<PAGE>
As filed with the Securities and Exchange Commission on February 2, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. ______ |_|
Post-Effective Amendment No. ______ |_|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. _____ |_|
HARTFORD SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Hartford Plaza, Hartford, Connecticut 06115
(Address of Principal Executive Offices)
Registrant's Telephone Number Including Area Code: (860) 547-5000
Michael O'Halloran, Esquire
The Hartford Financial Services Group, Inc.
Law Department
690 Asylum Avenue
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
COPIES TO: Thomas Mira, Esquire
Jorden, Burt, Berenson and Johnson
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D.C. 20036
Approximate Date of Proposed Public Offering
As soon as practicable after this registration statement is declared
effective.
It is proposed that this filing will become effective (check appropriate box).
<PAGE>
_____ Immediately upon filing pursuant to paragraph (b)
_____ On ________________________ pursuant to paragraph (b)(l)(v) of Rule 485
_____ 60 days after filing pursuant to paragraph (a)(1) of Rue 485
_____ On ________________________ pursuant to paragraph (a)(1)of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
_____ On ________________________ pursuant to paragraph (a)(2)of Rule 485
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Calculation of Registration Fee Under the Securities Act of 1933
Proposed Proposed
Title of Amount Being Maximum Maximum Amount of
Securities Being Registered Offering Price Aggregate Registration
Registered Per Unit Offering Price Fee
Common Stock,
par value $.001 * *
per share
*Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
hereby elects to register an indefinite number of shares of its Common Stock. No
initial fee is required.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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HARTFORD SERIES FUND, INC.
Cross-Reference Sheet Showing Location in each Prospectus and
Combined Statement of Additional Information of Information Required
by Items of the Registration Form
<TABLE>
<CAPTION>
Form N-1A Item
Number and Caption Location in Prospectus
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<S> <C>
1. Cover Page Cover Page.
2. Synopsis Not Applicable.
3. Condensed Financial Information Not Applicable.
4. General Description of Registrant Introduction to The Hartford Growth
and Income HLS Fund, Investment
Objective and Style of the Fund,
Common Investment Policies and Risk
Factors.
5. Management of the Fund Management of the Fund.
6. Capital Stock and other Securities Ownership and Capitalization of the
Fund.
7. Purchase of Securities Being Offered Purchase of Fund Shares.
8. Redemption or Repurchase Sale and Redemption of Fund Shares.
9. Pending Legal Proceedings Pending Legal Proceedings.
Form N-1A Item Location in Statement of
Number and Caption Additional Information
------------------ ----------------------
10. Cover Page Cover Page.
11. Table of Contents Cover Page.
12. General Information and History Cover Page, General Information.
13. Investment Objectives and Policies Investment Objectives and Policies of
the Fund, Investment Restrictions.
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14. Management of the Fund Advisory Arrangements; Fund Expenses.
15. Control Persons and Principal Management of the Company.
Holders of Securities
16. Investment Advisory and Other Investment Advisory Arrangements; Fund
Services Expenses; Distribution Arrangements;
Distribution Financing Plan;
Custodian; Transfer Agent Services;
Independent Public Accountants.
17. Brokerage Allocation and Other Portfolio and Brokerage Transactions.
Practices
18. Capital Stock and Other Securities Ownership and Capitalization of the
Company (Prospectus).
19. Purchase Redemption and Pricing of Determination of Net Asset Value,
Securities Being Offered Purchase and Redemption of Shares.
20. Tax Status Taxes
21. Underwriters Distribution Arrangements.
22. Calculation of Performance Data Investment Performance.
23. Financial Statements Financial Statements.
</TABLE>
<PAGE>
Hartford Growth and Income HLS Fund
PROSPECTUS -- , 1998
CLASS IA SHARES
The Hartford Growth and Income HLS Fund (the "Fund") is a separate series of
Hartford Series Fund, Inc., an open-end management investment company. The Fund
is one of thirteen affiliated diversified portfolios used as funding media for
certain variable annuity and variable life insurance separate accounts of
Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company
(collectively, "The Hartford Life Insurance Companies"). The Fund's investment
goal is to seek growth of capital by investing in equity securities with
earnings growth potential and steady or rising dividends. Only the Fund is
offered by this Prospectus.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Please read and retain this
Prospectus for future reference. Additional information about the Fund has been
filed with the Securities and Exchange Commission ("SEC") in a Statement of
Additional Information dated , 1998 ("SAI"), which is incorporated by
reference into this Prospectus. To obtain a copy of the SAI without charge, call
1-800-862-6668 or write to "Hartford Growth and Income HLS Fund, c/o Individual
Annuity Operations," P.O. Box 2999, Hartford, CT 06104-2999.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER BY THE FUND TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL FOR THE FUND TO MAKE SUCH OFFER.
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2 HARTFORD GROWTH AND INCOME HLS FUND
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TABLE OF CONTENTS
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PAGE
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Introduction to the Hartford Growth and Income HLS Fund............... 3
Investment Objective and Style of the Fund............................ 3
Common Investment Policies and Risk Factors........................... 3
Management of the Fund................................................ 8
Administrative Services for the Fund.................................. 9
Expenses of the Fund.................................................. 10
Performance Related Information....................................... 10
Dividends............................................................. 10
Determination of Net Asset Value...................................... 10
Purchase of Fund Shares............................................... 10
Sale and Redemption of Shares......................................... 11
Federal Income Taxes.................................................. 11
Ownership and Capitalization of the Fund.............................. 11
General Information................................................... 12
Appendix A: Description of Securities Ratings......................... 13
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HARTFORD GROWTH AND INCOME HLS FUND 3
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INTRODUCTION TO THE HARTFORD GROWTH AND INCOME HLS FUND
The Fund is a diversified series of Hartford Series Fund, Inc. (the
"Company"), an open-end management investment company which was organized as a
Maryland corporation on January 15, 1998. The Fund commenced operations on
, 1998. The Fund is made available to serve as the underlying
investment vehicle for certain variable annuity and variable life insurance
separate accounts of The Hartford Life Insurance Companies.
The Fund offers Class IA and Class IB shares. Only Class IA shares of the
Fund are offered by this Prospectus. Each Class incurs different expenses which
will affect performance. Class IB shares are offered pursuant to another
prospectus and are subject to the same expenses as the Class IA shares, but
unlike the Class IA shares they are subject to distribution fees imposed
pursuant to a distribution plan ("Distribution Plan") adopted under Rule 12b-1
of the Investment Company Act of 1940 (the "1940 Act"). Inquiries regarding
Class IB shares should be addressed to Hartford Growth and Income HLS Fund, c/o
Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999 or by
calling 1-800-862-6668.
HL Investment Advisors, Inc. ("HL Advisors") is the investment manager to
the Fund. In addition, under HL Advisors' general management, Wellington
Management Company, LLP ("Wellington Management") serves as sub-adviser to the
Fund.
HL Advisors was incorporated in Connecticut in 1981 and is a majority-owned
indirect subsidiary of The Hartford Financial Services Group, Inc. ("The
Hartford"), a Connecticut insurance holding company with over $100 billion in
assets. Wellington Management, a Massachusetts limited liability partnership, is
a professional investment counseling firm that provides services to investment
companies, employee benefit plans, endowments, foundations and other
institutions and individuals. Wellington Management and its predecessor
organizations have provided investment advisory services since 1928. As of
December 31, 1997, HL Advisors and their affiliates had investment management
authority with respect to approximately $54.9 billion of assets for various
clients. As of the same date, Wellington Management had investment management
authority with respect to approximately $175 billion of assets for various
clients.
INVESTMENT OBJECTIVE AND
STYLE OF THE FUND
The Fund is subject to certain fundamental investment restrictions that are
enumerated in detail in the SAI and may not be changed without shareholder
approval. All other investment policies (including the Fund's investment
objective) are non-fundamental and may be changed by the Board of Directors
without shareholder approval. Stated below is the investment objective and
investment style for the Fund. For a description of the Fund's investment
policies and risk factors, see "Common Investment Policies and Risk Factors."
INVESTMENT OBJECTIVE.
The Growth and Income HLS Fund seeks growth of capital by investing
primarily in equity securities with earnings growth potential.
INVESTMENT STYLE.
The Growth and Income HLS Fund invests in a diversified portfolio of
primarily equity securities that typically have steady or rising dividends and
whose prospects for capital appreciation are considered favorable by Wellington
Management. Wellington Management uses fundamental analysis to evaluate a
security for purchase or sale by the Fund. Fundamental analysis involves the
assessment of a company through such factors as its business environment,
management, balance sheet, income statement, anticipated earnings, revenues,
dividends, and other related measures of value. Wellington Management then uses
proprietary quantitative techniques to affirm its fundamental evaluation of a
security. The quantitative techniques evaluate a security using valuation
analysis, which includes use of a dividend discount model and cash flow
analysis, combined with momentum analysis, which includes an assessment of a
company's earnings momentum and stock price momentum. The quantitative
techniques look to affirm the fundamental evaluation by identifying those
securities that are attractive from the fundamental perspective and are also
both inexpensive based on the quantitative valuation factors and timely
according to the quantitative momentum factors. The Fund's portfolio will be
broadly diversified by industry and company. Up to 20% of the Fund's total
assets may be invested in securities of non-U.S. companies.
COMMON INVESTMENT POLICIES
AND RISK FACTORS
MONEY MARKET INSTRUMENTS AND
TEMPORARY INVESTMENT STRATEGIES
The Fund may hold cash or cash equivalents and invest in high quality money
market instruments under appropriate circumstances as determined by Wellington
Management. The Fund may invest up to 100% of its assets in cash, cash
equivalents or money market instruments only for temporary defensive purposes.
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4 HARTFORD GROWTH AND INCOME HLS FUND
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Money market instruments include: (1) banker's acceptances; (2) obligations
of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (3) short-term corporate obligations, including commercial
paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations
of U.S. banks, non-U.S. branches of U.S. banks (Eurodollars), U.S. branches and
agencies of non-U.S. banks (Yankee dollars), and non-U.S. branches of non-U.S.
banks; (6) asset-backed securities; and (7) repurchase agreements.
REPURCHASE AGREEMENTS
The Fund is permitted to enter into fully collateralized 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. It may also be viewed as the loan of money by the Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an agreed
upon market interest rate. Delays or losses could result if the other party to
the agreement defaults or becomes insolvent. The Fund's Board of Directors has
established standards for evaluation of the creditworthiness of the banks and
securities dealers with which the Fund may engage in repurchase agreements and
monitors on a quarterly basis Wellington Management's compliance with such
standards.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve sales by the Fund of portfolio assets concurrently
with an agreement by the Fund to repurchase the same assets at a later date at a
fixed price. Reverse repurchase agreements carry the risk that the market value
of the securities which the Fund is obligated to repurchase may decline below
the repurchase price. A reverse repurchase agreement is viewed as a
collateralized borrowing by the Fund. Borrowing magnifies the potential for gain
or loss on the portfolio securities of the Fund and, therefore, increases the
possibility of fluctuation in the Fund's net asset value. The Fund will
establish a segregated account with the Fund's custodian bank in which the Fund
will maintain liquid assets equal in value to the Fund's obligations in respect
of reverse repurchase agreements. As a non-fundamental policy, the Fund will not
enter into reverse repurchase transactions if the combination of all borrowings
from banks and the value of all reverse repurchase agreements for the Fund
equals more than 33 1/3% of the value of the Fund's total assets.
DEBT SECURITIES
The Fund is permitted to invest in debt securities including: (1) securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities; (2) debt securities issued or guaranteed by U.S.
corporations or other issuers (including foreign governments or corporations);
and (3) securities issued or guaranteed as to principal or interest by a
sovereign government or one of its agencies or political subdivisions,
supranational entities such as development banks, non-U.S. corporations, banks
or bank holding companies, or other non-U.S. issuers.
INVESTMENT GRADE DEBT SECURITIES
The Fund is permitted to invest in debt securities rated within the four
highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A or
BBB by S&P), or, if unrated, securities of comparable quality as determined by
Wellington Management. These securities are generally referred to as "investment
grade securities." Each rating category has within it different gradations or
sub-categories. If the Fund is authorized to invest in a certain rating
category, the Fund is also permitted to invest in any of the sub-categories or
gradations within that rating category. If a security is downgraded to a rating
category which does not qualify for investment, Wellington Management will use
its discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term. Debt securities
carrying the fourth highest rating (i.e., "Baa" by Moody's and "BBB" by S&P),
and unrated securities of comparable quality (as determined by Wellington
Management) are viewed as having adequate capacity for payment of principal and
interest, but do involve a higher degree of risk than that associated with
investments in debt securities in the higher rating categories.
HIGH YIELD-HIGH RISK DEBT SECURITIES
The Fund may invest up to 5% of its assets in high yield debt securities
(i.e., rated as low as "C" by Moody's or S&P, and unrated securities of
comparable quality as determined by Wellington Management). Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds". Each rating category has within it different
gradations or sub-categories. If the Fund is authorized to invest in a certain
rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. If a security is
downgraded to a rating category which does not qualify for investment,
Wellington Management will use its discretion on whether to hold or sell based
upon its opinion on the best method to maximize value for shareholders over the
long term. Securities in the rating categories below "Baa" as determined by
Moody's and "BBB" as determined by S&P are considered to be of poor standing and
predominantly speculative. The rating services' descriptions of securities are
set forth in Appendix A. High yield-high risk debt securities are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. Accordingly, it is
possible
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 5
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that these types of factors could, in certain instances, reduce the value of
securities held by the Fund with a commensurate effect on the value of the
Fund's shares.
EQUITY SECURITIES
The Fund may invest in equity securities including common stocks, preferred
stocks, convertible preferred stock and rights to acquire such securities. In
addition, the Fund may invest in securities such as bonds, debentures and
corporate notes which are convertible into common stock at the option of the
holder.
SMALL CAPITALIZATION SECURITIES
The Fund may invest in equity securities (including securities issued in
initial public offerings) of companies which have less than $2 billion in market
capitalization ("Small Capitalization Securities"). Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established companies,
they may have limited product lines, market share or financial resources and may
have less historical data with respect to operations and management. As a
result, Small Capitalization Securities are often less marketable and experience
a higher level of price volatility than securities of larger or more
well-established companies. In addition, companies whose securities are offered
in initial public offerings may be more dependent on a limited number of key
employees. Because securities issued in initial public offerings are being
offered to the public for the first time, the market for such securities may be
inefficient and less liquid.
NON-U.S. SECURITIES
The Fund is permitted to invest up to 20% of its assets in non-U.S.
securities. The Fund may invest in American Depositary Receipts ("ADRs") and
Global Depositary Receipts ("GDRs"). ADRs are certificates issued by a U.S. bank
or trust company and represent the right to receive non-U.S. securities. ADRs
are traded on a U.S. securities exchange, or in an over-the-counter market, and
are denominated in U.S. dollars. GDRs are certificates issued globally and
evidence a similar ownership arrangement. GDRs are traded on non-U.S. securities
exchanges and are denominated in non-U.S. currencies. The value of an ADR or a
GDR will fluctuate with the value of the underlying security, will reflect any
changes in exchange rates and otherwise will involve risks associated with
investing in non-U.S. securities.
When selecting non-U.S. securities Wellington Management will evaluate the
economic and political climate and the principal securities markets of the
country in which the company is located. Investing in non-U.S. securities
involves considerations and potential risks not typically associated with
investing in securities issued by U.S. companies. Less information may be
available about non-U.S. companies than about U.S. companies and non-U.S.
companies generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to U.S. companies. The values of non-U.S.
securities are affected by changes in currency rates or exchange control
regulations, restrictions or prohibitions on the repatriation of non-U.S.
currencies, application of non-U.S. tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in the
U.S. or outside the U.S.) or changed circumstances in dealings between nations.
Costs are also incurred in connection with conversions between various
currencies. The Fund may invest up to 25% of its assets in companies located in
emerging countries. Compared to the United States and other developed countries,
developing countries may have relatively unstable governments, economies based
on only a few industries, and securities markets that are less liquid and trade
a small number of securities. Prices on these exchanges tend to be volatile and,
in the past, securities in these countries have offered greater potential for
gain (as well as loss) than securities of companies located in developed
countries. See the SAI for additional risk disclosure concerning non-U.S.
securities.
CURRENCY TRANSACTIONS
The Fund may engage in currency transactions to hedge the value of portfolio
securities denominated in particular currencies against fluctuations in relative
value. Currency transactions include forward currency contracts, currency swaps,
exchange-listed and over-the-counter ("OTC") currency futures contracts and
options thereon and exchange listed and OTC options on currencies.
Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Currency swaps are agreements to exchange
cash flows based on the notional difference between or among two or more
currencies. See "Swap Agreements."
The use of currency transactions to protect the value of the Fund's assets
against a decline in the value of a currency does not eliminate potential losses
arising from fluctuations in the value of the Fund's underlying securities.
Further, the Fund may enter into currency transactions only with counterparties
that Wellington Management deems to be creditworthy.
The Fund may also enter into options and futures contracts relative to
foreign currency to hedge against fluctuations in foreign currency rates. See
"Options and Futures Contracts" for a discussion of risk factors relating to
foreign
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6 HARTFORD GROWTH AND INCOME HLS FUND
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currency transactions including related options and futures contracts.
OPTIONS AND FUTURES CONTRACTS
The Fund may employ certain hedging, income enhancement and risk management
techniques involving options and futures contracts, though such techniques may
also result in losses to the Fund. The Fund may write covered call options or
purchase put and call options on individual securities, write covered put and
call options and purchase put and call options on foreign currencies, aggregates
of equity and debt securities, indices of prices of equity and debt securities
and other financial indices, and enter into futures contracts and options
thereon for the purchase or sale of aggregates of equity and debt securities,
indices of equity and debt securities and other financial indices.
The Fund may write covered options only. "Covered" means that, so long as
the Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the same
underlying securities or currency having an expiration date not earlier than the
expiration date of the covered option and an exercise price equal to or less
than the exercise price of the covered option, or will establish or maintain
with its custodian for the term of the option a "segregated account" consisting
of cash, U.S. Government securities or other liquid, high grade debt obligations
having a value equal to the fluctuating market value of the optioned securities
or currencies. The Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit.
To hedge against fluctuations in currency exchange rates, the Fund may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. To the
extent that the Fund enters into futures contracts, options on futures contracts
and options on foreign currencies that are traded on an exchange regulated by
the Commodities Futures Trading Commission ("CFTC"), in each case that are not
for BONA FIDE hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish those non-hedging positions may not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account the unrealized profits and unrealized losses on any such contracts the
Fund has entered into.
The Fund's use of options, futures and options thereon and forward currency
contracts (as described under "Currency Transactions") would involve certain
investment risks and transaction costs to which it might not be subject were
such strategies not employed. Such risks include: (1) dependence on the ability
of Wellington Management to predict movements in the prices of individual
securities, fluctuations in the general securities markets or market sections
and movements in interest rates and currency markets; (2) imperfect correlation
between movements in the price of the securities or currencies hedged or used
for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract, option thereon or forward contract at any
particular time, which may affect the Fund's ability to establish or close out a
position; (5) possible impediments to effective portfolio management or the
ability to meet current obligations caused by the segregation of a large
percentage of the Fund's assets to cover its obligations; and (6) the possible
need to defer closing out certain options, futures contracts, options thereon
and forward contracts in order to continue to qualify for the beneficial tax
treatment afforded "regulated investment companies" under the Internal Revenue
Code of 1986, as amended (the "Code"). See the SAI for additional information on
options and futures contracts. Options and futures contracts are commonly known
as "derivative" securities.
SWAP AGREEMENTS
The Fund may enter into interest rate swaps, currency swaps and other types
of swap agreements such as caps, collars, and floors. In a typical interest rate
swap, one party agrees to make regular payments equal to a floating interest
rate multiplied by a "notional principal amount," in return for payments equal
to a fixed rate multiplied by the same amount, for a specified period of time.
If a swap agreement provides for payments in different currencies, the parties
might agree to exchange the notional principal amount as well. Swaps may also
depend on other prices or rates, such as the value of an index or mortgage
prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend to
decrease the Fund's exposure to rising interest rates. Caps and floors have an
effect similar to buying or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall volatility of the Fund's
investments and its share price and yield.
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 7
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Swap agreements are commonly known as "derivative" securities. Because swap
agreements are privately negotiated transactions rather than publicly traded,
they may be considered to be illiquid securities.
The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of the Fund's
portfolio securities and depends on Wellington Management's ability to predict
correctly the direction and degree of movement in interest rates. Although the
Fund believes that the use of the hedging and risk management techniques
described above will benefit the Fund, if Wellington Management's judgment about
the direction or extent of the movement in interest rates is incorrect, the
Fund's overall performance would be worse than if it had not entered into any
such transactions. These activities are commonly used when managing derivative
investments.
ILLIQUID SECURITIES
The Fund is permitted to invest in illiquid securities. The maximum
percentage of illiquid securities which may be purchased by the Fund is 15% of
its net assets. "Illiquid Securities" are securities that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price used to determine the Fund's net asset value. The Fund
may purchase certain restricted securities commonly known as Rule 144A
securities that can be resold to institutions and which may be determined to be
liquid pursuant to policies and guidelines of the Board of Directors.
Under current interpretations of the Securities and Exchange Commission
("SEC") staff, the following securities may be considered illiquid: (1)
repurchase agreements maturing in more than seven days; (2) certain restricted
securities (securities whose public resale is subject to legal or contractual
restrictions); (3) options, with respect to specific securities, not traded on a
national securities exchange that are not readily marketable; and (4) any other
securities in which the Fund may invest that are not readily marketable.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
The Fund is permitted to purchase or sell securities on a when-issued or
delayed-delivery basis. When-issued or delayed-delivery transactions arise when
securities are purchased or sold with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield at the time of entering into the transaction. While the Fund generally
purchases securities on a when-issued basis with the intention of acquiring the
securities, the Fund may sell the securities before the settlement date if
Wellington Management deems it advisable. At the time the Fund makes the
commitment to purchase securities on a when-issued basis, the Fund will record
the transaction and thereafter reflect the value, each day, of such security in
determining net asset value. At the time of delivery of the securities, the
value may be more or less than the purchase price.
OTHER INVESTMENT COMPANIES
The Fund is permitted to invest in other investment companies. Securities in
certain countries are currently accessible to the Fund only through such
investments. The investment in other investment companies is limited in amount
and will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. The Fund will not purchase a
security if, as a result, (1) more than 10% of the Fund's assets would be
invested in securities of other investment companies, (2) such purchase would
result in more than 3% of the total outstanding voting securities of any one
such investment company being held by the Fund or (3) more than 5% of the Fund's
assets would be invested in any one such investment company.
PORTFOLIO SECURITIES LENDING
The Fund may lend its portfolio securities to broker/ dealers and other
institutions as a means of earning interest income. Delays or losses could
result if a borrower of portfolio securities becomes bankrupt or defaults on its
obligation to return the loaned securities. The Fund may lend securities only
if: (1) the loan is fully secured by appropriate collateral at all times as
determined by HL Advisors; and (2) the value of all loaned securities of the
Fund is not more than 33 1/3% of the Fund's total assets.
OTHER RISK FACTORS
As mutual funds that primarily invest in equity and/or debt securities, the
Fund is subject to market risk, i.e., the possibility that equity and/or debt
prices in general will decline over short or even extended periods of time. The
financial markets tend to be cyclical, with periods when security prices
generally rise and periods when security prices generally decline.
The value of the debt securities in which the Fund invests will tend to
increase when interest rates are falling and to decrease when interest rates are
rising.
The Fund should not be considered to be a complete investment program in and
of itself. Each prospective purchaser should take into account his or her own
investment objectives as well as his or her other investments when considering
the purchase of shares of the Fund.
<PAGE>
8 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
There can be no assurance that the investment objectives of the Fund will be
met. In addition, the risk inherent in investing in the Fund is common to any
security -- the net asset value will fluctuate in response to changes in
economic conditions, interest rates and the market's perception of the
underlying portfolio securities held by the Fund.
In pursuit of a Fund's investment objective, Wellington Management attempts
to select appropriate individual securities for inclusion in the Fund's
portfolio. In addition, Wellington Management attempts to successfully forecast
market trends and increase investments in the types of securities best suited to
take advantage of such trends. Thus, the investor is dependent on Wellington
Management's success not only in selecting individual securities, but also in
identifying the appropriate mix of securities consistent with the Fund's
investment objective.
INVESTMENT LIMITATIONS
The Fund has adopted certain limitations in an attempt to reduce its
exposure to specific situations. Some of these limitations are that the Fund
will not:
(a) invest more than 25% of its assets in any one industry;
(b) borrow money, except from banks, and then only in amounts not exceeding
33 1/3% of the value of the Fund's total assets (although for purposes of
this restriction reverse repurchase agreements are not considered
borrowings, as a non-fundamental operating policy, the Fund will limit
combined borrowings and reverse repurchase transactions to 33 1/3% of the
value of the Fund's total assets);
(c) with respect to 75% of the value of the Fund's total assets, purchase the
securities of any issuer (other than cash, cash items or securities issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
authorities) if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
These investment restrictions are considered at the time investment
securities are purchased. The limitations described above, except as noted under
(b), and those listed under Fundamental Restrictions of the Funds in the SAI,
are considered fundamental and as such can only be changed with the approval of
a majority of the Fund's shareholders.
MANAGEMENT OF THE FUND
The Fund's Board of Directors manages the business and affairs of the Fund
and takes action on all matters not reserved for the shareholders, including the
annual election of officers of the Fund who carry out all orders and resolutions
of the Board of Directors and carry out functions relating to the day to day
management of the affairs of the Fund.
MANAGEMENT SERVICES
HL Advisors serves as investment manager to the Fund pursuant to a written
agreement entered into between HL Advisors and the Fund. Pursuant to such
agreement HL Advisors has overall investment supervisory responsibility for the
Fund. In addition, Hartford Life Insurance Company ("Hartford Life"), an
affiliate of HL Advisors, provides administrative personnel, services, equipment
and facilities and office space for proper operation of the Fund. HL Advisors
has contracted with Wellington Management for the provision of day to day
investment management services to the Fund. The Fund pays a fee to HL Advisors,
a portion of which may be used to compensate Wellington Management.
For services rendered to the Fund, HL Advisors charges a monthly fee based
on the following annual rates as applied to the average of the calculated daily
net asset value of the Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $250,000,000 0.575%
Next $250,000,000 0.525%
Next $500,000,000 0.475%
Amount Over $1 Billion 0.425%
</TABLE>
HL Advisors, Hartford Plaza, Hartford, Connecticut 06115, is a wholly-owned
subsidiary of Hartford Life and was organized under the laws of the State of
Connecticut in 1981. In addition to the Fund, HL Advisors is the investment
manager to twelve other mutual funds. A wholly-owned subsidiary of HL Investment
Advisors, Hartford Investment Financial Services Company, serves as investment
adviser to several other Hartford Life-sponsored mutual funds. Hartford Life is
a majority owned subsidiary of Hartford Fire Insurance Company, one of the
largest multiple lines insurance carriers in the United States. Hartford Fire
Insurance Company is a subsidiary of The Hartford Financial Services Group, Inc.
Certain officers of the Funds are also officers and/or directors of HL
Advisors: Joseph H. Gareau is a Director and the President of HL Advisors;
Andrew W. Kohnke is a Managing Director and a Director of HL Advisors; and C.
Michael O'Halloran is a Director, Secretary and General Counsel of HL Advisors.
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 9
- --------------------------------------------------------------------------------
INVESTMENT SUB-ADVISORY AND OTHER SERVICES
Wellington Management serves as sub-adviser to the Fund pursuant to a
written contract entered into between HL Advisors and Wellington Management.
In connection with the services provided to the Funds, Wellington Management
makes all determinations with respect to the purchase and sale of portfolio
securities (subject to the terms and conditions of the investment objectives,
policies and restrictions of the Fund and to the general supervision of the
Fund's Boards of Directors and HL Advisors) and places, in the name of the Fund,
all orders for execution of the Fund's portfolio transactions. In conjunction
with such activities, Wellington Management regularly furnishes reports to the
Fund's Boards of Directors concerning economic forecasts, investment strategy,
portfolio activity and performance of the Fund.
Wellington Management charges a quarterly fee to HL Advisors. The Fund does
not pay Wellington Management's fee nor any part thereof, nor does the Fund have
any obligation or responsibility to do so. Wellington Management's quarterly fee
is based upon the following annual rates as applied to the average of the
calculated daily net asset value of the Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $50,000,000 0.325%
Next $100,000,000 0.250%
Next $350,000,000 0.200%
Amount Over $500,000,000 0.150%
</TABLE>
Wellington Management has agreed to waive 100% of its sub-advisory fee until
shareholder assets (excluding assets contributed by HL Advisors or its
affiliates) reach $50 million.
Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals. Wellington
Management and its predecessor organizations have provided investment advisory
services since 1928. As of September 30, 1997, Wellington Management held
discretionary management authority with respect to approximately $169 billion of
client assets. Wellington Management, 75 State Street, Boston, MA 02109, is a
Massachusetts limited liability partnership, of which the following persons are
managing partners: Robert W. Doran, Duncan M. McFarland and John R. Ryan.
PORTFOLIO MANAGER
James A. Rullo, CFA and Vice President of Wellington Management, serves as
portfolio manager to the Fund. Prior to joining Wellington Management in 1994 as
a quantitative analyst and portfolio manager, Mr. Rullo was a portfolio manager
with PanAgora Asset Management from 1991 to 1994 and prior to that with The
Boston Company from 1987.
PORTFOLIO TURNOVER
The Fund may sell a portfolio investment soon after its acquisition if
Wellington Management believes that such a disposition is in the Fund's best
interest. A high rate of portfolio turnover involves correspondingly greater
brokerage commission expenses and other transaction costs, which must be
ultimately borne by a Fund's shareholders. High portfolio turnover may result in
the realization of substantial capital gains; distributions derived from such
gains may be treated as ordinary income for Federal income tax purposes.
Although it is not possible to predict future portfolio turnover rates
accurately, and such rates may vary from year to year, it is anticipated that
the Fund's portfolio turnover rate will not exceed 100%.
BROKERAGE COMMISSIONS
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers who
sell shares of the Fund. Wellington Management may also select an affiliated
broker-dealer to execute transactions for the Fund, provided that the
commissions, fees or other remuneration paid to such affiliated broker are
reasonable and fair as compared to that paid to non-affiliated brokers for
comparable transactions.
ADMINISTRATIVE SERVICES
FOR THE FUND
An Administrative Services Agreement between the Fund and Hartford Life
provides that Hartford Life will manage the business affairs and provide
administrative services to the Fund. Under the terms of this Agreement, Hartford
Life will provide the following: administrative personnel, services, equipment
and facilities and office space for proper operation of the Fund. Hartford Life
has also agreed to arrange for the provision of additional services necessary
for the proper operation of the Fund, although the Fund pays for these services
directly. See "Expenses of the Fund." As compensation for the services to be
performed by Hartford Life, the Fund pays to Hartford Life, as promptly as
possible after the last day of each
<PAGE>
10 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
month, a monthly fee equal to the annual rate of .175% of the average daily net
assets of the Fund.
EXPENSES OF THE FUND
The Fund assumes and pays the following costs and expenses: interest; taxes;
brokerage charges (which may be to affiliated broker-dealers); costs of
preparing, printing and filing any amendments or supplements to the registration
forms of the Fund and its securities; all federal and state registration,
qualification and filing costs and fees, (except the initial costs and fees,
which will be borne by Hartford Life), issuance and redemption expenses,
transfer agency and dividend and distribution disbursing agency costs and
expenses; custodian fees and expenses; accounting, auditing and legal expenses;
fidelity bond and other insurance premiums; fees and salaries of directors,
officers and employees of the Fund other than those who are also officers of
Hartford Life or its affiliates; industry membership dues; all annual and
semiannual reports and prospectuses mailed to the Fund's shareholders as well as
all quarterly, annual and any other periodic report required to be filed with
the SEC or with any state; any notices required by a federal or state regulatory
authority, and any proxy solicitation materials directed to the Fund's
shareholders as well as all printing, mailing and tabulation costs incurred in
connection therewith, and any expenses incurred in connection with the holding
of meetings of the Fund's shareholders and other miscellaneous expenses related
directly to the Fund's operations and interest.
PERFORMANCE RELATED INFORMATION
The Fund may advertise certain performance related information. Performance
information about the Fund is based on the Fund's past performance only and is
no indication of future performance.
The Fund may include its total return in advertisements or other sales
material. When the Fund advertises its total return, it will usually be
calculated for one year, five years, and ten years or some other relevant
periods if the Fund has not been in existence for at least ten years. Total
return is measured by comparing the value of an investment in the Fund at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming immediate reinvestment of any dividends or capital gains
distributions).
DIVIDENDS
The shareholders of the Fund shall be entitled to receive such dividends as
may be declared by the Fund's Board of Directors, from time to time based upon
the investment performance of the assets making up the Fund's portfolio. The
policy with respect to the Fund is to pay dividends from net investment income
and to make distributions of realized capital gains, if any, at least once each
year.
Such dividends and distributions will be automatically invested in
additional full or fractional shares monthly on the last business day of each
month at the per share net asset value on that date. Provision is also made to
pay such dividends and distributions in cash if requested. Such dividends and
distributions will be in cash or in full or fractional shares of the Fund at net
asset value.
DETERMINATION OF
NET ASSET VALUE
The net asset value per share is determined for the Fund as of the close of
the NYSE (normally 4:00 p.m. Eastern Time) on each regular business day (as
previously defined) by dividing the value of the Fund's net assets by the number
of shares outstanding. The assets of the Fund are valued primarily on the basis
of market quotations. If quotations are not readily available, assets are valued
by a method that the Board of Directors believes accurately reflects fair value.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. With respect to the Fund, short-term
investments that will mature in 60 days or less are also valued at amortized
cost, which approximates market value.
PURCHASE OF FUND SHARES
Fund shares are made available to serve as the underlying investment vehicle
for variable annuity and variable life insurance separate accounts of The
Hartford Life Insurance Companies. Shares of the Fund are sold by Hartford
Securities Distribution Company, Inc. (the "Distributor") on a no-load basis at
their net asset values. See "Determination of Net Asset Value" and "Sale and
Redemption of Shares."
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although The Hartford Life Insurance
Companies and the Funds do not currently foresee any such disadvantages either
to variable annuity contract owners or variable life insurance policy owners,
each Fund's Board of Directors intends to monitor events in order to identify
any material conflicts between such contract owners and policy owners and to
determine what action, if any, should be taken in response thereto. If the Board
of Directors of a
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 11
- --------------------------------------------------------------------------------
Fund were to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable life and variable
annuity contract holders would not bear any expenses attendant to the
establishment of such separate funds.
The Fund offers investors two different classes of shares -- Class IA and
Class IB. Class IA shares are offered by this Prospectus. Class IB shares are
offered by a separate prospectus in connection with a variable annuity product.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
SALE AND REDEMPTION
OF SHARES
The shares of the Fund are sold and redeemed by the Fund at their net asset
value next determined after receipt of a purchase or redemption order in good
order in writing at its home office, P.O. Box 2999, Hartford, CT 06104-2999. The
value of shares redeemed may be more or less than original cost, depending upon
the market value of the portfolio securities at the time of redemption. Payment
for shares redeemed will be made within seven days after the redemption request
is received in proper form by the Fund. However, the right to redeem Fund shares
may be suspended or payment therefor postponed for any period during which: (1)
trading on the NYSE is closed for other than weekends and holidays; (2) an
emergency exists, as determined by the SEC, as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practicable, or (b) it is
not reasonably practicable for the Fund to determine fairly the value of its net
assets; or (3) the SEC by order so permits for the protection of stockholders of
the Fund.
FEDERAL INCOME TAXES
The Fund has elected and intends to qualify under Subchapter M of the Code.
The Fund intends to distribute all of its net income and gains to shareholders.
Such distributions are taxable income and capital gains. The Fund will inform
shareholders of the amount and nature of such income and gains. The Fund may be
subject to a 4% nondeductible excise tax as well as an income tax measured with
respect to certain undistributed amounts of income and capital gain. The Fund
expects to make such additional distributions of net investment income as are
necessary to avoid the application of these taxes. For a discussion of the tax
implications of a purchase or sale of the Fund's shares by the insurer,
reference should be made to the section entitled "Federal Tax Considerations" in
the appropriate separate account prospectus.
If eligible, the Fund may make an election to pass through to its
shareholders, The Hartford Life Insurance Companies, a credit for any foreign
taxes paid during the year. If such election is made, the pass-through of the
foreign tax credit will result in additional taxable income and income tax to
The Hartford Life Insurance Companies. The amount of additional tax may be more
than offset by the foreign tax credits which are passed through. These foreign
tax credits may provide a benefit to The Hartford Life Insurance Companies.
OWNERSHIP AND CAPITALIZATION OF THE FUND
CAPITAL STOCK
As of the date of this prospectus, the authorized capital stock of the Fund
consists of 3 billion shares at a par value of $.001 per share.
The Board of Directors is authorized, without further shareholder approval,
to authorize additional shares and to classify and reclassify the Fund into one
or more classes. Accordingly, the Directors have authorized the issuance of two
classes of shares of the Fund designated as Class IA and Class IB shares. The
shares of each class represent an interest in the same portfolio of investments
of the Fund and have equal rights as to voting, redemption, and liquidation.
However, each class bears different expenses and therefore the net asset values
of the two classes and any dividends declared may differ between the two
classes.
VOTING
Each shareholder shall be entitled to one vote for each share of the Fund
held upon all matters submitted to the shareholders generally. Class specific
issues, such as a modification to a Rule 12b-1 plan that could materially
increase fees, will be voted on only by the affected class. With respect to the
Fund's shares issued as described above under "Purchase of Fund Shares," as well
as Fund shares which are not otherwise attributable to variable annuity contract
owners or variable life policy holders, The Hartford Life Insurance Companies
shall be the shareholders of record. Each of The Hartford Life Insurance
Companies will vote all Fund shares, pro rata, according to the written
instructions of the contract owners of the variable annuity contracts and the
policy holders of the variable life contracts issued by it using the Fund as
investment vehicles. This position is consistent with the policy of the SEC
staff.
OTHER RIGHTS
Each share of Fund stock, when issued and paid for in accordance with the
terms of the offering, will be fully paid
<PAGE>
12 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
and non-assessable. Shares of Fund stock have no pre-emptive, subscription or
conversion rights and are redeemable as set forth under "Sale and Redemption of
Shares." Upon liquidation of the Fund, the shareholders of the Fund shall be
entitled to share, pro rata, in any assets of the Fund after discharge of all
liabilities and payment of the expenses of liquidation.
GENERAL INFORMATION
REPORTS TO SHAREHOLDERS
The Fund will issue unaudited semiannual reports showing current investments
in the Fund and other information and annual financial statements examined by
independent auditors for the Fund.
DISTRIBUTOR
Hartford Securities Distribution Company, Inc., P.O. Box 2999, Hartford, CT
06104-2999 serves as distributor to the Fund.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, serves as
custodian of the Fund's assets.
TRANSFER AND DIVIDEND DISBURSING AGENTS
Hartford Life Insurance Company, P.O. Box 2999, Hartford, Connecticut
06104-2999, serves as Transfer and Dividend Disbursing Agent for the Funds.
PENDING LEGAL PROCEEDINGS
As of the date of this Prospectus, there are no material pending legal
proceedings involving the Fund, HL Advisors or Wellington Management as a party.
REQUESTS FOR INFORMATION
This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC. The Registration Statement, including
the exhibits filed therewith, may be examined at the SEC's office in Washington,
D.C. Statements contained in the Prospectus as to the contents of any contract
or other document referred to herein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified, in all respects by such reference.
For additional information, write to "Hartford Growth and Income HLS Fund,
c/o Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 13
- --------------------------------------------------------------------------------
APPENDIX A
The rating information which follows describes how the rating services
mentioned presently rate the described securities. No reliance is made upon the
rating firms as "experts" as that term is defined for securities purposes.
Rather, reliance on this information is on the basis that such ratings have
become generally accepted in the investment business.
RATING OF BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever earning any
real investment standing.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")
AAA -- Bonds rated AAA are the highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A -- Bonds rated A have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the considerable
investment strength but are not entirely free from adverse effects of changes in
circumstances and economic conditions than debt in the highest rated categories.
BBB -- Bonds rated BBB and regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category then in higher rated categories.
BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC, and C is regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
RATING OF COMMERCIAL PAPER
Purchases of corporate debt securities used for short-term investment,
generally called commercial paper, will be limited to the top two grades of
Moody's, Standard & Poor's, Duff & Phelps, Fitch Investor Services and Thomson
Bank Watch or other NRSROs (nationally recognized statistical
<PAGE>
14 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
rating organizations) rating services and will be an eligible security under
Rule 2a-7.
MOODY'S
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
- - Leading market positions in well-established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- - Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- - Well-established access to a range of financial markets and assured sources of
alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
STANDARD & POOR'S
The relative strength or weakness of the following factors determines
whether the issuer's commercial paper is rated A-1 or A-2.
- - Liquidity ratios are adequate to meet cash requirements.
Liquidity ratios are basically as follows, broken down by the type of
issuer:
Industrial Company: acid test ratio, cash flow as a percent of current
liabilities, short-term debt as a percent of current liabilities, short-term
debt as a percent of current assets.
Utility: current liabilities as a percent of revenues, cash flow as a
percent of current liabilities, short-term debt as a percent of capitalization.
Finance Company: current ratio, current liabilities as a percent of net
receivables, current liabilities as a percent of total liabilities.
- - The long-term senior debt rating is "A" or better; in some instances "BBB"
credits may be allowed if other factors outweigh the "BBB".
- - The issuer has access to at least two additional channels of borrowing.
- - Basic earnings and cash flow have an upward trend with allowances made for
unusual circumstances.
- - Typically, the issuer's industry is well established and the issuer has a
strong position within its industry.
- - The reliability and quality of management are unquestioned.
<PAGE>
Hartford Growth and Income HLS Fund
PROSPECTUS -- , 1998
CLASS IB SHARES
The Hartford Growth and Income HLS Fund (the "Fund") is a separate series of
Hartford Series Fund, Inc., an open-end management investment company. The Fund
is one of thirteen affiliated diversified portfolios used as funding media for
certain variable annuity and variable life insurance separate accounts of
Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company
(collectively, "The Hartford Life Insurance Companies"). The Fund's investment
goal is to seek growth of capital by investing in equity securities with
earnings growth potential and steady or rising dividends. Only the Fund is
offered by this Prospectus.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Please read and retain this
Prospectus for future reference. Additional information about the Fund has been
filed with the Securities and Exchange Commission ("SEC") in a Statement of
Additional Information dated , 1998 ("SAI"), which is incorporated by
reference into this Prospectus. To obtain a copy of the SAI without charge, call
1-800-862-6668 or write to "Hartford Growth and Income HLS Fund, c/o Individual
Annuity Operations," P.O. Box 2999, Hartford, CT 06104-2999.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER BY THE FUND TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL FOR THE FUND TO MAKE SUCH OFFER.
- --------------------------------------------------------------------------------
<PAGE>
2 HARTFORD GROWTH AND INCOME HLS FUND
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TABLE OF CONTENTS
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PAGE
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Introduction to the Hartford Growth and Income HLS Fund............... 3
Investment Objective and Style of the Fund............................ 3
Common Investment Policies and Risk Factors........................... 4
Management of the Fund................................................ 8
Administrative Services for the Fund.................................. 9
Expenses of the Fund.................................................. 10
Performance Related Information....................................... 10
Dividends............................................................. 10
Determination of Net Asset Value...................................... 10
Purchase of Fund Shares............................................... 10
Sale and Redemption of Shares......................................... 11
Federal Income Taxes.................................................. 11
Ownership and Capitalization of the Fund.............................. 12
General Information................................................... 12
Appendix A: Description of Securities Ratings......................... 14
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HARTFORD GROWTH AND INCOME HLS FUND 3
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INTRODUCTION TO THE HARTFORD
GROWTH AND INCOME HLS FUND
The Fund is a diversified series of Hartford Series Fund, Inc. (the
"Company"), an open-end management investment company which was organized as a
Maryland corporation on January 15, 1998. The Fund commenced operations on
, 1998. The Fund is made available to serve as the underlying
investment vehicle for certain variable annuity and variable life insurance
separate accounts of The Hartford Life Insurance Companies.
The Fund offers Class IA and Class IB shares. Only Class IB shares of the
Fund are offered by this Prospectus. Each Class incurs different expenses which
will affect performance. Class IA shares are offered pursuant to another
prospectus and are subject to the same expenses as the Class IB shares, but
unlike the Class IB shares they are not subject to distribution fees imposed
pursuant to a distribution plan ("Distribution Plan") adopted under Rule 12b-1
of the Investment Company Act of 1940 (the "1940 Act"). Inquiries regarding
Class IA shares should be addressed to Hartford Growth and Income HLS Fund, c/o
Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999 or by
calling 1-800-862-6668.
HL Investment Advisors, Inc. ("HL Advisors") is the investment manager to
the Fund. In addition, under HL Advisors' general management, Wellington
Management Company, LLP ("Wellington Management") serves as sub-adviser to the
Fund.
HL Advisors was incorporated in Connecticut in 1981 and is a majority-owned
indirect subsidiary of The Hartford Financial Services Group, Inc. ("The
Hartford"), a Connecticut insurance holding company with over $100 billion in
assets. Wellington Management, a Massachusetts limited liability partnership, is
a professional investment counseling firm that provides services to investment
companies, employee benefit plans, endowments, foundations and other
institutions and individuals. Wellington Management and its predecessor
organizations have provided investment advisory services since 1928. As of
December 31, 1997, HL Advisors and their affiliates had investment management
authority with respect to approximately $54.9 billion of assets for various
clients. As of the same date, Wellington Management had investment management
authority with respect to approximately $175 billion of assets for various
clients.
INVESTMENT OBJECTIVE AND
STYLE OF THE FUND
The Fund is subject to certain fundamental investment restrictions that are
enumerated in detail in the SAI and may not be changed without shareholder
approval. All other investment policies (including the Fund's investment
objective) are non-fundamental and may be changed by the Board of Directors
without shareholder approval. Stated below is the investment objective and
investment style for the Fund. For a description of the Fund's investment
policies and risk factors, see "Common Investment Policies and Risk Factors."
INVESTMENT OBJECTIVE.
The Growth and Income HLS Fund seeks growth of capital by investing
primarily in equity securities with earnings growth potential.
INVESTMENT STYLE.
The Growth and Income HLS Fund invests in a diversified portfolio of
primarily equity securities that typically have steady or rising dividends and
whose prospects for capital appreciation are considered favorable by Wellington
Management. Wellington Management uses fundamental analysis to evaluate a
security for purchase or sale by the Fund. Fundamental analysis involves the
assessment of a company through such factors as its business environment,
management, balance sheet, income statement, anticipated earnings, revenues,
dividends, and other related measures of value. Wellington Management then uses
proprietary quantitative techniques to affirm its fundamental evaluation of a
security. The quantitative techniques evaluate a security using valuation
analysis, which includes use of a dividend discount model and cash flow
analysis, combined with momentum analysis, which includes an assessment of a
company's earnings momentum and stock price momentum. The quantitative
techniques look to affirm the fundamental evaluation by identifying those
securities that are attractive from the fundamental perspective and are also
both inexpensive based on the quantitative valuation factors and timely
according to the quantitative momentum factors. The Fund's portfolio will be
broadly diversified by industry and company. Up to 20% of the Fund's total
assets may be invested in securities of non-U.S. companies.
<PAGE>
4 HARTFORD GROWTH AND INCOME HLS FUND
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COMMON INVESTMENT POLICIES AND RISK FACTORS
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES
The Fund may hold cash or cash equivalents and invest in high quality money
market instruments under appropriate circumstances as determined by Wellington
Management. The Fund may invest up to 100% of its assets in cash, cash
equivalents or money market instruments only for temporary defensive purposes.
Money market instruments include: (1) banker's acceptances; (2) obligations
of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (3) short-term corporate obligations, including commercial
paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations
of U.S. banks, non-U.S. branches of U.S. banks (Eurodollars), U.S. branches and
agencies of non-U.S. banks (Yankee dollars), and non-U.S. branches of non-U.S.
banks; (6) asset-backed securities; and (7) repurchase agreements.
REPURCHASE AGREEMENTS
The Fund is permitted to enter into fully collateralized 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. It may also be viewed as the loan of money by the Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an agreed
upon market interest rate. Delays or losses could result if the other party to
the agreement defaults or becomes insolvent. The Fund's Board of Directors has
established standards for evaluation of the creditworthiness of the banks and
securities dealers with which the Fund may engage in repurchase agreements and
monitors on a quarterly basis Wellington Management's compliance with such
standards.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve sales by the Fund of portfolio assets concurrently
with an agreement by the Fund to repurchase the same assets at a later date at a
fixed price. Reverse repurchase agreements carry the risk that the market value
of the securities which the Fund is obligated to repurchase may decline below
the repurchase price. A reverse repurchase agreement is viewed as a
collateralized borrowing by the Fund. Borrowing magnifies the potential for gain
or loss on the portfolio securities of the Fund and, therefore, increases the
possibility of fluctuation in the Fund's net asset value. The Fund will
establish a segregated account with the Fund's custodian bank in which the Fund
will maintain liquid assets equal in value to the Fund's obligations in respect
of reverse repurchase agreements. As a non-fundamental policy, the Fund will not
enter into reverse repurchase transactions if the combination of all borrowings
from banks and the value of all reverse repurchase agreements for the Fund
equals more than 33 1/3% of the value of the Fund's total assets.
DEBT SECURITIES
The Fund is permitted to invest in debt securities including: (1) securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities; (2) debt securities issued or guaranteed by U.S.
corporations or other issuers (including foreign governments or corporations);
and (3) securities issued or guaranteed as to principal or interest by a
sovereign government or one of its agencies or political subdivisions,
supranational entities such as development banks, non-U.S. corporations, banks
or bank holding companies, or other non-U.S. issuers.
INVESTMENT GRADE DEBT SECURITIES
The Fund is permitted to invest in debt securities rated within the four
highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A or
BBB by S&P), or, if unrated, securities of comparable quality as determined by
Wellington Management. These securities are generally referred to as "investment
grade securities." Each rating category has within it different gradations or
sub-categories. If the Fund is authorized to invest in a certain rating
category, the Fund is also permitted to invest in any of the sub-categories or
gradations within that rating category. If a security is downgraded to a rating
category which does not qualify for investment, Wellington Management will use
its discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term. Debt securities
carrying the fourth highest rating (i.e., "Baa" by Moody's and "BBB" by S&P),
and unrated securities of comparable quality (as determined by Wellington
Management) are viewed as having adequate capacity for payment of principal and
interest, but do involve a higher degree of risk than that associated with
investments in debt securities in the higher rating categories.
HIGH YIELD-HIGH RISK DEBT SECURITIES
The Fund may invest up to 5% of its assets in high yield debt securities
(i.e., rated as low as "C" by Moody's or S&P, and unrated securities of
comparable quality as determined by Wellington Management). Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds". Each rating category has within it different
gradations or sub-categories. If the Fund
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 5
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is authorized to invest in a certain rating category, the Fund is also permitted
to invest in any of the sub-categories or gradations within that rating
category. If a security is downgraded to a rating category which does not
qualify for investment, Wellington Management will use its discretion on whether
to hold or sell based upon its opinion on the best method to maximize value for
shareholders over the long term. Securities in the rating categories below "Baa"
as determined by Moody's and "BBB" as determined by S&P are considered to be of
poor standing and predominantly speculative. The rating services' descriptions
of securities are set forth in Appendix A. High yield-high risk debt securities
are considered speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations.
Accordingly, it is possible that these types of factors could, in certain
instances, reduce the value of securities held by the Fund with a commensurate
effect on the value of the Fund's shares.
EQUITY SECURITIES
The Fund may invest in equity securities including common stocks, preferred
stocks, convertible preferred stock and rights to acquire such securities. In
addition, the Fund may invest in securities such as bonds, debentures and
corporate notes which are convertible into common stock at the option of the
holder.
SMALL CAPITALIZATION SECURITIES
The Fund may invest in equity securities (including securities issued in
initial public offerings) of companies which have less than $2 billion in market
capitalization ("Small Capitalization Securities"). Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established companies,
they may have limited product lines, market share or financial resources and may
have less historical data with respect to operations and management. As a
result, Small Capitalization Securities are often less marketable and experience
a higher level of price volatility than securities of larger or more
well-established companies. In addition, companies whose securities are offered
in initial public offerings may be more dependent on a limited number of key
employees. Because securities issued in initial public offerings are being
offered to the public for the first time, the market for such securities may be
inefficient and less liquid.
NON-U.S. SECURITIES
The Fund is permitted to invest up to 20% of its assets in non-U.S.
securities. The Fund may invest in American Depositary Receipts ("ADRs") and
Global Depositary Receipts ("GDRs"). ADRs are certificates issued by a U.S. bank
or trust company and represent the right to receive non-U.S. securities. ADRs
are traded on a U.S. securities exchange, or in an over-the-counter market, and
are denominated in U.S. dollars. GDRs are certificates issued globally and
evidence a similar ownership arrangement. GDRs are traded on non-U.S. securities
exchanges and are denominated in non-U.S. currencies. The value of an ADR or a
GDR will fluctuate with the value of the underlying security, will reflect any
changes in exchange rates and otherwise will involve risks associated with
investing in non-U.S. securities.
When selecting non-U.S. securities Wellington Management will evaluate the
economic and political climate and the principal securities markets of the
country in which the company is located. Investing in non-U.S. securities
involves considerations and potential risks not typically associated with
investing in securities issued by U.S. companies. Less information may be
available about non-U.S. companies than about U.S. companies and non-U.S.
companies generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to U.S. companies. The values of non-U.S.
securities are affected by changes in currency rates or exchange control
regulations, restrictions or prohibitions on the repatriation of non-U.S.
currencies, application of non-U.S. tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in the
U.S. or outside the U.S.) or changed circumstances in dealings between nations.
Costs are also incurred in connection with conversions between various
currencies. The Fund may invest up to 25% of its assets in companies located in
emerging countries. Compared to the United States and other developed countries,
developing countries may have relatively unstable governments, economies based
on only a few industries, and securities markets that are less liquid and trade
a small number of securities. Prices on these exchanges tend to be volatile and,
in the past, securities in these countries have offered greater potential for
gain (as well as loss) than securities of companies located in developed
countries. See the SAI for additional risk disclosure concerning non-U.S.
securities.
CURRENCY TRANSACTIONS
The Fund may engage in currency transactions to hedge the value of portfolio
securities denominated in particular currencies against fluctuations in relative
value. Currency transactions include forward currency contracts, currency swaps,
exchange-listed and over-the-counter ("OTC") currency futures contracts and
options thereon and exchange listed and OTC options on currencies.
Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Currency swaps are agreements to exchange
cash flows based on the notional
<PAGE>
6 HARTFORD GROWTH AND INCOME HLS FUND
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difference between or among two or more currencies. See "Swap Agreements."
The use of currency transactions to protect the value of the Fund's assets
against a decline in the value of a currency does not eliminate potential losses
arising from fluctuations in the value of the Fund's underlying securities.
Further, the Fund may enter into currency transactions only with counterparties
that Wellington Management deems to be creditworthy.
The Fund may also enter into options and futures contracts relative to
foreign currency to hedge against fluctuations in foreign currency rates. See
"Options and Futures Contracts" for a discussion of risk factors relating to
foreign currency transactions including related options and futures contracts.
OPTIONS AND FUTURES CONTRACTS
The Fund may employ certain hedging, income enhancement and risk management
techniques involving options and futures contracts, though such techniques may
also result in losses to the Fund. The Fund may write covered call options or
purchase put and call options on individual securities, write covered put and
call options and purchase put and call options on foreign currencies, aggregates
of equity and debt securities, indices of prices of equity and debt securities
and other financial indices, and enter into futures contracts and options
thereon for the purchase or sale of aggregates of equity and debt securities,
indices of equity and debt securities and other financial indices.
The Fund may write covered options only. "Covered" means that, so long as
the Fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the same
underlying securities or currency having an expiration date not earlier than the
expiration date of the covered option and an exercise price equal to or less
than the exercise price of the covered option, or will establish or maintain
with its custodian for the term of the option a "segregated account" consisting
of cash, U.S. Government securities or other liquid, high grade debt obligations
having a value equal to the fluctuating market value of the optioned securities
or currencies. The Fund receives a premium from writing a call or put option,
which increases the Fund's return if the option expires unexercised or is closed
out at a net profit.
To hedge against fluctuations in currency exchange rates, the Fund may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. To the
extent that the Fund enters into futures contracts, options on futures contracts
and options on foreign currencies that are traded on an exchange regulated by
the Commodities Futures Trading Commission ("CFTC"), in each case that are not
for bona fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish those non-hedging positions may not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account the unrealized profits and unrealized losses on any such contracts the
Fund has entered into.
The Fund's use of options, futures and options thereon and forward currency
contracts (as described under "Currency Transactions") would involve certain
investment risks and transaction costs to which it might not be subject were
such strategies not employed. Such risks include: (1) dependence on the ability
of Wellington Management to predict movements in the prices of individual
securities, fluctuations in the general securities markets or market sections
and movements in interest rates and currency markets; (2) imperfect correlation
between movements in the price of the securities or currencies hedged or used
for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract, option thereon or forward contract at any
particular time, which may affect the Fund's ability to establish or close out a
position; (5) possible impediments to effective portfolio management or the
ability to meet current obligations caused by the segregation of a large
percentage of the Fund's assets to cover its obligations; and (6) the possible
need to defer closing out certain options, futures contracts, options thereon
and forward contracts in order to continue to qualify for the beneficial tax
treatment afforded "regulated investment companies" under the Internal Revenue
Code of 1986, as amended (the "Code"). See the SAI for additional information on
options and futures contracts. Options and futures contracts are commonly known
as "derivative" securities.
SWAP AGREEMENTS
The Fund may enter into interest rate swaps, currency swaps and other types
of swap agreements such as caps, collars, and floors. In a typical interest rate
swap, one party agrees to make regular payments equal to a floating interest
rate multiplied by a "notional principal amount," in return for payments equal
to a fixed rate multiplied by the same amount, for a specified period of time.
If a swap agreement provides for payments in different currencies, the parties
might agree to exchange the notional principal amount as well. Swaps may also
depend on other prices or rates, such as the value of an index or mortgage
prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 7
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interest rate floor is obligated to make payments to the extent that a specified
interest rate falls below an agreed-upon level. An interest rate collar combines
elements of buying a cap and selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend to
decrease the Fund's exposure to rising interest rates. Caps and floors have an
effect similar to buying or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall volatility of the Fund's
investments and its share price and yield. Swap agreements are commonly known as
"derivative" securities. Because swap agreements are privately negotiated
transactions rather than publicly traded, they may be considered to be illiquid
securities.
The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of the Fund's
portfolio securities and depends on Wellington Management's ability to predict
correctly the direction and degree of movement in interest rates. Although the
Fund believes that the use of the hedging and risk management techniques
described above will benefit the Fund, if Wellington Management's judgment about
the direction or extent of the movement in interest rates is incorrect, the
Fund's overall performance would be worse than if it had not entered into any
such transactions. These activities are commonly used when managing derivative
investments.
ILLIQUID SECURITIES
The Fund is permitted to invest in illiquid securities. The maximum
percentage of illiquid securities which may be purchased by the Fund is 15% of
its net assets. "Illiquid Securities" are securities that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price used to determine the Fund's net asset value. The Fund
may purchase certain restricted securities commonly known as Rule 144A
securities that can be resold to institutions and which may be determined to be
liquid pursuant to policies and guidelines of the Board of Directors.
Under current interpretations of the Securities and Exchange Commission
("SEC") staff, the following securities may be considered illiquid: (1)
repurchase agreements maturing in more than seven days; (2) certain restricted
securities (securities whose public resale is subject to legal or contractual
restrictions); (3) options, with respect to specific securities, not traded on a
national securities exchange that are not readily marketable; and (4) any other
securities in which the Fund may invest that are not readily marketable.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
The Fund is permitted to purchase or sell securities on a when-issued or
delayed-delivery basis. When-issued or delayed-delivery transactions arise when
securities are purchased or sold with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield at the time of entering into the transaction. While the Fund generally
purchases securities on a when-issued basis with the intention of acquiring the
securities, the Fund may sell the securities before the settlement date if
Wellington Management deems it advisable. At the time the Fund makes the
commitment to purchase securities on a when-issued basis, the Fund will record
the transaction and thereafter reflect the value, each day, of such security in
determining net asset value. At the time of delivery of the securities, the
value may be more or less than the purchase price.
OTHER INVESTMENT COMPANIES
The Fund is permitted to invest in other investment companies. Securities in
certain countries are currently accessible to the Fund only through such
investments. The investment in other investment companies is limited in amount
and will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. The Fund will not purchase a
security if, as a result, (1) more than 10% of the Fund's assets would be
invested in securities of other investment companies, (2) such purchase would
result in more than 3% of the total outstanding voting securities of any one
such investment company being held by the Fund or (3) more than 5% of the Fund's
assets would be invested in any one such investment company.
PORTFOLIO SECURITIES LENDING
The Fund may lend its portfolio securities to broker/ dealers and other
institutions as a means of earning interest income. Delays or losses could
result if a borrower of portfolio securities becomes bankrupt or defaults on its
obligation to return the loaned securities. The Fund may lend securities only
if: (1) the loan is fully secured by appropriate collateral at all times as
determined by HL Advisors; and (2) the value of all loaned securities of the
Fund is not more than 33 1/3% of the Fund's total assets.
OTHER RISK FACTORS
As mutual funds that primarily invest in equity and/or debt securities, the
Fund is subject to market risk, i.e., the possibility that equity and/or debt
prices in general will decline over short or even extended periods of time. The
financial markets tend to be cyclical, with periods when security prices
generally rise and periods when security prices generally decline.
<PAGE>
8 HARTFORD GROWTH AND INCOME HLS FUND
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The value of the debt securities in which the Fund invests will tend to
increase when interest rates are falling and to decrease when interest rates are
rising.
The Fund should not be considered to be a complete investment program in and
of itself. Each prospective purchaser should take into account his or her own
investment objectives as well as his or her other investments when considering
the purchase of shares of the Fund.
There can be no assurance that the investment objectives of the Fund will be
met. In addition, the risk inherent in investing in the Fund is common to any
security -- the net asset value will fluctuate in response to changes in
economic conditions, interest rates and the market's perception of the
underlying portfolio securities held by the Fund.
In pursuit of a Fund's investment objective, Wellington Management attempts
to select appropriate individual securities for inclusion in the Fund's
portfolio. In addition, Wellington Management attempts to successfully forecast
market trends and increase investments in the types of securities best suited to
take advantage of such trends. Thus, the investor is dependent on Wellington
Management's success not only in selecting individual securities, but also in
identifying the appropriate mix of securities consistent with the Fund's
investment objective.
INVESTMENT LIMITATIONS
The Fund has adopted certain limitations in an attempt to reduce its
exposure to specific situations. Some of these limitations are that the Fund
will not:
(a) invest more than 25% of its assets in any one industry;
(b) borrow money, except from banks, and then only in amounts not exceeding
33 1/3% of the value of the Fund's total assets (although for purposes of
this restriction reverse repurchase agreements are not considered
borrowings, as a non-fundamental operating policy, the Fund will limit
combined borrowings and reverse repurchase transactions to 33 1/3% of the
value of the Fund's total assets);
(c) with respect to 75% of the value of the Fund's total assets, purchase the
securities of any issuer (other than cash, cash items or securities issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
authorities) if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
These investment restrictions are considered at the time investment
securities are purchased. The limitations described above, except as noted under
(b), and those listed under Fundamental Restrictions of the Funds in the SAI,
are considered fundamental and as such can only be changed with the approval of
a majority of the Fund's shareholders.
MANAGEMENT OF THE FUND
The Fund's Board of Directors manages the business and affairs of the Fund
and takes action on all matters not reserved for the shareholders, including the
annual election of officers of the Fund who carry out all orders and resolutions
of the Board of Directors and carry out functions relating to the day to day
management of the affairs of the Fund.
MANAGEMENT SERVICES
HL Advisors serves as investment manager to the Fund pursuant to a written
agreement entered into between HL Advisors and the Fund. Pursuant to such
agreement HL Advisors has overall investment supervisory responsibility for the
Fund. In addition, Hartford Life Insurance Company ("Hartford Life"), an
affiliate of HL Advisors, provides administrative personnel, services, equipment
and facilities and office space for proper operation of the Fund. HL Advisors
has contracted with Wellington Management for the provision of day to day
investment management services to the Fund. The Fund pays a fee to HL Advisors,
a portion of which may be used to compensate Wellington Management.
For services rendered to the Fund, HL Advisors charges a monthly fee based
on the following annual rates as applied to the average of the calculated daily
net asset value of the Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- --------------------------------- -----------
<S> <C>
First $250,000,000 0.575%
Next $250,000,000 0.525%
Next $500,000,000 0.475%
Amount over $1 Billion 0.425%
</TABLE>
HL Advisors, Hartford Plaza, Hartford, Connecticut 06115, is a wholly-owned
subsidiary of Hartford Life and was organized under the laws of the State of
Connecticut in 1981. In addition to the Fund, HL Advisors is the investment
manager to twelve other mutual funds. A wholly-owned subsidiary of HL Investment
Advisors, Hartford Investment Financial Services Company, serves as investment
adviser to several other Hartford Life-sponsored mutual funds. Hartford Life is
a majority owned subsidiary of Hartford Fire Insurance Company, one of the
largest multiple lines insurance carriers in the United States. Hartford Fire
Insurance Company is a subsidiary of The Hartford Financial Services Group, Inc.
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 9
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Certain officers of the Funds are also officers and/or directors of HL
Advisors: Joseph H. Gareau is a Director and the President of HL Advisors;
Andrew W. Kohnke is a Managing Director and a Director of HL Advisors; and C.
Michael O'Halloran is a Director, Secretary and General Counsel of HL Advisors.
INVESTMENT SUB-ADVISORY AND OTHER SERVICES
Wellington Management serves as sub-adviser to the Fund pursuant to a
written contract entered into between HL Advisors and Wellington Management.
In connection with the services provided to the Funds, Wellington Management
makes all determinations with respect to the purchase and sale of portfolio
securities (subject to the terms and conditions of the investment objectives,
policies and restrictions of the Fund and to the general supervision of the
Fund's Boards of Directors and HL Advisors) and places, in the name of the Fund,
all orders for execution of the Fund's portfolio transactions. In conjunction
with such activities, Wellington Management regularly furnishes reports to the
Fund's Boards of Directors concerning economic forecasts, investment strategy,
portfolio activity and performance of the Fund.
Wellington Management charges a quarterly fee to HL Advisors. The Fund does
not pay Wellington Management's fee nor any part thereof, nor does the Fund have
any obligation or responsibility to do so. Wellington Management's quarterly fee
is based upon the following annual rates as applied to the average of the
calculated daily net asset value of the Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- --------------------------------- -----------
<S> <C>
First $50,000,000 0.325%
Next $100,000,000 0.250%
Next $350,000,000 0.200%
Amount Over $500,000,000 0.150%
</TABLE>
Wellington Management has agreed to waive 100% of its sub-advisory fee until
shareholder assets (excluding assets contributed by HL Advisors or its
affiliates) reach $50 million.
Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals. Wellington
Management and its predecessor organizations have provided investment advisory
services since 1928. As of December 31, 1997, Wellington Management held
discretionary management authority with respect to approximately $175 billion of
client assets. Wellington Management, 75 State Street, Boston, MA 02109, is a
Massachusetts limited liability partnership, of which the following persons are
managing partners: Robert W. Doran, Duncan M. McFarland and John R. Ryan.
PORTFOLIO MANAGER
James A. Rullo, CFA and Vice President of Wellington Management, serves as
portfolio manager to the Fund. Prior to joining Wellington Management in 1994 as
a quantitative analyst and portfolio manager, Mr. Rullo was a portfolio manager
with PanAgora Asset Management from 1991 to 1994 and prior to that with The
Boston Company from 1987.
PORTFOLIO TURNOVER
The Fund may sell a portfolio investment soon after its acquisition if
Wellington Management believes that such a disposition is in the Fund's best
interest. A high rate of portfolio turnover involves correspondingly greater
brokerage commission expenses and other transaction costs, which must be
ultimately borne by a Fund's shareholders. High portfolio turnover may result in
the realization of substantial capital gains; distributions derived from such
gains may be treated as ordinary income for Federal income tax purposes.
Although it is not possible to predict future portfolio turnover rates
accurately, and such rates may vary from year to year, it is anticipated that
the Fund's portfolio turnover rate will not exceed 100%.
BROKERAGE COMMISSIONS
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment company portfolio transactions on the basis of their
sales of investment company shares, under such rules, sales of investment
company shares may be considered in selecting brokers to effect portfolio
transactions. Accordingly, some portfolio transactions are, subject to such
Rules and to obtaining best prices and executions, effected through dealers who
sell shares of the Fund. Wellington Management may also select an affiliated
broker-dealer to execute transactions for the Fund, provided that the
commissions, fees or other remuneration paid to such affiliated broker are
reasonable and fair as compared to that paid to non-affiliated brokers for
comparable transactions.
ADMINISTRATIVE SERVICES
FOR THE FUND
An Administrative Services Agreement between the Fund and Hartford Life
provides that Hartford Life will manage the business affairs and provide
administrative services to the Fund. Under the terms of this Agreement, Hartford
Life will provide the following: administrative personnel, services, equipment
and facilities and office space for proper operation of the Fund. Hartford Life
has also agreed to arrange for the provision of additional services necessary
for the proper operation of the Fund,
<PAGE>
10 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
although the Fund pays for these services directly. See "Expenses of the Fund."
As compensation for the services to be performed by Hartford Life, the Fund pays
to Hartford Life, as promptly as possible after the last day of each month, a
monthly fee equal to the annual rate of .175% of the average daily net assets of
the Fund.
EXPENSES OF THE FUND
The Fund assumes and pays the following costs and expenses: interest; taxes;
brokerage charges (which may be to affiliated broker-dealers); costs of
preparing, printing and filing any amendments or supplements to the registration
forms of the Fund and its securities; all federal and state registration,
qualification and filing costs and fees, (except the initial costs and fees,
which will be borne by Hartford Life), issuance and redemption expenses,
transfer agency and dividend and distribution disbursing agency costs and
expenses; custodian fees and expenses; accounting, auditing and legal expenses;
fidelity bond and other insurance premiums; fees and salaries of directors,
officers and employees of the Fund other than those who are also officers of
Hartford Life or its affiliates; industry membership dues; all annual and
semiannual reports and prospectuses mailed to the Fund's shareholders as well as
all quarterly, annual and any other periodic report required to be filed with
the SEC or with any state; any notices required by a federal or state regulatory
authority, and any proxy solicitation materials directed to the Fund's
shareholders as well as all printing, mailing and tabulation costs incurred in
connection therewith, and any expenses incurred in connection with the holding
of meetings of the Fund's shareholders and other miscellaneous expenses related
directly to the Fund's operations and interest.
PERFORMANCE RELATED INFORMATION
The Fund may advertise certain performance related information. Performance
information about the Fund is based on the Fund's past performance only and is
no indication of future performance.
The Fund may include its total return in advertisements or other sales
material. When the Fund advertises its total return, it will usually be
calculated for one year, five years, and ten years or some other relevant
periods if the Fund has not been in existence for at least ten years. Total
return is measured by comparing the value of an investment in the Fund at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming immediate reinvestment of any dividends or capital gains
distributions).
DIVIDENDS
The shareholders of the Fund shall be entitled to receive such dividends as
may be declared by the Fund's Board of Directors, from time to time based upon
the investment performance of the assets making up the Fund's portfolio. The
policy with respect to the Fund is to pay dividends from net investment income
and to make distributions of realized capital gains, if any, at least once each
year.
Such dividends and distributions will be automatically invested in
additional full or fractional shares monthly on the last business day of each
month at the per share net asset value on that date. Provision is also made to
pay such dividends and distributions in cash if requested. Such dividends and
distributions will be in cash or in full or fractional shares of the Fund at net
asset value.
DETERMINATION OF
NET ASSET VALUE
The net asset value per share is determined for the Fund as of the close of
the NYSE (normally 4:00 p.m. Eastern Time) on each regular business day (as
previously defined) by dividing the value of the Fund's net assets by the number
of shares outstanding. The assets of the Fund are valued primarily on the basis
of market quotations. If quotations are not readily available, assets are valued
by a method that the Board of Directors believes accurately reflects fair value.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. With respect to the Fund, short-term
investments that will mature in 60 days or less are also valued at amortized
cost, which approximates market value.
PURCHASE OF FUND SHARES
Fund shares are made available to serve as the underlying investment vehicle
for variable annuity and variable life insurance separate accounts of The
Hartford Life Insurance Companies. Shares of the Fund are sold by Hartford
Securities Distribution Company, Inc. (the "Distributor") on a no-load basis at
their net asset values. See "Determination of Net Asset Value" and "Sale and
Redemption of Shares."
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although The Hartford Life Insurance
Companies and the Funds do not currently foresee any such disadvantages either
to variable annuity contract owners or variable life insurance policy owners,
each Fund's Board of Directors intends to monitor events in order to identify
any material conflicts between such contract owners and policy
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 11
- --------------------------------------------------------------------------------
owners and to determine what action, if any, should be taken in response
thereto. If the Board of Directors of a Fund were to conclude that separate
funds should be established for variable life and variable annuity separate
accounts, the variable life and variable annuity contract holders would not bear
any expenses attendant to the establishment of such separate funds.
The Fund offers investors two different classes of shares -- Class IA and
Class IB. Class IB shares are offered by this Prospectus. Class IA shares are
offered by a separate prospectus in connection with other variable insurance
products. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will likely
have different share prices.
SALE AND REDEMPTION
OF SHARES
The shares of the Fund are sold and redeemed by the Fund at their net asset
value next determined after receipt of a purchase or redemption order in good
order in writing at the Fund's home office, P.O. Box 2999, Hartford, CT
06104-2999. The value of shares redeemed may be more or less than original cost,
depending upon the market value of the portfolio securities at the time of
redemption. Payment for shares redeemed will be made within seven days after the
redemption request is received in proper form by the Fund. However, the right to
redeem Fund shares may be suspended or payment therefor postponed for any period
during which: (1) trading on the NYSE is closed for other than weekends and
holidays; (2) an emergency exists, as determined by the SEC, as a result of
which (a) disposal by the Fund of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for the Fund to determine
fairly the value of its net assets; or (3) the SEC by order so permits for the
protection of stockholders of the Fund.
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act for the Class IB shares. Pursuant to the Distribution Plan, the Fund
compensates the Distributor from assets attributable to the Class IB shares for
services rendered and expenses borne in connection with activities primarily
intended to result in the sale of the Class IB shares. It is anticipated that a
portion of the amounts received by the Distributor will be used to defray
various costs incurred or paid by the Distributor in connection with the
printing and mailing of Fund prospectuses, statements of additional information,
any supplements thereto and shareholder reports and holding seminars and sales
meetings with wholesale and retail sales personnel designed to promote the
distribution of Class IB shares. The Distributor may also use a portion of the
amounts received to provide compensation to financial intermediaries and
third-party broker-dealers for their services in connection with the
distribution of Class IB shares.
Although the Distribution Plan provides that the Fund may pay annually up to
0.25% of the average daily net assets of the Fund attributable to its Class IB
shares for activities primarily intended to result in the sale of Class IB
shares, the Distributor has voluntarily agreed to waive .07% of the fee. This
waiver may be withdrawn at any time after notice to shareholders. Under the
terms of the Distribution Plan and the principal underwriting agreement, the
Fund is authorized to make payments monthly to the Distributor which may be used
to pay or reimburse entities providing distribution and shareholder servicing
with respect to the Class IB shares for such entities' fees or expenses incurred
or paid in that regard.
The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the Fund with respect to Class IB
shares regardless of the level of expenditures by the Distributor. The Directors
will, however, take into account such expenditures for purposes of reviewing
operations under the Distribution Plan and in connection with their annual
consideration of the Plan's renewal. The Distributor has indicated that it
expects its expenditures to include, without limitation: (a) the printing and
mailing of Fund prospectuses, statements of additional information, any
supplements thereto and shareholder reports for prospective contract owners of
variable insurance products with respect to the Class IB shares of the Fund; (b)
those relating to the development, preparation, printing and mailing of
advertisements, sales literature and other promotional materials describing and/
or relating to the Class IB shares of the Fund; (c) holding seminars and sales
meetings designed to promote the distribution of Fund Class IB shares; (d)
obtaining information and providing explanations to wholesale and retail
distributors of contracts regarding Fund investment objectives and policies and
other information about the Fund, including the performance of the Fund; (e)
training sales personnel regarding the Class IB shares of the Fund; and (f)
financing any other activity that the Distributor determines is primarily
intended to result in the sale of Class IB shares.
FEDERAL INCOME TAXES
The Fund has elected and intends to qualify under Subchapter M of the Code.
The Fund intends to distribute all of its net income and gains to shareholders.
Such distributions are taxable income and capital gains. The Fund will inform
shareholders of the amount and nature of such income and gains. The Fund may be
subject to a 4% nondeductible excise tax as well as an income tax measured with
respect to certain undistributed amounts of income and capital gain. The Fund
expects to make such additional distributions of net investment income as are
necessary to avoid the application of these taxes. For a discussion of the tax
implications of a purchase or sale of the Fund's shares by
<PAGE>
12 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
the insurer, reference should be made to the section entitled "Federal Tax
Considerations" in the appropriate separate account prospectus.
If eligible, the Fund may make an election to pass through to its
shareholders, The Hartford Life Insurance Companies, a credit for any foreign
taxes paid during the year. If such election is made, the pass-through of the
foreign tax credit will result in additional taxable income and income tax to
The Hartford Life Insurance Companies. The amount of additional tax may be more
than offset by the foreign tax credits which are passed through. These foreign
tax credits may provide a benefit to The Hartford Life Insurance Companies.
OWNERSHIP AND CAPITALIZATION OF THE FUND
CAPITAL STOCK
As of the date of this prospectus, the authorized capital stock of the Fund
consists of 3 billion shares at a par value of $.001 per share.
The Board of Directors is authorized, without further shareholder approval,
to authorize additional shares and to classify and reclassify the Fund into one
or more classes. Accordingly, the Directors have authorized the issuance of two
classes of shares of the Fund designated as Class IA and Class IB shares. The
shares of each class represent an interest in the same portfolio of investments
of the Fund and have equal rights as to voting, redemption, and liquidation.
However, each class bears different expenses and therefore the net asset values
of the two classes and any dividends declared may differ between the two
classes.
VOTING
Under the Fund's multi-class system, shares of each class of the Fund
represent an equal pro rata interest in the Fund and, generally, shall have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class shall have a different designation; (b) each class of shares
shall bear its "Class Expenses;" (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangements; (d) each class shall have separate voting rights on
any matter submitted to shareholders in which the interests of one class differ
from the interests of any other class; (e) each class may have separate exchange
privileges, although exchange privileges are not currently contemplated; and (f)
each class may have different conversion features, although a conversion feature
is not currently contemplated. Expenses currently designated as "Class Expenses"
by the Fund's Board of Directors under the plan pursuant to Rule 18f-3 are
currently limited to payments made to the Distributor for the Class IB shares,
pursuant to the Distribution Plan for the Class IB shares adopted pursuant to
Rule 12b-1 under the 1940 Act. Each shareholder shall be entitled to one vote
for each share of the Fund held upon all matters submitted to the shareholders
generally. Class specific issues, such as a modification to a Rule 12b-1 plan
that could materially increase fees, will be voted on only by the affected
class. With respect to the Fund's shares issued as described above under
"Purchase of Fund Shares," as well as Fund shares which are not otherwise
attributable to variable annuity contract owners or variable life policy
holders, The Hartford Life Insurance Companies shall be the shareholders of
record. Each of The Hartford Life Insurance Companies will vote all Fund shares,
pro rata, according to the written instructions of the contract owners of the
variable annuity contracts and the policy holders of the variable life contracts
issued by it using the Fund as investment vehicles. This position is consistent
with the policy of the SEC staff.
OTHER RIGHTS
Each share of Fund stock, when issued and paid for in accordance with the
terms of the offering, will be fully paid and non-assessable. Shares of Fund
stock have no pre-emptive, subscription or conversion rights and are redeemable
as set forth under "Sale and Redemption of Shares." Upon liquidation of the
Fund, the shareholders of the Fund shall be entitled to share, pro rata, in any
assets of the Fund after discharge of all liabilities and payment of the
expenses of liquidation.
GENERAL INFORMATION
REPORTS TO SHAREHOLDERS
The Fund will issue unaudited semiannual reports showing current investments
in the Fund and other information and annual financial statements examined by
independent auditors for the Fund.
DISTRIBUTOR
Hartford Securities Distribution Company, Inc., P.O. Box 2999, Hartford, CT
06104-2999 serves as distributor to the Fund.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, serves as
custodian of the Fund's assets.
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 13
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENTS
Hartford Life Insurance Company, P.O. Box 2999, Hartford, Connecticut
06104-2999, serves as Transfer and Dividend Disbursing Agent for the Funds.
PENDING LEGAL PROCEEDINGS
As of the date of this Prospectus, there are no material pending legal
proceedings involving the Fund, HL Advisors or Wellington Management as a party.
REQUESTS FOR INFORMATION
This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC. The Registration Statement, including
the exhibits filed therewith, may be examined at the SEC's office in Washington,
D.C. Statements contained in the Prospectus as to the contents of any contract
or other document referred to herein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified, in all respects by such reference.
For additional information, write to "Hartford Growth and Income HLS Fund,"
c/o Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
14 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
APPENDIX A
The rating information which follows describes how the rating services
mentioned presently rate the described securities. No reliance is made upon the
rating firms as "experts" as that term is defined for securities purposes.
Rather, reliance on this information is on the basis that such ratings have
become generally accepted in the investment business.
RATING OF BONDS
MOODY'S INVESTORS SERVICE, INC. ("MOODY'S")
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever earning any
real investment standing.
STANDARD & POOR'S CORPORATION ("STANDARD & POOR'S")
AAA -- Bonds rated AAA are the highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A -- Bonds rated A have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the considerable
investment strength but are not entirely free from adverse effects of changes in
circumstances and economic conditions than debt in the highest rated categories.
BBB -- Bonds rated BBB and regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category then in higher rated categories.
BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC, and C is regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
RATING OF COMMERCIAL PAPER
Purchases of corporate debt securities used for short-term investment,
generally called commercial paper, will be limited to the top two grades of
Moody's, Standard & Poor's, Duff & Phelps, Fitch Investor Services and Thomson
Bank Watch or other NRSROs (nationally recognized statistical
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 15
- --------------------------------------------------------------------------------
rating organizations) rating services and will be an eligible security under
Rule 2a-7.
MOODY'S
Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:
- - Leading market positions in well-established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- - Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- - Well-established access to a range of financial markets and assured sources of
alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
STANDARD & POOR'S
The relative strength or weakness of the following factors determines
whether the issuer's commercial paper is rated A-1 or A-2.
- - Liquidity ratios are adequate to meet cash requirements.
Liquidity ratios are basically as follows, broken down by the type of
issuer:
Industrial Company: acid test ratio, cash flow as a percent of current
liabilities, short-term debt as a percent of current liabilities, short-term
debt as a percent of current assets.
Utility: current liabilities as a percent of revenues, cash flow as a
percent of current liabilities, short-term debt as a percent of capitalization.
Finance Company: current ratio, current liabilities as a percent of net
receivables, current liabilities as a percent of total liabilities.
- - The long-term senior debt rating is "A" or better; in some instances "BBB"
credits may be allowed if other factors outweigh the "BBB".
- - The issuer has access to at least two additional channels of borrowing.
- - Basic earnings and cash flow have an upward trend with allowances made for
unusual circumstances.
- - Typically, the issuer's industry is well established and the issuer has a
strong position within its industry.
- - The reliability and quality of management are unquestioned.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD GROWTH AND INCOME HLS FUND
P.O. Box 2999
Hartford, CT 06104-2999
This Statement of Additional Information ("SAI") is not a prospectus but
should be read in conjunction with the prospectus. To obtain a free copy of
the prospectus send a written request to: Hartford Growth and Income HLS
Fund, c/o Individual Annuity Operations, P.O. Box 2999, Hartford, CT
06104-2999 or call 1-800-862-6668.
Date of Prospectus:___________________________, 1998
Date of Statement of Additional Information:__________________________,
1998
<PAGE>
TABLE OF CONTENTS PAGE
General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . . .-1-
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Other Information about the Fund . . . . . . . . . . . . . . . . . . . . . -18-
Investment Management Arrangements . . . . . . . . . . . . . . . . . . . . -19-
Fund Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
Distribution Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . -22-
Portfolio Transactions and Brokerage . . . . . . . . . . . . . . . . . . . -22-
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . -23-
Purchase and Redemption of Shares. . . . . . . . . . . . . . . . . . . . . -23-
Investment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
Transfer Agent Services. . . . . . . . . . . . . . . . . . . . . . . . . . -31-
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . -31-
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
<PAGE>
GENERAL INFORMATION
The Hartford Growth and Income HLS Fund (the "Fund") is a separate series
of Hartford Series Fund, Inc. (the "Company"), an open-end management
investment company. The Fund is one of thirteen affiliated diversified
portfolios used as funding media for certain variable annuity and variable
life insurance separate accounts of Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company (collectively, "The Hartford Life
Insurance Companies"). This SAI relates only to the Hartford Growth and
Income HLS Fund. HL Investment Advisors, Inc. ("HL Advisors") is the
investment manager to the Fund. HL Advisors is an indirect majority owned
subsidiary of The Hartford Financial Services Group, Inc., ("The Hartford")
an insurance holding company with over $100 billion in assets. In addition,
Wellington Management Company, LLP ("Wellington Management") is sub-adviser
to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
A. FUNDAMENTAL RESTRICTIONS OF THE FUND
The Fund has adopted the following fundamental investment restrictions
which may not be changed without approval of a majority of the Fund's
outstanding voting securities. Under the Investment Company Act of 1940 (the
"1940 Act"), and as used in the Prospectus and this SAI, a "majority of the
outstanding voting securities" means the approval of the lesser of (1) the
holders of 67% or more of the shares of the Fund represented at a meeting if
the holders of more than 50% of the outstanding shares of the Fund are
present in person or by proxy or (2) the holders of more than 50% of the
outstanding shares of the Fund.
The investment objective, investment style and certain investment policies
of the Fund are set forth in the Prospectus. Set forth below are the
fundamental investment policies applicable to the Fund followed by the
non-fundamental policies applicable to the Fund.
The Fund may not:
1. Issue senior securities. For purposes of this restriction, the issuance
of shares of common stock in multiple classes or series, obtaining of
short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities, short sales against the box, and the following
practices when a segregated account has been established to cover such
transactions or when an offsetting position has been established by the Fund
are not deemed to be issuances of senior securities: the purchase or sale of
permissible options and futures transactions (and the use of initial and
maintenance margin arrangements with respect to futures contracts or related
options transactions), the purchase or sale of securities on a when issued or
delayed delivery basis, permissible borrowings entered into in accordance
with the Fund's investment policies, and reverse repurchase agreements and
mortgage dollar rolls.
-1-
<PAGE>
2. Borrow money, except from banks and then only if immediately after each
such borrowing there is asset coverage of at least 300% as defined in the
1940 Act. Although reverse repurchase agreements, mortgage dollar rolls,
short sales against the box, futures contracts, options on futures contracts,
securities or indices, when issued and delayed delivery transactions and
securities lending are not subject to this restriction, in most cases a
segregated account will be set up to cover such transactions.
3. Act as an underwriter for securities of other issuers.
4. Purchase or sell real estate, except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (e.g. real estate investment
trusts) (iii) invest in securities that are secured by real estate or
interests therein, (iv) purchase and sell mortgage-related securities, (v)
hold and sell real estate acquired by the Fund as a result of the ownership
of securities and (vi) invest in real estate limited partnerships.
5. Invest in commodities, except that the Fund may (i) invest in securities
of issuers that invest in commodities, and (ii) engage in permissible options
and futures transactions and forward foreign currency contracts, entered into
in accordance with the Fund's investment policies.
6. Make loans, except that the Fund (i) may lend portfolio securities in
accordance with the Fund's investment policies in amounts up to 33-1/3% of
the Fund's total assets taken at market value, (ii) enter into fully
collateralized repurchase agreements, and (iii) purchase debt obligations in
which the Fund may invest consistent with its investment policies.
7. Purchase the securities of issuers conducting their principal activity
in the same industry if, immediately after such purchase, the value of its
investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment. This limitation does not apply
to investments in obligations issued or guaranteed by the U.S. Government or
any of its agencies, instrumentalities or authorities.
In addition, the Fund will operate as a "diversified" fund within the
meaning of the 1940 Act. This means that with respect to 75% of the Fund's
total assets, the Fund will not purchase securities of an issuer (other than
cash, cash items or securities issued or guaranteed by the U.S. Government,
its agencies, instrumentalities or authorities), if
(a) such purchase would cause more than 5% of the Fund's total assets
taken at market value to be invested in the securities of such
issuer; or
(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the
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values of the Fund's assets will not be considered a violation of the
restriction; provided, however, that the asset coverage requirement
applicable to borrowings under Section 18(f)(1) of the 1940 Act shall be
maintained in the manner contemplated by that Section.
In order to permit the sale of shares of the Fund in certain states, the
Board of Directors may, in its sole discretion, adopt restrictions or
investment policies more restrictive than those described above. Should the
Board of Directors determine that any such more restrictive policy is no
longer in the best interest of the Fund and its shareholders, the Fund may
cease offering shares in the state involved and the Board of Directors may
revoke such restrictive policy. Moreover, if the states involved shall no
longer require any such restrictive policy, the Board of Directors may, in
its sole discretion, revoke such policy.
B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND.
The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without the approval of shareholders.
The Fund may not:
1. Purchase securities on margin or make short sales of securities,
except that the Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and except for transactions
in futures contracts and options thereon.
2. Purchase securities which are illiquid if, as a result of such
purchase, more than 15% of its net assets would consist of such securities.
3. Alone or together with any other of the Hartford Mutual Funds, make
investments for the purpose of exercising control over or management of any
issuer.
4. Mortgage, pledge, hypothecate, or in any manner transfer, as security
for indebtedness, any securities owned or held by it, except to secure reverse
repurchase agreements; however, for purposes of this restriction, collateral
arrangements with respect to transactions in futures contracts and options
thereon are not deemed to be a pledge of securities.
5. Invest more than 5% of its assets in securities of other investment
companies and will not acquire more than 3% of the total outstanding voting
securities of any one investment company.
6. Purchase additional securities when money borrowed exceeds 5% of the
Fund's total assets.
7. Borrow money, engage in reverse repurchase agreements or engage in
activities which are the economic equivalent of borrowing if the combination of
such activities exceeds 33-1/3% of the Fund's total assets.
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If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the values of the Fund's assets will not be
considered a violation of the restriction.
U.S. TREASURY DEPARTMENT DIVERSIFICATION REGULATIONS. The U.S. Treasury
Department has issued diversification regulations under Section 817 of the
Internal Revenue Code. If a mutual fund underlying a variable contract, other
than a pension plan contract, is not adequately diversified within the terms
of these regulations, the contract owner will have adverse income tax
consequences. These regulations provide, among other things, that a mutual
fund shall be considered adequately diversified if (i) no more than 55% of
the value of the assets in the fund is represented by any one investment;
(ii) no more than 70% of the value of the assets in the fund is represented
by any two investments; (iii) no more than 80% of the value of the assets in
the fund is represented by any three investments and (iv) no more than 90% of
the value of the total assets of the fund is represented by any four
investments. In determining whether the diversification standards are met,
each United States Government Agency or instrumentality shall be treated as a
separate issuer.
MISCELLANEOUS INVESTMENT PRACTICES
A further description of certain of the policies described in the
Prospectus is set forth below.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES
The Fund may hold cash or cash equivalents and invest in high quality money
market instruments under appropriate circumstances as determined by Wellington
Management. The Fund may invest up to 100% of its assets in cash, cash
equivalents or money market instruments only for temporary defensive purposes.
Money market instruments include: (1) banker's acceptances; (2)
obligations of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (3) short-term corporate obligations, including commercial
paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations
of U.S. banks, non-U.S. branches of U.S. banks (Eurodollars), U.S. branches and
agencies of non-U.S. banks (Yankee dollars), and non-U.S. branches of non-U.S.
banks; (6) asset-backed securities; and (7) repurchase agreements.
REPURCHASE AGREEMENTS
The Fund is permitted to enter into fully collateralized repurchase
agreements. The Fund's Board of Directors has established standards for
evaluation of the creditworthiness of the banks and securities dealers with
which the Funds will engage in repurchase agreements and monitors on a quarterly
basis Wellington Management's compliance with such standards. Presently, the
Fund may
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enter into repurchase agreements only with commercial banks with at least $1
billion in assets or with recognized government securities dealers with a
minimum net capital of $100 million.
Wellington Management will monitor such transactions to ensure that the
value of underlying collateral will be at least equal at all times to the
total amount of the repurchase obligation, including the accrued interest.
If the seller defaults, the Fund could realize a loss on the sale of the
underlying security to the extent that the proceeds of sale including accrued
interest are less than the resale price provided in the agreement including
interest.
A repurchase agreement is an agreement by which the seller of a security
agrees to repurchase the security sold at a mutually agreed upon time and
price. It may also be viewed as the loan of money by the Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an
agreed upon market interest rate.
REVERSE REPURCHASE AGREEMENTS
The Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve sales by the Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. Reverse repurchase agreements carry the risk
that the market value of the securities which the Fund is obligated to
repurchase may decline below the repurchase price. A reverse repurchase
agreement is viewed as a collateralized borrowing by the Fund. Borrowing
magnifies the potential for gain or loss on the portfolio securities of the
Fund and, therefore, increases the possibility of fluctuation in the Fund's
net asset value. The Fund will establish a segregated account with the Fund's
custodian bank in which the Fund will maintain liquid assets equal in value
to the Fund's obligations in respect of reverse repurchase agreements. The
Fund will not enter into reverse repurchase transactions if the combination
of all borrowings from banks and the value of all reverse repurchase
agreements for the Fund equals more than 33-1/3% of the value the Fund's
total assets.
DEBT SECURITIES
The Fund is permitted to invest in debt securities including: (1)
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities; (2) non-convertible debt
securities issued or guaranteed by U.S. corporations or other issuers
(including foreign governments or corporations); and (3) securities issued or
guaranteed as to principal or interest by a sovereign government or one of
its agencies or political subdivisions, supranational entities such as
development banks, non-U.S. corporations, banks or bank holding companies, or
other non-U.S. issuers.
INVESTMENT GRADE DEBT SECURITIES
The Fund is permitted to invest in debt securities rated within the four
highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A
or BBB by S&P) (or, if unrated,
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securities of comparable quality as determined by Wellington Management).
These securities are generally referred to as "investment grade securities."
Each rating category has within it different gradations or sub-categories.
If the Fund is authorized to invest in a certain rating category, the Fund is
also permitted to invest in any of the sub-categories or gradations within
that rating category. If a security is downgraded to a rating category which
does not qualify for investment, Wellington Management will use its
discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term. Debt
securities carrying the fourth highest rating (i.e., "Baa" by Moody's and
"BBB" by S&P), and unrated securities of comparable quality (as determined by
Wellington Management) are viewed to have adequate capacity for payment of
principal and interest, but do involve a higher degree of risk than that
associated with investments in debt securities in the higher rating
categories and such securities lack outstanding investment characteristics
and do have speculative characteristics.
HIGH YIELD-HIGH RISK SECURITIES
The Fund may invest up to 5% of its assets in high yield debt securities
(i.e., rated as low as "C" by Moody's or S&P, and unrated securities of
comparable quality as determined by Wellington Management). Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds". Each rating category has within it different
gradations or sub-categories. For instance the "Ba" rating for Moody's
includes "Ba3", "Ba2" and "Ba1". Likewise the S&P rating category of "BB"
includes "BB+", "BB" and "BB-". If the Fund is authorized to invest in a
certain rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. Securities in the
highest category below investment grade are considered to be of poor standing
and predominantly speculative. These securities are considered speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations. Accordingly, it is possible
that these types of factors could, in certain instances, reduce the value of
securities held by the Fund with a commensurate effect on the value of the
Fund's shares. If a security is downgraded to a rating category which does
not qualify for investment, Wellington Management will use its discretion on
whether to hold or sell based upon its opinion on the best method to maximize
value for shareholders over the long term.
EQUITY SECURITIES
The Fund may invest in equity securities which include common stocks,
preferred stocks (including convertible preferred stock) and rights to
acquire such securities. In addition, the Fund may invest in securities such
as bonds, debentures and corporate notes which are convertible into common
stock at the option of the holder.
SMALL CAPITALIZATION SECURITIES
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The Fund may invest in equity securities (including securities issued in
initial public offerings) of companies which have less than $2 billion in
market capitalization ("Small Capitalization Securities"). Because the
issuers of Small Capitalization Securities tend to be smaller or less
well-established companies, they may have limited product lines, market share
or financial resources and may have less historical data with respect to
operations and management. As a result, Small Capitalization Securities are
often less marketable and experience a higher level of price volatility than
securities of larger or more well-established companies. In addition,
companies whose securities are offered in initial public offerings may be
more dependent on a limited number of key employees. Because securities
issued in initial public offerings are being offered to the public for the
first time, the market for such securities may be inefficient and less liquid.
NON-U.S. SECURITIES
The Fund is permitted to invest a portion of its assets in non-U.S.
securities, including, in the case of permitted equity investments, American
Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). ADRs
are certificates issued by a U.S. bank or trust company and represent the
right to receive securities of a non-U.S. issuer deposited in a domestic bank
or non-U.S. branch of a U.S. bank. ADRs are traded on a U.S. securities
exchange, or in an over-the-counter market, and are denominated in U.S.
dollars. GDRs are certificates issued globally and evidence a similar
ownership arrangement. GDRs are traded on non-U.S. securities exchanges and
are denominated in non-U.S. currencies. The value of an ADR or a GDR will
fluctuate with the value of the underlying security, will reflect any changes
in exchange rates and otherwise will involve risks associated with investing
in non-U.S. securities. When selecting securities of non-U.S. issuers,
Wellington Management will evaluate the economic and political climate and
the principal securities markets of the country in which an issuer is located.
Investing in securities issued by non-U.S. companies involves
considerations and potential risks not typically associated with investing in
obligations issued by U.S. companies. Less information may be available about
non-U.S. companies than about U.S. companies and non-U.S. companies generally
are not subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to U.S. companies. The values of non-U.S. securities are
affected by changes in currency rates or exchange control regulations,
restrictions or prohibition on the repatriation of non-U.S. currencies,
application of non-U.S. tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in the U.S. or
outside the U.S.) or changed circumstances in dealings between nations. Costs
are also incurred in connection with conversions between various currencies.
Investing in non-U.S. sovereign debt will expose a Fund to the direct or
indirect consequences of political, social or economic changes in the
developing and emerging countries that issue the securities. The ability and
willingness of sovereign obligers in developing and emerging countries or the
governmental authorities that control repayment of their external debt to pay
principal and interest on such debt when due may depend on general economic
and political conditions within the relevant country. Countries such as those
in which the Fund may invest have
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historically experienced, and may continue to experience, high rates of
inflation, high interest rates, exchange rate trade difficulties and
unemployment. Some of these countries are also characterized by political
uncertainty or instability. Additional factors which may influence the
ability or willingness to service debt include, but are not limited to, a
country's cash flow situation, the availability of sufficient foreign
exchange on the date a payment is due, the relative size of its debt service
burden to the economy as a whole, and its government's policy towards the
IMF, the World Bank and other international agencies.
From time to time the Fund may invest up to 25% of its assets in companies
located in emerging countries. Compared to the United States and other
developed countries, developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that are less liquid and trade a small number of securities. Prices on these
exchanges tend to be volatile and, in the past, securities in these countries
have offered greater potential for gain (as well as loss) than securities of
companies located in developed countries.
CURRENCY TRANSACTIONS
The Fund may engage in currency transactions to hedge the value of
portfolio securities denominated in particular currencies against
fluctuations in relative value. Currency transactions include forward
currency contracts, currency swaps, exchange-listed and over-the-counter
("OTC") currency futures contracts and options thereon and exchange listed
and OTC options on currencies.
Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Currency swaps are agreements to
exchange cash flows based on the notional difference between or among two or
more currencies. See "Swap Agreements."
The use of currency transactions to protect the value of the Fund's assets
against a decline in the value of a currency does not eliminate potential
losses arising from fluctuations in the value of the Fund's underlying
securities. Further, the Fund may enter into currency transactions only with
counterparties that Wellington Management deems to be creditworthy.
The Fund may also enter into options and futures contracts relative to
foreign currency to hedge against fluctuations in foreign currency rates. See
"Options and Futures Contracts" for a discussion of risk factors relating to
foreign currency transactions including options and futures contracts related
thereto.
OPTIONS AND FUTURES CONTRACTS
In seeking to protect against the effect of changes in equity market
values, currency exchange rates or interest rates that are adverse to the
present or prospective position of the Fund, for cash flow management, and,
to a lesser extent, to enhance returns, the Fund may employ certain hedging,
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income enhancement and risk management techniques, including the purchase and
sale of options, futures and options on futures involving equity and debt
securities and foreign currencies, aggregates of equity and debt securities,
indices of prices of equity and debt securities and other financial indices.
The Fund's ability to engage in these practices may be limited by tax
considerations and certain other legal considerations.
The Fund may write covered options and purchase put and call options on
individual securities as a partial hedge against an adverse movement in the
security and in circumstances consistent with the objective and policies of
the Fund. This strategy limits potential capital appreciation in the
portfolio securities subject to the put or call option.
The Fund may also write covered put and call options and purchase put and
call options on foreign currencies to hedge against the risk of foreign
exchange fluctuations on foreign securities the Fund holds in its portfolio
or that it intends to purchase. For example, if the Fund enters into a
contract to purchase securities denominated in foreign currency, it could
effectively establish the maximum U.S. dollar cost of the securities by
purchasing call options on that foreign currency. Similarly, if the Fund held
securities denominated in a foreign currency and anticipated a decline in the
value of that currency against the U.S. dollar, the Fund could hedge against
such a decline by purchasing a put option on the foreign currency involved.
In addition, the Fund may purchase put and call options and write covered
put and call options on aggregates of equity and debt securities, and may
enter into futures contracts and options thereon for the purchase or sale of
aggregates of equity and debt securities, indices of equity and debt
securities and other financial indices, all for the purpose of protecting
against potential changes in the market value of portfolio securities or in
interest rates. Aggregates are composites of equity or debt securities that
are not tied to a commonly known index. An index is a measure of the value of
a group of securities or other interests. An index assigns relative values to
the securities included in that index, and the index fluctuates with changes
in the market value of those securities.
The Fund may write covered options only. "Covered" means that, so long as
the Fund is obligated as the writer of a call option on particular securities
or currency, it will own either the underlying securities or currency or an
option to purchase the same underlying securities or currency having an
expiration date not earlier than the expiration date of the covered option
and an exercise price equal to or less than the exercise price of the covered
option, or will establish or maintain with its custodian for the term of the
option a segregated account consisting of cash, U.S. Government securities or
other liquid, high grade debt obligations having a value equal to the
fluctuating market value of the optioned securities or currencies. The Fund
will cover any put option it writes on particular securities or currency by
maintaining a segregated account with its custodian as described above.
To hedge against fluctuations in currency exchange rates, the Fund may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. For
example, the Fund may use foreign currency futures contracts when
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it anticipates a general weakening of the foreign currency exchange rate that
could adversely affect the market values of the Fund's foreign securities
holdings. In this case, the sale of futures contracts on the underlying
currency may reduce the risk of a reduction in market value caused by foreign
currency variations and, by so doing, provide an alternative to the
liquidation of securities positions in the Fund and resulting transaction
costs. When the Fund anticipates a significant foreign exchange rate increase
while intending to invest in a non-U.S. security, the Fund may purchase a
foreign currency futures contract to hedge against a rise in foreign exchange
rates pending completion of the anticipated transaction. Such a purchase of a
futures contract would serve as a temporary measure to protect the Fund
against any rise in the foreign exchange rate that may add additional costs
to acquiring the non-U.S. security position. The Fund similarly may use
futures contracts on equity and debt securities to hedge against fluctuations
in the value of securities it owns or expects to acquire.
The Fund also may purchase call or put options on foreign currency futures
contracts to obtain a fixed foreign exchange rate at limited risk. The Fund
may purchase a call option on a foreign currency futures contract to hedge
against a rise in the foreign exchange rate while intending to invest in a
non-U.S. security of the same currency. The Fund may purchase put options on
foreign currency futures contracts to hedge against a decline in the foreign
exchange rate or the value of its non-U.S. securities. The Fund may write a
call option on a foreign currency futures contract as a partial hedge against
the effects of declining foreign exchange rates on the value of non-U.S.
securities and in circumstances consistent with the Fund's investment
objectives and policies.
Options on indexes are settled in cash, not in delivery of securities. The
exercising holder of an index option receives, instead of a security, cash
equal to the difference between the closing price of the securities index and
the exercise price of the option. When the Fund writes a covered option on an
index, the Fund will be required to deposit and maintain with a custodian
cash or high-grade, liquid short-term debt securities equal in value to the
aggregate exercise price of a put or call option pursuant to the requirements
and the rules of the applicable exchange. If, at the close of business on any
day, the market value of the deposited securities falls below the contract
price, the Fund will deposit with the custodian cash or high-grade, liquid
short-term debt securities equal in value to the deficiency.
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies that are traded on an
exchange regulated by the Commodities Futures Trading Commission ("CFTC"), in
each case that are not for "BONA FIDE hedging" purposes (as defined by
regulations of the CFTC), the aggregate initial margin and premiums required
to establish those positions may not exceed 5% of the liquidation value of
the Fund's portfolio, after taking into account the unrealized profits and
unrealized losses on any such contracts the Fund has entered into. However,
the "in-the-money" amount of such options may be excluded in computing the 5%
limit. Adoption of this guideline will not limit the percentage of the Fund's
assets at risk to 5%.
Although the Fund may not employ all or any of the foregoing strategies,
its use of options, futures and options thereon and forward currency
contracts (as described under "Currency Transactions") would involve certain
investment risks and transaction costs to which it might not
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be subject were such strategies not employed. Such risks include: (1)
dependence on the ability of Wellington Management to predict movements in
the prices of individual securities, fluctuations in the general securities
markets or market sections and movements in interest rates and currency
markets; (2) imperfect correlation between movements in the price of the
securities or currencies hedged or used for cover; (3) the fact that skills
and techniques needed to trade options, futures contracts and options thereon
or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures
contract, option thereon or forward contract at any particular time, which
may affect the Fund's ability to establish or close out a position; (5)
possible impediments to effective portfolio management or the ability to meet
current obligations caused by the segregation of a large percentage of the
Fund's assets to cover its obligations; and (6) the possible need to defer
closing out certain options, futures contracts, options thereon and forward
contracts in order to continue to qualify for the beneficial tax treatment
afforded "regulated investment companies" under the Code. In the event that
the anticipated change in the price of the securities or currencies that are
the subject of such a strategy does not occur, it may be that the Fund would
have been in a better position had it not used such a strategy at all.
SWAP AGREEMENTS
The Fund may enter into interest rate swaps, currency swaps, and other
types of swap agreements such as caps, collars, and floors. In a typical
interest rate swap, one party agrees to make regular payments equal to a
floating interest rate multiplied by a "notional principal amount," in return
for payments equal to a fixed rate multiplied by the same amount, for a
specified period of time. If a swap agreement provides for payments in
different currencies, the parties might agree to exchange the notional
principal amount as well. Swaps may also depend on other prices or rates,
such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right
to receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap
and selling a floor.
Swap agreements will tend to shift the Fund's investment exposure from one
type of investment to another. For example, if the Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend
to decrease the Fund's exposure to rising interest rates. Caps and floors
have an effect similar to buying or writing options. Depending on how they
are used, swap agreements may increase or decrease the overall volatility of
the Fund's investments and its share price and yield.
The Fund will usually enter into interest rate swaps on a net basis, i.e.,
where the two parties make net payments with the Fund receiving or paying, as
the case may be, only the net amount of
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the two payments. The net amount of the excess, if any, of the Fund's
obligations over its entitlement with respect to each interest rate swap will
be U.S. Government Securities or other liquid high grade debt obligations
having an aggregate net asset value at least equal to the accrued excess will
be maintained by the Fund's custodian in a segregated account. If the Fund
enters into a swap on other than a net basis, the Fund will maintain in the
segregated account the full amount of the Fund's obligations under each such
swap. The Fund may enter into swaps, caps, collars and floors with member
banks of the Federal Reserve System, members of the New York Stock Exchange
or other entities determined by Wellington Management, pursuant to procedures
adopted and reviewed on an ongoing basis by the Board of Directors, to be
creditworthy. If a default occurs by the other party to such transaction, the
Fund will have contractual remedies pursuant to the agreements related to the
transaction but such remedies may be subject to bankruptcy and insolvency
laws which could affect such Fund's rights as a creditor.
The swap market has grown substantially in recent years with a large number
of banks and financial services firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, collars and floors are more recent
innovations and they are less liquid than swaps. There can be no assurance,
however, that the Fund will be able to enter into interest rate swaps or to
purchase interest rate caps, collars or floors at prices or on terms
Wellington Management, as appropriate, believes are advantageous to the Fund.
In addition, although the terms of interest rate swaps, caps, collars and
floors may provide for termination, there can be no assurance that the Fund
will be able to terminate an interest rate swap or to sell or offset interest
rate caps, collars or floors that it has purchased. Because interest rate
swaps, caps, collars and floors are privately negotiated transactions rather
than publicly traded they may be considered to be illiquid securities.
The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of the Fund's
portfolio securities and depends on Wellington Management's ability to
predict correctly the direction and degree of movements in interest rates.
Although the Fund believes that use of the hedging and risk management
techniques described above will benefit the Fund, if Wellington Management's
judgment about the direction or extent of the movement in interest rates is
incorrect, the Fund's overall performance would be worse than if it had not
entered into any such transactions. For example, if the Fund had purchased an
interest rate swap or an interest rate floor to hedge against its expectation
that interest rates would decline but instead interest rates rose, the Fund
would lose part or all of the benefit of the increased payments it would
receive as a result of the rising interest rates because it would have to pay
amounts to its counterparties under the swap agreement or would have paid the
purchase price of the interest rate floor. These activities are commonly used
when managing derivative investments.
ILLIQUID SECURITIES
The Fund is permitted to invest in illiquid securities. No illiquid
securities will be acquired if upon the purchase more than 15% of the Fund's
net assets would consist of such securities. "Illiquid Securities" are
securities that may not be sold or disposed of in the ordinary course of
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business within seven days at approximately the price used to determine the
Fund's net asset value. The Fund may purchase certain restricted securities
commonly known as Rule 144A securities that can be resold to institutions and
which may be determined to be liquid pursuant to policies and guidelines of
the Board of Directors. The Fund may not be able to sell illiquid securities
when Wellington Management considers it desirable to do so or may have to
sell such securities at a price that is lower than the price that could be
obtained if the securities were more liquid. A sale of illiquid securities
may require more time and may result in higher dealer discounts and other
selling expenses than does the sale of securities that are not illiquid.
Illiquid securities also may be more difficult to value due to the
unavailability of reliable market quotations for such securities, and
investment in illiquid securities may have an adverse impact on net asset
value.
Under current interpretations of the SEC Staff, the following types of
securities in which the Fund may invest will be considered illiquid: (1)
repurchase agreements maturing in more than seven days; (2) certain
restricted securities (securities whose public resale is subject to legal or
contractual restrictions); (3) options, with respect to specific securities,
not traded on a national securities exchange that are not readily marketable;
and (4) any other securities in which the Fund may invest that are not
readily marketable.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
The Fund is permitted to purchase or sell securities on a when-issued or
delayed-delivery basis. When-issued or delayed-delivery transactions arise
when securities are purchased or sold with payment and delivery taking place
in the future in order to secure what is considered to be an advantageous
price and yield at the time of entering into the transaction. While the Fund
generally purchases securities on a when-issued basis with the intention of
acquiring the securities, the Fund may sell the securities before the
settlement date if Wellington Management deems it advisable. At the time the
Fund makes the commitment to purchase securities on a when-issued basis, the
Fund will record the transaction and thereafter reflect the value, each day,
of such security in determining the net asset value of the Fund. At the time
of delivery of the securities, the value may be more or less than the
purchase price. The Fund will maintain, in a segregated account, cash, U.S.
Government securities or other liquid, high-grade debt obligations having a
value equal to or greater than the Fund's purchase commitments; likewise the
Fund will segregate securities sold on a delayed-delivery basis.
OTHER INVESTMENT COMPANIES
The Fund is permitted to invest in other investment companies. Securities
in certain countries are currently accessible to the Fund only through such
investments. The investment in other investment companies is limited in
amount and will involve the indirect payment of a portion of the expenses,
including advisory fees, of such other investment companies. The Fund will
not purchase a security of an investment company if, as a result, (1) more
than 10% of the Fund's assets would be invested in securities of other
investment companies, (2) such purchase would result in more than 3% of the
total outstanding voting securities of any one such investment company being
-13-
<PAGE>
held by the Fund; or (3) more than 5% of the Fund's assets would be invested
in any one such investment company.
PORTFOLIO SECURITIES LENDING
The Fund may lend its portfolio securities to broker/dealers and other
institutions as a means of earning interest income. The borrower will be
required to deposit as collateral, cash, cash equivalents, U.S. government
securities or other high quality liquid debt securities that at all times
will be at least equal to 100% of the market value of the loaned securities
and such amount will be maintained in a segregated account of the Fund. While
the securities are on loan the borrower will pay the Fund any income accruing
thereon.
Delays or losses could result if a borrower of portfolio securities becomes
bankrupt or defaults on its obligation to return the loaned securities. The
Fund may lend securities only if: (1) the loan is fully secured by
appropriate collateral at all times; and (2) the value of all loaned
securities of the Fund is not more than 33-1/3% of the Fund's total assets
taken at the time of the loan.
MANAGEMENT OF THE FUND
The directors and officers of the Fund and their principal business
occupations for the last five years are set forth below. Those directors who
are deemed to be "interested persons" of the Fund, as that term is defined in
the 1940 Act are indicated by an asterisk next to their respective names.
NAME, ADDRESS, AGE AND POSITION WITH THE FUND
JOSEPH ANTHONY BIERNAT (age 70)
Director
30 Hurdle Fence Drive
Avon, CT 06001
Mr. Biernat served as Senior Vice President and Treasurer of United
Technologies Corporation from 1984 until March, 1987, when he retired. He
subsequently served as Executive Vice President of Boston Security
Counselors, Inc., Hartford, Connecticut (1988-1989), and served as Vice
President-Client Services of Wright Investors' Service, Bridgeport,
Connecticut (1989-1990). Mr. Biernat presently is consulting to organizations
on financial matters, with the majority of time spent with T.O. Richardson &
Co., Farmington, Connecticut.
-14-
<PAGE>
WINIFRED ELLEN COLEMAN (age 65)
Director
27 Buckingham Lane
West Hartford, CT 06117
Ms. Coleman has served as President of Saint Joseph College since 1991. She
is a Director of LeMoyne College and St. Francis Hospital.
JOSEPH HARRY GAREAU (age 50)
Director and President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Gareau has served as Executive Vice President and Chief Investment
Officer of The Hartford since April, 1993. Formerly, he served as Senior Vice
President and Chief Investment Officer/Property-Casualty Division (September,
1992 - April, 1993) and Vice President (October, 1987 - September, 1992). Mr.
Gareau is also a Director and the President of The Hartford Investment
Management Company ("HIMCO"), a Hartford affiliated registered investment
adviser, a Director and Executive Vice President of Hartford Investment
Financial Services Company ("HIFSCO"), a Hartford affiliated registered
investment adviser, and a Director of Hartford Fire Insurance Company.
WILLIAM ATCHISON O'NEILL (age 67)
Director
Box 360
East Hampton, CT 06424
The Honorable William A. O'Neill served as Governor of the State of Connecticut
from 1980 until 1991. He is presently retired.
MILLARD HANDLEY PRYOR, JR. (age 64)
Director
695 Bloomfield Avenue
Bloomfield, CT 06002
Mr. Pryor has served as Managing Director of Pryor & Clark Company, Hartford,
Connecticut, since June, 1992. He served as Chairman and Chief Executive
Officer of Corcap, Inc. from 1988-1992. In addition, Mr. Pryor is a Director
of Pryor & Clark Company, Corcap, Inc., the Wiremold Company, Hoosier
Magnetics, Inc., Infodata Systems, Inc., Pacific Scientific Corporation and
Fibralock, Inc.
-15-
<PAGE>
LOWNDES ANDREW SMITH (age 58)
Director and Chairman
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Smith has served as President of The Hartford Life Insurance Companies
since January, 1989. He was formerly Senior Vice President and Group
Comptroller of The Hartford Insurance Group from 1987-1989. He has been a
Director of Connecticut Children's Medical Center since 1993 and a Director
of American Counsel of Life Insurance since 1990. Mr. Smith is also President
and a Director of HIFSCO.
JOHN KELLEY SPRINGER (age 66)
Director
225 Asylum Avenue
Hartford, CT 06103
Mr. Springer currently serves as Chairman of Medspan, Inc. From 1989 to 1997
he served as Chief Executive Officer of Connecticut Health System, Inc.
Formerly, he served as the Chief Executive Officer of Hartford Hospital,
Hartford, Connecticut (June, 1971 - August, 1989). He is also a Director of
Hartford Hospital, Connecticut Health System, Inc., Hospital Research and
Development Institute, and CHS Insurance Ltd. (Chairman).
PETER CUMMINS (age 60)
Vice President
Hartford Plaza
Hartford, CT 06115
Mr. Cummins has served as Senior Vice President since 1997 and Vice President
since 1989 of sales and marketing of the Individual Life and Annuity Division
of The Hartford Financial Services Group, Inc. - Life Companies. He is also
a Director and Vice President of HIFSCO.
-16-
<PAGE>
JOHN PHILLIP GINNETTI (age 52)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Ginnetti has served as Executive Vice President and Director of Asset
Management Services, a division of The Hartford Financial Services Group,
Inc. - Life Companies, since 1994. From 1988 to 1994 he served as Senior Vice
President and Director of the Individual Life and Annuities Division, also a
division of The Hartford Financial Services Group, Inc. - Life Companies.
ANDREW WILLIAM KOHNKE (age 39)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Kohnke has served as a Vice President since 1992, and as an Investment
Manager since 1983, of The Hartford Financial Services Group, Inc. Mr. Kohnke
is also a Director and Managing Director of HIMCO and a Director and Vice
President of HIFSCO.
THOMAS MICHAEL MARRA (age 39)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Marra has served as an Executive Vice President since 1996, as Senior
Vice President since 1994, and as Director of the Individual Life and Annuity
Division of The Hartford Financial Services Group, Inc. - Life Companies,
since 1980. Mr. Marra is also a Director and Executive Vice President of
HIFSCO.
CHARLES MINER O'HALLORAN (age 50)
Vice President and Secretary
Hartford Plaza
Hartford, CT 06115
Mr. O'Halloran has served as Senior Vice President since January, 1998,
Corporate Secretary since 1996, Vice President since 1994 and Senior
Associate General Counsel since 1988 of The Hartford Financial Services
Group, Inc. Mr. O'Halloran is also a Director, Secretary and General Counsel
of HIMCO and a Director of HIFSCO.
-17-
<PAGE>
GEORGE RICHARD JAY (age 45)
Controller and Treasurer
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Jay has served as Secretary and Director, Life and Equity Accounting and
Financial Control, of The Hartford Financial Services Group, Inc. - Life
Companies since 1987 and is a Director of HIFSCO.
KEVIN J. CARR (age 43)
Assistant Secretary and Counsel
Hartford Plaza
Hartford, CT 06115
Mr. Carr has served as Counsel since November 1996 and Associate Counsel
since November 1995, of The Hartford Financial Services Group, Inc. Formerly
he served as Counsel of Connecticut Mutual Life Insurance Company from March
1995 to November 1995, Associate Counsel of 440 Financial Group of Worcester
from 1994 to 1995 and Corporate Counsel-General Manager of Parker Media, a
Hartford-based publishing company, from 1990-1994. Mr. Carr is also an
Assistant Secretary of HIFSCO.
An Audit Committee and Nominating Committee have been appointed for the
Fund. Each Committee is made up of those directors who are not "interested
persons" of the Fund.
All Board members and officers of the Fund are also board members and
officers of The Hartford Mutual Funds, Inc., an open-end management
investment company comprised of nine separate funds, whose shares are sold to
the general public. Each of the Directors and principal officers affiliated
with the Fund who is also an affiliated person of HL Advisors or Wellington
Management is named above, together with the capacity in which such person is
affiliated with the Fund, HL Advisors or Wellington Management.
COMPENSATION OF OFFICERS AND DIRECTORS. The Funds pay no salaries or
compensation to any officer or director affiliated with The Hartford. The
chart below sets forth the fees paid by the Fund to the non-interested
Directors and certain other information as of December 31, 1997:
<TABLE>
<CAPTION>
JOSEPH A. WINIFRED E. WILLIAM A. MILLARD H. JOHN K.
BIERNAT COLEMAN O'NEILL PRYOR SPRINGER
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
COMPENSATION
RECEIVED FROM THE
FUND $0 $0 $0 $0 $0
PENSION OR
RETIREMENT BENEFITS
ACCRUED AS FUND
EXPENSE $0 $0 $0 $0 $0
TOTAL COMPENSATION
FROM THE FUND AND
COMPLEX PAID TO
DIRECTORS* $23,250 $23,250 $23,250 $23,250 $23,250
</TABLE>
*As of December 31, 1997, there were twenty-one funds in the Complex.
-18-
<PAGE>
OTHER INFORMATION ABOUT THE FUND
The Fund is a diversified series of the Hartford Series Fund, Inc., an
open-end investment company which was organized as a Maryland corporation on
January 15, 1998. The authorized capital stock of the Fund consists of 3
billion shares of common stock, par value $0.001 per share (Common Stock).
The Directors have authorized the issuance of two classes of shares of the
Fund designated in each instance as Class IA and Class IB shares.
The shares of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series of the Company vote together in the election and
selection of Directors and accountants. Shares of the Fund vote together as a
class on matters that affect the Fund in substantially the same manner. As
to matters affecting a single class, shares of such class will vote
separately. Shares of the Fund do not have cumulative voting rights. The
Company and the Fund do not intend to hold annual meetings of shareholders
unless required to do so by the 1940 Act or the Maryland statutes under which
the Company is organized. Although Directors are not elected annually by the
shareholders, shareholders have under certain circumstances the right to
remove one or more Directors. If required by applicable law, a meeting will
be held to vote on the removal of a Director or Directors of the Company if
requested in writing by the holders of not less than 25% of the Company's
outstanding shares. The Fund's shares are fully paid, and nonassessable and,
when issued, have no preference, preemptive, conversion or similar rights and
are freely transferable. With respect to the Fund's shares issued as
described above under "Purchase of Fund Shares," as well as Fund shares which
are not otherwise attributable to variable annuity contract owners or
variable life policy holders, The Hartford Life Insurance Companies shall be
the shareholders of record. Each of The Hartford Life Insurance Companies
will vote all Fund shares, pro rata, according to the written instructions of
the contract owners of the variable annuity contracts and the policy holders
of the variable life contracts issued by it using the Fund as investment
vehicles. This position is consistent with the policy of the SEC Staff.
The Company's Articles of Incorporation provide that the Directors,
officers and employees of the Company may be indemnified by the Company to
the fullest extent permitted by Maryland law and the federal securities laws.
The Company's Bylaws provide that the Fund shall indemnify each of its
Directors, officers and employees against liabilities and expenses reasonably
incurred by them, in connection with, or resulting from, any claim, action,
suit or proceeding, threatened against or otherwise involving such Director,
officer or employee, directly or indirectly, by reason of being or having
been a Director, officer or employee of the Company. Neither the Articles of
Incorporation nor the Bylaws authorize the Company to indemnify any Director
or officer against any liability to
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<PAGE>
which he or she would otherwise be subject by reason of or for willful
misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
INVESTMENT MANAGEMENT ARRANGEMENTS
The Fund has entered into an investment advisory agreement with HL
Investment Advisors, Inc. ("HL Advisors"). The investment advisory agreement
provides that HL Advisors, subject to the supervision and approval of the
Fund's Board of Directors, is responsible for the management of the Fund. HL
Advisors is responsible for investment management supervision of the Fund.
Hartford Life Insurance Company ("Hartford Life"), a corporate affiliate of
HL Advisors, provides administrative services to the Fund including
administrative personnel, services, equipment and facilities and office space
for proper operation of the Fund. Although Hartford Life has agreed to
arrange for the provision of additional services necessary for the proper
operation of the Fund, the Fund pays for these services directly.
With respect to the Fund, HL Advisors has entered into a sub-advisory
investment management agreement with Wellington Management Company
("Wellington Management"). Under the sub-advisory agreement, Wellington
Management, subject to the general supervision of the Board of Directors and
HL Advisors, is responsible for (among other things) the day-to-day
investment and reinvestment of the assets of the Fund and furnishing the Fund
with advice and recommendations with respect to investments and the purchase
and sale of appropriate securities for the Fund.
As provided by the investment advisory agreement, the Fund pays HL Advisors
an investment management fee, which is accrued daily and paid monthly, equal
on an annual basis to a stated percentage of the Fund's average daily net
asset value. HL Advisors, not the Fund, pays the subadvisory fees of
Wellington Management as set forth in the Prospectus.
No person other than HL Advisors or Wellington Management and their
directors and employees regularly furnishes advice to the Fund with respect
to the desirability of the Fund investing in, purchasing or selling
securities. Wellington Management may from time to time receive statistical
or other information regarding general economic factors and trends, from The
Hartford and its affiliates.
Securities held by the Fund may also be held by other funds and other
clients for which Wellington Management or its respective affiliates provide
investment advice. Because of different investment objectives or other
factors, a particular security may be bought by Wellington Management for one
or more clients when one or more clients are selling the same security. If
purchases or sales of securities arise for consideration at or about the same
time for any fund or client accounts (including other funds) for which
Wellington Management act as an investment adviser, (including the Fund
described herein) transactions in such securities will be made, insofar as
feasible, for the respective funds and other client accounts in a manner
deemed equitable to all.
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<PAGE>
To the extent that transactions on behalf of more than one client of
Wellington Management or its respective affiliates during the same period may
increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.
Pursuant to the investment advisory agreement, subadvisory investment
agreements and investment services agreements neither HL Advisors nor
Wellington Management is liable to the Fund or its shareholders for any error
of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which its agreements relate, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part
of Wellington Management in the performance of its duties or from its
reckless disregard of the obligations and duties under the applicable
agreement.
HL Advisors, whose principal business address is at 200 Hopmeadow Street,
Simsbury, Connecticut and whose mailing address is P.O. Box 2999, Hartford,
Connecticut 06104, was organized in 1981. As of December 31, 1997, HL
Advisors and its affiliates had over $54.9 billion in assets under
management. HL Advisors is a majority owned indirect subsidiary of The
Hartford.
Wellington Management, 75 State Street, Boston, MA 02109, is a professional
investment counseling firm that provides services to investment companies,
employee benefit plans, endowments, foundations and other institutions and
individuals. Wellington Management and its predecessor organizations have
provided investment advisory services since 1928. As of December 31, 1997,
Wellington Management had investment management authority with respect to
approximately $175 billion in assets. Wellington Management is a Massachusetts
Limited Liability Partnership. The three managing general partners of
Wellington Management are Robert W. Doran, Duncan M. McFarland and
John R. Ryan.
The investment management agreement and subadvisory investment agreement
continue in effect for two years from initial approval and from year to year
thereafter if approved annually by a vote of a majority of the Directors of
the Fund including a majority of the Directors who are not parties to an
agreement or interested persons of any party to the contract, cast in person
at a meeting called for the purpose of voting on such approval, or by holders
of a majority of the Fund's outstanding voting securities. The contract
automatically terminates upon assignment as defined under the 1940 Act. The
investment advisory agreement may be terminated without penalty on 60 days'
notice at the option of either party to the respective contract or by vote of
the holders of a majority of the outstanding voting securities of the Fund.
The subadvisory investment agreements and investment services agreements may
be terminated at any time without the payment of any penalty by the Board of
Directors, by vote of a majority of the outstanding voting securities of the
Fund or by HL Advisors, upon 60 days' notice to Wellington Management, and by
Wellington Management upon 90 days' written notice to HL Advisors (with
respect to the Fund only). The subadvisory investment agreement and
investment services agreement terminate automatically upon the termination of
the corresponding investment advisory agreement.
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<PAGE>
HL Advisors may make payments from time to time from its own resources,
which may include the management fees paid by the Fund to compensate broker
dealers, depository institutions, or other persons for providing distribution
assistance and administrative services and to otherwise promote the sale of
shares of the Fund including paying for the preparation, printing and
distribution of prospectuses and sales literature or other promotional
activities.
FUND EXPENSES
The Fund assumes and pays the following costs and expenses: interest;
taxes; brokerage charges (which may be to affiliated broker-dealers); costs
of preparing, printing and filing any amendments or supplements to the
registration forms of the Fund and its securities; all federal and state
registration, qualification and filing costs and fees, (except the initial
costs and fees, which will be borne by Hartford Life), issuance and
redemption expenses, transfer agency and dividend and distribution disbursing
agency costs and expenses; custodian fees and expenses; accounting, auditing
and legal expenses; fidelity bond and other insurance premiums; fees and
salaries of directors, officers and employees of the Fund other than those
who are also officers of Hartford Life; industry membership dues; all annual
and semiannual reports and prospectuses mailed to the Fund's shareholders as
well as all quarterly, annual and any other periodic report required to be
filed with the SEC or with any state; any notices required by a federal or
state regulatory authority, and any proxy solicitation materials directed to
the Fund's shareholders as well as all printing, mailing and tabulation costs
incurred in connection therewith, and any expenses incurred in connection
with the holding of meetings of the Fund's shareholders and other
miscellaneous expenses related directly to the Fund's operations and interest.
DISTRIBUTION ARRANGEMENTS
The Fund's shares are sold on a continuous basis by Hartford Securities
Distribution Company (the "Distributor") to separate accounts sponsored by
The Hartford and its affiliates.
-22-
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Fund has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to any policy
established by HL Advisors and the Board of Directors, Wellington Management
is primarily responsible for the investment decisions of the Fund and the
placing of its portfolio transactions. In placing orders, it is the policy
of the Fund to obtain the most favorable net results, taking into account
various factors, including price, dealer spread or commission, if any, size
of the transaction and difficulty of execution. While Wellington Management
generally seeks reasonably competitive spreads or commissions. Wellington
Management may direct brokerage transactions to broker/dealers who also sell
The Hartford's variable annuity and variable life insurance contracts and the
sale of such contracts may be taken into account by Wellington Management
when allocating brokerage transactions.
Wellington Management will generally deal directly with the dealers who
make a market in the securities involved (unless better prices and execution
are available elsewhere) if the securities are traded primarily in the
over-the-counter market. Such dealers usually act as principals for their
own account. On occasion, securities may be purchased directly from the
issuer. Bonds and money market securities are generally traded on a net basis
and do not normally involve either brokerage commissions or transfer taxes.
While Wellington Management seek to obtain the most favorable net results
in effecting transactions in the Fund's portfolio securities, dealers who
provide supplemental investment research to Wellington Management may receive
orders for transactions from Wellington Management. Such supplemental
research services ordinarily consist of assessments and analyses of the
business or prospects of a company, industry, or economic sector. If, in the
judgment of Wellington Management, the Fund will be benefited by such
supplemental research services, Wellington Management is authorized to pay
spreads or commissions to brokers or dealers furnishing such services which
are in excess of spreads or commissions which another broker or dealer may
charge for the same transaction. Information so received will be in addition
to and not in lieu of the services required to be performed by Wellington
Management under the investment advisory agreement or the sub-investment
advisory agreement. The expenses of Wellington Management will not
necessarily be reduced as a result of the receipt of such supplemental
information. Wellington Management may use such supplemental research in
providing investment advice to portfolios other than those for which the
transactions are made. Similarly, the Fund may benefit from such research
obtained by Wellington Management for portfolio transactions for other
clients.
Investment decisions for the Fund will be made independently from those of
any other clients that may be (or in the future may be) managed by Wellington
Management or its affiliates. If, however, accounts managed by Wellington
Management are simultaneously engaged in the purchase of the same security,
then, pursuant to general authorization of the Fund's Board of Directors,
available securities may be allocated to the Fund or other client account and
may be averaged as to price in whatever manner Wellington Management deems to
be fair. Such allocation and pricing may affect the amount of brokerage
commissions paid by the Fund. In some cases, this system
-23-
<PAGE>
might adversely affect the price paid by the Fund (for example, during
periods of rapidly rising or falling interest rates) or limit the size of the
position obtainable for the Fund (for example, in the case of a small issue).
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is determined by Hartford
Life, in the manner described in the Fund's Prospectus. The Fund will be
closed for business and will not price its shares on the following business
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Securities held by the Fund will be valued as follows: Debt
securities (other than short-term obligations) are valued on the basis of
valuations furnished by an unaffiliated pricing service which determines
valuations for normal institutional size trading units of debt securities.
The Fund's short-term investments with a maturity of 60 days or less when
purchased are valued at amortized cost, which approximates market value.
Short-term investments with a maturity of more than 60 days when purchased
are valued based on market quotations until the remaining days to maturity
become less than 61 days. From such time until maturity, the investments are
valued at amortized cost.
Equity securities are valued at the last sales price reported on principal
securities exchanges (domestic or foreign). If no sale took place on such
day and in the case of certain equity securities traded over-the-counter,
then such securities are valued at the mean between the bid and asked prices.
Securities quoted in foreign currencies are translated into U.S. dollars at
the exchange rate at the end of the reporting period. Options are valued at
the last sales price; if no sale took place on such day, then options are
valued at the mean between the bid and asked prices. Securities for which
market quotations are not readily available and all other assets are valued
in good faith at fair value by, or under guidelines established by, the
Fund's Board of Directors.
PURCHASE AND REDEMPTION OF SHARES
For information regarding the purchase of Fund shares, see "Purchase of
Fund Shares" in the Fund's Prospectus.
For a description of how a shareholder may have the Fund redeem his/her
shares, or how he/she may sell shares, see "Sale and Redemption of Shares" in
the Fund's Prospectus.
SUSPENSION OF REDEMPTIONS
The Fund may not suspend a shareholder's right of redemption, or postpone
payment for a redemption for more than seven days, unless the New York Stock
Exchange (NYSE) is closed for other than customary weekends or holidays, or
trading on the NYSE is restricted, or for any period during which an
emergency exists as a result of which (1) disposal by the Fund of securities
owned by it is not reasonably practicable, or (2) it is not reasonably
practicable for the Fund to fairly
-24-
<PAGE>
determine the value of its assets, or for such other periods as the
Securities and Exchange Commission may permit for the protection of investors.
INVESTMENT PERFORMANCE
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. Average annual total
return quotations for the Fund are computed by finding the average annual
compounded rates of return that would cause a hypothetical investment made on
the first day of a designated period to equal the ending redeemable value of
such hypothetical investment on the last day of the designated period in
accordance with the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of n = number of years
$1,000, less the maximum sales
load applicable to the Fund
T = average annual total return ERV = ending redeemable value of
the hypothetical $1,000
initial payment made at the
beginning of the designated
period (or fractional
portion thereof)
The computation above assumes that all dividends and distributions made by
the Fund are reinvested at net asset value during the designated period. The
average annual total return quotation is determined to the nearest 1/100 of
1%.
One of the primary methods used to measure performance is "total return."
"Total return" will normally represent the percentage change in value of a
class of the Fund, or of a hypothetical investment in a class of the Fund,
over any period up to the lifetime of the class. Unless otherwise indicated,
total return calculations will assume the deduction of the maximum sales
charge and usually assume the reinvestment of all dividends and capital gains
distributions and will be expressed as a percentage increase or decrease from
an initial value, for the entire period or for one or more specified periods
within the entire period. Total return calculations that do not reflect the
reduction of sales charges will be higher than those that do reflect such
charges.
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<PAGE>
Total return percentages for periods longer than one year will usually be
accompanied by total return percentages for each year within the period
and/or by the average annual compounded total return for the period. The
income and capital components of a given return may be separated and
portrayed in a variety of ways in order to illustrate their relative
significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee any
particular future result. In determining the average annual total return
(calculated as provided above), recurring fees, if any, that are charged to
all shareholder accounts are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of
the above computation is assumed to be the fee that would be charged to the
mean account size of the Fund.
The Fund's average annual total return quotations and yield quotations as
they may appear in the Prospectus, this SAI or in advertising are calculated
by standard methods prescribed by the SEC.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the
most recent monthly distribution per share annualized, by the current net
asset value per share. The Fund's effective distribution rate is computed by
dividing the distribution rate by the ratio used to annualize the most recent
monthly distribution and reinvesting the resulting amount for a full year on
the basis of such ratio. The effective distribution rate will be higher than
the distribution rate because of the compounding effect of the assumed
reinvestment. The Fund's yield is calculated using a standardized formula,
the income component of which is computed from the yields to maturity of all
debt obligations held by the Fund based on prescribed methods (with all
purchases and sales of securities during such period included in the income
calculation on a settlement date basis), whereas the distribution rate is
based on the Fund's last monthly distribution. The Fund's monthly
distribution tends to be relatively stable and may be more or less than the
amount of net investment income and short- term capital gain actually earned
by the Fund during the month (see "Dividends, Capital Gains and Taxes" in the
Fund's Prospectus).
Other data that may be advertised or published about the Fund include the
average portfolio quality, the average portfolio maturity and the average
portfolio duration.
STANDARDIZED YIELD QUOTATIONS. The yield of a class is computed by
dividing the class's net investment income per share during a base period of
30 days, or one month, by the maximum offering price per share of the class
on the last day of such base period in accordance with the following formula:
a-b (6)
2[(--------- +1) -1]
cd
Where:
a = net investment income earned c = the average daily number of shares
during the period attributable of the subject class outstanding
to the subject class during the period that were
entitled to receive dividends
b = net expenses accrued for d = the maximum offering price per
the period attributable share of the subjectNet investment
to the subject class income will be determined in
accordance with rules established
by the SEC.
-26-
<PAGE>
NON-STANDARDIZED PERFORMANCE. In addition, in order to more completely
represent the Fund's performance or more accurately compare such performance
to other measures of investment return, the Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return may be
quoted for the same or different periods as those for which Standardized
Return is quoted; it may consist of an aggregate or average annual percentage
rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without taking the effect of sales charges into
account will be higher than data including the effect of such charges. All
non-standardized performance will be advertised only if the standard
performance data for the same period, as well as for the required periods, is
also presented.
GENERAL INFORMATION. From time to time, the Fund may advertise its
performance compared to similar funds using certain unmanaged indices,
reporting services and publications. Descriptions of some of the indices
which may be used are listed below.
The Standard & Poor's 500 Composite Stock Price Index is a well diversified
list of 500 companies representing the U.S. Stock Market.
In addition, from time to time in reports and promotions: (1) the Fund's
performance may be compared to other groups of mutual funds tracked by: (a):
Lipper Analytical Services, a widely used independent research firm which
ranks mutual funds by overall performance, investment objectives, and assets;
(b) Morningstar, Inc., another widely used independent research firm which
ranks mutual funds by overall performance, investment objectives, and assets;
or (c) other financial or business publications, such as Business Week, Money
Magazine, Forbes and Barron's which provide similar information; (2) the
Consumer Price Index (measure for inflation) may be used to assess the real
rate of return from an investment in the Fund; (3) other statistics such as
GNP, and net import and export figures derived form governmental
publications, e.g., The Survey of Current Business or other independent
parties, e.g.,the Investment Company Institute, may be used to illustrate
investment attributes to the Fund or the general economic, business,
investment, or financial environment in which the Fund operates; (4) various
financial, economic and market statistics developed by brokers, dealers and
other persons may be used to illustrate aspects of the Fund's performance;
(5) the effect of tax-deferred compounding on the Fund's investment returns,
or on returns in general, may be illustrated by graphs, charts, etc. where
such graphs or charts would compare, at various points in time, the return
from an investment in the Fund (or returns in general) on a tax-deferred
basis (assuming reinvestment of capital gains and dividends and assuming one
or
-27-
<PAGE>
more tax rates) with the return on a taxable basis; and (6) the sectors or
industries in which the Fund invests may be compared to relevant indices or
surveys (e.g., S&P Industry Surveys) in order to evaluate the Fund's
historical performance or current or potential value with respect to the
particular industry or sector.
The Fund's investment performance may be advertised in various financial
publications, newspapers, magazines including the following:
Across the Board Inc
Advertising Age Independent Business
Adviser's Magazine Institutional Investor
Adweek Insurance Forum
Agent Insurance Advocate Independent
American Banker Insurance Review Investor's
American Agent and Broker Insurance Times
Associated Press Insurance Week
Barron's Insurance Product News
Best's Review Insurance Sales
Bloomberg Investment Dealers Digest
Broker World Investment Advisor
Business Week Journal of Commerce
Business Wire Journal of Accountancy
Business News Features Journal of the American Society
Business Month of CLU & ChFC
Business Marketing Kiplinger's Personal Finance
Business Daily Knight-Ridder
Business Insurance Life Association News
California Broker Life Insurance Selling
Changing Times Life Times
Consumer Reports LIMRA's MarketFacts
Consumer Digest Lipper Analytical Services, Inc.
Crain's MarketFacts
Dow Jones News Service Medical Economics
Economist Money
Entrepreneur Morningstar, Inc.
Entrepreneurial Woman Nation's Business
Financial Services Week National Underwriter
Financial World New Choices (formerly 50 Plus)
Financial Planning New England Business
Financial Times New York Times
Forbes Pension World
Fortune Pensions & Investments
Hartford Courant Professional Insurance Agents
-28-
<PAGE>
Professional Agent Reuter's
Registered Representative Rough Notes
Round the Table U.S. News & World Report
Service U.S. Banker
Success United Press International
The Standard USA Today
The Boston Globe Value Line
The Washington Post Wall Street Journal
Tillinghast Wiesenberger Investment
Time Working Woman
From time to time the Fund may publish the sales of shares of one or more
of the Funds on a gross or net basis and for various periods of time, and
compare such sales with sales similarly reported by other investment companies.
The manner in which total return and yield are calculated is described
above.
TAXES
The Fund is treated as a separate entity for accounting and tax purposes.
The Fund has qualified and elected or intends to qualify and elect to be
treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and intends to
continue to so qualify in the future. As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timing of its distributions, and the diversification of its assets, the Fund
will not be subject to federal income tax on taxable income (including net
short-term and long-term capital gains) which is distributed to shareholders
at least annually in accordance with the timing requirements of the Code.
The Fund will be subject to a 4% non-deductible federal excise tax on
certain amounts not distributed (and not treated as having been distributed)
on a timely basis in accordance with annual minimum distribution
requirements. The Fund intends under normal circumstances to avoid liability
for such tax by satisfying such distribution requirements.
If the Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as
interest, dividends, rents, royalties or capital gain) or hold at least 50%
of their assets in investments producing such passive income ("passive
foreign investment companies"), the Fund could be subject to federal income
tax and additional interest charges on "excess distributions" received from
such companies or gain from the sale of stock in such companies, even if all
income or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders
any credit or deduction for such a tax. Certain elections may, if available,
ameliorate these adverse tax consequences, but any such election would
require the Fund to recognize taxable income or gain without the concurrent
receipt of cash. Any Fund that is permitted to acquire stock in foreign
-29-
<PAGE>
corporations may limit and/or manage its holdings in passive foreign
investment companies to minimize its tax liability or maximize its return
from these investments.
Foreign exchange gains and losses realized by the Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain foreign currency futures and options, foreign currency forward
contracts, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally
causes such gains and losses to be treated as ordinary income and losses and
may affect the amount, timing and character of distributions to shareholders.
Any such transactions that are not directly related to the Fund's investment
in stock or securities, possibly including speculative currency positions or
currency derivatives not used for hedging purposes, may increase the amount
of gain it is deemed to recognize from the sale of certain investments held
for less than three months, which gain is limited under the Code to less than
30% of its annual gross income, and could under future Treasury regulations
produce income not among the types of "qualifying income" from which the Fund
must derive at least 90% of its annual gross income.
The Fund may be subject to withholding and other taxes imposed by foreign
countries with respect to their investments in foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate
such taxes. The Fund anticipates that it generally will not qualify to pass
such foreign taxes and any associated tax deductions or credits through to
its shareholders, who therefore generally will not report such amounts on
their own tax returns.
For Federal income tax purposes, the Fund is permitted to carry forward a
net capital loss in any year to offset its own capital gains, if any, during
the eight years following the year of the loss. To the extent subsequent
capital gains are offset by such losses, they would not result in federal
income tax liability to the Fund and would not be distributed as such to
shareholders.
The Fund that invests in certain PIKs, zero coupon securities or certain
deferred interest securities (and, in general, any other securities with
original issue discount or with market discount if the Fund elects to include
market discount in income currently) must accrue income on such investments
prior to the receipt of the corresponding cash payments. However, the Fund
must distribute, at least annually, all or substantially all of its net
income, including such accrued income, to shareholders to qualify as a
regulated investment company under the Code and avoid federal income and
excise taxes. Therefore, the Fund may have to dispose of its portfolio
securities under disadvantageous circumstances to generate cash, or may have
to leverage itself by borrowing the cash, to satisfy distribution
requirements.
Investment in debt obligations that are at risk of or in default presents
special tax issues for any Fund that may hold such obligations. Tax rules
are not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what
extent deductions may be taken for bad debts or worthless securities, how
payments received on obligations in default should be allocated between
principal and income, and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by any
-30-
<PAGE>
Fund that may hold such obligations in order to reduce the risk of
distributing insufficient income to preserve its status as a regulated
investment company and seek to avoid becoming subject to federal income or
excise tax.
Limitations imposed by the Code on regulated investment companies like the
Fund may restrict the Fund's ability to enter into futures, options, and
forward transactions.
Certain options, futures and forward foreign currency transactions
undertaken by the Fund may cause the Fund to recognize gains or losses from
marking to market even though its positions have not been sold or terminated
and affect the character as long-term or short-term (or, in the case of
certain currency forwards, options and futures, as ordinary income or loss)
and timing of some capital gains and losses realized by the Fund. Also,
certain of the Fund's losses on its transactions involving options, futures
or forward contracts and/or offsetting portfolio positions may be deferred
rather than being taken into account currently in calculating the Fund's
taxable income. Certain of the applicable tax rules may be modified if the
Fund is eligible and chooses to make one or more of certain tax elections
that may be available. These transactions may therefore affect the amount,
timing and character of the Fund's distributions to shareholders. The Fund
will take into account the special tax rules (including consideration of
available elections) applicable to options, futures or forward contracts in
order to minimize any potential adverse tax consequences.
The federal income tax rules applicable to interest rate swaps, caps and
floors are unclear in certain respects, and the Fund may be required to
account for these transactions in a manner that, in certain circumstances,
may limit the degree to which it may utilize these transactions.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under
such law. The discussion does not address special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance
companies, and financial institutions. Dividends, capital gain
distributions, and ownership of or gains realized on the redemption
(including an exchange) of the shares of the Fund may also be subject to
state and local taxes. Shareholders should consult their own tax advisers as
to the federal, state or local tax consequences of ownership of shares of,
and receipt of distributions from, the Fund in its particular circumstances.
STATE AND LOCAL. The Fund may be subject to state or local taxes in
jurisdictions in which the Fund may be deemed to be doing business. In
addition, in those states or localities which have income tax laws, the
treatment of the Fund and its shareholders under such laws may differ from
their treatment under federal income tax laws, and investment in the Fund may
have different tax consequences for shareholders than would direct investment
in the Fund's portfolio securities. Shareholders should consult their own
tax advisers concerning these matters.
-31-
<PAGE>
CUSTODIAN
Portfolio securities of the Fund are held pursuant to Custodian Agreements
between the Fund and State Street Bank and Trust Company.
DISTRIBUTOR
Hartford Securities Distribution Company, 200 Hopmeadow Street, Simsbury,
Connecticut 06070, acts as the Fund's Distributor.
TRANSFER AGENT SERVICES
Hartford Life Insurance Company, Hartford Plaza, Hartford, Connecticut
06115, serves as Transfer and Dividend Disbursing Agent for the Fund. The
Transfer Agent issues and redeems shares of the Fund and disburses any
dividends declared by the Fund.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, has been selected as the independent certified public
accountants of the Fund to provide audit services and assistance and
consultation with respect to the preparation of filings with the SEC.
OTHER INFORMATION
The Hartford has granted the Fund the right to use the name, "The Hartford"
or "Hartford", and has reserved the right to withdraw its consent to the use
of such name by the Fund at any time, or to grant the use of such name to any
other company.
-32-
<PAGE>
HARTFORD SERIES FUND, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
In Part A: Not Applicable
In Part B: Not Applicable
(b) Exhibits
1. Articles of Incorporation
2. By-Laws
3. Not Applicable
5. Form of Investment Management Agreement
5.1 Form of Sub-Advisory Agreement
6. Form of Principal Underwriting Agreement
7. Not Applicable
8. Form of Custodian Agreement
9. Not Applicable
10. Opinion and Consent of Counsel
11. Not Applicable
12. Not Applicable
13. Share Purchase Agreement
14. Not Applicable
15. Form of Rule 12b-1 Plan
16. Schedule of Computation for Performance Quotations(1)
17. Not Applicable
18. Form of Multi-Class Plan Pursuant to Rule 18f-3
19. Powers of Attorney
27. Not Applicable
Item 25. Persons Controlled by or Under Common Control with Registrant.
Inapplicable
- --------
(1) To be filed by Amendment.
<PAGE>
Item 26. Number of Record Holders by Class of Securities as of January 5, 1998.
Fund Name Class IA Class IB
Hartford Growth and Income HLS Fund 0 0
Total Number of Record Holders by Class 0 0
=======================================
Item 27. Indemnification.
Reference is made to Article V of the Articles of Incorporation filed
herewith.
Item 28. Business and Other Connections of Investment Adviser.
All of the information required by this item is set forth in Schedules
D of Forms ADV, as amended, for HL Investment Advisors, Inc. (File No.
801-16814) and Wellington Management (File No. 801-15908).
Item 29. Principal Underwriters
Hartford Securities Distribution Company, Inc. ("HSD") is an indirect
wholly owned subsidiary of The Hartford Financial Services Group, Inc. HSD is
the principal underwriter for the following registered investment companies:
Hartford Life Insurance Company - DC Variable Account I; Hartford Life Insurance
Company - Separate Account Two (DC Variable Account II); Hartford Life Insurance
Company - Separate Account Two (Variable Account "A"); Hartford Life Insurance
Company - Separate Account Two (QP Variable Account); Hartford Life Insurance
Company - Separate Account Two (NQ Variable Account); Hartford Life Insurance
Company - Putnam Capital Manager Trust Separate Account; Hartford Life Insurance
Company - Separate Account Two; Hartford Life Insurance Company - Separate
Account Three; ITT Hartford Life and Annuity Insurance Company - Separate
Account Three; Hartford Life Insurance Company - Separate Account Five; ITT
Hartford Life and Annuity Insurance Company - Separate Account One; ITT Hartford
Life and Annuity Insurance Company - Putnam Capital Manager Trust Separate
Account Two.
The Directors and principal officers of HSD and their position with the
Registrant are as follows:
Position or Office
Name* HSD with Registrant
----- --- ---------------
Peter Cummins Senior Vice-President Vice President
Lynda Godkin Senior Vice President, None
General Counsel and
Corporate Secretary
John P. Ginnetti Executive Vice Vice President
President
<PAGE>
George Jay Controller & Fin. Controller & Treasurer
Principal
Stephen T. Joyce Asst. Secretary None
Glen J. Kvadus Asst. Secretary None
Thomas M. Marra Exec. Vice-Pres. Vice President
Paul Eugene Olson Supv. Registered None
Principal
Edward M. Ryan, Jr. Asst. Secretary None
Lowndes A. Smith President and CEO Chairman
Donald W. Waggaman, Jr. Treasurer None
o Principal business address is P.O. Box 2999, Hartford, CT 01604-2999
Item 30. Location of Accounts and Records.
Books or other documents required to be maintained by the Registrant by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained by the Registrant's custodian, State Street Bank and
Trust Company, 224 Franklin Street, Boston, MA 02110 and by Hartford Life
Insurance Companies, 200 Hopmeadow Street, Simsbury, CT 06089.
Item 31. Management Services
Not Applicable
Item 32. Undertakings.
(a) Not Applicable
(b) The Company will file a post-effective amendment, using financial
statements which need not be certified, within four to six months
from the effective date of the Registrant's registration statement.
(c) The Company will furnish each person to whom a prospectus is
delivered with a copy of the Company's latest annual report to
shareholders, upon request and without charge.
(d) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended, as it relates to the
assistance to be rendered to shareholders with respect to the call
of a meeting to replace a director.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on the 29th day of January, 1998.
HARTFORD SERIES FUND, INC.
By: *
------------------------
Joseph H. Gareau
Its: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
* President January 29, 1998
- ---------------------- (Chief Executive Officer
Joseph H. Gareau & Director)
* Controller & Treasurer January 29, 1998
- ---------------------- (Chief Accounting Officer
George R. Jay and Chief Financial
Officer)
* Director January 29, 1998
- ----------------------
Joseph A. Biernat
* Director January 29, 1998
- ----------------------
Winifred E. Coleman
* Director January 29, 1998
- ----------------------
William A. O'Neill
* Director January 29, 1998
- ----------------------
Millard H. Pryor, Jr.
* Director January 29, 1998
- ----------------------
Lowndes A. Smith
* Director January 29, 1998
- ----------------------
John K. Springer
Part C - Page 15
<PAGE>
/s/ Kevin J. Carr January 29, 1998
- ----------------------
*By: Kevin J. Carr
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Page No.
- ----------- --------
1. Articles of Incorporation
2. By-Laws
5. Form of Investment Management Agreement
5.1 Form of Sub-Advisory Agreement
6. Form of Principal Underwriting Agreement
8. Form of Custodian Agreement
10. Opinion and Consent of Counsel
13. Share Purchase Agreement
15. Form of Rule 12b-1 Distribution Plan
18. Form of Multi-Class Plan Pursuant to
Rule 18f-3
19. Powers of Attorney
<PAGE>
ARTICLES OF INCORPORATION
OF
HARTFORD SERIES FUND, INC.
I, THE UNDERSIGNED, Kevin J. Carr, whose post office address is 55
Farmington Avenue, Hartford, CT 06105, being at least eighteen (18) years of
age, subscribe these Articles of Incorporation as the sole incorporator forming
a corporation under the General Laws of the State of Maryland.
ARTICLE I
NAME
The name of the corporation (which is hereinafter called the
"Corporation") is:
Hartford Series Fund, Inc.
ARTICLE II
PURPOSES AND POWERS
(a) The purposes for which the Corporation is formed and the
business and objects to be carried on and promoted by it are:
(1) To engage generally in the business of investing,
reinvesting, owning, holding or trading in securities, as defined in the
Investment Company Act of 1940, as from time to time amended (hereinafter
referred to as the "Investment Company Act"), as an investment company
classified under the Investment Company Act as an open-end management company.
(2) To engage in any one or more businesses or transactions,
or to acquire all or any portion of any entity engaged in any one or more
businesses or transactions, which the Board of Directors may from time to time
authorize or approve, whether or not related to the business described elsewhere
in this Article or to any other business at the time or theretofore engaged in
by the Corporation.
(3) To hold, invest and reinvest its assets in securities,
including securities of other investment companies and other instruments and
obligations, and in connection therewith, to hold part or all of its assets in
cash.
(4) To subscribe for, invest in, purchase or otherwise
acquire, own, hold, sell, exchange, pledge or otherwise dispose of, securities
of every nature and kind, including, without limitation, all types of stocks,
bonds, debentures, notes, other securities or obligations or evidences or
indebtedness or ownership issued or created by any and all persons,
associations, agencies, trusts or corporations, public or private, whether
created, established or organized under the laws of the United States, any of
the States, or any territory or district or colony or possession thereof, or
under the laws of any foreign country, and also foreign and domestic government
and municipal obligations, bank acceptances and commercial paper, to pay for the
<PAGE>
same in cash or by the issue of stock, bonds, or notes of this Corporation or
otherwise; and while owning and holding any such securities, to exercise all the
rights, powers and privileges of a stockholder or owner, including, and without
limitation, the right to delete and assign to one or more persons, firms,
associations, or corporations the power to exercise any of said rights, powers
and privileges in respect of any such securities; to borrow money or otherwise
obtain credit and, if required, to secure the same by mortgaging, pledging or
otherwise encumbering as security the assets of this Corporation.
(5) To issue and sell shares of its own capital stock in such
amounts and on such terms and conditions, for such purposes and for such amount
or kind of consideration now or hereafter permitted by the Maryland General
Corporation Law and by this charter, as its Board of Directors may determine,
provided, however, that the value of the consideration per share to be received
by the Corporation upon the sale or other disposition of any shares of its
capital stock shall be not less than the par value per share of such capital
stock outstanding at the time of such event.
(6) To redeem, purchase or otherwise acquire, hold, dispose
of, resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by the General Corporation Law of the
State of Maryland and by the Corporation's charter.
(7) To do any and all such further acts or things and to
exercise any and all such further powers or rights as may be necessary,
incidental, relative, conducive, appropriate or desirable for the
accomplishment, carrying out or attainment of any of the foregoing purposes or
objects.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of the charter of the Corporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the General Laws of the State of Maryland.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation in this State shall
be c/o The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202. The name and address of the resident agent of the Corporation in this
State are The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a Maryland corporation.
<PAGE>
ARTICLE IV
CAPITAL STOCK
(a) The total number of shares of stock of all classes and series
which the Corporation initially has authority to issue is Three Billion
(3,000,000,000) shares of capital stock (par value $0.001 per share), amounting
in aggregate par value to $3,000,000. All of such shares are initially
classified as "Common Stock". The Board of Directors may classify or reclassify
any unissued shares of capital stock (whether or not such shares have been
previously classified or reclassified) from time to time by setting or changing
in any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
(b) Unless otherwise prohibited by law, so long as the Corporation
is registered as an open-end company under the Investment Company Act, the Board
of Directors shall have the power and authority, without the approval of the
holders of any outstanding shares, to increase or decrease the number of shares
of capital stock or the number of shares of capital stock of any class or series
that the Corporation has authority to issue.
(c) The authorized shares of Common Stock shall be classified into
the following series of Common Stock, subject to the authority of the Board of
Directors to classify or reclassify any unissued shares of capital stock and to
the authority of the Board of Directors to increase or decrease the number of
shares of capital stock or the number of shares of capital stock of any class or
series that the Corporation has the authority to issue:
SERIES NUMBER OF SHARES IN SERIES
------ --------------------------
Hartford Growth and Income HLS Fund 3,000,000,000
Any series of Common Stock shall be referred to herein individually as a
"Series" and collectively, together with any further series from time to time
established, as the "Series".
(d) The following is a description of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the shares of Common
Stock classified into the Series listed above and any additional Series of
Common Stock of the Corporation (unless provided otherwise by the Board of
Directors with respect to any such additional Series at the time it is
established and designated):
(1) Assets Belonging to Series. All consideration received by
the Corporation from the issue or sale of shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any investment or reinvestment of such proceeds in
<PAGE>
whatever form the same may be, shall irrevocably belong to that Series for all
purposes, subject only to the rights of creditors, and shall be so recorded upon
the books of account of the Corporation. Such consideration, assets, income,
earnings, profits and proceeds, together with any General Items (as defined
below) allocated to that Series as provided in the following sentence, are
herein referred to collectively as "assets belonging to" that Series. In the
event that there are any assets, income, earnings, profits or proceeds which are
not readily identifiable as belonging to any particular Series (collectively,
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
the Board of Directors, in its sole discretion, deems fair and equitable; and
any General Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Board of Directors shall be conclusive and
binding for all purposes.
(2) Liabilities of Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Corporation in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series, and any general liabilities, expenses, costs,
charges or reserves of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and charged by or under
the supervision of the Board of Directors to and among any one or more of the
Series established and designated from time to time in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to collectively as "liabilities of"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors shall be
conclusive and binding for all purposes.
(3) Dividends and Distributions. Dividends and capital gains
distributions on shares of a particular Series may be paid with such frequency,
in such form and in such amount as the Board of Directors may determine by
resolution adopted from time to time, or pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Board of Directors
may determine, after providing for actual and accrued liabilities of that
Series. All dividends on shares of a particular Series shall be paid only out of
the income belonging to that Series and all capital gains distributions on
shares of a particular Series shall be paid only out of the capital gains
belonging to that Series. All dividends and distributions on shares of a
particular Series shall be distributed pro rata to the holders of that Series in
proportion to the number of shares of that Series held by such holders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure, the Board of Directors may determine that no dividend or
distribution shall be payable on shares as to which the stockholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.
<PAGE>
Dividends and distributions may be paid in cash,
property or additional shares of the same or another Series, or a combination
thereof, as determined by the Board of Directors or pursuant to any program that
the Board of Directors may have in effect at the time for the election by
stockholders of the form in which dividends or distributions are to be paid. Any
such dividend or distribution paid in shares shall be paid at the current net
asset value thereof.
(4) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote for each share
outstanding in his name on the books of the Corporation, irrespective of the
Series thereof, and all shares of all Series shall vote as a single class
("Single Class Voting"); provided, however, that (i) as to any matter with
respect to which a separate vote of any Series is required by the Investment
Company Act or by the Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single Class Voting, (ii) in
the event that the separate vote requirement referred to in clause (i) above
applies with respect to one or more Series, then, subject to clause (iii) below,
the shares of all other Series shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular Series, including
liquidation of another Series as described in subsection (7) below, only the
holders of shares of the one or more affected Series will be entitled to vote.
(5) Redemption by Stockholders. Each holder of shares of a
particular Series shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his shares
of that Series, at a redemption price per share equal to the net asset value per
share of that Series next determined after the shares are properly tendered for
redemption, less such redemption fee or sales charges, if any, as may be
established by the Board of Directors in its sole discretion in accordance with
any applicable provisions of the Investment Company Act. Payment of the
redemption price shall be in cash; provided, however, that if the Board of
Directors determines, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Corporation
may, to the extent and in the manner permitted by the Investment Company Act,
make payment wholly or partly in securities or other assets belonging to the
Series of which the shares being redeemed are a part, at the value of such
securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Corporation may
postpone payment of the redemption price and may suspend the right of the
holders of shares of any Series to require the Corporation to redeem shares of
that Series during any period or at any time when and to the extent permissible
under the Investment Company Act.
(6) Redemption by Corporation. The Board of Directors may
cause the Corporation to redeem at their net asset value the shares of any
Series held in an account (i) if the redemption is, in the opinion of the Board
of Directors of the Corporation, desirable in order to
<PAGE>
prevent the Corporation from being deemed a "personal holding company" within
the meaning of the Internal Revenue Code of 1986, as from time to time amended,
(ii) if the value of an account maintained by the Corporation or its transfer
agent for any stockholder is less than a specified amount determined by the
Board of Directors of the Corporation, from time to time, and the stockholder
has been given at least thirty (30) days' written notice of the redemption and
has failed to make additional purchases of shares in an amount sufficient to
bring the value of the account up to the specified account value before the
redemption is effected by the Corporation or (iii) if the stockholder has failed
to furnish a correct certified social security or tax identification number
required by the Corporation to be obtained.
(7) Liquidation. In the event of the liquidation of a
particular Series, the stockholders of the Series that is being liquidated shall
be entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets belonging to that Series over the
liabilities of that Series. The holders of shares of any particular Series shall
not be entitled thereby to any distribution upon liquidation of any other
Series. The assets so distributable to the stockholders of any particular Series
shall be distributed among such stockholders in proportion to the number of
shares of that Series held by them and recorded on the books of the Corporation.
The liquidation of any particular Series in which there are shares then
outstanding may be authorized by vote of a majority of the Board of Directors
then in office, and, if required under Maryland or other applicable law, subject
to the approval of a majority of the outstanding voting securities of that
Series, as defined in the Investment Company Act, and without the vote of the
holders of shares of any other Series. The liquidation of a particular Series
may be accomplished, in whole or in part, by the transfer of assets of such
Series to another Series or by the exchange of shares of such Series for the
shares of another Series.
(8) Net Asset Value Per Share. The net asset value per share
of any Series shall be the quotient obtained by dividing the value of the net
assets of that Series (being the value of the assets belonging to that Series
less the liabilities of that Series) by the total number of shares of that
Series outstanding, all as determined by or under the direction of the Board of
Directors in accordance with generally accepted accounting principles and the
Investment Company Act. Subject to the applicable provisions of the Investment
Company Act, the Board of Directors, in its sole discretion, may prescribe and
shall set forth in the Bylaws of the Corporation or in a duly adopted resolution
of the Board of Directors such bases and times for determining the value of the
assets belonging to, and the net asset value per share of outstanding shares of,
each Series, or the net income attributable to such shares, as the Board of
Directors deems necessary or desirable. The Board of Directors shall have full
discretion, to the extent not inconsistent with the Maryland General Corporation
Law and the Investment Company Act, to determine which items shall be treated as
income and which items as capital and whether any item of expense shall be
charged to income or capital. Each such determination and allocation shall be
conclusive and binding for all purposes.
<PAGE>
The Board of Directors may determine to maintain the net asset
value per share of any Series at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the Investment
Company Act for the continuing declaration of income attributable to that Series
as dividends and for the handling of any losses attributable to that Series.
Such procedures may provide that in the event of any loss, each stockholder
shall be deemed to have contributed to the capital of the Corporation
attributable to that Series his pro rata portion of the total number of shares
required to be canceled in order to permit the net asset value per share of that
Series to be maintained, after reflecting such loss, at the designated constant
dollar amount. Each stockholder of the Corporation shall be deemed to have
agreed, by his investment in any Series with respect to which the Board of
Directors shall have adopted any such procedure, to make the contribution
referred to in the preceding sentence in the event of any such loss.
(9) Conversion of Exchange Rights. Subject to compliance with
the requirements of the Investment Company Act, the Board of Directors shall
have the authority to provide that holders of shares of any Series shall have
the right to convert or exchange said shares into shares of one or more other
Series of shares in accordance with such requirements and procedures as may be
established by the Board of Directors.
(e) The Series identified in paragraph (c) of this Article IV and
any additional Series of Common Stock (unless otherwise specified in the
articles supplementary designating such Series) shall each initially have two
classes of shares, which shall be designated Class IA and Class IB, each
consisting, until further changed, of the lesser of (x) the total number of
shares of each such Series designated and specified in Paragraph (c) above or
(y) the number of shares that could be issued by issuing all of the shares of
that Series currently or hereafter classified less the total number of shares of
all other classes of such Series then issued and outstanding. Any class of a
Series of Common Stock shall be referred to herein individually as a "Class" and
collectively, together with any further class or classes of such Series from
time to time established, as the "Classes". For each of the Series listed above,
all of the shares of such Series that are not classified otherwise shall be
referred to as Class IA shares.
(f) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation, and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding anything
in the charter of the Corporation to the contrary:
(1) The Class IB shares shall be subject to such fees and
expenses under a Rule 12b-1 plan as may be established for the Class
IB Shares from time to time by the Board of Directors in accordance
with the Investment Company Act and applicable rules and regulations
of the National Association of Securities Dealers, Inc.
<PAGE>
(2) Class IA Shares may be exchanged only for Class IA Shares
of another Series and Class IB Shares may be exchanged only for
Class IB Shares of another Series.
(3) Expenses related solely to a particular Class of a Series
(including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses (including transfer agent
fees) under an administration or service agreement, plan or other
arrangement, however designated) shall be borne by that Class and
shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distribution
and liquidation rights of the shares of that Class.
(4) At such time as may be determined by the Board of
Directors in accordance with the Investment Company Act and
applicable rules and regulations of the National Association of
Securities Dealers, Inc. and reflected in the current registration
statement relating to a Series, shares of a particular Class of a
Series may be automatically converted into shares of another Class;
provided, however, that such conversion shall be subject, at the
election of the Board of Directors, to the continuing availability
of a private letter ruling of the Internal Revenue Service, an
opinion of counsel or such other evidence as deemed appropriate by
the Board of Directors to the effect that such conversion does not
constitute a taxable event under federal income tax law and shall
otherwise be in accordance with the Investment Company Act. The
Board of Directors, in its sole discretion, may suspend any
conversion rights if such opinion is no longer available.
(5) As to any matter with respect to which a separate vote of
any Class of a Series is required by the Investment Company Act or
by the Maryland General Corporation Law (including, without
limitation, approval of any plan, agreement or other arrangement
referred to in subsection (2) above), such requirement as to a
separate vote by that Class shall apply in lieu of Single Class
Voting, and if permitted by the Investment Company Act or the
Maryland General Corporation Law, the Classes of more than one
Series shall vote together as a single class on any such matter
which shall have the same effect on each such Class. As to any
matter which does not affect the interest of a particular Class of a
Series, only the holders of shares of the affected Classes of that
Series shall be entitled to vote.
(g) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the charter or Bylaws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
<PAGE>
(h) The Corporation shall not be obligated to issue certificates
representing shares of any Class or Series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall provide
the stockholder with such information as may be required under the Maryland
General Corporation Law.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(a) The initial number of Directors of the Corporation shall be one;
provided, however, that the number may be increased in accordance with the
Bylaws of the Corporation. The name of the Director who shall act until the
first annual or special meeting or until his successor is duly chosen and
qualifies is:
Kevin J. Carr
(b) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its stock of any class or series,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or series, whether now or hereafter authorized, for such
consideration as may be deemed advisable by the Board of Directors and without
any action by the stockholders.
(c) No holder of any stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any stock or any other securities of the
Corporation other than such, if any, as the Board of Directors, in its sole
discretion, may determine and at such price or prices and upon such other terms
as the Board of Directors, in its sole discretion, may fix; and any stock or
other securities which the Board of Directors may determine to offer for
subscription may, as the Board of Directors in its sole discretion shall
determine, be offered to the holders of any class, series or type of stock or
other securities at the time outstanding to the exclusion of the holders of any
or all other classes, series or types of stock or other securities at the time
outstanding.
(d) The Board of Directors of the Corporation shall, consistent with
applicable law, have power in its sole discretion to determine from time to time
in accordance with sound accounting practice or other reasonable valuation
methods what constitutes annual or other net profits, earnings, surplus, or net
assets in excess of capital; to determine that the retained earnings or surplus
shall remain in the hands of the Corporation; to set apart out of any funds of
the Corporation such reserve or reserves in such amount or amounts and for such
proper purpose or purposes as it shall determine and to abolish any such reserve
or any part thereof; to distribute and pay distributions or dividends in stock,
cash or other securities or property, out of surplus or
<PAGE>
any other funds or amounts legally available therefor, at such times and to the
stockholders of record on such dates as it may, from time to time, determine;
and to determine whether and to what extent and at what times and places and
under what conditions and regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection of stockholders,
except as otherwise provided by statute or by the Bylaws, and, except as so
provided, no stockholder shall have any right to inspect any book, account or
document of the Corporation unless authorized so to do by resolution of the
Board of Directors.
(e) Notwithstanding any provision of Maryland law requiring the
authorization of any action by a greater proportion than a majority of the total
number of shares of all classes and series of capital stock or of the total
number of shares of any class or series of capital stock entitled to vote as a
separate class, such action shall be valid and effective if authorized by the
affirmative vote of the holders of a majority of the total number of shares of
all classes and series outstanding and entitled to vote thereon, or of the class
or series entitled to vote thereon as a separate class, as the case may be,
except as otherwise provided in the charter of the Corporation. As provided in
the Investment Company Act, a "majority" vote means the affirmative vote of the
lesser of (i) more than 50% of the outstanding shares of capital stock, or (ii)
67% or more of the shares present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy.
(f) The Corporation shall indemnify (i) its directors and officers,
whether serving the Corporation or at its request any other entity, to the full
extent required or permitted by the General Laws of the State of Maryland and
the federal securities laws now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by law, and (ii)
other employees and agents to such extent as shall be authorized by the Board of
Directors or the Bylaws and as permitted by law. Nothing contained herein shall
be construed to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time to
time such bylaws, resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law. No amendment of
the charter of the Corporation or repeal of any of its provisions shall limit or
eliminate the right of indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.
(g) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act, no
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
<PAGE>
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal.
(h) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its charter, of any of its outstanding stock by classification,
reclassification or otherwise.
(i) The enumeration and definition of particular powers of the Board
of Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other Article of the charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.
ARTICLE VI
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
I, Kevin J. Carr, hereby acknowledge that I have executed the foregoing
Articles of Incorporation as my free act and deed this 13th day of January,
1998.
/s Kevin J. Carr
------------------------
Kevin J. Carr
<PAGE>
Bylaws
of
HARTFORD SERIES FUND, INC.
Adopted:
<PAGE>
BYLAWS
of
HARTFORD SERIES FUND, INC.
ARTICLE I
Meetings of Stockholders
Section 1.1 Place of Meetings: All meetings of stockholders shall be held at
the principal office of the Corporation in the City of Hartford, Connecticut, or
at such place within the United States as from time to time may be designated by
resolution of the Board of Directors.
Section 1.2 Annual Meeting: Except as hereinafter otherwise provided, the
annual meeting of stockholders shall be held each year at such date and time as
shall be designated by resolution of the Board of Directors for such business as
may properly come before said meeting. Insofar as the Corporation is registered
under the Investment Act of 1940, the Corporation shall not be required to hold
an annual meeting of stockholders unless specifically required by the Investment
Company Act of 1940 or the General Laws of the State of Maryland.
Section 1.3 Special Meetings: Special meetings of the stockholders entitled
to vote at such meetings may be called at any time by the President or by any
three of the Directors, and shall be called at the request in writing of the
stockholders of record owning not less than twenty-five (25) percent of the
shares of the Corporation's capital stock entitled to vote at such meeting if
required by Maryland General Corporation Law or other applicable law.
Section l.4 Notice of Meetings: Not less than ten (l0) days or more than
ninety (90) days before every stockholders' meeting, notice of the time, place,
and in the case of a special meeting, the purpose, of such meeting shall be
given, either by serving such notice upon the stockholder personally or by
mailing such notice to each stockholder at his last known post office address as
it appears upon the stock book, unless he shall have filed with the Secretary of
the Corporation a written request that notices intended for him be mailed to
some other address, in which case it shall be mailed to the address designated
in such request. Except as otherwise required by law, no notice of the time,
place or purpose of any meeting of stockholders need be given to any stockholder
who attends in person or by proxy, or who, in a written instrument executed by
any officer and filed with the records of the meeting either before or after the
holding thereof, waives such notice. No notice of any adjourned meeting of
stockholders need be given.
Section l.5 Record Date: The Board of Directors by resolution may fix in
advance a date, not exceeding ninety (90) days preceding the date of any meeting
of stockholders or the
<PAGE>
date for the payment of any dividend or the date for the allotment of rights or
the date when any change or conversion or exchange of capital stock shall go
into effect, as a record date for the determination of the stockholders entitled
to notice of, and to vote at, any such meeting, or entitled to receive payment
of any such dividend or any such allotment of rights, or to exercise the rights
in respect of any such change or conversion or exchange of capital stock, and in
such case only such stockholders as shall be stockholders of record on the date
so fixed shall be entitled to such notice of and to vote at, such meeting, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
capital stock on the books of the Corporation after any such record date fixed
as aforesaid.
Section l.6 Quorum: At all meetings of stockholders, there shall be present,
either in person or by proxy, stockholders owning a majority of the shares
entitled to vote thereat in order to constitute a quorum, but in the absence of
a quorum the stockholders present in person or by proxy at the time and place
fixed by Section l of this Article I for an annual meeting, or designated in the
notice of a special meeting, or at the time and place of any adjournment
thereof, may adjourn the meeting from time to time without notice, other than by
announcement at the meeting until a quorum shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally noticed.
Section l.7 Voting: At all meetings of stockholders, the voting shall be by
voice, except that whenever a vote by the holders of the outstanding shares of
capital stock is required by law or where a stockholder present in person or by
proxy at any such meeting requests a vote by ballot, the voting shall be by
ballot, each of which shall state the name of the stockholder voting and the
number of shares voted by him, and, if such ballot is cast by proxy, it shall
also state the name of such proxy. Subject to the provisions of the Articles of
Incorporation of the Corporation, the holders of the capital stock shall have
the right to vote at any meeting of the stockholders or at any election of the
Corporation, and otherwise to participate in any action taken by the
stockholders thereof, and each such holder shall be entitled to one vote for
each share of capital stock that he holds. The Corporation may permit the voting
of fractional shares. Except in cases in which it is by law, by the Articles of
Incorporation, or by these Bylaws otherwise provided, the votes of a majority of
the shares of capital stock of the Corporation present or represented at any
meeting of stockholders at which a quorum is present shall be sufficient to
elect and to pass any resolution.
As provided in the Investment Company Act of 1940 a "majority"
vote means the affirmative vote of the lesser of (i) more than 50% of the
outstanding shares of capital stock, or (ii) 67% or more of the shares present
at a meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
Section l.8 Proxies: Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy, but no proxy which is dated
more than eleven (11) months
<PAGE>
before the meeting at which it is offered shall be accepted, unless such proxy
shall on its face name a longer period for which it is to remain in force. Every
proxy shall be in writing, signed by the stockholder or his duly authorized
attorney, and dated, but need not be sealed, witnessed, or acknowledged.
ARTICLE II
Board of Directors
Section 2.l Powers and Election: The Directors of the Corporation shall have
the powers as stated in the Articles of Incorporation and as provided in these
By-laws, and such as are prescribed by the laws of the State of Maryland. They
shall be residents of the United States of America and they shall be elected to
office by the stockholders of the Corporation at an annual or a special meeting
duly called for that purpose, except as hereinafter otherwise provided for
filling vacancies.
Section 2.2 Meetings and Notice: Regular meetings of the Board of Directors
shall be held at such times as may from time to time be fixed by resolution of
the Board, and whenever called together by the Chairman, President or Treasurer,
on two days' notice, given to each Director. Special meetings may be called at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board, the President or the Treasurer or by one-third (1/3)
of the Directors, sufficient notice thereof being given by the Secretary,
Assistant Secretary or by the officer or Directors calling the meeting. Notice
may be served personally upon each Director, or mailed, cabled, or telegraphed
to him at his present address appearing upon the books of the Corporation. Such
notice also may be telephoned, provided that any Director so notified shall be
actually reached by telephone.
Section 2.3 Quorum: The presence of not less than two (2) of the Directors or
of one-third (1/3) of the total number of Directors, whichever shall be greater,
shall be necessary to constitute a quorum for the transaction of business at any
meeting of the Board, but a majority of the Directors present at the time and
place of any regular or special meeting, although less than a quorum, may
adjourn the same from time to time without further notice until a quorum shall
be present at which time any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2.4 Place of Meetings and Office: The Board of Directors may hold
their meetings and have an office or offices within or without the State of
Maryland.
Section 2.5 Vacancies: Except as law or valid regulations may require of
registered investment companies, any vacancy in the Board of Directors occurring
through death, resignation, removal, increase in number, or other cause, may be
filled by a majority vote of the remaining Directors at any regular or special
meeting of the Board of Directors.
<PAGE>
Section 2.6 Number: The Board of Directors shall be not less than one nor
more than twenty (20) in number (as consistent with Section 2-402 of the
Maryland General Corporation Law). The number may be changed at any time or
times by an amendment to this Bylaw duly adopted by a majority of the Board of
Directors or by the stockholders at any stockholders' meeting.
Section 2.7 Compensation: Each Director may receive a stated fee for his
services as a Director, as may be fixed by resolution of the Board of Directors
for attendance, and the expenses of attendance, if any, at each regular or
special meeting of the Board or committee of the Board on which he serves. Such
resolution may apply to any class of Directors the Board of Directors considers
to be reasonable. Any Director receiving compensation under these provisions
shall not be barred from serving the Corporation in any other capacity and
receiving reasonable compensation for such other services.
Section 2.8 Meeting by Conference Telephone: Subject to the provisions of the
Investment Company Act of 1940, as amended, and the Rules and Regulations
thereunder, members of the Board of Directors or any committee thereof may meet
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time and participation by such means shall constitute presence in person at
a meeting.
Section 2.9 Action Without Meeting: Except as otherwise provided by law, any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.
Section 2.10 Waiver of Notice: Whenever under the provisions of these Bylaws
or any of the laws of the State of Maryland, the stockholders or Board of
Directors are authorized to hold any meeting after notice or after the lapse of
any prescribed period of time, such meeting may be held without notice and
without such lapse of time by a written waiver of such notice signed by every
person entitled to notice.
ARTICLE III
Executive and Other Committees of the Board
Section 3.l Election of Executive Committee: The Board of Directors may elect
from their number an Executive Committee of two (2) or more and may designate a
Chairman for said Committee. The Chairman of the Committee and the members of
the Executive Committee shall continue in office at the pleasure of the Board.
The Board of Directors shall fill vacancies in the Executive Committee by
election of members from the Board of Directors and at all times it
<PAGE>
shall be the duty of the Board of Directors to keep the membership of such
committee full, if such Executive Committee has been elected.
Section 3.2 Powers and Supervisions by the Board: During the intervals
between the meetings of the Board of Directors, the Executive Committee shall
possess and may exercise all of the powers of the Board of Directors in the
management and direction of the Business of the Corporation, except as to
matters wherein action of the Board of Directors is specifically required, in
such manner as the Executive Committee shall deem best for the interests of the
Corporation in all cases in which specific directions shall not have been given
by the Board of Directors. All actions of the Executive Committee shall be
reported to the Board of Directors at its next meeting and shall be subject to
revision or alteration by the Board, provided that no rights or acts of third
parties shall be affected by any such revision or alteration.
Section 3.3 Other Committees: The Board of Directors may by resolution
provide for such Audit, Administrative, Nominating, Standing and/or Special
Committees from its membership as it may deem desirable, and may discontinue the
same at pleasure. Each such committee shall have such powers and shall perform
such duties, not inconsistent with law, as may be assigned to it by the Board of
Directors.
Section 3.4 Meetings of Board Committees: The Executive Committee and any
other committee of the Board shall meet upon such day or days and at such hour
or hours as may be designated from time to time by resolution passed by a
majority of such committee and whenever called together by its Chairman upon
notice given to each member of the Committee not later than the day next
preceding the date of the meeting. Upon the written request of any two members
of the committee, the Chairman shall call a special meeting of the committee.
The presence of at least a majority of the Executive Committee shall be
necessary to adopt any resolution. In the absence of any member of the Executive
Committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board to act in place of the
absent member.
ARTICLE IV
Officers
Section 4.l Election and Appointment: The Board of Directors shall elect
annually a Chairman, a President, a Secretary and a Treasurer, and may appoint
one or more Vice Presidents, a Controller, and one or more Assistant Secretaries
and Assistant Treasurers. One person may hold any two offices except those of
President and Vice President. Except for the Chairman and the President, the
Officers need not be Directors. Each of the appointed Officers shall serve
during the pleasure of the Board of Directors. Any vacancy in any of the above
offices shall be filled for the unexpired portion of the term by the Board of
Directors.
<PAGE>
Section 4.2 Chairman: The Chairman shall preside at all meetings of the
shareholders and of the Board of Directors and shall have such other powers and
duties as may from time to time be prescribed by the Board of Directors.
Section 4.3 President: The President shall be the chief Executive Officer of
the Corporation and shall have the responsibility for the general management of
the affairs of the Corporation and for seeing that all orders and resolutions of
the Board of Directors are carried into effect. The President may sign
certificates of stock, sign and execute all contracts in the name of the
Corporation, and appoint and discharge agents and employees, subject to the
approval of the Board of Directors.
Section 4.4 Vice Presidents: The Vice Presidents shall perform all the duties
incidental to their offices and all such duties as may from time to time be
assigned to them respectively by the Board of Directors. The said Vice
Presidents in such order of precedence as may from time to time be designated by
the Board of Directors, shall perform all the duties of the President in the
event of his absence or disability.
Section 4.5 Secretary: The Secretary shall keep the minutes of the meetings
of the Board of Directors, of any committees thereof, and of the stockholders.
The Secretary shall attend to the giving and serving of all notices of the
Corporation, and may affix the seal of the Corporation to all certificates of
stock and other documents of the Corporation or to which the Corporation is a
party. The Secretary shall have charge of the certificates book and such other
books and papers as the Board may direct, shall attend to such correspondence as
may be assigned from time to time by the Board of Directors, and shall perform
all duties incidental to the office.
Section 4.6 Treasurer: The Treasurer shall have the custody of the funds and
securities of the Corporation and shall deposit the same in the name of the
Corporation in such banks or trust companies as the Directors may elect. The
Treasurer shall keep full and accurate accounts of receipts and disbursements of
the Corporation, and shall disburse funds of the Corporation as may be ordered
by the Board of Directors, the President or the Vice Presidents, taking proper
vouchers for such disbursements. The Treasurer shall render to the President and
the Directors at the regular meetings of the Board, or whenever they may require
it, an account of all transactions and of the financial condition of the
Corporation, and at the regular meeting of the Board next preceding the annual
stockholders meeting a like report for the preceding year. The Treasurer shall
give such bond for the faithful performance of duties as may be required by the
Board of Directors and shall perform such other duties as the Board of Directors
may from time to time prescribe.
Section 4.7 Controller: The Controller shall have the supervision of the
corporate accounts and the books of the Corporation, its accounting methods and
audits, and the preparation of its financial statements of all kinds, including
tax reports and returns. The
<PAGE>
Controller shall have general supervision of the bookkeeping staff and shall
perform such other duties as may from time to time be prescribed by the Board of
Directors.
Section 4.8 Assistant Secretary: The Assistant Secretary in the presence or
at the request of the Secretary shall perform all the duties of the Secretary,
and shall perform such other duties as may from time to time be prescribed by
the Board of Directors.
Section 4.9 Assistant Treasurer: The Assistant Treasurer in the absence or at
the request of the Treasurer shall perform all the duties of the Treasurer and
shall perform such other duties as may from time to time be prescribed by the
Board of Directors.
Section 4.10 Compensation: The Board of Directors shall have power to fix the
compensation of all Officers of the Corporation. It may authorize any Officer
upon whom the power of appointing subordinate Officers may have been conferred,
to fix the compensation of such subordinate Officers.
Section 4.ll Removal: Any Officer of the Corporation may be removed, with or
without cause, by a vote of a majority of the entire Board of Directors, or,
except in case of an Officer elected by the Board of Directors, by the Executive
Committee or by an Officer upon whom such power of removal may have been
conferred.
ARTICLE V
Capital Stock
Section 5.l Certificates: Certificates of stock (if any should be issued)
shall be numbered in the order of issuance thereof and shall be signed by the
President or Vice President, and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, and the seal of the
Corporation shall be affixed thereto. Facsimile signatures and seals may be used
on stock certificates in accordance with Maryland law.
Section 5.2 Transfer Agents and Registrars: The Board of Directors may by
separate resolutions appoint corporate transfer agents, clerks and/or corporate
registrars to perform such duties in respect to the issuance and transfer of the
certificates of capital stock of the Corporation as such resolution may provide.
Section 5.3 Holder of Record as Exclusive Owner: The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to, or interest in, such shares on the part of any
other persons whether or not it shall have express or other notice thereof, save
as expressly provided by the laws of the State of Maryland.
<PAGE>
Section 5.5 Lost Certificates: If a certificate of stock be lost or
destroyed, another may be issued into stead upon sworn proof of such loss or
destruction, and upon the giving of a satisfactory bond of indemnity in an
amount satisfactory to the Board of Directors or Executive Committee.
ARTICLE VI
Contracts, Borrowings, Checks, Deposits, Custody, Etc.
Section 6.l Contracts, etc., How Executed: The Board of Directors, or the
Executive Committee, except as in these Bylaws otherwise provided, may authorize
any Officer or Officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances; and, unless so
authorized by the Board of Directors or by the provisions of these Bylaws, no
Officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable pecuniarily for any purpose or to any account.
Section 6.2 Deposits: All Funds of the Corporation shall be deposited from
time to time to the credit of the Corporation in such banks, trust companies or
other depositories as the Board of Directors or any individual designated by the
Board of Directors may select; and for the purpose of such deposit the President
or Vice President, or the Treasurer or the Secretary, or any other Officer or
agent to whom such power may be delegated by the Board of Directors, may
endorse, assign and deliver checks, drafts and other orders for the payment of
money which are payable to the order of the Corporation.
Section 6.3 Custodian: The securities and other investments and assets owned
by the Corporation shall be held by a custodian which shall be a bank or trust
company regulated by federal or state authority having not less than the minimum
aggregate capital, surplus and undivided profits as required of a custodian by
Section 17(f) of the Investment Company Act of 1940, as amended, provided that
such a custodian can be found ready and willing to act. Securities and other
investments and assets owned by the Corporation may also be held in accordance
with custodial arrangements permitted by rules promulgated under the Investment
Company Act. Upon the resignation or inability to serve of a custodian, the
Officers and Directors shall sue their best efforts to obtain a successor
custodian and shall require that the securities and other investments owned by
the Corporation be delivered directly to such successor custodian.
Section 6.4 Checks, Drafts, Etc.: All checks, notes, drafts and other
instruments in writing for the payment of money shall be signed only by such
Officer or Officers as shall be designated from time to time by resolution of
the Board of Directors.
<PAGE>
ARTICLE VII
Dividends
Section 7.l Declaration of Dividends: Dividends upon the capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting out of the surplus or net profits of the Corporation, subject, however,
to the provisions of the Articles of Incorporation.
Section 7.2 Reserves: The Board of Directors shall in its own discretion have
the right to set apart out of the earnings of the Corporation reserve and
surplus funds to be held for the purpose of the Corporation, and may invest and
reinvest the same in the same way and subject to the same restrictions as are
provided for the investment and reinvestment of the capital of the Corporation.
When, and only when, the Board of Directors shall decide that it is advisable or
necessary to pay dividends out of the reserve and surplus funds, shall such
funds be subject to the payment of dividends.
ARTICLE VIII
Seal
Section 8.l The seal of the Corporation shall be in the form of a circle,
shall bear the name of the Corporation, the year and state of its incorporation,
and the word "Seal".
ARTICLE IX
Fiscal Year and Financial Reports
Section 9.l Fiscal Year: The fiscal year of the Corporation shall end on
December 31 of each year, except that the Board of Directors may set a different
fiscal year end for any Series.
Section 9.2 Financial Statements: The Directors shall submit to stockholders
financial reports not less often than semiannually of the operations of the
Corporation, based at least annually upon an audit by independent public
accountants, prepared in accordance with generally accepted accounting
principles.
ARTICLE X
Construction and Interpretation
Section 10.l The Bylaws shall be construed and interpreted to further the
operation of the Corporation as a registered open-end management-type investment
company under the Investment Company Act of 1940, as amended and in effect from
time to time.
<PAGE>
ARTICLE XI
Amendments
Section 11.1 Except as otherwise required, the Bylaws of the Corporation may
be amended, altered, repealed, or added to at any regular meeting of the
stockholders or at any special meeting of the stockholders, called for that
purpose, by affirmative vote of the majority of the stock issued and outstanding
and entitled to vote; or by a majority of the Directors, as the case may be.
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
This Agreement is made by and between HL Investment Advisors, Inc., a
Connecticut corporation ( "HL Advisors") and Hartford Series Fund, Inc., a
Maryland corporation (the "Company") whereby HL Advisors will act as investment
manager to each series of the Company as listed on Attachment A (each a
"Portfolio" and together the "Portfolios") and any future series as agreed to
between HL Advisors and the Company.
WHEREAS, the Company and HL Advisors wish to enter into an agreement
setting forth the services to be performed by HL Advisors for each Portfolio of
the Company and the terms and conditions under which such services will be
performed.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. General Provision.
The Company hereby employs HL Advisors and HL Advisors hereby
undertakes to act as the investment manager of the Company and to each
Portfolio and to perform for the Company such other duties and
functions as are hereinafter set forth and such other duties as may be
necessary or appropriate in connection with its services as investment
manager. HL Advisors shall, in all matters, give to the Company and its
Board of Directors the benefit of its best judgment, effort, advice and
recommendations and shall, at all times conform to, and use its best
efforts to enable the Company to conform to (i) the provisions of the
Investment Company Act of 1940 (the "Investment Company Act") and any
rules or regulations thereunder, (ii) any other applicable provisions
of state or federal law; (iii) the provisions of the Articles of
Incorporation and By-Laws of the Company as amended from time to time;
(iv) policies and determinations of the Board of Directors of the
Company; (v) the fundamental policies and investment restrictions of
the Company and Portfolios as reflected in the Company's registration
statement under the Investment Company Act or as such policies may,
from time to time, be amended by the Company's shareholders, and (vi)
the Prospectus and Statement of Additional Information of the Company
in effect from time to time. The appropriate officers and employees of
HL Advisors shall be available upon reasonable notice for consultation
with any of the Directors and officers of the Company with respect to
any matters dealing with the business and affairs of the Company
including the valuation of any of each Portfolios' securities which are
either not registered for public sale or not being traded on any
securities market.
<PAGE>
2. Investment Management Services
(a) HL Advisors shall, subject to the direction and control by the
Company's Board of Directors, (i) regularly provide investment
advice and recommendations to each Portfolio with respect to its
investments, investment policies and the purchase and sale of
securities; (ii) supervise continuously the investment program of
each Portfolio and the composition of its portfolio securities and
determine what securities shall be purchased or sold by each
Portfolio; and (iii) arrange, subject to the provisions of
paragraph 5 hereof, for the purchase of securities and other
investments for each Portfolio and the sale of securities and other
investments held in each Portfolio.
(b) HL Advisors shall provide such economic and statistical data
relating to each Portfolio and such information concerning
important economic, political and other developments as HL Advisors
shall deem appropriate or as shall be requested by the Company's
Board of Directors.
3. Sub-Advisers and Sub-Contractors.
HL Advisors, upon approval of the Board of Directors and shareholders
where appropriate, may engage one or more investment advisers which are
either registered as such or specifically exempt from registration
under the Investment Advisers Act of 1940, to act as sub-advisers to
provide, with respect to existing and future Portfolios of the Company,
some or all of the services set forth in Sections 2 and 5 of this
Agreement.
4. Brokerage Transactions.
When placing orders for the purchase or sale of a Portfolio's
securities, HL Advisors or any subadviser approved in accordance with
Section 4 of this Agreement, shall use its best efforts to obtain the
best net security price available for a Portfolio. Subject to and in
accordance with any directions which the Board of Directors may issue
from time to time, HL Advisors or the subadviser, if applicable, may
also be authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available,
if HL Advisors or the subadviser, if applicable, determines in good
faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or
dealer, viewed in terms of either that particular transaction or HL
Advisors' or the subadviser's overall responsibilities with respect to
a Portfolio and other advisory clients. The execution of such
transactions shall not be deemed to represent an unlawful act or breach
of any duty created by this Agreement or otherwise. HL Advisors or the
subadviser will
<PAGE>
promptly communicate to the Board of Directors such information
relating to portfolio transactions as the Board may reasonably request.
5. Expenses.
Expenses to be paid by the Company, include, but are not limited to (i)
interest and taxes; (ii) brokerage commissions; (iii) premium for
fidelity and other insurance coverage requisite to the Company's
operations; (iv) the fees and expenses of its non-interested directors;
(v) legal, audit and fund accounting expenses; (vi) custodian and
transfer agent fees and expenses; (vii) expenses incident to the
redemption of its shares; (viii) fees and expenses related to the
registration under federal and state securities laws of shares of the
Company for public sale; (ix) expenses of printing and mailing
prospectuses, reports, notices and proxy material to shareholders of
the Company; (x) all other expenses incidental to holding meetings of
the Company's shareholders; and (xi) such extraordinary non-recurring
expenses as may arise, including litigation affecting the Company and
any obligation which the Company may have to indemnify its officers and
Directors with respect thereto. Any officer or employee of HL Advisors
or of any entity controlling, controlled by or under common control
with HL Advisors, who may also serve as officers, directors or
employees of the Company shall not receive any compensation from the
Company for their services.
6. Compensation of HL Advisors.
As compensation for the services rendered by HL Advisors, each
Portfolio shall pay to HL Advisors as promptly as possible after the
last day of each month during the term of this Agreement, a fee accrued
daily and paid monthly, based upon the following annual rates and upon
the calculated daily net asset value of the Portfolio:
Net Asset Value Annual Rate
--------------- -----------
First $250,000,000 0.575%
Next $250,000,000 0.525%
Next $500,000,000 0.475%
Amount Over $1 0.425%
Billion
HL Advisors, or an affiliate of HL Advisors, may agree to subsidize any
of the Portfolios to any level that HL Advisors, or any such affiliate,
may specify. Any such undertaking may be modified or discontinued at
any time.
If it is necessary to calculate the fee for a period of time which is
less than a month, then the fee shall be (i) calculated at the annual
rates provided above but prorated for the number of days elapsed in the
month in question as a percentage of the total
<PAGE>
number of days in such month, (ii) based upon the average of the
Portfolio's daily net asset value for the period in question, and (iii)
paid within a reasonable time after the close of such period.
7. Liability of HL Advisors.
HL Advisors shall not be liable for any loss or losses sustained by
reason of any investment including the purchase, holding or sale of any
security, or with respect to the administration of the Company, as long
as HL Advisors shall have acted in good faith and with due care;
provided, however, that no provision in this Agreement shall be deemed
to protect HL Advisors against any liability to the Company or its
shareholders by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
8. Duration of Agreement.
(a) This Agreement shall be effective on _________________ , 1998 and
shall continue in effect through ___________________ , 199_. This
Agreement, unless sooner terminated in accordance with 8(b) below,
shall continue in effect from year to year thereafter provided that
its continuance is specifically approved at least annually (1) by a
vote of a majority of the members of the Board of Directors of the
Company or by a vote of a majority of the outstanding voting
securities of each Portfolio, and (2) in either event, by the vote
of a majority of the members of the Company's Board of Directors
who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on this Agreement.
(b) This Agreement (1) may be terminated at any time without the
payment of any penalty either by a vote of a majority of the
members of the Board of Directors of the Company or by a vote of a
majority of the Portfolio's outstanding voting securities, on sixty
days' prior written notice to HL Advisors; (2) shall immediately
terminate in the event of its assignment and (3) may be terminated
by HL Advisors on sixty days' prior written notice to the
Portfolio, but such termination will not be effective until the
Portfolio shall have contracted with one or more persons to serve
as a successor investment adviser for the Portfolio and such
person(s) shall have assumed such position.
(c) As used in this Agreement, the terms "assignment", "interested
person" and "vote of majority of the Company's outstanding voting
securities" shall have the meanings set forth for such terms in the
1940 Act, as amended.
<PAGE>
(d) Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party to
this Agreement to whom such notice is to be given at such party's
current address.
10. Additional Series.
The amendment of this Agreement for the sole purpose of adding one or
more Portfolios shall not be deemed an amendment affecting an already
existing Portfolio and requiring the approval of shareholders of that
Portfolio.
11. Invalid Provisions.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. Governing Law.
To the extent that federal securities laws do not apply, this Agreement
and all performance hereunder shall be governed by the laws of the
State of Connecticut which apply to contracts made and to be performed
in the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the ________________ day of _________________, 1998.
HL INVESTMENT ADVISORS, INC.
__________________________________
By:
Title:
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Growth and Income HLS Fund
__________________________________
By:
Title:
<PAGE>
ATTACHMENT A
The following series of the Hartford Series Fund, Inc. is made a part of this
agreement:
Hartford Growth and Income HLS Fund
Dated:
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement is made by and between HL
Investment Advisors, Inc., a Connecticut corporation ("HL Advisors") and
Wellington Management Company, LLP, a Massachusetts partnership ("Wellington
Management").
WHEREAS, HL Advisors has entered into an agreement for the provision of
investment management services to the Hartford Series Fund, Inc. (the "Company")
currently comprised of the Hartford Growth and Income HLS Fund, and
WHEREAS, HL Advisors wishes to engage the services of Wellington
Management Company as Sub-Adviser to the Hartford Income and Growth HLS Fund,
("Portfolio") and any future series (together the "Portfolios") as agreed to
between HL Advisors and the Company), and
WHEREAS, Wellington Management is willing to perform advisory services on
behalf of the Portfolios upon the terms and conditions and for the compensation
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the parties hereto agree as follows:
1. HL Advisors hereby employs Wellington Management to serve as Sub-Adviser
with respect to the assets of the Portfolios and to perform the services
hereinafter set forth subject to the terms and conditions of the investment
objectives, policies and restrictions of each Portfolio, and Wellington
Management hereby accepts such employment and agrees during such period to
assume the obligations herein set forth for the compensation herein
provided.
2. Wellington Management shall evaluate and implement an investment program
appropriate for each Portfolio which program shall be amended and updated
from time to time as financial and other economic conditions change as
determined by HL Advisors and Wellington Management.
3. Wellington Management, in consultation with HL Advisors when
appropriate, will make all determinations with respect to the investment
of the assets of the Portfolios and the purchase or sale of portfolio
securities, and shall take such steps as may be necessary to implement
the same. Such determinations and services shall include advising the
Company's Board of Directors of the manner in which voting rights, rights
to consent to corporate action, and any other non-investment decisions
pertaining to a Portfolio's securities should be exercised.
4. Wellington Management will regularly furnish reports with respect to the
Portfolios at periodic meetings of the Company's Board of Directors and
at such other times as may be reasonably requested by the Company's Board
of Directors, which reports shall include Wellington Management's
economic outlook and investment strategy and a discussion of the
portfolio activity and the performance of the Portfolios since the last
report. Copies of all
<PAGE>
such reports shall be furnished to HL Advisors for examination and review
within a reasonable time prior to the presentation of such reports to the
Company's Board of Directors.
5. Wellington Management shall manage each Portfolio in conformity with the
Company's Articles of Incorporation and By-laws, each as amended from
time to time, and the Investment Company Act of 1940, as amended, other
applicable laws, and to the investment objectives, policies and
restrictions of each Portfolio as set forth in the Portfolios' prospectus
and statement of additional information, or any investment guidelines or
other instructions received in writing from HL Advisors, and subject
further to such policies and instructions as the Board of Directors or HL
Advisors may from time to time establish and deliver to Wellington
Management.
In addition, Wellington Management will cause the Portfolios to comply with
the requirements of (a) Section 851(b)(2) of the Internal Revenue Code of
1986, as amended (the "Code") regarding derivation of income from specified
investment activities; (b) Section 851(b)(3) of the Code regarding the
limitation of gains from the disposition of securities and certain other
investments held less than three months; and (c) Section 851(b)(4) of the
Code regarding diversification of the Portfolios' assets.
6. Wellington Management will select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the
Portfolios and place, in the name of each Portfolio or its nominees, all
such orders. When placing such orders, Wellington Management shall use
its best efforts to obtain the best net security price available for each
Portfolio. Subject to and in accordance with any directions that the
Board of Directors may issue from time to time, Wellington Management may
also be authorized to effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if
Wellington Management determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer, viewed in terms of
either that particular transaction or Wellington Management's overall
responsibilities with respect to the Portfolios and Wellington
Management's other advisory clients. The execution of such transactions
shall not be deemed to represent an unlawful act or breach of any duty
created by this Agreement or otherwise. Wellington Management will
promptly communicate to the Board of Directors such information relating
to portfolio transactions as they may reasonably request.
7. (a) As compensation for the performance of the services by Wellington
Management hereunder, HL Advisors shall pay to Wellington Management, as
promptly as possible after the last day of each calendar year quarter, a fee
accrued daily and paid quarterly, based upon the following annual rates and
calculated based upon the average daily net asset values of each of the
Portfolios as follows:
<PAGE>
Net Asset Value Annual Rate
--------------- -----------
First $50,000,000 0.325%
Next $100,000,000 0.250%
Next $350,000,000 0.200%
Over $500,000,000 0.150%
Wellington Management may waive all or a portion of its fees from time
to time as agreed between the parties.
If it is necessary to calculate the fee for a period of time which is
not a calendar quarter, then the fee shall be (i) calculated at the
annual rates provided above but prorated for the number of days elapsed
in the period in question, as a percentage of the total number of days
in such period, (ii) based upon the average of each Portfolio's daily
net asset value for the period in question, and (iii) paid within a
reasonable time after the close of such period.
(b) Wellington Management will bear all expenses in connection with the
performance of its services under this Agreement.
(c) Wellington Management will not be entitled to receive any payment for
the performance of its services hereunder from the Portfolios.
(d) Wellington Management agrees to notify HL Advisors of any change in
Wellington Management's personnel that are directly involved in the
management of the Portfolios within a reasonable time following the
occurrence of such change.
8. Wellington Management shall not be liable for any loss or losses
sustained by reason of any investment including the purchase, holding or
sale of any security as long as Wellington Management shall have acted in
good faith and with due care; provided, however, that no provision in
this Agreement shall be deemed to protect Wellington Management, and
Wellington Management shall indemnify HL Advisors, for any and all loss,
damage, judgment, fine or award paid in settlement and attorney's fees
related to Wellington Managements' willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
9. (a) This Agreement shall become effective on ______________, 1998 and shall
continue in effect through _______________, 199_. This Agreement,
unless sooner terminated in accordance with 9(b) below, shall continue
in effect from year to year thereafter provided that its continuance is
specifically approved at least annually (1) by a vote of the majority
of the members of the Board of Directors of the Company or by a vote of
a majority of the outstanding voting securities of each Portfolio, and
(2) in
<PAGE>
either event, by the vote of a majority of the members of the Company's
Board of Directors who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the
purpose of voting on this Agreement.
(b) This Agreement (1) may be terminated with respect to each Portfolio
at any time without the payment of any penalty either by vote of the
members of the Board of Directors of the Company or by a vote of a
majority of any Portfolio's outstanding voting securities, or by HL
Advisors on written notice to Wellington Management, (2) shall
immediately terminate in the event of its assignment, (3) may be
terminated by Wellington Management on ninety days' prior written
notice to HL Advisors, but such termination will not be effective
until HL Advisors shall have contracted with one or more persons to
serve as a successor Sub-Adviser for the Portfolio (or HL Advisors
or an affiliate of HL Advisors agrees to manage the Portfolio) and
such person(s) shall have assumed such position, and (4) will
terminate automatically upon termination of the advisory agreement
between HL Advisors and the Company of even date herewith.
(c) As used in this Agreement, the terms "assignment," "interested parties"
and "vote of a majority of the Company's outstanding voting securities"
shall have the meanings set forth for such terms in the Investment
Company Act of 1940, as amended.
(d) Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party or parties at the
current office address provided by each party.
10. Nothing in this Agreement shall limit or restrict the right of any partner,
officer, or employee of Wellington Management to engage in any business or
to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of Wellington Management to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
11. HL Advisors agrees that neither it nor any affiliate of HL Advisors will use
Wellington Management's name or refer to Wellington Management or Wellington
Management's clients in marketing and promotional materials without prior
notification to and authorization by Wellington Management, such
authorization not to be unreasonably withheld.
12. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
<PAGE>
13. The amendment of this Agreement for the sole purpose of adding one or more
Portfolios shall not be deemed an amendment affecting an already existing
Portfolio and requiring the approval of shareholders of that Portfolio.
14. To the extent that federal securities laws do not apply, this Agreement and
all performance hereunder shall be governed by the laws of the State of
Connecticut which apply to contracts made and to be performed in the State
of Connecticut.
[The remainder of this page is left blank intentionally.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day of , 1998.
HL INVESTMENT ADVISORS, INC.
By:___________________________________
Name:
Title:
WELLINGTON MANAGEMENT COMPANY, LLP
By:___________________________________
Name:
Title:
<PAGE>
PRINCIPAL UNDERWRITING AGREEMENT
Hartford Series Fund, Inc. (the "Company")
___________________, 1998
Hartford Securities Distribution Company, Inc.
200 Hopmeadow Street
Simsbury, CT 06089
Re: Principal Underwriting Agreement
Ladies and Gentlemen:
The Company is a Maryland corporation registered as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Company has two classes of shares available for purchase: Class IA shares and
Class IB shares (individually the "Class IA shares" and "Class IB shares" and
collectively, the "Shares") representing interests in the Company. The Shares
are registered under the Securities Act of 1933, as amended (the "1933 Act") and
securities acts of various states and jurisdictions, where appropriate.
You have informed us that your company, Hartford Securities Distribution
Company, Inc. ("HSD"), is registered as a broker-dealer under the provisions of
the Securities Exchange Act of 1934 (the "1934 Act") and that HSD is a member in
good standing of the National Association of Securities Dealers, Inc. You have
indicated your desire to become the exclusive selling agent and principal
underwriter for the Company for the sale of Shares to insurance company separate
accounts ("Separate Accounts") and other accounts as agreed to between the
parties. We have been authorized to execute and deliver this Agreement to you,
which Agreement has been approved by a vote of a majority of the company's
directors (the "Directors") who are not parties to such Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on the approval of this Agreement.
1. Appointment of Underwriter. Upon the execution of this Agreement
and in consideration of the agreements on your part herein expressed and upon
the terms and conditions set forth herein, we hereby appoint you as the
exclusive sales agent for distribution of the Shares and agree that we will
deliver to you such shares as you may sell. You agree to use your best efforts
to promote the sale of the Shares, but you are not obligated to sell any
specific number of the Shares.
2. Independent Contractor. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind the Company by your actions, conduct, or contracts,
except that you are authorized to accept orders for the purchase or repurchase
of the Shares as our agent. You may appoint sub-agents or distribute the Shares
through dealers (or otherwise) as you may determine necessary or desirable from
time to time. This Agreement shall not, however, be construed as authorizing any
dealer or
<PAGE>
other person to accept orders for sale or repurchase on our behalf or to
otherwise act as our agent for any purpose.
3. Offering Price. Shares shall be offered for sale at a price
equivalent to their net asset value as determined pursuant to the Company's
Prospectus for the Shares, as amended from time to time. On each business day on
which the New York Stock Exchange is open for business, we will furnish you with
the net asset value of the Shares, which shall be determined and become
effective as of the close of business of the New York Stock Exchange on that
day. The net asset value so determined shall apply to all orders for the
purchase of the Shares received by purchasers prior to such determination, and
you are authorized in your capacity as our agent to accept orders and confirm
sales at such net asset value. To the extent that our Shareholder Servicing and
Transfer Agent (collectively "Agent") and the Custodian(s) for any pension,
profit-sharing, employer or self-employed plan receive payments on behalf of the
investors, such Agent and Custodian(s) shall be required to record the time of
such receipt with respect to each payment, and the applicable net asset value
shall be that which is next determined and effective after the time of receipt
by them. In all events, you shall forthwith notify all of the dealers comprising
your selling group and the Agent and Custodian(s) of the effective net asset
value as received from us. Should we at any time calculate our net asset value
more frequently than once each business day, you and we will follow procedures
with respect to such additional price or prices comparable to those set forth
above in this Section 3.
4. Compensation.
(a) Sales Commissions. You shall not be entitled to charge a sales
commission on the sale of Shares of the Company.
(b) Rule 12b-1 Fees. In accordance with the distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (the "Distribution Plan") for
the Class IB shares, you will be entitled to be paid a distribution fee of up to
.25% of the average daily net assets of the Class IB shares.
5. Payment for Shares. At or prior to the time of delivery of any of
our Shares you will pay or cause to be paid to the Custodian, for our account,
an amount in cash equal to the net asset value of such Shares. In the event that
you pay for shares sold by you prior to your receipt of payment from purchasers,
you are authorized to reimburse yourself for the net asset value of such Shares
from the offering price of such Shares when received by you.
6. Registration of Shares. No Shares shall be registered on our
books until (i) receipt by us of your written request therefor; (ii) receipt by
the Custodian and Agent of a certificate signed by an officer of the Company
stating the amount to be received therefor; and (iii) receipt of payment of that
amount by the Custodian. We will provide for the recording of all Shares
purchased in unissued form in "book accounts," unless a request in writing for
certificates
<PAGE>
(if available) is received by the Agent, in which case certificates for Shares
in such names and amounts as is specified in such writing will be delivered by
the Agent, as soon as practicable after registration thereof on the books.
7. Purchases for Your Own Account. You shall not purchase Shares for
your own account for purposes of resale to the Separate Accounts, but you may
purchase Shares for your own investment account upon your written assurance that
the purchase is for investment purposes only and that the Shares will not be
resold except through redemption by us.
8. Allocation of Expenses. (a) We will pay the following expenses in
connection with the sales and distribution of Shares of the Company:
(i) expenses pertaining to the preparation of our audited and
certified financial statements to be included in any
amendments ("Amendments") to our Registration Statements under
the 1933 Act, including the Prospectuses and Statements of
Additional Information included therein;
(ii) expenses pertaining to the preparation (including legal
fees) and printing of all Amendments or supplements filed with
the Securities and Exchange Commission, including the copies
of the Prospectuses and Statements of Additional Information
included in the Amendments and the first ten (10) copies of
the definitive Prospectuses and Statements of Additional
Information or supplements thereto, other than those
necessitated by or related to your (including your "Parent")
activities where such amendments or supplements result in
expenses which we would not otherwise have incurred;
(iii) expenses pertaining to the preparation, printing, and
distribution of any reports or communications, including
Prospectuses and Statements of Additional Information, which
are sent to our existing shareholders;
(iv) filing and other fees to federal and state securities
regulatory authorities necessary to register and maintain
registration of the Shares; and
(v) expenses of the Agent, including all costs and expenses in
connection with the issuance, transfer and registration of the
Shares, including but not limited to any taxes and other
governmental charges in connection therewith.
<PAGE>
(b) Except to the extent that you are entitled to compensation under
the provisions of any of the Distribution Plans for the Company, you will pay
the following expenses:
(i) expenses of printing additional copies of the Prospectuses
and Statements of Additional Information and any amendments or
supplements thereto which are necessary to continue to offer
our shares to the public;
(ii) expenses pertaining to the preparation (excluding legal
fees) and printing of all amendments and supplements to our
Registration Statements if the Amendment or supplement arises
from or is necessitated by or related to your (including your
"Parent") activities where those expenses would not otherwise
have been incurred by us; and
(iii) expenses pertaining to the printing of additional
copies, for use by you as sales literature, of reports or
other communications which have been prepared for distribution
to our existing shareholders or incurred by you in
advertising, promoting and selling our Shares to the public.
9. Furnishing of Information. We will furnish to you such
information with respect to our Company and its Shares, in such form and signed
by such of our officers as you may reasonably request, and we warrant that the
statements therein contained when so signed will be true and correct. We will
also furnish you with such information and will take such action as you may
reasonably request in order to qualify our Shares for sale in jurisdictions in
which you may wish to offer them. We will furnish you at least annually with
audited financial statements of our books and accounts certified by independent
public accountants, and with such additional information regarding our financial
condition, as you may reasonably request from time to time.
10. Conduct of Business. Other than currently effective Prospectuses
and Statements of Additional Information, you will not issue any sales material
or statements except literature or advertising which conforms to the
requirements of federal and state securities laws and regulations and which have
been filed, where necessary, with the appropriate regulatory authorities. You
will furnish us with copies of all such material prior to their use and no such
material shall be published if we shall reasonably and promptly object.
You shall comply with the applicable federal and state laws
and regulations where our Shares are offered for sale and conduct your affairs
with us and with dealers, brokers, or investors in accordance with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc.
<PAGE>
11. Other Activities. Your services pursuant to this Agreement shall
not be deemed to be exclusive, and you may render similar services and act as an
underwriter, distributor or dealer for other investment companies in the
offering of their shares.
12. Term of Agreement. This Agreement shall become effective on the
date of its execution and shall remain in effect for a period of two (2) years
from the date of this Agreement. This Agreement shall continue annually
thereafter for successive one (1) year periods if approved at least annually (i)
by a vote of a majority of the outstanding voting securities of the Company or
by a vote of the Directors of the Company, and (ii) by a vote of a majority of
the Directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on this Agreement.
13. Termination. This Agreement: (i) may be terminated at any time
without the payment of any penalty, either by vote of the Directors of the
Company or by a vote of a majority of the outstanding voting securities of the
Company, on sixty (60) days' written notice to you; (ii) shall terminate
immediately in the event of its assignment; and (iii) may be terminated by you
on sixty (60) days' written notice to us.
14. Suspension of Sales. We reserve the right at all times to
suspend or limit the offering of the Shares to the Separate Accounts upon
written notice to you, and to reject any order in whole or in part.
15. Miscellaneous. This Agreement shall be subject to the laws of
the State of Connecticut and shall be interpreted and construed to further and
promote the operation of the Company as an open-end investment company. As used
herein, the terms "Net Asset Value," "Offering Price," "Investment Company,"
"Open-End Investment Company," "Assignment," "Principal Underwriter,"
"Interested Person," and "Majority of the Outstanding Voting Securities," shall
have the meanings set forth in the 1933 Act and the 1940 Act, as applicable, and
the rules and regulations promulgated thereunder.
16. Liability. Nothing contained herein shall be deemed to protect
you against any liability to us or to our shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
<PAGE>
If the foregoing meets with your approval, please acknowledge your
acceptance by signing below whereupon this shall constitute a binding agreement
as of the date first above written.
Very truly yours,
Hartford Series Fund, Inc.
By:_________________________________
Print Name:_________________________
Its:________________________________
Agreed to and Accepted:
Hartford Securities Distribution Company, Inc.
By:__________________________
Print Name:__________________
Its:_________________________
Date:________________________
<PAGE>
CUSTODIAN CONTRACT
Between
HARTFORD SERIES FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
GlobalSeriesCorp
21N
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held By
It...................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States...............2
2.1 Holding Securities.............................................2
2.2 Delivery of Securities.........................................2
2.3 Registration of Securities.....................................4
2.4 Bank Accounts..................................................5
2.5 Availability of Federal Funds..................................5
2.6 Collection of Income...........................................5
2.7 Payment of Fund Monies.........................................6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased................................7
2.9 Appointment of Agents..........................................7
2.10 Deposit of Fund Assets in U.S. Securities System...............7
2.11 Fund Assets Held in the Custodian's Direct
Paper System...................................................9
2.12 Segregated Account.............................................9
2.13 Ownership Certificates for Tax Purposes.......................10
2.14 Proxies.......................................................10
2.15 Communications Relating to Portfolio Securities...............10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States..........................11
3.1 Appointment of Foreign Sub-Custodians.........................11
3.2 Assets to be Held.............................................11
3.3 Foreign Securities Systems....................................11
3.4 Holding Securities............................................11
3.5 Agreements with Foreign Banking Institutions..................12
3.6 Access of Independent Accountants of the Fund.................12
3.7 Reports by Custodian..........................................12
3.8 Transactions in Foreign Custody Account.......................12
3.9 Liability of Foreign Sub-Custodians...........................13
3.10 Liability of Custodian........................................13
3.11 Reimbursement for Advances....................................13
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3.12 Monitoring Responsibilities...................................14
3.13 Branches of U.S. Banks........................................14
3.14 Tax Law.......................................................14
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund...............................................14
5. Proper Instructions.................................................15
6. Actions Permitted Without Express Authority.........................15
7. Evidence of Authority...............................................16
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.......................16
9. Records.............................................................16
10. Opinion of Fund's Independent Accountants...........................17
11. Reports to Fund by Independent Public Accountants...................17
12. Compensation of Custodian...........................................17
13. Responsibility of Custodian.........................................17
14. Effective Period, Termination and Amendment.........................19
15. Successor Custodian.................................................19
16. Interpretive and Additional Provisions..............................20
17. Additional Funds....................................................20
18. Massachusetts Law to Apply..........................................21
19. Prior Contracts.....................................................21
20. Shareholder Communications..........................................21
3
<PAGE>
CUSTODIAN CONTRACT
This Contract between Hartford Series Fund, Inc., a corporation organized
and existing under the laws of the State of Maryland, having its principal place
of business at 690 Asylum Avenue, Hartford Plaza, Hartford, Connecticut 06115
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the
Hartford Income and Growth HLS Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities
<PAGE>
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies (each, a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into
2
<PAGE>
the name or nominee name of any agent appointed pursuant to Section
2.9 or into the name or nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a different number of
bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, which may be in the form of cash or obligations
issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt
of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national
3
<PAGE>
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective prospectus
and statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on
such securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
4
<PAGE>
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such bank
or trust company and the funds to be deposited with each such bank or
trust company shall on behalf of each applicable Portfolio be approved by
vote of a majority of the Board of Directors of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed
5
<PAGE>
appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of
title to such options, futures contracts or options on futures
contracts to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to
act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Portfolio or
in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.11; (d) in the case of repurchase
agreements entered into between the Fund on behalf of the Portfolio
and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses of
the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6
<PAGE>
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is to
be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
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2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
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2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the Fund
on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to
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compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures contracts
or options thereon purchased or sold by the Portfolio, (iii) for the
purposes of compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an officer
of the Fund and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
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3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Directors, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside of the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are collectively referred to herein as
the "Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property belonging to
the Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the foreign
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sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or notifications of
any transfers of securities to or from each custodial account maintained
by a foreign banking institution for the Custodian on behalf of each
applicable Portfolio indicating, as to securities acquired for a
Portfolio, the identity of the entity having physical possession of such
securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account
of each applicable Portfolio and delivery of securities maintained for the
account of each applicable Portfolio may be effected in accordance with
the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities
to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer)
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against a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer. (c) Securities maintained in the
custody of a foreign sub-custodian may be maintained in the name of such
entity's nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from any
liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility to the Fund for
any loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
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Custodian shall be entitled to utilize available cash and to dispose of
such Portfolios assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection with
the initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b) Cash
held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental
charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are
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received for Shares of that Portfolio issued or sold from time to time by the
Fund. The Custodian will provide timely notification to the Fund on behalf of
each such Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
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1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Fund's currently effective prospectus related to such
Portfolio.
9. Records
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The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in
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acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper party or
parties, including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. The Custodian shall be held to
the exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge or
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
18
<PAGE>
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors has approved the initial use
of the Direct Paper System by such Portfolio; provided further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
19
<PAGE>
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision
20
<PAGE>
of the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the Hartford Income and Growth HLS Fund with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the Custodian
"no", the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or do not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. For the Fund's protection, the Rule
prohibits the requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate below whether the
Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
21
<PAGE>
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
22
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1998.
ATTEST HARTFORD SERIES FUND, INC.
__________________________ By _______________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
COMPANY
__________________________ By _______________________________
23
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Hartford Series
Fund, Inc. for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
_________________________
Fund's Authorized Officer
Date:____________________
<PAGE>
The Hartford Financial Services Group, Inc.
Hartford Plaza
Hartford, CT 06115
January 29, 1998
Hartford Series Fund, Inc.
Hartford Plaza
Hartford, CT 06115
Gentlemen:
I have examined the Articles of Incorporation of Hartford Series Fund,
Inc. (the "Fund"); the By-Laws of the Fund, documents evidencing various
pertinent corporate proceedings, and such other things considered to be material
to determine the legality of the sale of the authorized but unissued shares of
the Fund's common stock. Based upon my examination, it is my opinion that the
Fund is a validly organized and existing Maryland corporation and it is legally
authorized to issue up to 3 billion shares of common stock of a par value of
$.001 per share, at prices determined as described in the Fund's Prospectus,
when such shares are properly registered under all application federal and state
securities laws.
Based upon the foregoing, it is my opinion that the Fund's shares of
common stock, when issued for cash consideration as described in the Fund's
prospectus, will be validly issued, fully paid and nonassessable.
I hereby consent to the inclusion of this Opinion as an Exhibit to the
Fund's Registration Statement on Form N-1A.
Very truly yours,
/s/ Kevin J. Carr
Kevin J. Carr
Counsel
<PAGE>
HARTFORD SERIES FUND, INC.
SHARE PURCHASE AGREEMENT
HARTFORD LIFE INSURANCE COMPANY ("HL"), a Connecticut Corporation, as
Sponsor-Depositor, now and in the future, of certain unit investment trusts, and
issuer of certain variable annuity and variable life insurance contracts (the
"Contracts") issued with respect to such unit investment trusts hereby agrees as
of the _____________ day of _______________, 199_ with HARTFORD SERIES FUND,
INC. (the "Fund"), an open-end, diversified, management investment company, to
an arrangement whereby Fund shares shall be made available to serve as the
underlying investment media for the Contracts, subject to the following
provisions:
1. Fund shares shall be purchased at the net asset value applicable to each
order as established in accordance with the provisions of the then
currently-effective prospectus of the Fund. Fund shares shall be ordered
in such quantity and at such times as determined by HL (or its successor)
to be necessary to meet the requirements of the Contracts. Confirmations
of Fund share purchases will be sent directly to HL by the Fund. All Fund
share purchases shall be maintained in a book share account in the name of
HL. Payment for shares shall be made directly to the Fund by HL and
payment for redemption shall be made directly to HL by the Fund, all
within the applicable time periods allowed for settlement of securities
transactions. If payment is not received by the Fund within such period,
the Fund may, without notice, cancel the order and hold HL responsible for
any loss suffered by the Fund resulting from such failure to receive
timely payment.
Notice shall be furnished promptly to HL by the Fund of any dividend or
distribution payable on Fund shares.
2. (a)The Fund represents that its shares are registered under the Securities
Act of 1933, as amended, and that all appropriate federal and state
registration provisions have been complied with as to such shares and that
such shares may properly be made available for the purposes of this
Agreement. The Fund shall bear the cost of any such registration, as well
as the expense of any taxes assessed upon the issuance or transfer of Fund
shares pursuant to this Agreement.
(b) The Fund shall supply to HL, in a timely manner and in a sufficient
number to allow distribution by HL to each owner of or participant under a
Contract (i) annual and semiannual reports of the Fund's condition, and
(ii) any other shareholder notice, report or document required by law to
be delivered to
<PAGE>
shareholders. The Fund shall bear the cost of preparing and supplying the
foregoing materials and HL shall bear the cost of any distribution
thereof.
3. HL shall not make any representation concerning Fund shares except those
contained in the then current prospectus of the Fund and in printed
information subsequently issued by the Fund as information supplemental to
the prospectus.
4. This Agreement shall terminate as to new Contracts:
(a) At the option of HL or the Fund upon six months' advance notice to the
other;
(b) At the option of HL if Fund shares are not available for any reason to
meet the requirements of the Contracts but then only as to those new
Contracts, the terms of which require the periodic payments to be invested
in whole or in part in that particular Series;
(c) At the option of HL, upon institution of formal proceedings against
the Fund by the Securities and Exchange Commission or any other regulatory
body;
(d) Upon assignment of this Agreement, unless made with the written
consent of the other party to this Agreement;
(e) If Fund shares are not registered, issued or sold in conformance with
applicable federal or state law or if such laws preclude the use of Fund
shares as the underlying investment media of the Contracts. Prompt notice
shall be given to HL in the event the conditions of this provision occur.
Notice of termination hereunder shall be given promptly by the party
desiring to terminate to the other party to this Agreement.
5. Termination as the result of any cause listed in the preceding paragraph
shall not affect the Fund's obligation to furnish Fund shares in
connection with Contracts then in force for which the shares of the Fund
serve or may serve as the underlying investment media, unless further sale
of Fund shares is proscribed by the Securities and Exchange Commission or
other regulatory body, or if Fund shares of the requisite Series are no
longer available.
6. This Agreement shall supersede any prior agreement between the parties
hereto relating to the same subject matter.
7. Each notice required by this Agreement shall be given in writing as
follows:
If to the Fund:
Hartford Series Fund, Inc.
P.O. Box 2999
Hartford, Connecticut 06104-2999
2
<PAGE>
If to HL:
Hartford Life Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
8. This Agreement shall be construed in accordance with the laws of the State
of Connecticut.
Dated:
HARTFORD SERIES FUND, INC.
By:______________________________
HARTFORD LIFE INSURANCE COMPANY
By:______________________________
3
<PAGE>
HARTFORD SERIES FUND, INC.
SHARE PURCHASE AGREEMENT
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY ("Hartford"), a Connecticut
Corporation, as Sponsor-Depositor, now and in the future, of certain unit
investment trusts, and issuer of certain variable annuity and variable life
insurance contracts (the "Contracts") issued with respect to such unit
investment trusts hereby agrees as the ______________ day of _________________,
199_ with HARTFORD SERIES FUND, INC. (the "Fund"), an open-end, diversified,
management investment company to an arrangement whereby Fund shares shall be
made available to serve as the underlying investment media for the Contracts,
subject to the following provisions:
1. Fund shares shall be purchased at the net asset value applicable to each
order as established in accordance with the provisions of the then
currently-effective prospectus of the Fund. Fund shares shall be ordered
in such quantity and at such times as determined by Hartford (or its
successor) to be necessary to meet the requirements of the Contracts.
Confirmations of Fund share purchases will be sent directly to Hartford by
the Fund. All Fund share purchases shall be maintained in a book share
account in the name of Hartford. Payment for shares shall be made directly
to the Fund by Hartford and payment for redemption shall be made directly
to Hartford by the Fund, all within the applicable time periods allowed
for settlement of securities transactions. If payment is not received by
the Fund within such period, the Fund may, without notice, cancel the
order and hold Hartford responsible for any loss suffered by the Fund
resulting from such failure to receive timely payment.
Notice shall be furnished promptly to Hartford by the Fund of any dividend
or distribution payable on Fund shares.
2. (a) The Fund represents that its shares are registered under the
Securities Act of 1933, as amended, and that all appropriate federal and
state registration provisions have been complied with as to such shares
and that such shares may properly be made available for the purposes of
this Agreement. The Fund shall bear the cost of any such registration, as
well as the expense of any taxes assessed upon the issuance or transfer of
Fund shares pursuant to this Agreement.
(b) The Fund shall supply to Hartford, in a timely manner and in a
sufficient number to allow distribution by Hartford to each owner of or
participant under a Contract (i) annual and semiannual reports of the
Fund's condition, and (ii) any other shareholder notice, report or
document required by law to be delivered to shareholders. The Fund shall
bear the cost of preparing and supplying the foregoing materials and
Hartford shall bear the cost of any distribution thereof.
<PAGE>
3. Hartford shall not make any representation concerning Fund shares except
those contained in the then current prospectus of the Fund and in printed
information subsequently issued by the Fund as information supplemental to
the prospectus.
4. This Agreement shall terminate as to new Contracts:
(a) At the option of Hartford or the Fund upon six months' advance notice
to the other;
(b) At the option of Hartford if Fund shares are not available for any
reason to meet the requirements of the Contracts but then only as to those
new Contracts, the terms of which require the periodic payments to be
invested in whole or in part in that particular Series;
(c) At the option of Hartford, upon institution of formal proceedings
against the Fund by the Securities and Exchange Commission or any other
regulatory body;
(d) Upon assignment of this Agreement, unless made with the written
consent of the other party to this Agreement;
(e) If Fund shares are not registered, issued or sold in conformance with
applicable federal or state law or if such laws preclude the use of Fund
shares as the underlying investment media of the Contracts. Prompt notice
shall be given to Hartford in the event the conditions of this provision
occur.
Notice of termination hereunder shall be given promptly by the party
desiring to terminate to the other party to this Agreement.
5. Termination as the result of any cause listed in the preceding paragraph
shall not affect the Fund's obligation to furnish Fund shares in
connection with Contracts then in force for which the shares of the Fund
serve or may serve as the underlying investment media, unless further sale
of Fund shares is proscribed by the Securities and Exchange Commission or
other regulatory body, or if Fund shares of the requisite Series are no
longer available.
6. This Agreement shall supersede any prior agreement between the parties
hereto relating to the same subject matter.
7. Each notice required by this Agreement shall be given in writing as
follows:
If to the Fund:
Hartford Series Fund, Inc.
P.O. Box 2999
Hartford, Connecticut 06104-2999
2
<PAGE>
If to Hartford:
Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
8. This Agreement shall be construed in accordance with the laws of the State
of Connecticut.
Dated:
HARTFORD SERIES FUND, INC.
By:______________________________
HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
By:______________________________
3
<PAGE>
HARTFORD SERIES FUND, INC.
Distribution Plan
Class IB Shares
_______________, 1998
Article I. The Plan
This Distribution Plan (the "Plan") sets forth the terms and conditions on
which Hartford Series Fund, Inc. (the "Company") on behalf of The Hartford
Growth and Income HLS Fund (the "Fund") will, after the effective date hereof,
pay certain amounts to Hartford Securities Distribution Company, Inc. (the
"Distributor") in connection with the provision by the Distributor, of certain
services to the Fund and its Class IB shareholders, as set forth herein. Certain
of such payments by the Fund may, under Rule 12b-1 (the "Rule") under the
Investment Fund Act of 1940, as amended (the "Act"), be deemed to constitute the
financing of distribution by the Fund of its Class IB shares. This Plan
describes all material aspects of such financing as contemplated by the Rule and
shall be administered and interpreted, and implemented and continued, in a
manner consistent with the Rule.
Article II. Distribution and Service Expenses
The Fund shall pay to the Distributor a fee in the amount specified in
Article III hereof. Such fee may be spent by the Distributor on any activities
or expenses primarily intended to result in the sale of Class IB shares of the
Fund, including, but not limited to:
(a) compensation to and expenses, including overhead and telephone
expenses, of employees of Distributor engaged in the distribution of
the Class IB shares;
(b) printing and mailing of prospectuses, statements of additional
information, and reports for prospective purchasers of variable
annuity or variable life insurance contracts ("Variable Contracts")
investing indirectly in Class IB shares;
1
<PAGE>
(c) compensation to financial intermediaries and broker-dealers to pay
or reimburse them for their services or expenses in connection with
the distribution of Variable Contracts investing indirectly in Class
IB shares;
(d) expenses relating to the development, preparation, printing, and
mailing of Fund advertisements, sales literature, and other
promotional materials describing and/or relating to the Fund;
(e) expenses of holding seminars and sales meetings designed to
promote the distribution of the Class IB shares;
(f) expenses of obtaining information and providing explanations to
Variable Contract owners regarding Fund investment objectives and
policies and other information about the Fund, including
performance;
(g) expenses of training sales personnel regarding the Fund;
(h) expenses of compensating sales personnel in connection with
the allocation of cash values and premiums of the Variable
Contracts to the Fund; and
(i) expenses of personal services and/or maintenance of Variable
Contract accounts with respect to Class IB shares attributable to
such accounts.
Article III. Maximum Expenditures
The expenditures to be made by the Fund pursuant to this Plan, and the
basis upon which such expenditures will be made, shall be determined by the
Fund, and in no event shall such expenditures exceed 0.25% of the average daily
net asset value of the Class IB shares of the Fund (determined in accordance
with the Fund's prospectus as from time to time in effect) on an annual basis to
cover distribution expenses. All such expenditures shall be calculated and
accrued daily and paid monthly or at such other intervals as the Board of
Directors shall determine.
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Fund may bear the
respective expenses under any administrative services agreement, as from time to
time in effect under the Fund's current prospectus. Except as otherwise
contemplated by this Plan, the Fund shall not, directly or indirectly, engage in
financing any activity which is primarily intended to or should reasonably
result in the sale of shares of the Fund.
2
<PAGE>
To the extent that any investment management and administration fees paid
by the Fund might be considered as indirectly financing any activity which is
primarily intended to result in the sale of the Fund's shares, the payment by
that Fund of such fees hereby is authorized under this Plan.
3
<PAGE>
Article V. Approval by Board of Directors, Shareholders
This Plan shall not take effect until: (a) it has been approved by the
vote of the majority of the outstanding voting Class IB shares; and (b) it has
been approved, together with any related agreements, by votes cast in person at
a meeting called for the purpose of voting on this Plan and any such related
agreements, of a majority of both (i) the Directors of the Fund and (ii) those
directors who are not "interested persons" of the Fund and have no direct of
indirect financial interest in the operation of this Plan or any agreements
related to it (the "Independent Directors").
Article VI. Continuance
This Plan and any related agreement shall continue in effect for a period
of more than one year after it takes effect only for so long as such continuance
is specifically approved at least annually in the manner provided for in Article
V.
Article VII. Information
The Distributor shall provide the Board of Directors and the Board of
Directors, and, in particular, the Independent Directors, shall review, in the
exercise of their fiduciary duties, at least quarterly, a written report of the
amounts expended with respect to the Class IB shares of the Fund by the
Distributor under this Plan and the Principal Underwriting Agreement and the
purposes for which such expenditures were made.
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of the
Independent Directors, or a majority of the Fund's outstanding voting Class IB
shares, or (b) by the Distributor on 60 days' notice in writing to the Fund.
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Independent Directors
or by vote of a majority of the Fund's then outstanding voting Class
IB shares.
(b) That such agreement shall terminate automatically in the event of
its assignment.
4
<PAGE>
Article X. Amendments
This Plan may not be amended to increase materially the maximum amount of
the fees payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class IB shares of the Fund. No material amendment to the
Plan shall, in any event, be effective unless it is approved by the Board of
Directors in the same manner as is provided for in Article V.
Article XI. Preservation of Documents
The Fund shall preserve copies of this Plan (including any amendments
thereto) and any related agreements and all reports made to the Board for a
period of not less than six years from the date of this Plan, the first two
years in an easily accessible place.
Article XII. Selection of Directors
While this Plan is in effect, the selection and nomination of Directors
who are not interested persons of the Fund shall be committed to the discretion
of the Board of Directors who are not interested persons of the Fund.
Article XIII. Defined Terms
As used in this Plan, the terms "majority of the outstanding voting Class
IB shares" shall have the same meaning as the phrase "Majority of the
outstanding voting securities" has in the Act, and the phrase "interested
person" and "assignment" shall have the same meaning as that phrase has in the
Act.
IN WITNESS WHEREOF, the Fund has executed this Distribution Plan effective
as of the ______________ day of ____________________, 1998 in Hartford,
Connecticut.
Hartford Series Fund, Inc., on behalf of
Hartford Growth and Income HLS Fund
By:_____________________________
Print Name:
Title:
Hartford Securities Distribution Company, Inc.
By:_____________________________
Print Name:
Title:
5
<PAGE>
HARTFORD SERIES FUND, INC.
PLAN PURSUANT TO RULE 18F-3 UNDER
THE INVESTMENT COMPANY ACT OF 1940
This Plan (the "Plan") is adopted by the Hartford Series Fund, Inc.
(the "Fund") pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "Act"), and sets forth the general characteristics of, and the
general conditions under which the Fund may offer multiple classes of shares.
This Plan is intended to allow the Fund to offer multiple classes of shares to
the full extent and in the manner permitted by Rule 18f-3 under the Act (the
"Rule"), subject to the requirements and conditions imposed by the Rule. This
Plan may be revised or amended from time to time as provided below.
CLASS DESIGNATIONS
The Fund may from time to time issue one or more of the following
classes of shares: Class IA shares and Class IB shares. Each of the two classes
of shares will represent interests in the same portfolio of investments of the
Fund and, except as described herein, shall have the same rights and obligations
as each other class. Each class shall be subject to such investment minimums and
other conditions of eligibility as are set forth in the Fund's prospectus or
statement of additional information as from time to time in effect (the
"Prospectus").
CLASS CHARACTERISTICS
Class IA shares are offered at a public offering price that is equal to
their net asset value ("NAV") without an initial sales charge or a contingent
deferred sales charge ("CDSC").
Class IB shares are offered at their NAV, without an initial sales
charge or a CDSC, but may be subject to a fee imposed in accordance with Rule
12b-1 under the Act ("Rule 12b-1 fees"), which may include a service fee, as
described in the Prospectus.
The Class IA shares and Class IB shares may subsequently be offered
pursuant to an initial sales charge and/or CDSC (each of which may be subject to
reduction or waiver) as permitted by the Act, and as described in the
Prospectus.
<PAGE>
ALLOCATIONS TO EACH CLASS
EXPENSE ALLOCATIONS
The following expenses shall be allocated, to the extent practicable,
on a class-by-class basis: (i) Rule 12b-1 fees payable by the Fund to the
distributor of the Fund's Class IB shares(1). Subject to the approval of a
majority of the Fund's Board of Directors, including a majority of the
Independent Directors (as defined in the Distribution Plan), the following
"Class Expenses" may, to the extent not required to be borne by HL Investment
Advisors, Inc. (the "Manager") or an affiliate, pursuant to the Fund's
Investment Advisory Agreement or Administrative Agreement, be allocated on a
class-by-class basis: (a) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, Prospectuses and proxy
statements to current shareholders of a specific class; (b) SEC registration
fees incurred with respect to a specific class; (c) state blue sky and foreign
registration fees and expenses incurred with respect to a specific class; (d)
the expenses of administrative personnel and services required to support
shareholders of a specific class; (e) litigation and other legal expenses
relating to a specific class; (f) Directors' fees or expenses incurred as a
result of issues relating to a specific class of shares; (g) accounting and
consulting expenses relating to a specific class; (h) any fees imposed pursuant
to a non-Rule 12b-1 shareholder services plan that relate to a specific class;
and (i) any additional expenses, not including management fees, investment
advisory fees, custodial fees or other expenses relating to the management of
the Fund's assets, if such expenses are actually incurred in a different amount
with respect to a class that are of a different kind or to a different degree
than with respect to one or more other classes.
All expenses not hereafter designated as Class Expenses will be
allocated to each class on the basis of the net asset value of that class in
relation to the net asset value of the Fund ("Fund Expenses").
However, notwithstanding the above, the Fund may allocate all expenses
other than Class Expenses on the basis of the relative net assets (settled
shares) of each class, as permitted by Rule 18f-3(c)(2) under the Act.
WAIVERS AND REIMBURSEMENTS
The Manager or Distributor may choose to waive or reimburse Rule 12b-1
fees or any Class Expenses on a voluntary basis. Such waiver or reimbursement
may be applicable to some or all of the classes and may be in different amounts
for one or more classes.
- ----------
(1) As of the date of this Plan, the Fund has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Act only for the Class IB shares (the
"Distribution Plan"). Hartford Securities Distribution Company, Inc. serves as
distributor for both the Class IA shares and Class IB shares (the
"Distributor").
<PAGE>
INCOME, GAINS AND LOSSES
Income and realized and unrealized capital gains and losses shall be
allocated to each class on the basis of the net asset value of that class in
relation to the net asset value of the Fund.
The Fund may allocate income and realized and unrealized capital gains
and losses to each share based on relative net assets (settled shares) of each
class, as permitted by Rule 18f-3(c)(2) under the Act.
CONVERSION AND EXCHANGE
The Class IA shares and Class IB shares shall not convert into another
class. Subsequent classes of shares (each a "Converting Class") may
automatically convert into another class of shares (the "Conversion Class"),
subject to such terms as may be approved by the Directors.
In the event of any material increase in payments authorized under the
Distribution Plan (or, if presented to shareholders, any material increase in
payments authorized by a non-Rule 12b-1 shareholder services plan) applicable to
any Conversion Class, existing Converting Class shares will not be permitted to
convert into Conversion Class shares unless the Converting Class shareholders,
voting separately as a class, approve the material increase in such payments.
Pending approval of such increase, or if such increase is not approved, the
Directors shall take such action as is necessary to ensure that existing
Converting Class shares are exchanged or converted into a new class of shares
("New Conversion Class") identical in all material respects to the Conversion
Class shares as they existed prior to the implementation of the material
increase in payments, no later than the time such shares were scheduled to
convert to the Conversion Class shares. Converting Class shares sold after the
implementation of the fee increase may convert into Conversion Class shares
subject to the higher maximum payment, provided that the material features of
the Conversion Class plan and the relationship of such plan to the Converting
Class shares were disclosed in an effective registration statement.
EXCHANGE FEATURES
Shares of each class generally will be permitted to be exchanged only
for shares of a class with similar characteristics in another Fund managed by
the Manager; Class IA shares may be exchanged for Class IA shares of another
Fund; Class IB shares may be exchanged for Class IB shares of another Fund. All
exchange features applicable to each class will be described in the Prospectus.
<PAGE>
DIVIDENDS
Dividends paid by the Fund with respect to its Class IA shares and
Class IB shares, to the extent any dividends are paid, will be calculated in the
same manner, at the same time and will be in the same amount, except that any
Rule 12b-1 fee payments relating to a class of shares will be borne exclusively
by that class and any incremental transfer agency costs or, if applicable, Class
Expenses relating to a class shall be borne exclusively by that class.
VOTING RIGHTS
Each share of the Fund entitles the shareholder of record to one vote.
Each class of shares of the Fund will vote separately as a class with respect to
any Distribution Plan, as defined herein, applicable to that class and on other
matters for which class voting is required under applicable law. Class IB
shareholders will vote separately as a class to approve any material increase in
payments authorized under the Distribution Plan applicable to Class IB shares.
RESPONSIBILITIES OF THE DIRECTORS
On an ongoing basis, the Directors will monitor the Fund for the
existence of any material conflicts among the interests of the two classes of
shares. The Directors shall further monitor on an ongoing basis the use of
waivers or reimbursement by the Manager and the Distributor of expenses to guard
against cross-subsidization between classes. The Directors, including a majority
of the Independent Directors, shall take such action as is reasonably necessary
to eliminate any such conflict that may develop. If a conflict arises, the
Manager and Distributor (which also distributes the Class IA shares) at their
own cost, will remedy such conflict up to and including establishing one or more
new registered management investment companies.
REPORTS TO THE DIRECTORS
The Manager and the Distributor will be responsible for reporting any
potential or existing conflicts among the two classes of shares to the
Directors. In addition, the Directors will receive quarterly and annual
statements concerning expenditures complying with paragraph (b)(3)(ii) of Rule
12b-1. In the statements, only expenditures properly attributable to the direct
or indirect sale or servicing of a particular class of shares shall be used to
justify any distribution fee charged to that class. The statements, including
the allocations upon which they are based, will be subject to the review of the
Independent Directors in the exercise of their fiduciary duties.
<PAGE>
AMENDMENTS
The Plan may be amended from time to time in accordance with the
provisions and Requirements of Rule 18f-3 under the Act.
Adopted this _______________________ day of _________________________, 1998.
<PAGE>
Hartford Advisers Fund, Inc., Hartford Bond Fund, Inc., Hartford Capital
Appreciation Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford Index
Fund, Inc., Hartford International Advisers Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford MidCap Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Series Fund, Inc., Hartford Small Company Fund,
Inc., Hartford Stock Fund, Inc., HVA Money Market Fund, Inc.
and The Hartford Mutual Funds, Inc.,
POWER OF ATTORNEY
-----------------
Joseph A. Biernat William A. O'Neill
Winifred E. Coleman Millard H. Pryor, Jr.
Joseph H. Gareau Lowndes A. Smith
George R. Jay John K. Springer
Charles M. O'Halloran
do hereby jointly and severally authorize Kevin J. Carr, Charles M. O'Halloran,
Lynda Godkin or Lewis Beers, to sign as their agent any Securities Act of 1933
and/or Investment Company Act of 1940 Registration Statement, pre-effective
amendment or post-effective amendment and any Application for Exemption Relief
or other filings with the Securities and Exchange Commission relating to each
above-described Fund.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Joseph A. Biernat (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Joseph A. Biernat
/s/ Winifred E. Coleman (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Winifred E. Coleman
/s/ Joseph H. Gareau (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Joseph H. Gareau
/s/ George R. Jay (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
George R. Jay
<PAGE>
/s/ Charles M. O'Halloran (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Charles M. O'Halloran
/s/ William A. O'Neill (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
William A. O'Neill
/s/ Millard H. Pryor, Jr. (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Millard H. Pryor, Jr.
/s/ Lowndes A. Smith (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
Lowndes A. Smith
/s/ John K. Springer (SEAL) Dated January 22, 1998
- ------------------------------ -------------------------
John K. Springer
