<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrants [X]
Filed by a Party other than the Registrants [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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 MORTGAGE SECURITIES FUND,
INC., HARTFORD SMALL COMPANY FUND, INC., HARTFORD STOCK FUND, INC., HARTFORD
U.S. GOVERNMENT MONEY MARKET FUND, INC., HVA MONEY MARKET FUND, INC.
----------------------------------------------------------------------------
(Names of Registrants as Specified in their Charters)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
5) Total fee paid:
____________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by the registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
_________________________________________________
2) Form, Schedule or Registration Statement No.:
_________________________________________________
3) Filing Party:
_________________________________________________
4) Date Filed:
_________________________________________________
<PAGE>
HARTFORD MUTUAL FUNDS
HARTFORD LIFE INSURANCE COMPANIES
200 HOPMEADOW STREET
SIMSBURY, CT 06089
February 19, 1997
TO OUR VARIABLE ANNUITY AND VARIABLE LIFE CONTRACT OWNERS:
A Special Meeting (the "Meeting") of Shareholders of the mutual funds which
serve as funding media for your variable annuity or variable life insurance
policy (each a "Fund", or, jointly the "Funds") will be held at the offices of
Hartford Life Insurance Companies, 200 Hopmeadow Street, Simsbury, CT 06089, on
April 22, 1997 at 1:30 p.m., Eastern Standard Time, for the purpose of
considering the proposals described in the enclosed Notice of Special Meeting of
Shareholders and Proxy Statement.
Shareholders of each Fund are being asked to consider a number of proposals.
First, under Proposal No. 1, shareholders of each Fund are being asked to
consider and vote upon the election of seven Directors to each Fund's Board of
Directors. In addition, under Proposal Nos. 2 through 7, shareholders of each
Fund are being asked to approve amendments to various fundamental investment
restrictions of each Fund, as described more fully in the accompanying Proxy
Statement. Finally, under Proposal No. 8, shareholders of each Fund are being
asked to ratify the selection of independent accountants for each Fund for the
Fund's fiscal year ending December 31, 1997.
THE BOARD OF DIRECTORS OF EACH FUND HAS UNANIMOUSLY VOTED IN FAVOR OF THE
PROPOSALS AND RECOMMENDS THAT YOU VOTE FOR EACH PROPOSAL.
Although you are not technically a shareholder of the Funds, your contract
value is invested in shares of one or more of the Funds through separate
accounts established by the Hartford Life Insurance Companies for such purpose.
Since the value of your contract depends on the investment performance of the
Funds, you have the right to instruct the Hartford Life Insurance Companies as
to the manner in which shares of the Funds attributable to your contract value
are voted. The number of votes as to each Fund for which you may give
instructions is equal to the proportional value of the amount you have allocated
to a Fund. Fractional votes are counted. Fund shares for which no instructions
are received, including shares not attributable to contract owners, will be
voted in the same proportion as those for which instructions are received.
Enclosed you will find a Notice of Special Meeting of Shareholders, a Proxy
Statement for the Funds and a Voting Instructions Form for each Fund in which
your contract values were invested as of February 10, 1997, the record date for
the Meeting. The Proxy Statement provides background information and explains
the matters to be voted on at the Meeting. WE URGE YOU TO READ THE PROXY
STATEMENT AND THEN COMPLETE AND RETURN EACH VOTING INSTRUCTIONS FORM ON OR
BEFORE APRIL 21, 1997. YOUR VOTE IS EXTREMELY IMPORTANT AND YOUR PROMPT RESPONSE
WILL HELP SAVE THE EXPENSE OF ADDITIONAL SOLICITATION MAILINGS.
Sincerely yours,
Joseph H. Gareau
President of the Funds
<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 MORTGAGE SECURITIES FUND, INC.
HARTFORD SMALL COMPANY FUND, INC.
HARTFORD STOCK FUND, INC.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
HVA MONEY MARKET FUND, INC.
HARTFORD MUTUAL FUNDS
HARTFORD LIFE INSURANCE COMPANIES
200 HOPMEADOW STREET
SIMSBURY, CT 06089
- --------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
- --------------------------------------------------------------------------------
<PAGE>
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of
shareholders of Hartford Advisers Fund, Inc. ("Advisers Fund"), Hartford Bond
Fund, Inc. ("Bond Fund"), Hartford Capital Appreciation Fund, Inc. ("Capital
Appreciation Fund"), Hartford Dividend and Growth Fund, Inc. ("Dividend and
Growth Fund"), Hartford Index Fund, Inc. ("Index Fund"), Hartford International
Advisers Fund, Inc. ("International Advisers Fund"), Hartford International
Opportunities Fund, Inc. ("International Opportunities Fund"), Hartford Mortgage
Securities Fund, Inc. ("Mortgage Securities Fund"), Hartford Small Company Fund,
Inc. ("Small Company Fund"), Hartford Stock Fund, Inc. ("Stock Fund"), Hartford
U.S. Government Money Market Fund, Inc. ("U.S. Government Money Market Fund"),
and HVA Money Market Fund, Inc. ("HVA Money Market Fund") (each a "Fund" or,
jointly, "Funds") will be held at the offices of Hartford Life Insurance
Companies, 200 Hopmeadow Street, Simsbury, CT 06089, on the 22nd day of April,
1997 at 1:30 p.m. At the Meeting, shareholders of each Fund, voting separately,
will consider and vote upon the following proposals:
1. To elect seven (7) nominees as Directors of the Funds.
2. To approve an amendment to the Fund's fundamental investment restriction
regarding the making of loans.
3. To approve an amendment to the Fund's fundamental investment restriction
regarding borrowing.
4. To approve an amendment to the Fund's fundamental investment restriction
regarding diversification.
5. To approve an amendment to the Fund's fundamental investment restriction
regarding real estate.
6. To approve an amendment to the Fund's fundamental investment restriction
regarding senior securities.
7. To approve an amendment to the Fund's fundamental investment restriction
regarding commodities.
8. To ratify the selection of Arthur Andersen LLP as each Fund's
independent public accountants for each Fund's fiscal year ending December 31,
1997.
9. To transact any other business that may properly come before the Meeting
or any adjournment of the Meeting.
These proposals are more fully discussed in the accompanying Proxy
Statement.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ALL PROPOSALS.
Each person who was a shareholder ("Shareholder") on February 10, 1997 is
entitled to receive notice of, and to vote at, the Meeting. The number of votes
to which each Shareholder is entitled will be determined as of the close of
business on that date.
A copy of the Annual Report of the Funds for the fiscal year ended December
31, 1996, and subsequent semi-annual report, if any, may be obtained free of
charge by writing to Hartford Life Insurance Companies, Variable Products
Operations, Hartford Plaza, Hartford, CT 06115, or by calling 1-800-862-6668.
<PAGE>
WE URGE YOU TO MARK, SIGN, DATE AND MAIL THE ENCLOSED VOTING INSTRUCTION
CARDS IN THE POSTAGE-PAID ENVELOPE PROVIDED SO YOU WILL BE REPRESENTED AT THE
MEETING.
<TABLE>
<S> <C>
February 19, 1997 /s/ Michael O'Halloran
- ------------------------------------------- -------------------------------------------
Date Michael O'Halloran
SECRETARY
</TABLE>
2
<PAGE>
INSTRUCTIONS FOR EXECUTING INSTRUCTION CARD
The following general rules for executing instruction cards may be of
assistance to you and help you avoid the time and expense to the Funds involved
in validating your vote if you fail to execute your instruction card properly.
1. Individual Accounts: Your name should be signed exactly as it appears in
the registration on the instruction card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration on the
instruction card.
3. All other accounts should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself
or by the individuals executing the proxy card. For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
- --------------------------------------------- ---------------------------------------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp. Sarah Smith, Treasurer
(2) ABC Corp.
c/o Sarah Smith, Treasurer
TRUST ACCOUNTS
(1) ABC Corp. Profit Sharing Plan Ann B. Brown, Trustee
(2) ABC Trust
Ann B. Brown, Trustee
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John Conner, Cust. John Conner
f/b/o John Conner, Jr.
UGMA
(2) City of San Lucia Paul Ring, City Manager
Paul Ring, Chairman of Deferred Compensation
Committee
</TABLE>
<PAGE>
HARTFORD MUTUAL FUNDS
HARTFORD LIFE INSURANCE COMPANIES
200 HOPMEADOW STREET
SIMSBURY, CT 06089
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1997
The accompanying Proxy is solicited on behalf of the Boards of Directors of
Hartford Advisers Fund, Inc. ("Advisers Fund"), Hartford Bond Fund, Inc. ("Bond
Fund"), Hartford Capital Appreciation Fund, Inc. ("Capital Appreciation Fund"),
Hartford Dividend and Growth Fund, Inc. ("Dividend and Growth Fund"), Hartford
Index Fund, Inc. ("Index Fund"), Hartford International Advisers Fund, Inc.
("International Advisers Fund"), Hartford International Opportunities Fund, Inc.
("International Opportunities Fund"), Hartford Mortgage Securities Fund, Inc.
("Mortgage Securities Fund"), Hartford Small Company Fund, Inc. ("Small Company
Fund"), Hartford Stock Fund, Inc. ("Stock Fund"), Hartford U.S. Government Money
Market Fund, Inc. ("U.S. Government Money Market Fund"), and HVA Money Market
Fund, Inc. ("HVA Money Market Fund") (each a "Fund" or, jointly, "Funds") for
the Special Meeting of Shareholders (the "Meeting") to be held at Hartford Life
Insurance Companies, 200 Hopmeadow Street, Simsbury, Connecticut 06089, the
principal offices of the Funds, on April 22, 1997 at 1:30 p.m., Eastern Standard
Time, or any adjournments thereof. This Proxy solicitation is being made through
the mails, but supplementary solicitations may also be made by telephone,
telegraph or personal interview by representatives of the Funds. The cost of all
solicitations will be borne by the Funds.
This Proxy Statement is being furnished to owners of variable annuity
contracts and variable life insurance policies ("Contract owners") issued by
Hartford Life Insurance Companies and ITT Hartford Life and Annuity Insurance
Company (collectively, "Hartford") who have allocated value under their variable
annuity contracts and variable life insurance policies ("Variable Contracts") to
separate accounts sponsored by Hartford which are registered under the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Separate
Accounts"). The Separate Accounts invest Contract owners' assets in the Funds in
accordance with instructions received from Contract owners. The Funds are
sponsored by Hartford for use only in conjunction with Variable Contracts and,
therefore, shares of the Funds are not sold directly to the public. Because
Contract owners are indirectly invested in the Funds through their investment in
the Separate Accounts and have the right to instruct Hartford how to vote shares
of the Funds on all matters requiring a Shareholder vote, Contract owners should
consider themselves Shareholders of the Funds for purposes of this Proxy
Statement.
Each Proxy given may be revoked at any time before its exercise by giving
notice of revocation to the Secretary of the Funds by written message, facsimile
transmission, telegraph, telephone, or attending the Meeting and voting in
person. This Proxy material is being mailed to Shareholders on or about February
19, 1997.
The Boards of Directors of the Funds have fixed the close of business on
February 10, 1997 as the record date for the determination of the shares
entitled to notice of and to vote at the Meeting and at any adjournments
thereof. Shareholders at the close of business on the record date will be
entitled to one full
<PAGE>
or fractional vote for each full or fractional share held. As of the close of
business on February 10, 1997, the number of shares of each Fund outstanding was
as follows:
<TABLE>
<CAPTION>
NAME OF FUND OUTSTANDING SHARES
- --------------------------------------------------------------------------------------------- -------------------
<S> <C>
Advisers Fund................................................................................
Bond Fund....................................................................................
Capital Appreciation Fund....................................................................
Dividend and Growth Fund.....................................................................
Index Fund...................................................................................
International Advisers Fund..................................................................
International Opportunities Fund.............................................................
Mortgage Securities Fund.....................................................................
Small Company Fund...........................................................................
Stock Fund...................................................................................
U.S. Government Money Market Fund............................................................
HVA Money Market Fund........................................................................
</TABLE>
Hartford will vote the shares of the Funds held by the Separate Accounts in
accordance with instructions received from Contract owners. Shares for which no
instructions have been given, shares owned by Hartford ("seed money" shares),
and shares held by Hartford in separate accounts not registered under the 1940
Act will be voted in the same proportion as shares for which Hartford has
received instructions from Contract owners.
Hartford or its affiliates has contributed seed money to certain of the
Funds. As of December 31, 1996, Hartford had direct ownership in the following
funds:
<TABLE>
<CAPTION>
FUND NAME PERCENTAGE OWNERSHIP
- ------------------------------------------------------------------------------------------- -----------------------
<S> <C>
Small Company Fund......................................................................... 7.5%
</TABLE>
Other than the foregoing, all shares of the Funds are held by the Separate
Accounts and unregistered separate accounts of Hartford.
Except to the extent indicated above, to the knowledge of the Funds, no
Shareholder owned of record or beneficially more than 5% of the outstanding
shares of any of the Funds on the record date.
All Funds were incorporated under the laws of the State of Maryland. The
Stock Fund was organized on March 11, 1976. The HVA Money Market Fund, the
Hartford Bond Fund, the U.S. Government Money Market Fund, and the Advisers Fund
were organized on December 1, 1982. The Index Fund was organized on May 16,
1983. The Capital Appreciation Fund was organized on September 20, 1983. The
Mortgage Securities Fund was organized on October 5, 1984. The International
Opportunities Fund was organized on January 25, 1990. The Dividend and Growth
Fund was organized on October 22, 1993. The International Advisers Fund was
organized on September 28, 1994. The Small Company Fund was organized on January
19, 1996. Under Maryland law, there is no requirement that the Funds hold annual
Shareholder meetings.
A COPY OF THE ANNUAL REPORT OF THE FUNDS FOR THE FISCAL YEAR ENDED DECEMBER
31, 1996, AND SUBSEQUENT SEMI-ANNUAL REPORT, IF ANY, MAY BE OBTAINED FREE OF
CHARGE BY WRITING TO HARTFORD LIFE INSURANCE COMPANIES, VARIABLE PRODUCTS
OPERATIONS, HARTFORD PLAZA, HARTFORD, CT 06115, OR BY CALLING 1-800-862-6668.
2
<PAGE>
The following tables set forth the proposals that apply to your Fund. Each
Fund will vote separately with respect to each proposal.
<TABLE>
<CAPTION>
PROPOSAL
-----------------------------------------------------
1. 2.
ELECTION OF MAKING OF 3. 4.
FUND NAME DIRECTORS LOANS BORROWING DIVERSIFICATION
-------------------------- ----------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Advisers Fund............. x x x x
Bond Fund................. x x x x
Capital Appreciation
Fund..................... x x x x
Dividend & Growth Fund.... x x x x
Index Fund................ x x x x
International Advisers
Fund..................... x x x x
International
Opportunities Fund....... x x x x
Mortgage Securities
Fund..................... x x x x
Small Company Fund........ x x x x
Stock Fund................ x x x x
U.S. Government Money
Market Fund.............. x x x x
HVA Money Market Fund..... x x x x
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL
------------------------------------------------------
8.
SELECTION
5. 7. OF
INVESTMENTS 6. INVESTMENTS INDEPENDENT
IN REAL SENIOR IN PUBLIC
FUND NAME ESTATE SECURITIES COMMODITIES ACCOUNTANTS
-------------------------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Advisers Fund............. x x x x
Bond Fund................. x x x x
Capital Appreciation
Fund..................... x x x x
Dividend & Growth Fund.... x x x x
Index Fund................ x x x x
International Advisers
Fund..................... x x x x
International
Opportunities Fund....... x x x x
Mortgage Securities
Fund..................... x x x x
Small Company Fund........ x x x x
Stock Fund................ x x x x
U.S. Government Money
Market Fund.............. x x x x
HVA Money Market Fund..... x x x x
</TABLE>
To be approved, each proposal requires the affirmative vote of a majority of
the outstanding voting securities of each Fund. A majority vote for each Fund is
defined in the 1940 Act as the lesser of: (a) 67% or more of the voting
securities present at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy;
or (b) more than 50% of the outstanding voting securities of the Fund.
PROPOSAL 1 -- ELECTION OF SEVEN (7) DIRECTORS FOR EACH FUND. FOR SHAREHOLDERS OF
ALL FUNDS, VOTING SEPARATELY.
The Nominating Committee of the Boards of Directors recommends that the
number of Directors for each Fund be set at seven and that you vote for the
election of the nominees described below to hold
3
<PAGE>
office until their successors are elected and shall qualify or until they die,
retire, resign, are removed or become disqualified. All nominees named below are
currently Directors of each Fund and have served in that capacity continuously
since originally elected or appointed. In case a vacancy shall for any reason
exist, the remaining Directors will fill such vacancy by appointing another
Director, so long as, immediately after such appointment, at least two-thirds of
the Board of Directors holding office has been elected by Shareholders. If, at
any time, less than a majority of the Board of Directors holding office has been
elected by Shareholders, the Directors then in office will promptly call a
Shareholders' meeting for the purpose of electing the Board of Directors.
Otherwise, there will normally be no meeting of Shareholders for the purpose of
electing Directors.
Each nominee has consented to being named in this Proxy Statement and to
serving as a Director of the Funds, if elected. The nominees for election as
Directors of each Fund, and certain information about them, is set forth below.
<TABLE>
<CAPTION>
NOMINEE (AGE) PRINCIPAL OCCUPATION
- ---------------------------- ------------------------------------------------------------------------------------
<S> <C>
Joseph A. Biernat Financial consultant; formerly, Vice President of Client Services, Wright Investors
Director since 1982 (69) Services (1989-1990), Executive Vice President, Boston Security Counselors
(1988-1989) and Senior Vice President and Treasurer of United Technologies
Corporation (1984-1987).
Winifred E. Coleman President of Saint Joseph College, West Hartford, CT (since 1991). Director of
Director since 1995 (64) LeMoyne College and St. Francis Hospital.
Joseph H. Gareau* Executive Vice President and Chief Investment Officer of ITT Hartford Group, Inc.
Director since 1993 (50) (since April, 1993); formerly, Senior Vice President and Chief Investment
Officer/Property-Casualty Division of ITT Hartford Group, Inc. (September,
1992-April, 1993) and Vice President (1987-September, 1992). Director (since 1986)
and President (since 1993) of The Hartford Investment Management Company, Director
of Hartford Fire Insurance Company since April, 1993.
Gov. William A. O'Neill Presently retired; formerly Governor of the State of Connecticut (1980-1991).
Director since 1992 (66)
Millard H. Pryor, Jr. Managing Director of Pryor & Clark Co. since 1992; formerly Chairman and Chief
Director since 1982 (64) Executive Officer of Corcap, Inc. (1988-1992); Director of Pryor & Clark Company,
Corcap, Inc., the Wiremold Company, Hoosier Magnetics, Inc., Infodata Systems, Inc.,
Pacific Scientific Corporation and Fibralock, Inc.
Lowndes A. Smith* President of The Hartford Life Insurance Companies since January, 1989; formerly,
Director since 1990 (57) Senior Vice President and Group Comptroller of ITT Hartford Group, Inc. Director of
Connecticut Children's Medical Center and American Counsel of Life Insurance.
John K. Springer Chief Executive Officer of Connecticut Health Systems, Inc. since 1989. Director of
Director since 1982 (65) Connecticut Health Systems, Inc., Hartford Hospital, Medspan (Chairman), CHS
Insurance, Ltd. (Chairman) and Hospital Research and Development Institute.
</TABLE>
*Designates "interested person" as that term is defined in the 1940 Act due to
their positions with Hartford Fire Insurance Companies which ultimately owns
the Funds' investment adviser.
4
<PAGE>
Each of the Directors listed above is also a Director of ITT Hartford Mutual
Funds, Inc., an open-end management investment company with eight publicly
available series and advised by The Hartford Investment Management Company
("HIMCO"), which also serves as investment adviser to the Funds.
EXECUTIVE OFFICERS OF THE FUNDS
The Executive Officers of the Funds are listed in the following table:
<TABLE>
<CAPTION>
NAME, POSITION WITH FUNDS PRINCIPAL OCCUPATION
- ---------------------------------- ------------------------------------------------------------------------------
<S> <C>
Joseph H. Gareau Executive Vice President and Chief Investment Officer of ITT Hartford Group,
President Inc.
Peter Cummins Vice President of sales and marketing of the Individual Life and Annuity
Vice President Division of ITT Hartford Group, Inc. -- Life Companies.
J. Richard Garrett Vice President and Treasurer of ITT Hartford Group, Inc.
Vice President and Treasurer
John P. Ginnetti Executive Vice President and Director of Asset Management Services, a division
Vice President of ITT Hartford Group, Inc. -- Life Companies.
Andrew W. Kohnke Vice President and Investment Manager of the ITT Hartford Group, Inc. -- Life
Vice President Companies.
Thomas M. Marra Executive Vice President and Director of the Individual Life and Annuity
Vice President Division of ITT Hartford Group, Inc. -- Life Companies.
Michael O'Halloran Corporate Secretary and Vice President of ITT Hartford Group, Inc.
Vice President, Secretary, and
General Counsel
George R. Jay Secretary and Director, Life and Equity Accounting and Financial Control of
Controller ITT Hartford Group, Inc. -- Life Companies.
Kevin J. Carr Counsel of ITT Hartford Group, Inc.
Assistant Secretary
James Cubanski Director of Tax Administration of ITT Hartford Group, Inc.
Assistant Secretary
</TABLE>
Directors and officers of the Funds, in the aggregate, own, or have the
right to provide voting instructions for, less than one percent of the
outstanding shares of the Funds.
REMUNERATION OF OFFICERS AND DIRECTORS
The Independent Directors receive the following fees from the Funds for
their services to the Funds: an aggregate annual retainer of $10,000 and an
attendance fee for joint quarterly meetings of the Funds of $8,000, totaling
$18,000 if all quarterly meetings are attended. There are no fees for attending
committee meetings.
The following table provides additional information regarding the
compensation paid by the Funds and by all investment companies advised by HIMCO
(collectively, the "Fund Complex") to those Directors who are not "interested
persons" of the Funds, as defined in the 1940 Act (the "Independent
5
<PAGE>
Directors"), for their services for the Funds' most recently completed fiscal
year. The two non-Independent Directors, Messrs. Gareau and Smith, and each of
the officers of the Funds are compensated by ITT Hartford and receive no
compensation from the Fund Complex for their services.
<TABLE>
<CAPTION>
PENSION OR RETIREMENT
AGGREGATE BENEFITS ACCRUED AS TOTAL COMPENSATION FROM THE
COMPENSATION PART OF THE FUNDS' FUNDS AND OTHER FUNDS IN
INDEPENDENT DIRECTOR FROM THE FUNDS EXPENSES THE FUND COMPLEX(1)
- ------------------------------------------ --------------- --------------------- ---------------------------
<S> <C> <C> <C>
Joseph A. Biernat......................... $18,000 0 $ 23,250
Winifred E. Coleman....................... $18,000 0 $ 20,250
Gov. William A. O'Neill................... $18,000 0 $ 23,250
Millard H. Pryor, Jr...................... $18,000 0 $ 23,250
John K. Springer.......................... $16,000 0 $ 23,250
-
--------------- ----------
Totals.................................... $88,000 0 $113,250
-
-
--------------- ----------
--------------- ----------
</TABLE>
(1)The aggregate compensation from the Funds, as well as the total compensation
paid by the Funds and the Fund Complex to the Independent Directors, are for
the fiscal year ended December 31, 1996. The Fund Complex currently consists
of twenty-one funds.
During the fiscal year ended December 31, 1996, each Fund's Board of
Directors met four times. While the Boards have no compensation committee, each
Board does have an Audit Committee and a Nominating Committee which are composed
solely of Independent Directors. The Audit Committees held two joint meetings in
1996. The functions of the Audit Committees include, but are not limited to: (1)
recommending to the Boards of Directors the engagement of an independent
auditor; (2) reviewing the plan and audits of such auditors' engagement; and (3)
reviewing the Funds' internal audit arrangements. The Nominating Committee,
which was formed in April of 1996, has met once.
INVESTMENT MANAGER
HIMCO is the investment manager to each Fund. HIMCO is an indirect
wholly-owned subsidiary of ITT Hartford Group, Inc., a Connecticut insurance
holding company. Pursuant to investment sub-advisory agreements between HIMCO
and Wellington Management Company, LLP of Boston, Massachusetts ("Wellington
Management"), Wellington Management serves as sub-investment adviser to the
Advisers Fund, Capital Appreciation Fund, Dividend and Growth Fund,
International Advisers Fund, International Opportunities Fund, Small Company
Fund and Stock Fund.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS OF THE FUNDS RECOMMEND THAT THE SHAREHOLDERS VOTE
FOR THE PROPOSED NOMINEES FOR ELECTION AS DIRECTORS.
REQUIRED VOTE:
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSALS 2 THROUGH 7
As described in the following proposals, the Boards of Directors recommend
that Shareholders of each Fund approve a number of changes to their respective
Funds' fundamental investment restrictions.
6
<PAGE>
In this regard, the 1940 Act requires mutual funds (like the Funds) to have
certain specific investment policies which can be changed only by a Shareholder
vote. Mutual funds may also elect to designate additional policies which may be
changed only by a Shareholder vote. Both types of policies are often referred to
as fundamental.
Certain investment restrictions which are not required by the 1940 Act or
are more stringent than the requirements of the 1940 Act have been adopted in
the past by the Funds to reflect then-existing regulatory, business or industry
conditions. In some cases these restrictions no longer reflect the prevailing
economic or regulatory climate and do not provide the Funds with sufficient
investment flexibility. The Boards of Directors have reviewed all investment
restrictions and identified areas where helpful changes could be made. The
Boards of Directors believe that HIMCO's ability to manage the Funds in a
changing economic and regulatory environment will be enhanced if the proposed
changes are made. In addition to providing the Funds with greater flexibility,
the changes are intended to standardize the investment restrictions of all the
HIMCO-managed funds to enable HIMCO to more easily monitor each Fund's
compliance with its investment policies.
THE FOLLOWING PROPOSALS AFFECT ALL FUNDS. HOWEVER, EACH FUND WILL VOTE
SEPARATELY ON EACH PROPOSAL. VOTING BY ONE FUND WILL NOT AFFECT VOTING ON THE
PROPOSAL BY ANY OTHER FUND.
THE ADOPTION OF ANY OF THESE PROPOSALS IS NOT CONTINGENT ON THE ADOPTION OF
ANY OTHER PROPOSAL.
PROPOSAL 2 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING THE MAKING OF LOANS. FOR SHAREHOLDERS OF ALL
FUNDS, VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the Fund's fundamental investment restriction regarding the
making of loans. The 1940 Act requires a mutual fund to have a fundamental
investment restriction concerning the making of loans to other persons. The
current fundamental investment restriction in this regard is significantly more
stringent than the requirements of the 1940 Act. As described more fully below,
the Boards of Directors believe that the amendment would provide each Fund with
greater investment flexibility consistent with the Fund's investment objectives
and policies and the limitations of the 1940 Act.
The Funds' current fundamental investment restriction regarding the making of
loans states that:
"No Fund will make loans, except through the acquisition of (a) publicly
distributed bonds, debentures or other evidences of indebtedness of a
type customarily purchased by institutional investors; (b) money market
instruments as permitted in accordance with the Fund's investment
policies; and (c) repurchase agreements and except that the Small
Company Fund 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.
The Fund may enter into repurchase agreements with respect to securities
issued or guaranteed by the U.S. Government, with commercial banks
having assets in excess of $1 billion or with recognized government
securities dealers with net capital in excess of $50 million. The Fund
may not enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the market value of a Fund's
total assets would be invested in such repurchase agreements together
with any other investment the Fund may hold for which market quotations
are not readily available."
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As amended, each Fund's fundamental investment restriction regarding the
making of loans would be as follows:
"[Each Fund] may not . . .
Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the
Fund's total assets taken at market value, (2) enter into fully
collateralized repurchase agreements, and (3) purchase debt obligations
in which the Fund may invest consistent with its investment policies."
Following this amendment each Fund would be permitted to lend its portfolio
securities in amounts up to 33 1/3% of the Fund's total assets. When a Fund
enters into a securities loan, it lends certain of its portfolio securities to
broker-dealers or other parties and typically receives an interest payment in
return. These transactions must be fully collateralized at all times, but
involve some risk to the Fund if the other party to a transaction (the
"counterparty") should default on its obligation. If the counterparty should
become involved in bankruptcy or insolvency proceedings, it is possible that the
Fund may be treated as an unsecured creditor and be required to return the
underlying collateral to the counterparty's estate. The Boards of Directors
believe that this risk is outweighed by the potential benefits that will inure
to the Funds through the interest income they will receive.
This amendment would also provide additional flexibility with respect to
repurchase agreements. When a Fund enters into a repurchase agreement, it
typically purchases a security for a relatively short period (usually not more
than one week), which the seller agrees to repurchase at a fixed time and price,
representing a Fund's cost plus interest. Current industry practice is to
consider repurchase agreements with a maturity of greater than seven days as
"illiquid." The current restriction prevents a Fund from investing in a
repurchase agreement that matures in more than one week if such a transaction
would result in the Fund having more than 10% of its assets invested in such
repurchase agreements as well as securities for which market quotations are not
readily available. Securities for which market quotations are not readily
available are also generally considered to be illiquid securities. Each Fund
currently has a non-fundamental investment restriction with respect to the
maximum amount of assets that may be invested in illiquid securities, which
varies by Fund as follows: 15% for the Dividend and Growth Fund, International
Advisers Fund, International Opportunities Fund and Small Company Fund, 10% for
the Advisers Fund, Capital Appreciation Fund, Bond Fund, Mortgage Securities
Fund, Stock Fund, U.S. Government Money Market Fund and the HVA Money Market
Fund. The Board intends to revise this non-fundamental investment restriction
regarding illiquid securities to permit all Funds, other than the U.S.
Government Money Market Fund and the HVA Money Market Fund, to invest up to 15%
of their total assets in illiquid securities. Under the new non-fundamental
investment restriction, the U.S. Government Money Market Fund and the HVA Money
Market Fund will continue to be subject to the 10% limitation. Thus, the
amendment would reflect the change to the non-fundamental investment restriction
regarding investment in illiquid securities by permitting each Fund to invest up
to 15% of its assets in repurchase agreements maturing in more than one week and
other illiquid securities, except that the U.S. Government Money Market Fund and
the HVA Money Market Fund will continue to be subject to a 10% limit in this
regard.
The amendment would also allow the Boards of Directors the flexibility to
set the qualifications of counterparties to repurchase agreements as they deem
appropriate. The Boards of Directors intend to continue the current operating
policy, which is more restrictive than the current fundamental investment
restriction, allowing the Fund to enter into repurchase agreements only with
commercial banks
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having assets in excess of $1 billion or with recognized government securities
dealers with net capital of at least $100 million. The Boards of Directors
believe that this amendment will benefit the Funds by enabling the Boards to set
new counterparty qualifications based on market and industry conditions as
deemed appropriate without seeking a Shareholder vote.
In addition, following this amendment, the Funds would be permitted to
purchase privately distributed debt securities consistent with their investment
objectives and policies. Currently, each Fund may only invest in publicly
distributed debt. HIMCO believes this limitation has unnecessarily constrained
the range of debt securities available to the Funds without affording any
material reduction in risk or other benefits to the Funds. Privately issued debt
may, in some cases, be less liquid than publicly distributed debt securities.
Nevertheless, HIMCO and the Boards of Directors believe that the Funds would
benefit by being permitted to invest in privately distributed debt assuming that
a purchase of such debt is otherwise consistent with a Fund's investment
objectives and policies.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
THE MAKING OF LOANS.
REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 3 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING BORROWING. FOR SHAREHOLDERS OF ALL FUNDS,
VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the fundamental investment restriction regarding borrowing.
The 1940 Act requires a mutual fund to have a fundamental investment restriction
concerning the borrowing of money. The current fundamental investment
restriction in this regard is significantly more stringent than the applicable
requirement of the 1940 Act. As described more fully below, the Boards of
Directors believe that the amendment would provide each Fund with, among other
things, greater flexibility to meet redemption requests.
The Funds' current fundamental investment restriction regarding borrowing states
that:
"Except for the Dividend and Growth Fund, the International Advisers
Fund, the International Opportunities Fund and the Small Company Fund,
none of the Funds may borrow amounts in excess of 5% of its assets, and
borrowing by each of the Funds can be only from banks or through reverse
repurchase agreements and as a temporary measure for extraordinary or
emergency purposes. For the Dividend and Growth Fund and the
International Advisers Fund, the percentage limit on borrowing is 15%,
for the International Opportunities Fund the percentage limit is 20%,
and for the Small Company Fund the percentage limit is 33 1/3%. In
addition, the Dividend and Growth Fund will not purchase securities when
its borrowings exceed 5% of its assets."
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As amended, each Fund's fundamental investment restriction regarding
borrowing would be as follows:
"[Each Fund] may not . . .
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. For purposes of this restriction, 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 shall
not constitute borrowing."
Because the Funds may occasionally need to borrow money to meet substantial
Shareholder redemption or exchange requests when available cash is not
sufficient to satisfy these needs, the Boards of Directors have proposed this
amendment to each Fund's fundamental investment restriction to afford each Fund
greater flexibility to engage in borrowing transactions. The new restriction
would allow the Funds to borrow larger amounts of money consistent with the
"asset coverage" requirements of the 1940 Act (which provide that borrowings may
not constitute more than 33 1/3% of a Fund's assets). Although the proposal
would provide the Funds with greater flexibility to engage in borrowing
transactions, as a practical matter, the Boards of Directors currently do not
expect the amendments to result in any material changes to any Fund's investment
program.
In addition, the Boards of Directors of the Funds intend to adopt the
following operating policy when money borrowed exceeds 5% of a Fund's assets:
"[As a matter of operating policy, the Fund will not:] Purchase
additional securities when money borrowed exceeds 5% of the Fund's total
assets;"
This policy is intended to ensure that the amendment will not result in any
Fund being exposed to undue risk as a consequence of "leveraging," which
involves the purchase of securities with borrowed money. Since a Fund will not
be able to purchase securities when borrowings exceed 5% of assets, the Funds
will not be able to engage in leveraging to any significant degree and, thus,
the proposal does not give rise to the risks associated with leveraging.
Nevertheless, it is possible that a Fund's ability to borrow a larger
percentage of its assets could adversely affect a Fund if a Fund was unable to
liquidate sufficient securities or was forced to liquidate securities at
unfavorable prices in order to pay back the borrowed sums. However, the Boards
of Directors believe that these risks are outweighed by the greater flexibility
a Fund would have in borrowing. The increased ability to borrow should permit a
Fund, if it were faced with substantial Shareholder redemptions or other
emergency situations, to avoid liquidating securities at unfavorable prices or
times to a greater degree than would be the case under the current policy.
The Funds presently anticipate that borrowings would be effected through
borrowings from banks and through reverse repurchase agreements. A reverse
repurchase agreement is a transaction whereby a Fund sells a portfolio security
to a bank or broker-dealer (counterparty) in return for a percentage of the
portfolio security's market value. The Fund retains record ownership of the
security involved including the right to receive interest and principal
payments. At an agreed upon future date, the Fund repurchases the security from
the counterparty by paying an agreed upon purchase price plus interest. Reverse
repurchase agreements can avoid certain market risks and transaction costs
associated with an outright sale and repurchase. The Securities and Exchange
Commission ("SEC") considers a reverse repurchase agreement to be a borrowing
because, in economic reality, the transaction can be viewed as a
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collateralized loan to a Fund as the Fund typically retains all incidents of
ownership over the security to be repurchased. However, under applicable SEC
interpretations, a Fund may "cover" its obligation to repurchase the security by
establishing a segregated account consisting of liquid assets which are
"marked-to-market" daily so that the value of the segregated account is at all
times equal to the value of the Fund's obligation under the reverse repurchase
agreement. The existence of a segregated account in connection with a reverse
repurchase agreement eliminates the risks associated with "leveraging," and,
under these circumstances, such an agreement is not deemed to be a borrowing
that is subject to the 300% asset coverage test. The amendment would clarify
that reverse repurchase agreements (as well as other "covered" instruments) are
not "borrowings" for purposes of the 300% asset coverage requirement. However,
it is anticipated that each Fund will adopt a non-fundamental investment
restriction to the effect that bank borrowings, reverse repurchase agreements
and other transactions that may be economically equivalent to a borrowing shall
not exceed 33 1/3% of a Fund's assets.
The Funds intend to comply with applicable state regulations with respect to
borrowing. The most restrictive of these regulations currently limits borrowing
to (1) 10% of a Fund's net asset value when borrowing for any general purpose,
and (2) 25% of a Fund's net asset value when borrowing as a temporary measure to
facilitate redemptions.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
BORROWING.
REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 4 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING DIVERSIFICATION. FOR SHAREHOLDERS OF ALL
FUNDS, VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the Fund's fundamental investment restriction regarding the
diversification of its investments. This amendment would reflect the standard
restriction which is used by other HIMCO-managed funds to provide the maximum
flexibility permitted by the 1940 Act. Under the 1940 Act, a "diversified" fund
generally may 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, with respect to 75% of a fund's assets:
(a) such purchase would cause more than 5% of the fund's total assets taken at
market value to be invested in securities of such issuer, or (b) such purchase
would result in more than 10% of the outstanding voting securities of such
issuer being held by the fund. The remaining 25% of a fund's total assets are
not subject to restrictions in this regard. While each Fund is a "diversified"
fund, each Fund's current restriction relating to diversification is more
restrictive than the applicable requirements of the 1940 Act.
The Funds' current fundamental investment restriction regarding diversification
states that:
"At least 75% of the assets of each Fund will be represented by
securities limited in respect of any one issuer (except U.S. Government
securities) to an amount not greater in value than 5% of the value of
the total assets of such Fund. Not more than 10% of the assets of a Fund
will be
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invested in the securities of any one issuer (except U.S. Government
securities)," and, with respect to all Funds except the Capital
Appreciation Fund and Small Company Fund, "no Fund will acquire more
than 5% of the outstanding voting securities of any one issuer."
As amended each Fund's fundamental investment restriction regarding
diversification would be as follows:
"[Each Fund] may not . . .
With respect to 75% of its total assets, 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 securities of such
issuer; or (b) such purchase would result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund."
Currently, each of the Advisers Fund, Bond Fund, Dividend and Growth Fund,
Index Fund, International Advisers Fund, International Opportunities Fund,
Mortgage Securities Fund, Stock Fund, U.S. Government Money Market Fund, and HVA
Money Market Fund, is prohibited from purchasing more than 5% of the outstanding
voting securities of any issuer. Following the amendment, each Fund would
continue to be a "diversified" fund for purposes of the 1940 Act, but would be
able to invest up to 25% of its total assets in the securities of any one
issuer. HIMCO believes that this additional flexibility could assist a Fund in
achieving its investment objective. Investment of a greater amount of assets in
fewer issuers decreases the amount of portfolio diversification and enhances the
possibility that a Fund's performance could be adversely affected by the
performance of a single issuer. However, as a practical matter, HIMCO does not
currently anticipate that the proposed amendment would result in a change to any
Fund's investment program nor materially increase any Fund's investment risk.
To the extent a Fund individually or with other funds and accounts managed
by HIMCO or its affiliates were to own a substantial portion of the outstanding
voting securities of a particular issuer, under adverse market or economic
conditions or in the event of adverse changes in the financial condition of the
issuer, a Fund could find it more difficult to sell such voting securities when
HIMCO believes it advisable to do so, or may be able to sell the securities only
at prices significantly lower than if they were more widely held.
In addition, certain of the companies in which a Fund may invest a greater
portion of its assets following the amendment could have relatively small equity
market capitalizations (e.g., under $1 billion). Such companies often have
limited product lines, markets or financial resources. The securities of these
companies may trade less frequently and in limited volume, and only in the
over-the-counter market or on a regional securities exchange. As a result, these
securities may fluctuate in value more than those of larger, more established
companies. Under such circumstances, it may also be more difficult to determine
the fair value of such securities for purposes of computing a Fund's net asset
value.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION WITH
RESPECT TO DIVERSIFICATION.
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REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 5 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING INVESTMENTS IN REAL ESTATE. FOR SHAREHOLDERS
OF ALL FUNDS, VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the Fund's fundamental investment restriction regarding
investments in real estate. The 1940 Act requires a mutual fund to have a
fundamental investment restriction regarding the purchase and sale of real
estate. As described more fully below, the amendment would provide maximum
flexibility under the 1940 Act and reflect the standard restriction which is
used by other HIMCO-managed funds.
The Funds' current fundamental investment restriction regarding real estate
states that:
"No Fund will invest in real estate, except that each of the Adviser's
Fund, Bond Fund, Index Fund and Stock Fund may invest up to 10% of its
assets in interests in real estate which are readily marketable, and
except that the Dividend and Growth Fund, the International
Opportunities Fund and the International Advisers Fund may hold up to 5%
of its assets in real estate or mineral leases acquired through the
ownership of securities, but such Funds will not acquire securities for
the purpose of acquiring real estate or mineral leases, commodities or
commodity contracts. Notwithstanding the above restriction, the Mortgage
Securities Fund may invest up to 100% of its assets in mortgage-related
securities."
As amended, each Fund's fundamental investment restriction regarding real
estate would be as follows:
"[Each Fund] may not . . .
Purchase or sell real estate, except that a 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."
The proposed amendment enables each Fund to invest in a wider range of real
estate-related investments and permits each Fund to commit a greater portion of
assets to such investments, many of which the Funds may already invest in under
the current restriction. In addition, each Fund would have additional
flexibility to own real estate directly as a result of the exercise of its
rights in connection with debt obligations it owns. In such cases, the ability
to acquire and dispose of real estate may serve to protect the Fund during times
where an issuer of debt securities is unable to meet its obligations. HIMCO
believes that the enhanced flexibility could assist a Fund in achieving its
investment objective.
To the extent a Fund holds real estate-related securities, it will be
subject to the risks associated with the real estate market. These risks may
include declines in the value of real estate, changes in general or local
economic conditions, overbuilding, difficulty in completing construction,
increased competition, changes in zoning laws, increases in property taxes and
operating expenses, and variations in rental
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<PAGE>
income. Generally, increases in interest rates will increase the cost of
obtaining financing, which may result in a decrease in the value of such
investments. In addition, in order to enforce its rights in the event of a
default of these securities, the Fund may be required to participate in various
legal proceedings or take possession of and manage assets securing the issuer's
obligations. This could increase the Fund's operating expenses and adversely
affect the Fund's net asset value. Moreover, direct investments in real estate
as well as certain real estate related investments are considered "illiquid" and
are subject to the risks associated with illiquid assets. These risks include
the possibility that a Fund may be unable to dispose of the asset at a time when
it may be advantageous to do so and that the asset may be worth less than the
price at which a Fund values it for purpose of determining net asset value.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF EACH FUND WITH
RESPECT TO INVESTMENTS IN REAL ESTATE.
REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 6 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING SENIOR SECURITIES. FOR SHAREHOLDERS OF ALL
FUNDS, VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the Fund's fundamental investment restriction regarding the
issuance of senior securities. Generally, a "senior security" is a security
which has priority over any other security as to distribution of assets or
dividends. The 1940 Act requires a mutual fund to have a fundamental investment
restriction regarding the issuance of senior securities. The amendment would
clarify that certain investment practices are not considered to be the issuance
of a senior security and reflect the standard restriction which is used by other
HIMCO-managed funds.
The Funds' current fundamental investment restriction regarding senior
securities states that:
"No Fund will issue senior securities, but for this purpose transactions
in futures contracts and options thereon shall not be deemed the
issuance of senior securities."
As amended, each Fund's fundamental investment restriction regarding the
issuance of senior securities would be as follows:
"[Each Fund] may not . . .
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, 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 a Fund's investment policies,
and reverse repurchase agreements and mortgage dollar rolls for which a
segregated account has been established to
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cover such transactions or for which an offsetting position has been
established by the Fund, are not deemed to be issuances of senior
securities."
The 1940 Act generally prohibits open-end investment companies such as the
Funds from issuing any senior security. The purpose of the existing investment
restriction was to confirm that a Fund will not issue any senior securities and
clarify that certain instruments would not be considered senior securities for
this purpose. That is, certain investments which give rise to an economic
obligation on the part of a Fund could conceivably be viewed as constituting the
issuance of a senior security by a Fund. To avoid such a result, under existing
interpretations of the SEC, a Fund must "cover" the amount of the economic
obligation with a "segregated account" consisting of liquid securities or
through an "offsetting position." The existing investment restriction enumerated
only futures contracts and options thereon as investments that give rise to an
economic obligation which will not be considered senior securities (if they are
covered through a segregated account or an offsetting position). The proposal
merely clarifies that any permissible investment that gives rise to an economic
obligation will not be considered a senior security (as long as it is covered by
a segregated account or an offsetting position). Although HIMCO believes that
each Fund may currently engage in all of the investment practices described in
the new investment restriction without violating its current restriction, it
believes that the amendment will remove any possible ambiguity.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
SENIOR SECURITIES.
REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 7 -- PROPOSED AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTION OF
EACH FUND REGARDING INVESTMENTS IN COMMODITIES. FOR SHAREHOLDERS
OF ALL FUNDS, VOTING SEPARATELY.
The Boards of Directors recommend that Shareholders of each Fund approve a
proposal to amend the Fund's fundamental investment restriction regarding
investments in commodities. The 1940 Act requires a mutual fund to have a
fundamental investment restriction regarding the purchase and sale of
commodities. As described more fully below, the amendment is intended to clarify
the nature of the permissible commodities transactions in which the Funds may
engage.
The Funds' current fundamental investment restriction regarding commodities
states that:
"No Fund will purchase commodities or commodity contracts, except for
transactions in futures contracts and options on futures contracts."
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As amended, each Fund's fundamental investment restriction regarding
commodities would be as follows:
"[Each Fund] may not . . .
Invest in commodities, except that a 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."
Under the revised restriction, each Fund will continue to be able to engage
in a variety of transactions involving the use of financial futures and options
and foreign currencies, as well as various other commodity related financial
transactions to the extent consistent with its investment objectives and
policies, and, in the case of the Money Market Fund, SEC rules applicable to
money market funds. For example, the revised restriction clarifies that the
Funds may invest in issuers which in turn invest in commodities. Additionally,
the revised restriction clarifies that each Fund may enter into forward foreign
currency contracts to the extent such transactions are consistent with a Fund's
existing investment policies. The Boards of Directors believe that the Funds can
engage in these types of transactions under the existing policy, but believe the
change will be helpful to avoid any ambiguity in this regard.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE BOARDS OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND ADOPT
THE PROPOSED CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENTS IN COMMODITIES.
REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROPOSAL 8 -- PROPOSAL TO RATIFY SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS.
FOR SHAREHOLDERS OF ALL FUNDS, VOTING SEPARATELY.
The Directors of each Fund, including the Independent Directors, have
selected Arthur Andersen LLP to serve as the independent accountants for each
Fund for the Fund's fiscal year ending December 31, 1997, subject to the right
of each Fund to terminate such employment immediately without penalty by vote of
a majority of the outstanding voting securities of the Fund at any meeting
called for such purpose.
Arthur Andersen LLP has served as each Fund's independent public accountants
since each Fund's inception. Audit services during the fiscal year ended
December 31, 1996 consisted of examinations of each Fund's financial statements
for this period and reviews of each Fund's filings with the SEC. Arthur Andersen
LLP also serves as the independent public accountants for ITT Hartford Group,
Inc. and its affiliates. A representative of Arthur Andersen LLP is expected to
be available at the Meeting to make a statement and to respond to appropriate
questions.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF THE FUNDS:
THE DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF THE RATIFICATION OF ARTHUR ANDERSEN
LLP AS EACH FUND'S INDEPENDENT PUBLIC ACCOUNTANTS.
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REQUIRED VOTE
Approval of this proposal by each Fund requires the affirmative vote of a
majority of the Fund's outstanding voting securities, as previously defined.
PROXIES AND VOTING AT THE SPECIAL MEETING
Any person giving a proxy has the power to revoke the proxy any time prior
to its exercise by executing a superseding proxy or by submitting a written
notice of revocation to the Secretary of the Fund. In addition, although mere
attendance at the Meeting will not revoke a proxy, a Shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
the same proportion as shares of the Funds for which instructions were received.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the Meeting
to a later date. In the event that a quorum is present but sufficient votes in
favor of any of Proposals 2 through 8 and for the nominees set forth in Proposal
1 have not been received, the persons named as proxies will vote those proxies
which they are entitled to vote in favor of the relevant proposal for such an
adjournment and will vote those proxies required to be voted against the
proposal against any such adjournment. A Shareholder vote may be taken on one or
more of the proposals in the Proxy Statement prior to such adjournment if
sufficient votes for its approval have been received and it is otherwise
appropriate.
Shares of common stock of each Fund represented in person or by proxy
(including shares which abstain or do not vote with respect to one or more of
the Proposals presented for Shareholder approval) will be counted for purposes
of determining whether a quorum is present at the Meeting. Under each Fund's
Articles of Incorporation, fifty percent (50%) of the shares of a Fund entitled
to vote on a matter shall constitute a quorum for the transaction of business on
that matter. As noted above, the vote of a majority (as previously defined) of
all of the shares voted at the Meeting is sufficient to elect the nominees.
SHAREHOLDERS' PROPOSALS
The Fund is not required, and does not intend, to hold meetings of
Shareholders each year. Instead, meetings will be held only when and if
required. Any Shareholders desiring to present a proposal for consideration at
the next meeting of Shareholders of a Fund must submit such proposal in writing
so that it is received by the Fund at Hartford Life Insurance Companies,
Variable Products Operations, Hartford Plaza, Hartford, Connecticut 06115 within
a reasonable time before any such meeting.
OTHER BUSINESS
The Boards of Directors know of no other business that will be presented for
consideration at this Meeting. If, however, any of the nominees named above is
not available for election because of death or other unexpected occurrence, or
if any other matters are properly brought before the Meeting, it is the
intention of each person named as a proxy to cast all votes for which there are
not specific instructions to the contrary in accordance with his own judgment.
17
<PAGE>
FUND NAME PRINTS HERE
The undersigned contract owner, an annuitant or participant, by completing
this form does hereby appoint Michael O'Halloran, Kevin Carr and Andrew Kohnke
with full power of substitution to each, to direct that the votes attributable
to the undersigned's interest be cast as indicated at the Special Meeting of
the Fund to be held at 1:30 p.m. on April 22, 1997 at the offices of ITT
Hartford Insurance Group, Hartford Life Insurance Company, 200 Hopmeadow
Street, Simsbury, Connecticut and at any adjournments thereof.
PLEASE VOTE, DATE, SIGN EXACTLY AS NAME APPEARS BELOW AND RETURN THIS FORM IN
THE ENCLOSED SELF-ADDRESSED ENVELOPE. YOU WILL RECEIVE A SEPARATE INSTRUCTION
CARD FOR EACH FUND FOR WHICH YOU ARE ENTITLED TO VOTE. PLEASE COMPLETE AND
RETURN EACH FORM IN THE ENCLOSED ENVELOPE.
Date:_____________________, 1997
NOTE: The undersigned hereby
acknowledges receipt of the Notice of
Special Meeting and Proxy Statement,
and revokes any proxy heretofore
given with respect to votes covered
by this proxy.
_____________________________________
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(Signature)
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THIS SOLICITATION IS BEING MADE ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOXES BELOW / / USING BLUE OR BLACK
INK OR DARK PENCIL.
THE PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO SPECIFICATIONS ARE MADE,
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
(1) Election of Directors:
NOMINEES: Joseph A. Biernat Winifred E. Coleman FOR all nominees WITHHOLD
Joseph H. Gareau Gov. William A. O'Neill (except as marked AUTHORITY
Millard H. Pryor, Jr. Lowndes A. Smith to the contrary to vote for
John K. Springer below). all nominees
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY NOMINEE, WRITE THAT NOMINEE'S NAME ON THIS
LINE. _________________________________________ / / / /
APPROVAL OF AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTIONS REGARDING:
(2) the making of loans FOR / / AGAINST / / ABSTAIN / /
(3) borrowing FOR / / AGAINST / / ABSTAIN / /
(4) diversification FOR / / AGAINST / / ABSTAIN / /
(5) real estate FOR / / AGAINST / / ABSTAIN / /
(6) senior securities FOR / / AGAINST / / ABSTAIN / /
(7) commodities FOR / / AGAINST / / ABSTAIN / /
(8) Ratification of Arthur Andersen FOR / / AGAINST / / ABSTAIN / /
LLP as each Fund's independent
public accountants for the fiscal
period ending December 31, 1997.
The undersigned, by completing this form, does hereby request that the
Proxies be authorized to exercise their discretion in voting upon such other
business as may properly come before the meeting.
