestment of
distributions.......... 889,158
Shares redeemed......... (7,020,346)
------------
Net increase............ $ 56,433,030
------------
------------
AMOUNT
------------
CLASS A
Shares sold............. $ 15,957,135
Shares issued on
reinvestment of
distributions.......... 299,574
Shares redeemed......... (3,879,591)
------------
Net increase............ $ 12,377,118
------------
------------
AMOUNT
------------
CLASS B
Shares sold............. $ 34,876,647
Shares issued on
reinvestment of
distributions.......... 385,513
Shares redeemed......... (4,637,659)
------------
Net increase............ $ 30,624,501
------------
------------
38
INTERNATIONAL
CAPITAL OPPORTUNITIES
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS B
Shares sold............. 2,451,215 $34,862,504 8,639,143 $172,632,683 788,063 $10,175,219 689,420
Shares issued on
reinvestment of
distributions.......... 4,573 66,285 284,109 5,301,745 34,763 398,035 12,211
Shares redeemed......... (212,892) (3,097,391) (144,046) (2,910,190) (40,102) (486,917) (31,621)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 2,242,896 $31,831,398 8,779,206 $175,024,238 782,724 $10,086,337 670,010
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
MONEY MARKET BOND INCOME DIVIDEND AND
FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS Y
Shares sold............. 5,724,039 $ 5,724,039 476,540 $ 5,016,788 3,224,923 $36,739,860 931,473
Shares issued on
reinvestment of
distributions.......... 81,393 81,393 13,863 146,182 58,225 752,023 13,922
Shares redeemed......... (3,167,837) (3,167,837) (43,885) (455,655) (331,924) (4,128,773) (52,079)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 2,637,595 $ 2,637,595 446,518 $ 4,707,315 2,951,224 $33,363,110 893,316
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
INTERNATIONAL
CAPITAL OPPORTUNITIES
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND FUND
--------------------------- ---------------------------- ----------------------- -------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
------------- ----------- ------------- ------------ ---------- ----------- -------------
CLASS Y
Shares sold............. 357,092 $ 5,308,377 1,565,763 $ 30,037,701 805,629 $ 9,682,345 671,155
Shares issued on
reinvestment of
distributions.......... 718 10,592 49,948 945,864 32,532 378,667 13,375
Shares redeemed......... (270) (3,307) (142,907) (2,765,560) (104,804) (1,277,729) (85,615)
------------- ----------- ------------- ------------ ---------- ----------- -------------
Net increase............ 357,540 $ 5,315,662 1,472,804 $ 28,218,005 733,357 $ 8,783,283 598,915
------------- ----------- ------------- ------------ ---------- ----------- -------------
------------- ----------- ------------- ------------ ---------- ----------- -------------
AMOUNT
------------
CLASS B
Shares sold............. $ 7,753,696
Shares issued on
reinvestment of
distributions.......... 125,757
Shares redeemed......... (348,497)
------------
Net increase............ $ 7,530,956
------------
------------
AMOUNT
------------
CLASS Y
Shares sold............. $ 12,795,139
Shares issued on
reinvestment of
distributions.......... 198,485
Shares redeemed......... (696,187)
------------
Net increase............ $ 12,297,437
------------
------------
AMOUNT
------------
CLASS Y
Shares sold............. $ 7,458,393
Shares issued on
reinvestment of
distributions.......... 139,815
Shares redeemed......... (975,640)
------------
Net increase............ $ 6,622,568
------------
------------
The following information is for the period from July 1, 1996 (inception) to
December 31, 1996:
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS A
Shares sold.................... 10,742,496 $10,742,496 1,033,915 $10,347,528 1,286,188 $13,174,231 528,490 $5,568,935
Shares issued on reinvestment
of distributions.............. 206,091 206,091 30,839 314,647 8,674 97,406 3,550 41,188
Shares redeemed................ (194,966) (194,966) (324) (3,347) (261) (2,893) (612) (6,992)
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 10,753,621 $10,753,621 1,064,430 $10,658,828 1,294,601 $13,268,744 531,428 $5,603,131
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
39
THE HARTFORD MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
CAPITAL INTERNATIONAL
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS A
Shares sold.................... 544,300 $ 5,784,608 658,540 $ 7,560,478 410,929 $ 4,223,877 397,759 $4,020,902
Shares issued on reinvestment
of distributions.............. 927 10,897 19,716 260,446 27,530 290,714 3,456 36,538
Shares redeemed................ (1,348) (15,644) (2,381) (30,977) (972) (11,012) (741) (7,862)
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 543,879 $ 5,779,861 675,875 $ 7,789,947 437,487 $ 4,503,579 400,474 $4,049,578
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS B
Shares sold.................... -- $ -- 12,400 $ 126,990 135,067 $ 1,502,853 63,586 $ 723,176
Shares issued on reinvestment
of distributions.............. -- -- 215 2,203 890 9,972 405 4,673
Shares redeemed................ -- -- (561) (5,820) (324) (3,637) -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... -- $ -- 12,054 $ 123,373 135,633 $ 1,509,188 63,991 $ 727,849
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CAPITAL INTERNATIONAL
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS B
Shares sold.................... 109,160 $ 1,251,332 64,875 $ 834,147 22,152 $ 250,555 15,077 $ 159,562
Shares issued on reinvestment
of distributions.............. 189 2,215 1,881 24,777 1,387 14,601 130 1,371
Shares redeemed................ (315) (3,650) (11) (151) (880) (10,044) -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 109,034 $ 1,249,897 66,745 $ 858,773 22,659 $ 255,112 15,207 $ 160,933
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS Y
Shares sold.................... 276 $ 276 490 $ 4,900 3,039 $ 33,608 3,119 $ 35,353
Shares issued on reinvestment
of distributions.............. 4 4 15 157 24 269 24 281
Shares redeemed................ -- -- -- -- -- -- -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 280 $ 280 505 $ 5,057 3,063 $ 33,877 3,143 $ 35,634
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CAPITAL INTERNATIONAL
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS Y
Shares sold.................... 3,838 $ 44,018 7,775 $ 103,199 6,324 $ 70,546 5,873 $ 62,502
Shares issued on reinvestment
of distributions.............. 10 116 241 3,189 432 4,565 58 611
Shares redeemed................ -- -- -- -- -- -- -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 3,848 $ 44,134 8,016 $ 106,388 6,756 $ 75,111 5,931 $ 63,113
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
40
8. RECLASSIFICATION OF CAPITAL ACCOUNTS:
In accordance with AICPA Statement of Position 93-2, DETERMINATION,
DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN,
AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES, 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 net realized gain on
investments on a tax basis which is considered to be more informative to the
shareholder. As of December 31, 1997, the Funds recorded the following
reclassifications to increase (decrease) the accounts listed below.
ACCUMULATED
ACCUMULATED UNDISTRIBUTED
UNDISTRIBUTED (DISTRIBUTION IN
(DISTRIBUTION EXCESS OF)
IN EXCESS OF) NET REALIZED
NET INVESTMENT GAIN PAID-IN
INCOME ON INVESTMENTS SURPLUS
-------------- -------------------- -------
Bond Income Strategy Fund....................................................... $ 4,342 $ (4,342) $ --
Advisers Fund................................................................... 3,640 (3,640) --
Dividend and Growth Fund........................................................ (6,895) 7,032 (137)
Stock Fund...................................................................... 64,098 (64,098) --
Capital Appreciation Fund....................................................... 1,553,692 (1,553,692) --
Small Company Fund.............................................................. 103,029 (103,029) --
International Opportunities Fund................................................ (92,840) 92,840 --
9. TAX INFORMATION NOTICE (UNAUDITED):
For the year ended December 31, 1997, the following funds distributed
long-term capital gains dividends as follows:
Advisers Fund................................................................... $ 198,812
Dividend and Growth Fund........................................................ 49,443
Stock Fund...................................................................... 98,356
For federal income tax purposes, the following percentages of ordinary
income dividends paid by the following funds during the year ended December
31, 1997 qualify for the dividends received deduction for corporate
shareholders:
Advisers Fund................................................................... 28.53%
Dividend and Growth Fund........................................................ 58.09%
Stock Fund...................................................................... 100.00%
Capital Appreciation Fund....................................................... 1.41%
Small Company Fund.............................................................. 2.21%
41
The Hartford Mutual Funds, Inc.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-- SELECTED PER-SHARE DATA(A) --
------------------------------------------
NET REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM NET
VALUE AT NET GAIN (LOSS) TOTAL FROM FROM NET REALIZED
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT GAIN ON
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS
--------- ---------- ------------ ----------- ---------- -------------
THE HARTFORD MONEY MARKET
FUND
For the Year Ended
December 31, 1997
Class A................ $1.00 $ 0.05 $ 0.00 $ 0.05 $(0.05) $ 0.00
Class B................ 1.00 0.01 0.00 0.01 (0.01) 0.00
Class Y................ 1.00 0.05 0.00 0.05 (0.05) 0.00
July 1, 1996 to
December 31, 1996
Class A................ 1.00 0.02 0.00 0.02 (0.02) 0.00
Class Y................ 1.00 0.02 0.00 0.02 (0.02) 0.00
THE HARTFORD BOND INCOME
STRATEGY FUND
For the Year Ended
December 31, 1997
Class A................ 10.26 0.57 0.50 1.07 (0.56) (0.16)
Class B................ 10.25 0.53 0.46 0.99 (0.50) (0.16)
Class Y................ 10.27 0.58 0.54 1.12 (0.59) (0.16)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.26 0.31 0.57 (0.25) (0.06)
Class B................ 10.00 0.20 0.34 0.54 (0.23) (0.06)
Class Y................ 10.00 0.28 0.31 0.59 (0.26) (0.06)
THE HARTFORD ADVISERS
FUND
For the Year Ended
December 31, 1997
Class A................ 11.08 0.16 2.41 2.57 (0.17) (0.07)
Class B................ 11.05 0.16 2.31 2.47 (0.12) (0.07)
Class Y................ 11.10 0.31 2.32 2.63 (0.20) (0.07)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.09 1.07 1.16 (0.08) 0.00
Class B................ 10.00 0.02 1.11 1.13 (0.08) 0.00
Class Y................ 10.00 0.03 1.16 1.19 (0.09) 0.00
THE HARTFORD DIVIDEND AND
GROWTH FUND
For the Year Ended
December 31, 1997
Class A................ 11.45 0.13 3.40 3.53 (0.12) (0.14)
Class B................ 11.40 0.13 3.30 3.43 (0.08) (0.14)
Class Y................ 11.46 0.21 3.39 3.60 (0.15) (0.14)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.07 1.46 1.53 (0.06) (0.02)
Class B................ 10.00 0.01 1.48 1.49 (0.07) (0.02)
Class Y................ 10.00 0.02 1.53 1.55 (0.07) (0.02)
THE HARTFORD STOCK FUND
For the Year Ended
December 31, 1997
Class A................ 11.53 0.00 3.66 3.66 0.00 (0.03)
Class B................ 11.50 (0.02) 3.56 3.54 0.00 (0.03)
Class Y................ 11.55 0.03 3.70 3.73 0.00 (0.03)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.02 1.53 1.55 (0.02) 0.00
Class B................ 10.00 0.00 1.52 1.52 (0.02) 0.00
Class Y................ 10.00 0.01 1.57 1.58 (0.03) 0.00
THE HARTFORD CAPITAL
APPRECIATION FUND
For the Year Ended
December 31, 1997
Class A................ 13.36 (0.03) 7.34 7.31 0.00 (0.77)
Class B................ 13.32 (0.06) 7.22 7.16 0.00 (0.77)
Class Y................ 13.38 (0.03) 7.47 7.44 0.00 (0.77)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 (0.03) 3.80 3.77 0.00 (0.41)
Class B................ 10.00 (0.02) 3.75 3.73 0.00 (0.41)
Class Y................ 10.00 0.00 3.79 3.79 0.00 (0.41)
THE HARTFORD SMALL
COMPANY FUND
For the Year Ended
December 31, 1997
Class A................ 10.68 (0.02) 2.05 2.03 0.00 (0.55)
Class B................ 10.65 (0.03) 1.97 1.94 0.00 (0.55)
Class Y................ 10.71 (0.01) 2.09 2.08 0.00 (0.55)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 (0.02) 1.42 1.40 0.00 (0.72)
Class B................ 10.00 (0.02) 1.39 1.37 0.00 (0.72)
Class Y................ 10.00 0.00 1.43 1.43 0.00 (0.72)
THE HARTFORD
INTERNATIONAL
OPPORTUNITIES FUND
For the Year Ended
December 31, 1997
Class A................ 10.72 0.09 (0.01) 0.08 (0.05) (0.17)
Class B................ 10.69 0.07 (0.06) 0.01 (0.04) (0.17)
Class Y................ 10.73 0.15 (0.02) 0.13 (0.07) (0.17)
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.02 0.79 0.81 (0.06) (0.03)
Class B................ 10.00 (0.01) 0.80 0.79 (0.07) (0.03)
Class Y................ 10.00 0.00 0.84 0.84 (0.08) (0.03)
(a) Information presented relates to a share of capital stock outstanding
throughout the indicated period.
(b) Annualized.
(c) Does not include sales charges.
(d) Not annualized.
(e) Portfolio turnover and average commission rates are calculated on the basis
of the Fund as a whole without distinguishing between the classes of shares
issued.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
42
- --------------------------------------------------------------------------------
-- RATIOS AND SUPPLEMENTAL DATA
- --
- --------------------------
------------------------------------------------------------------------------
RATIO OF
NET ASSETS EXPENSES TO
NET INCREASE NET ASSET AT END OF AVERAGE
(DECREASE) VALUE AT PERIOD NET ASSETS
TOTAL IN NET ASSET END TOTAL (IN BEFORE WAIVERS
DISTRIBUTIONS VALUE OF PERIOD RETURN(C) THOUSANDS) AND REIMBURSEMENTS
---------- ------------ --------- ------- ----------- ------------------
THE HARTFORD MONEY MARKET
FUND
For the Year Ended
December 31, 1997
Class A................ $(0.05) $ 0.00 $1.00 4.73 % $22,578 1.23%
Class B................ (0.01) 0.00 1.00 1.45 (d) 4,449 3.63(b)
Class Y................ (0.05) 0.00 1.00 5.23 2,638 0.82
July 1, 1996 to
December 31, 1996
Class A................ (0.02) 0.00 1.00 2.01 (d) 10,754 2.70(b)
Class Y................ (0.02) 0.00 1.00 2.34 (d) 0.3 3,496.38(b)
THE HARTFORD BOND INCOME
STRATEGY FUND
For the Year Ended
December 31, 1997
Class A................ (0.72) 0.35 10.61 10.80 28,589 1.44
Class B................ (0.66) 0.33 10.58 9.96 5,745 2.19
Class Y................ (0.75) 0.37 10.64 11.30 4,756 1.01
July 1, 1996 to
December 31, 1996
Class A................ (0.31) 0.26 10.26 5.73 (d) 10,925 2.72(b)
Class B................ (0.29) 0.25 10.25 5.38 (d) 124 22.36(b)
Class Y................ (0.32) 0.27 10.27 5.95 (d) 5 185.34(b)
THE HARTFORD ADVISERS
FUND
For the Year Ended
December 31, 1997
Class A................ (0.24) 2.33 13.41 23.30 98,633 1.55
Class B................ (0.19) 2.28 13.33 22.44 39,334 2.31
Class Y................ (0.27) 2.36 13.46 23.80 39,773 1.03
July 1, 1996 to
December 31, 1996
Class A................ (0.08) 1.08 11.08 11.56(d) 14,347 2.94(b)
Class B................ (0.08) 1.05 11.05 11.28(d) 1,499 6.71(b)
Class Y................ (0.09) 1.10 11.10 11.88(d) 34 144.82(b)
THE HARTFORD DIVIDEND AND
GROWTH FUND
For the Year Ended
December 31, 1997
Class A................ (0.26) 3.27 14.72 30.99 67,861 1.59
Class B................ (0.22) 3.21 14.61 30.20 33,741 2.34
Class Y................ (0.29) 3.31 14.77 31.59 13,241 1.09
July 1, 1996 to
December 31, 1996
Class A................ (0.08) 1.45 11.45 15.29(d) 6,083 4.12(b)
Class B................ (0.09) 1.40 11.40 14.82(d) 730 12.97(b)
Class Y................ (0.09) 1.46 11.46 15.49(d) 36 141.53(b)
THE HARTFORD STOCK FUND
For the Year Ended
December 31, 1997
Class A................ (0.03) 3.63 15.16 31.78 65,763 1.64
Class B................ (0.03) 3.51 15.01 30.82 35,294 2.38
Class Y................ (0.03) 3.70 15.25 32.33 5,510 1.11
July 1, 1996 to
December 31, 1996
Class A................ (0.02) 1.53 11.53 15.50(d) 6,273 3.96(b)
Class B................ (0.02) 1.50 11.50 15.20(d) 1,254 7.76(b)
Class Y................ (0.03) 1.55 11.55 15.80(d) 44 133.50(b)
THE HARTFORD CAPITAL
APPRECIATION FUND
For the Year Ended
December 31, 1997
Class A................ (0.77) 6.54 19.90 55.11 233,601 1.64
Class B................ (0.77) 6.39 19.71 54.15 174,392 2.38
Class Y................ (0.77) 6.67 20.05 56.00 29,693 1.13
July 1, 1996 to
December 31, 1996
Class A................ (0.41) 3.36 13.36 37.75(d) 9,028 4.10(b)
Class B................ (0.41) 3.32 13.32 37.35(d) 889 9.05(b)
Class Y................ (0.41) 3.38 13.38 37.95(d) 107 93.64(b)
THE HARTFORD SMALL
COMPANY FUND
For the Year Ended
December 31, 1997
Class A................ (0.55) 1.48 12.16 19.28 19,391 1.77
Class B................ (0.55) 1.39 12.04 18.49 9,694 2.53
Class Y................ (0.55) 1.53 12.24 19.69 9,062 1.30
July 1, 1996 to
December 31, 1996
Class A................ (0.72) 0.68 10.68 14.11(d) 4,673 4.24(b)
Class B................ (0.72) 0.65 10.65 13.81(d) 241 20.03(b)
Class Y................ (0.72) 0.71 10.71 14.41(d) 72 115.33(b)
THE HARTFORD
INTERNATIONAL
OPPORTUNITIES FUND
For the Year Ended
December 31, 1997
Class A................ (0.22) (0.14) 10.58 0.84 15,701 2.25
Class B................ (0.21) (0.20) 10.49 0.12 7,188 3.03
Class Y................ (0.24) (0.11) 10.62 1.31 6,422 1.76
July 1, 1996 to
December 31, 1996
Class A................ (0.09) 0.72 10.72 8.14 (d) 4,294 5.35(b)
Class B................ (0.10) 0.69 10.69 7.86 (d) 163 32.61(b)
Class Y................ (0.11) 0.73 10.73 8.36 (d) 64 126.52(b)
RATIO OF
EXPENSES TO RATIO OF NET
AVERAGE INVESTMENT AVERAGE
NET ASSETS INCOME (LOSS) PORTFOLIO COMMISSION
AFTER WAIVERS AND TO AVERAGE TURNOVER RATE
REIMBURSEMENTS NET ASSETS RATE(E) PAID(E)
----------------- ------------- --------- ----------
THE HARTFORD MONEY MARKET
FUND
For the Year Ended
December 31, 1997
Class A................ 1.00% 4.67% N/A N/A
Class B................ 1.70(b) 3.92(b) -- --
Class Y................ 0.55 5.13 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.00(b) 4.49(b) N/A N/A
Class Y................ 0.55(b) 4.56(b) -- --
THE HARTFORD BOND INCOME
STRATEGY FUND
For the Year Ended
December 31, 1997
Class A................ 1.25 5.59 220.45% N/A
Class B................ 1.95 4.85 -- --
Class Y................ 0.80 5.98 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.25(b) 5.72(b) 75.52 N/A
Class B................ 1.95(b) 5.22(b) -- --
Class Y................ 0.80(b) 6.17(b) -- --
THE HARTFORD ADVISERS
FUND
For the Year Ended
December 31, 1997
Class A................ 1.40 1.54 38.62 $0.0429
Class B................ 2.10 0.80 -- --
Class Y................ 0.95 2.08 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.40(b) 2.13(b) 19.75 0.0297
Class B................ 2.10(b) 1.24(b) -- --
Class Y................ 0.95(b) 2.75(b) -- --
THE HARTFORD DIVIDEND AND
GROWTH FUND
For the Year Ended
December 31, 1997
Class A................ 1.40 1.42 28.75 0.0449
Class B................ 2.10 0.69 -- --
Class Y................ 0.95 1.83 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.40(b) 1.95(b) 29.80 0.0306
Class B................ 2.10(b) 0.82(b) -- --
Class Y................ 0.95(b) 2.41(b) -- --
THE HARTFORD STOCK FUND
For the Year Ended
December 31, 1997
Class A................ 1.45 0.06 42.83 0.0419
Class B................ 2.15 (0.66) -- --
Class Y................ 1.00 0.53 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.45(b) 0.71(b) 11.87 0.0281
Class B................ 2.15(b) (0.12)(b) -- --
Class Y................ 1.00(b) 1.37(b) -- --
THE HARTFORD CAPITAL
APPRECIATION FUND
For the Year Ended
December 31, 1997
Class A................ 1.45 (0.80) 119.61 0.0430
Class B................ 2.15 (1.46) -- --
Class Y................ 1.00 (0.35) -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.45(b) (0.70)(b) 149.99 0.0381
Class B................ 2.15(b) (1.53)(b) -- --
Class Y................ 1.00(b) 0.04(b) -- --
THE HARTFORD SMALL
COMPANY FUND
For the Year Ended
December 31, 1997
Class A................ 1.45 (0.61) 255.37 0.0434
Class B................ 2.15 (1.30) -- --
Class Y................ 1.00 (0.14) -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.45(b) (0.60)(b) 69.92 0.0313
Class B................ 2.15(b) (1.30)(b) -- --
Class Y................ 1.00(b) 0.03(b) -- --
THE HARTFORD
INTERNATIONAL
OPPORTUNITIES FUND
For the Year Ended
December 31, 1997
Class A................ 1.65 0.88 59.16 0.0070
Class B................ 2.35 (0.05) -- --
Class Y................ 1.20 1.33 -- --
July 1, 1996 to
December 31, 1996
Class A................ 1.65(b) 0.51(b) 21.51 0.0175
Class B................ 2.35(b) (0.86)(b) -- --
Class Y................ 1.20(b) 0.57(b) -- --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
43
Report of Independent Public Accountants
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TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
THE HARTFORD MUTUAL FUNDS, INC.:
We have audited the accompanying statements of net assets of The Hartford
Mutual Funds, Inc. (a Maryland Corporation) (consisting of The Hartford Money
Market, The Hartford Bond Income Strategy, The Hartford Advisers, The Hartford
Dividend and Growth, The Hartford Stock, The Hartford Capital Appreciation, The
Hartford Small Company and The Hartford International Opportunities Funds) (the
Funds) as of December 31, 1997, and the related statement of operations for the
year then ended and the statements of changes in net assets and the financial
highlights for the year then ended and the period from July 1, 1996 (inception)
to December 31, 1996. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian bank. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our 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 respective Funds comprising The Hartford Mutual Funds, Inc. as of
December 31, 1997, the results of their operations for the year then ended and
the changes in their net assets and the financial highlights for the year then
ended and the period from July 1, 1996 (inception) to December 31, 1996, in
conformity with generally accepted accounting principles.
Hartford, Connecticut
February 16, 1998 ARTHUR ANDERSEN LLP
44