T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates

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1 T HE H ARTFORD F LOATING R ATE F UND Helping Investors Prepare for Rising Interest Rates Michael J. Bacevich Portfolio Manager The Hartford Floating Rate Fund John P. Connor Portfolio Manager The Hartford Floating Rate Fund

2 Floating Rate Loans: A Unique Asset Class Floating rate loans are debt obligations made by banks and investment firms to public and private corporations. The yields on these investment loans adjust up or down as interest rates change. This adjustable feature means floating rate loans may provide an effective hedge against rising interest rates. Floating Rate Loans vs. Other Debt Securities Interest rate Forms of Risk Credit Liquidity Income potential Floating rate loans Low Medium Medium Medium High yield bonds Medium High Low High Long-term investment-grade bonds Short-term investment-grade bonds Money market instruments High Low Low Medium Medium Low Low Low Low Low Low Low CDs Low Low Medium Low Interest rate risk refers to the possibility that bond prices will decline because of rising interest rates. Interest rate risk is low for floating rate loans; their prices are much less sensitive to interest rate changes than the prices of longterm bonds. Liquidity risk is the ease with which a security may be sold in the marketplace for its true value. Liquidity risk for loans has improved over the years, yet there is still less institutional demand for floating rate loans versus most investment-grade and high-yield bonds. Credit risk is the chance that an issuer will fail to pay interest and principal in a timely manner. Since most floating rate loans are made to lower-rated corporations, they are subject to moderate credit risk. However, the credit risk is generally lower risk than traditional fixed-rate bonds because these loans are senior secured debt, which means they have both the highest priority and are secured with the company's assets. The assets typically include inventory, equipment, real estate and future payments owed. Capital Structure of a Company Highest Priority Senior Secured Debt Subordinated Debt Unsecured Debt Preferred Stock Common Stock Lowest Priority FLOATING RATE LOANS High-yield bonds, also referred to as junk bonds are debt securities issued by companies with questionable credit strength. Long-term investment-grade bonds are high-quality debt securities with average maturities of years. Short-term investment-grade bonds are debt securities issued by corporations that have an average maturity and duration of three to five years. Money market instruments are debt securities with maturities of 90 days or less. CDs, or Certificates of Deposit, which are debt securities issued by banks, are FDIC insured up to $100,000, offer a fixed rate of return, and are not subject to market volatility.

3 Meeting the Challenges of a Rising Interest Rate Environment Rising interest rates cause PROBLEM traditional bonds to decline in price. Did you know that prices on traditional fixed-rate bonds go down when interest rates go up (and vice versa)? As newer bonds paying higher rates are introduced, the demand for bonds paying lower rates decreases causing their prices to drop. POSSIBLE SOLUTION Floating rate loans can help manage interest rate risk. The interest rates on floating rate loans generally adjust every 30, 60 or 90 days. This adjustable feature means the prices on these loans will be fairly stable compared with high yield or longterm investment grade bond funds that pay a fixed rate. Consider past years in which interest rates rose substantially. Performance for the floating rate loan index compared favorably with the index for long-term, fixed-rate bonds. Floating Rate Loans vs. Long-Term Bonds Cumulative Returns During Calendar Years When Interest Rates (Fed Funds Rate) Climbed 1994 Interest Rates Rose from 3.00% on 1/1/94 to 5.50% on 12/31/ Interest Rates Rose from 4.75% on 1/1/99 to 5.50% on 12/31/99 12% 8% 10.32% 12% 8% 4% 0% 4% 0% 4.69% -4% -8% -7.85% -4% -8% -8.43% Floating Rate Loans (CSFB Leveraged Loan Index) 1 Long-Term Bonds (Lehman Brothers 10-Year U.S. Treasury Constant Maturity Index) 2 Sources: 3/05, Lipper Inc. 3/05. Loans and securities subject to prepayment risk generally offer less potential for gains when interest rates decline. INDEX PAST PERFORMANCE IS NO INDICATION OF FUTURE RESULTS. 1 The CSFB Leveraged Loan Index is a representative index of tradable, senior secured, U.S. dollar-denominated non-investment-grade loans. 2 The Lehman Brothers 10-Year U.S. Treasury Constant Maturity Index, an unmanaged list of Treasury bonds, is used as a general gauge of the market for long-term maturity fixed-income securities. Indices are unmanaged and not available for direct investment.

4 The Hartford Floating Rate Fund Investment Goal The Hartford Floating Rate Fund seeks to provide a high level of current income. Investment Approach The Fund invests at least 80% of its assets in below investment-grade variable or floating rate loans and floating rate securities. In an effort to help manage risk, a two-part strategy is used to manage the Fund. The Fund s Portfolio Managers utilize two lines of defense to attempt to help reduce downside risk. Dedicated 6 Person Bank Loan Team Analyze Corporate Risk Avoid High Risk Sectors/Industries Best in Class Emphasis Leading market share Demonstrated ability to generate cash flow Bias toward stable industries with sustainable profit margins Appropriate Capital Structure Active Portfolio Management Use Broad Diversification to Lower Risk Focus on Liquid Loans and Securities Pursuit of Superior Risk-Adjusted Returns The investment return and principal value of the investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. The Fund is subject to both credit and interest rate risk. Because the Fund invests mainly in investments rated below-investment-grade, it is subject to heightened credit risk. Share price, yield and total return may fluctuate more than with less aggressive loan and bond funds. A percentage of the Fund may be invested in foreign issuers and/or non-dollar securities. Investing in foreign issuers and non-dollar securities may involve different and additional risks associated with foreign currencies, investment disclosure, accounting, securities regulation, commissions, taxes, political or social instability, war or expropriation. Please see a prospectus for the permissible limit in foreign issuers and non-dollar securities.

5 Experienced Money Management Co-Portfolio Managers Michael J. Bacevich Managing Director Hartford Investment Management Company 21 Years of Professional Experience BS, U.S. Military Academy MBA, University of Chicago John P. Connor Vice President Hartford Investment Management Company 13 Years of Professional Experience BA, Columbia University MBA, University of Chicago Hartford Investment Management Company Sub-adviser to The Hartford Floating Rate Fund Strength in Numbers Entrusted with over $114.3 billion in assets under management (as of 6/30/05)* Mutual fund assets of over $12 billion representing 20 fixed income and equity funds Breadth of Resources 89 dedicated investment professionals providing extensive coverage of global bonds Portfolio Managers average more than 17 years of investment experience and 9 years with the firm Credit analysts and traders average more than 13 years of professional experience Independent Research Research is conducted in-house Extensive credit and quantitative research resources allow Hartford Investment Management to capitalize on a wide variety of opportunities across the credit spectrum Long-Term Perspective Approach reflects an understanding of interest rate cycles and historical trends not just today s current environment Performance target of consistent value-added returns versus peers and benchmarks *Includes wholly-owned subsidiary. Information above is as of 3/31/05, unless otherwise indicated. Who May Benefit From This Fund? Bond investors who are concerned about climbing interest rates. Investors seeking moderately high income along with some degree of capital preservation. Investors who wish to increase the diversification of their portfolios.

6 If you find a fund which... Invests in an asset class that has historically performed well when interest rates are rising, Provides potential for greater price stability compared with long-term bond investments, Can help increase the diversification of your overall fixed income portfolio,...then you have found The Hartford Floating Rate Fund. Fund Symbols: A Share: HFLAX B Share: HFLBX C Share: HFLCX This presentation is authorized only when preceded or accompanied by a currently effective prospectus. The prospectus contains detailed information about the Funds, including charges and fees. Please read it carefully before you invest or send money. The Hartford Mutual Funds are underwritten and distributed by Hartford Investment Financial Services, LLC. MF1163 7/05