<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /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
HVA MONEY MARKET FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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 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>
As filed with the Securities and Exchange Commission on March 17, 1997
Securities Act File No. 333-
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. _____
[ ] Post-Effective Amendment No. _____
HVA MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Hartford Plaza
Hartford, Connecticut 06115
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 1-(860) 547-2883
KEVIN CARR
HVA MONEY MARKET FUND, INC.
C/O ITT HARTFORD GROUP, INC.
HARTFORD PLAZA
HARTFORD, CONNECTICUT 06115
(Name and Address of Agent for Service)
COPIES TO:
THOMAS MIRA, ESQ.
JORDEN, BURT, BERENSON & JOHNSON LLP
1025 THOMAS JEFFERSON STREET, N.W.
SUITE 400 EAST
WASHINGTON, D.C. 20007
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective
date of this Registration Statement.
- --------------------------------------------------------------------------------
The index to Exhibits is located on sequentially numbered page [ ]
Registrant has previously filed a declaration of indefinite registration of
its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended; accordingly, no fee is payable herewith. Registrant's Rule 24f-2
Notice for the most recent fiscal year was filed on February 26, 1997.
It is proposed that this Registration Statement will become effective
pursuant to Rule 488 under the Securities Act of 1933 on April 16, 1997.
<PAGE>
HVA MONEY MARKET FUND, INC.
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
PROSPECTUS/PROXY STATEMENT CAPTION;
FORM N-14 ITEM STATEMENT OF ADDITIONAL INFORMATION
- -------------- -----------------------------------
PART A
- ------
Item 1. Beginning of Registration Facing Sheet of Registration
Statement and Outside Front Statement; Front Cover Page of
Cover Page of Prospectus Prospectus
Item 2. Beginning and Outside Back Beginning Page of Prospectus; Outside
Cover Page of Prospectus Cover Page of Prospectus
Item 3. Fee Table, Synopsis Investor Expenses; Synopsis of
Information and Risk Reorganization; Reasons for the
Factors Reorganization; Comparison of
Investment Objectives, Policies and
Restrictions
Item 4. Information About the Synopsis of Reorganization; Reasons
Transaction for the Reorganization; Information
about Reorganization
Item 5. Information About the Synopsis of Reorganization; Reasons
Registrant for the Reorganization; Comparison of
Investment Objectives, Policies and
Restrictions; Information about
Hartford U.S. Government Money Market
Fund and HVA Money Market Fund
Item 6. Information About the Synopsis of Reorganization; Reasons
Company being Acquired for the Reorganization; Comparison of
Investment Objectives, Policies and
Restrictions; Information about
Hartford U.S. Government Money Market
Fund and HVA Money Market Fund
Item 7. Voting Information Voting Information
Item 8. Interest of Certain Persons Synopsis of Reorganization; Experts;
and Experts Voting Information
Item 9. Additional Information Not Applicable
Required for Reoffering by
Persons Deemed to be
Underwriters
PART B
- ------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
<PAGE>
PROSPECTUS/PROXY STATEMENT CAPTION;
FORM N-14 ITEM STATEMENT OF ADDITIONAL INFORMATION
- -------------- -----------------------------------
Item 12. Additional Information Current Statement of Additional
About the Registrant Information of Registrant
Item 13. Additional Information Current Statement of Additional
About the Company Being Information of the Hartford U.S.
Acquired Government Money Market Fund and HVA
Money Market Fund
Item 14. Financial Statements Current Statement of Additional
Information of the Hartford U.S.
Government Money Market Fund and HVA
Money Market Fund
PART C
- ------
Item 15. Indemnification Indemnification
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
<PAGE>
May 12, 1997
Dear Contractowner:
The accompanying Prospectus/Proxy Statement is being provided to owners of
contracts ("Contractowners") issued by Hartford Life Insurance Company
("Hartford Life"), a member of the Hartford Life Insurance Companies, that are
funded by Hartford Life Separate Accounts DC Variable Account I and Separate
Account Two (collectively, "Separate Accounts") in connection with an upcoming
Special Meeting of shareholders of the Hartford U.S. Government Money Market
Fund, Inc. ("U.S. Government Fund") at which a proposal concerning the
reorganization (the "Reorganization") of U.S. Government Fund will be
considered. Under current interpretations of law, Contractowners have the right
to instruct Hartford Life how to vote shares of U.S. Government Fund based on
their pro rata investment in the Separate Accounts.
Under the proposed Reorganization, the assets of U.S. Government Fund would
be combined with the assets of the HVA Money Market Fund, Inc. ("HVA Fund") and
the Separate Accounts would become invested in the HVA Fund. If this proposal is
approved and the Reorganization is consummated, Contractowners' contract values
would, immediately after the Reorganization, be unaffected; the values under the
contracts allocated to the HVA Fund thereafter, would vary based upon the
performance of the HVA Fund.
The Board of Directors of U.S. Government Fund has determined that the
foregoing transaction would be in the best interests of all Contractowners
concerned. As a result of the Reorganization, Contractowners will be invested in
a fund with a larger combined asset base than U.S. Government Fund, which is
expected to result in greater investment opportunities and enhanced portfolio
diversification and liquidity. Hartford Life will pay all costs incurred in
connection with the proposed Reorganization and this Prospectus/Proxy Statement.
HVA Fund will obtain an opinion of counsel to the effect that the transaction
will have no adverse tax consequences to Contractowners or any party to the
Reorganization.
All Contractowners who had an interest in the Separate Accounts as of the
record date are being asked to give instructions to Hartford Life with respect
to the proposed Reorganization of U. S. Government Fund with the HVA Fund. WE
STRONGLY INVITE YOUR PARTICIPATION BY ASKING YOU TO REVIEW, COMPLETE AND RETURN
YOUR PROXY AS SOON AS POSSIBLE.
Detailed information about the proposed transaction and the reasons therefor
are contained in the enclosed materials. Please exercise your right to vote by
completing, dating and signing the enclosed proxy card. A self-addressed,
postage-paid envelope has been enclosed for your convenience. It is very
important that you vote and that your voting instructions be received no later
than June 18, 1997.
Sincerely,
Lowndes A. Smith
Chairman of the Board
<PAGE>
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
Hartford Plaza
Hartford, Connecticut 06115
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of the
Hartford U.S. Government Money Market Fund, Inc. ("U.S. Government Fund") an
open-end, diversified, management investment company, will be held at the
offices of Hartford Life Insurance Companies, 200 Hopmeadow Street, Simsbury,
Connecticut, 06089 on June 19, 1997 at 1:30 P.M. for the following purposes:
1. To consider and vote on approval of an Agreement and Plan of
Reorganization and Liquidation providing for the acquisition of the
assets and liabilities of U.S. Government Fund by HVA Money Market Fund,
Inc., a diversified, open-end, management investment company established
as a Maryland corporation (the "HVA Fund"), in exchange for shares of
the HVA Fund and for the distribution of such shares of the HVA Fund to
shareholders of U.S. Government Fund in liquidation of U.S. Government
Fund; and
2. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on May 5, 1997, as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting.
By Order of the Board of Directors,
Michael O'Halloran
Secretary
May 12, 1997
<PAGE>
Prospectus/Proxy Statement Dated May 12, 1997
For Special Meeting of Shareholders
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
Hartford Plaza
Hartford, Connecticut 06115
(860) 862-6668
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hartford U.S. Government Money Market Fund,
Inc. (the "U.S. Government Fund"), a Maryland corporation, to be voted at a
Special Meeting of Shareholders of the U. S. Government Fund (the "Meeting"), to
be held at the offices of Hartford Life Insurance Companies, 200 Hopmeadow
Street, Simsbury, Connecticut 06089, June 19, 1997 at 1:30 p.m. It is
anticipated that the approximate mailing date of this Prospectus/Proxy Statement
will be May 12, 1997.
At the Meeting, shareholders will be asked to vote on an Agreement and Plan
of Reorganization and Liquidation (the "Plan") to be entered into by U.S.
Government Fund and HVA Money Market Fund, Inc., an open-end, diversified,
management investment company (the "HVA Fund"). Under the Plan, HVA Fund would
acquire all of the assets and liabilities of U.S. Government Fund in exchange
for which HVA Fund would issue shares of HVA Fund. Shares of the HVA Fund would
be distributed to former shareholders of the U.S. Government Fund, including DC
Variable Account I and Separate Account Two, which are separate accounts owned
by Hartford Life Insurance Company ("Hartford Life"), a member company of the
Hartford Life Insurance Companies, in such amount that the value of such shares
will be equal to the value of each shareholder's former holdings in U.S.
Government Fund. The Board of Directors of U.S. Government Fund believes
shareholders will be afforded significant benefits by the Reorganization
associated with the increased and growing asset base of the HVA Fund.
U.S. Government Fund is an open-end, diversified, management investment
company under the Investment Company Act of 1940 ("1940 Act") and is organized
as a corporation under the laws of the State of Maryland. The principal
investment objective of U.S. Government Fund is to achieve maximum current
income consistent with preservation of capital. In keeping with this investment
objective, U.S. Government Fund invests in instruments permitted by Rule 2a-7
under the 1940 Act including short-term marketable obligations issued or
guaranteed by the U.S. Government or by agencies or instrumentalities of the
U.S. Government. Since 1984, HL Investment Advisors, Inc. (the "Adviser") has
served as the investment adviser to the U.S. Government Fund. The Adviser is an
indirect, majority-owned subsidiary of The Hartford Financial Services Group,
Inc. ("The Hartford") and is registered under the Investment Advisers Act of
1940, as amended. The Hartford Investment Management Company ("HIMCO"), a
corporate affiliate of the Adviser, and a direct wholly-owned subsidiary of The
Hartford, provides investment management services to the Adviser for the U.S.
Government Fund. HIMCO is also registered under the Investment Advisers Act of
1940.
HVA Fund, a Maryland corporation, is an open-end, diversified, management
investment company under the 1940 Act. The investment objective of the HVA Fund
is to achieve maximum current income consistent with liquidity and preservation
of capital. The HVA Fund seeks to achieve its objective by investing in money
market securities permitted under Rule 2a-7 under the 1940 Act such as, but not
limited to: (a) banker's acceptances; (b) obligations of governments (whether
U.S. or non-U.S.) and their agencies and instrumentalities; (c) short-term
corporate obligations, including commercial paper, notes, and bonds; (d) other
short-term debt obligations; (e) 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; and (f) asset-backed
securities. The Adviser serves as investment adviser to the HVA Fund. HIMCO
provides investment management services to the Adviser for the HVA Fund.
Hartford Life, an indirect, majority-owned subsidiary of The Hartford, has
informed U.S. Government Fund that it will vote the shares of U.S. Government
Fund held in DC Variable Account I and Separate Account Two, separate accounts
owned by Hartford Life (collectively the "Separate Accounts") based on
instructions received from the owners of Contracts ("Contractowners") having on
the Record Date a voting interest in the Separate Accounts. The number of votes
which a Contractowner has the right to cast will be determined by applying
his/her percentage interest in the sub-accounts of the Separate Accounts which
invest in U.S. Government Fund to the total number of votes attributable to the
sub-accounts of the Separate Account. In determining the number of votes,
fractional shares will be recognized. Fund shares held in the sub-accounts of
the Separate Accounts for which no timely instructions are received will be
voted by Hartford Life in proportion to the voting instructions which are
received with respect to all Contracts participating in those Separate Accounts.
Voting instructions to abstain on any item to be voted upon effectively is a
vote against the item. Hartford Life has informed the U.S. Government Fund that
in connection with the solicitation of such instructions from such
Contractowners, Hartford Life will furnish a copy of this Prospectus/Proxy
Statement to Contractowners.
<PAGE>
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about U.S. Government Fund and
the HVA Fund that shareholders and Contractowners should know before approving
the proposed Reorganization. The Prospectus/Proxy Statement is accompanied by
the combined Prospectus of U.S. Government Fund and HVA Fund, dated May 1, 1997,
containing additional information about both Funds, which Prospectus is
incorporated by reference herein. A Statement of Additional Information to this
Prospectus/Proxy Statement, dated May 12, 1997 (the "Statement"), which provides
a further discussion of certain areas in this Prospectus/Proxy Statement, has
been filed with the Securities and Exchange Commission and is incorporated by
reference into this Prospectus/Proxy Statement. A combined Statement of
Additional Information for U.S. Government Fund and HVA Fund, dated May 1, 1997,
containing additional information about both Funds has also been filed with the
Securities and Exchange Commission as a part of the Statement. A copy of the
Statement may be obtained upon request and without charge by calling 1-(800)
862-6668.
THE SHARES OFFERED BY THIS COMBINED PROSPECTUS/PROXY STATEMENT ARE NOT
DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK,
ARE NOT INSURED OR GUARANTEED BY ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
U.S. GOVERNMENT AGENCY.
INVESTMENTS IN THE HVA FUND OR THE U.S. GOVERNMENT FUND ARE NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT EITHER HVA
FUND OR U.S. GOVERNMENT FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE
OF $1.00 PER SHARE.
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.
<PAGE>
Prospectus/Proxy Statement dated May 12, 1997
FOR SPECIAL MEETING OF SHAREHOLDERS
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
Hartford Plaza
Hartford, Connecticut 06115
(860) 862-6668
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proposal -- Synopsis of Reorganization.................................... 1
Proposed Transactions................................................... 1
Tax Consequences........................................................ 1
Investment Objectives and Policies...................................... 1
Investment Advisory and Administrative Arrangements..................... 2
Dividends and Distributions............................................. 3
Offering of Shares...................................................... 3
Fees and Expenses....................................................... 3
Reasons for the Reorganization............................................ 4
Comparison of Investment Objectives, Policies and Restrictions............ 5
Information about the Reorganization...................................... 5
The Agreement and Plan of Reorganization and Liquidation................ 5
Description of Shares of the HVA Fund................................... 6
Federal Income Tax Consequences......................................... 6
Pro Forma Financial Information........................................... 6
Available Information about U.S. Government Fund and the HVA Fund......... 6
Experts................................................................... 6
Other Information......................................................... 7
Voting Information........................................................ 7
Miscellaneous............................................................. 7
Exhibit A -- Agreement and Plan of Reorganization and Liquidation......... A-1
</TABLE>
For detailed information about U.S. Government Fund and HVA Fund, see the
combined Prospectus of U.S. Government Fund and HVA Fund dated May 1, 1997,
enclosed herewith and incorporated by reference herein.
<PAGE>
PROPOSAL
SYNOPSIS OF REORGANIZATION
This synopsis is qualified by reference to the more complete information
contained elsewhere in this Prospectus/Proxy Statement, the prospectus of U.S.
Government Fund, the prospectus of HVA Fund and the Agreement and Plan of
Reorganization and Liquidation, attached to this Prospectus/Proxy Statement as
Exhibit A.
PROPOSED TRANSACTIONS
The Board of Directors of U.S. Government Fund ("Directors"), including the
Directors who are not "interested persons" (as defined in the 1940 Act) of U.S.
Government Fund, have unanimously approved an Agreement and Plan of
Reorganization and Liquidation ("Plan") that provides for (a) the transfer of
the assets and liabilities of U.S. Government Fund to HVA Fund in exchange for
shares of the HVA Fund, and (b) the distribution of such shares of the HVA Fund
to shareholders of U.S. Government Fund (including Separate Accounts) in
liquidation of U.S. Government Fund (the proposed transactions are referred to
herein as the "Reorganization"). Shareholders of U.S. Government Fund as of the
Effective Time of the Reorganization (as defined in the Plan) will receive
interests in that number of full and fractional shares of the HVA Fund equal in
value at the date of the exchange to the value of their former shares of U.S.
Government Fund. The Plan can be implemented only if it is approved by the
holders of two-thirds of the outstanding shares of U.S. Government Fund.
The Reorganization will be effected at net asset value without the
imposition of any sales charges. The Directors have determined that the
interests of shareholders of U.S. Government Fund will not be diluted as a
result of the proposed transaction and that the Reorganization would be in the
best interests of all shareholders of U.S. Government Fund. The Board of
Directors of HVA Fund, including the Directors who are not interested persons of
the HVA Fund, also has determined that the interest of shareholders of HVA Fund
will not be diluted as a result of the proposed transaction and that the
Reorganization would be in the best interests of all shareholders of HVA Fund.
The expenses incurred in connection with the Reorganization will be borne by
Hartford Life. These costs include the costs of preparing and mailing this
Prospectus/ Proxy Statement, related legal and accounting fees and all costs
associated with consummation of the proposed Reorganization. Because the
investment policies and restrictions of U.S. Government Fund and HVA Fund are
comparable, the Reorganization will not necessitate disposal of any portfolio
securities. HVA Fund will take all action necessary to ensure that the interests
in the HVA Fund will be duly and validly recorded on the individual account
records of the shareholders.
As discussed more fully herein, the Directors believe that the investment
objectives, policies and restrictions applicable to the HVA Fund will benefit
shareholders. Shareholders should be aware that to the extent that the
investment objectives, policies and restrictions of the HVA Fund differ from
those of U.S. Government Fund, the approval of the Reorganization by
shareholders may also be deemed to be an approval of a change in the investment
objectives, policies and restrictions applicable to their interests.
TAX CONSEQUENCES
In the opinion of tax counsel, no gain or loss will be recognized by U.S.
Government Fund or the shareholders thereof as a result of the consummation of
the Reorganization. The holding period and tax basis of the shares of the HVA
Fund received by a shareholder will be the same as the holding period and tax
basis of the shareholder's shares of U.S. Government Fund. In addition, the
holding period and tax basis of the assets of U.S. Government Fund, in the hands
of the HVA Fund as a result of the Reorganization, will be the same as the
holding period and tax basis of such assets in the hands of U.S. Government Fund
prior to such Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
A. U.S. GOVERNMENT FUND
The principal investment objective of U.S. Government Fund is to achieve
maximum current income consistent with the preservation of capital. Shares of
U.S. Government Fund are currently sold only to the Separate Accounts.
In keeping with this investment objective, U.S. Government Fund invests in
instruments permitted by Rule 2a-7 under the 1940 Act and invests primarily in
short-term marketable obligations issued or guaranteed by the U.S. Government or
by agencies or instrumentalities of the U.S. Government ("U.S. Government
Securities"). In this connection, the U.S. Government Fund is required to invest
at least 65% of its assets in U.S. Government Securities. Each investment has an
effective
1
<PAGE>
maturity date of 397 days or less as computed in accordance with Rule 2a-7 and
the average maturity of the portfolio may not exceed 90 days.
U.S. Government Fund is an open-end, diversified, management investment
company under the 1940 Act established as a Maryland corporation. Responsibility
for managing U.S. Government Fund and overseeing its investment adviser rests
with U.S. Government Fund's elected Board of Directors.
For additional information about U.S. Government Fund, see its prospectus,
dated May 1, 1997, which is included herewith and incorporated by reference
herein.
B. THE HVA FUND
The primary investment objective of the HVA Fund is to achieve maximum
current income consistent with liquidity and preservation of capital. The HVA
Fund seeks to achieve its objective by investing in money market securities
permitted by Rule 2a-7 such as, but not limited to: (a) banker's acceptances;
(b) U.S. Government Securities; (c) short-term corporate obligations, including
commercial paper, notes, and bonds; (d) other short- term debt obligations; (e)
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; and (f) asset-backed securities. Each investment has an
effective maturity date of 397 days or less as computed in accordance with Rule
2a-7 and the average maturity of the portfolio may not exceed 90 days.
HVA Fund is an open-end, diversified, management investment company under
the 1940 Act established as a Maryland corporation. Responsibility for managing
HVA Fund and overseeing its investment adviser rests with HVA Fund's elected
Board of Directors.
Shares of HVA Fund are sold to Separate Account One, Separate Account Two,
Separate Account Five, DC Variable Account I, Separate Account Variable Life
One, Separate Account Variable Life Two, and ICMG Secular Trust Separate Account
to fund the benefits under variable annuity contracts and variable universal
life insurance policies issued by Hartford Life and to Separate Account One,
Separate Account Five and ICMG Registered Variable Life Separate Account One to
fund the benefits under variable annuity contracts and variable universal life
insurance policies issued by ITT Hartford Life and Annuity Insurance Company
("Hartford Life and Annuity") (collectively, the "Hartford Contracts"). Hartford
Life and Hartford Life and Annuity purchase and redeem shares of HVA Fund to
provide funding under the Hartford Contracts. Hartford Life and Hartford Life
and Annuity may establish other separate accounts which may purchase shares of
the HVA Fund.
For additional information about the HVA Fund, see HVA Fund's prospectus,
dated May 1, 1997, which is included herewith and incorporated by reference
herein.
INVESTMENT ADVISORY AND ADMINISTRATIVE ARRANGEMENTS
A. U.S. GOVERNMENT FUND
Under an investment advisory agreement dated August 8, 1984 ("Management
Agreement"), approved by the Directors, including a majority of the Directors
who are not "interested persons" of U.S. Government Fund, the Adviser acts as
investment adviser to U.S. Government Fund. The Adviser is authorized to place
orders for purchases and sales with respect to U.S. Government Fund's portfolio
and is responsible for the overall portfolio management of U.S. Government Fund.
As compensation for its services as investment adviser to U.S. Government Fund,
the Adviser is paid a monthly fee, accrued daily, at an annual rate of 0.25% of
the average daily net asset value of U.S. Government Fund. Under an investment
services agreement, the Adviser has contracted with HIMCO to provide day-to-day
investment management services to the Adviser on behalf of the U.S. Government
Fund. As a corporate affiliate of the Adviser, HIMCO is reimbursed by the
Adviser for the costs its incurs in providing such services to the Adviser.
Under an administrative agreement dated August 8, 1984 ("Administrative
Agreement") approved by the Directors, including a majority of the Directors who
are not interested persons of the U.S. Government Fund, Hartford Life, an
affiliate of the Adviser, manages the business affairs of the Fund, subject to
the general or specific instructions as may be given by U.S. Government Fund's
Directors. Hartford Life provides administrative personnel, services, office
equipment and facilities and office space for the proper operation of the Fund.
Hartford Life also arranges for the provision of additional services necessary
for the proper operation of the Fund. The U.S. Government Fund is responsible
for the following expenses: interest; taxes; brokerage charges; 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 are borne by Hartford Life), issuance and redemption expenses,
2
<PAGE>
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 disinterested
directors, as well as officers and employees of the Fund other than those who
are also officers of Hartford Life or any of 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 Funds' operations and interest.
As compensation for its services as administrator to U.S. Government Fund,
Hartford Life is paid a monthly fee, accrued daily, at an annual rate of .175%
of the average daily net asset value of U.S. Government Fund.
B. THE HVA FUND
The Adviser and Hartford Life also act as the investment adviser and
administrator, respectively, for the HVA Fund. In addition, HIMCO provides
day-to-day investment management services to the Adviser for the HVA Fund. The
responsibilities of the Adviser and Hartford Life are identical to those
described under the U.S. Government Fund above. For their services with respect
to the HVA Fund, the Adviser and Hartford Life are entitled to a fee, accrued
daily and payable monthly, at an annual rate of 0.25% and 0.175%, respectively,
of the average of the aggregate daily net asset value of the HVA Fund. HIMCO is
reimbursed the costs incurred in providing the day-to-day investment management
services to the Adviser on behalf of the HVA Fund.
DIVIDENDS AND DISTRIBUTIONS
The U.S. Government Fund and the HVA Fund distribute substantially all net
investment income and net realized capital gains (if any) to shareholders at
least monthly, payable in shares of the respective Fund at net asset value. At
the option of the shareholders, these distributions may be made in cash.
OFFERING OF SHARES
Shares of U.S. Government Fund and the HVA Fund are currently offered at
their net asset value as next computed after the receipt of the request for
purchase by separate accounts of Hartford Life or Hartford Life and Annuity
which are used to fund variable annuity contracts and variable life insurance
policies. U.S. Government Fund and the HVA Fund redeem shares without any
redemption charge, at the net asset value as next computed after receipt of the
request for redemption.
FEES AND EXPENSES
The following table sets forth all expenses and fees that a shareholder of
the U.S. Government Fund or HVA Fund will incur:
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND HVA FUND
--------------------- -----------
<S> <C> <C>
Investment Management Fee.................................................... 0.425% 0.425%
Other Expenses............................................................... 0.015% 0.015%
Total Fund Operating Expenses................................................ 0.58% 0.440%
<CAPTION>
HVA FUND
PRO-FORMA COMBINED
--------------------
<S> <C>
Investment Management Fee.................................................... 0.425%
Other Expenses............................................................... 0.015%
Total Fund Operating Expenses................................................ 0.447%
</TABLE>
EXAMPLE
You would pay the following expenses on a $1,000 investment based upon
payment of operating expenses at the levels set forth in the above table
assuming a 5% return and redemption at the end of the period.
Example:
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND HVA FUND
----------------------- -----------
<S> <C> <C>
1 Year....................................................................... $ 5.95 $ 4.51
3 Years...................................................................... $ 6.48 $ 4.93
5 Years...................................................................... $ 7.06 $ 5.39
10 Years..................................................................... $ 8.76 $ 6.73
<CAPTION>
HVA FUND
PRO-FORMA COMBINED
---------------------
<S> <C>
1 Year....................................................................... $ 4.50
3 Years...................................................................... $ 4.92
5 Years...................................................................... $ 5.38
10 Years..................................................................... $ 6.72
</TABLE>
3
<PAGE>
The preceding table of fees and expenses is provided to assist investors in
understanding the various costs and expenses that an investor in either the U.S.
Government Fund or HVA Fund (both before and after the Reorganization) will
incur directly or indirectly and the examples should not be considered a
representation of past or future expenses. The percentages shown above are based
on actual expenses incurred by the U.S. Government Fund and HVA Fund. The 5%
assumed annual return is for comparison purposes only. THE ANNUAL RETURNS FOR
BOTH U.S. GOVERNMENT FUND AND HVA FUND MAY BE MORE OR LESS DEPENDING ON MARKET
CONDITIONS, AND THE ACTUAL EXPENSES AN INVESTOR INCURS IN FUTURE PERIODS MAY BE
MORE OR LESS THAN THOSE SHOWN ABOVE AND WILL DEPEND ON THE AMOUNT INVESTED AND
ON THE ACTUAL GROWTH RATE OF EITHER THE U.S. GOVERNMENT FUND OR HVA FUND.
REASONS FOR THE REORGANIZATION
The Directors have unanimously determined to recommend that the shareholders
of U.S. Government Fund approve the Plan pursuant to which the assets of U.S.
Government Fund would be merged with the assets of the HVA Fund in exchange for
shares of the HVA Fund.
In determining whether to recommend approval of the Plan to shareholders,
the Directors, including a majority of the Directors who are not "interested
persons" of U.S. Government Fund as defined in the 1940 Act, inquired into a
number of matters and considered the following factors, among others: (1) the
expense ratios and published information regarding the fees and expenses of U.S.
Government Fund and HVA Fund; (2) the terms and conditions of the Plan and
whether the Plan would result in dilution of shareholder interests; (3) costs,
if any, incurred by U.S. Government Fund as a result of the proposed
transactions, including any costs that might be associated with the disposition
by U.S. Government Fund, prior to consummation of the Reorganization, of
portfolio securities which are not appropriate for the HVA Fund (no such costs
are anticipated); and (4) tax consequences of the proposed Reorganization.
In reaching the decision to recommend that the shareholders of U.S.
Government Fund vote to approve the Plan, the Directors of U.S. Government Fund
concluded that the merger would be in the best interests of its shareholders and
would not result in the dilution of shareholders' interests. Their conclusion
was based on a number of factors, including the following:
1. The Directors believe that combining U.S. Government Fund with the HVA
Fund would result in a single investment medium that will be more
attractive to investors. The investment objectives of the two Funds are
substantially identical. Moreover, the policies and restrictions of U.S.
Government Fund and the HVA Fund are comparable. Thus, U.S. Government
Fund as reconstituted into the HVA Fund will have a comparable and
compatible range of investments except that, whereas the U.S. Government
Fund invests primarily in U.S. Government Securities, the HVA Fund may
invest in U.S. Government Securities but is not required to invest
primarily in such securities. Thus, HVA Fund has greater investment
flexibility. As discussed below, the Directors concluded that the
investment objectives of each Fund are substantially identical. The
Directors concluded that the shareholders of U.S. Government Fund will be
benefited by and will not be exposed to any undue risk under the HVA
Fund's investment policies and restrictions.
2. The combination of the assets of U.S. Government Fund with the assets of
the HVA Fund will result in shareholders of U.S. Government Fund becoming
shareholders of an investment portfolio with a larger asset base. The
larger aggregate net assets should enable the combined entities to
realize significant benefits associated with economies of scale,
increased investment opportunities and enhanced portfolio diversification
and liquidity.
3. Few insurance contracts funded by U.S. Government Fund are currently
being offered and no new contracts will be offered which use U.S.
Government Fund as a funding medium. As outstanding insurance contracts
funded by U.S. Government Fund are fully or partially surrendered, shares
of U.S. Government Fund may be redeemed. As a result, the Directors do
not anticipate any further substantial growth in the assets of the U.S.
Government Fund and they contemplate a decrease in assets. The Directors
further believe that performance of U.S. Government Fund could eventually
suffer if its assets do not grow or if they decrease. HVA Fund, on the
other hand, is growing through funds received under both new and existing
insurance policies issued by Hartford Life and Hartford Life and Annuity.
The combination of the two entities is expected to greatly alleviate the
potential problems U.S. Government Fund could otherwise encounter.
4. The Directors of U.S. Government Fund found that the interests of
existing shareholders of U.S. Government Fund will not be diluted as a
result of consummation of the merger.
4
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives of the U.S. Government Fund and HVA Fund are
substantially identical. Moreover, the policies and restrictions currently
applicable to U.S. Government Fund are, in the opinion of the Board of Directors
of U.S. Government Fund, comparable to those of the HVA Fund, though differences
do exist. The U.S. Government Fund's investment objective is to achieve maximum
current income consistent with preservation of capital. In keeping with this
investment objective, U.S. Government Fund invests in instruments permitted by
Rule 2a-7 under the 1940 Act and invests primarily in U.S. Government
Securities. Each investment must have an effective maturity date of 397 days or
less as computed in accordance with Rule 2a-7 and the average maturity of the
entire portfolio must not exceed 90 days. Likewise, the HVA Fund's investment
objective is to achieve maximum current income consistent with liquidity and
preservation of capital. In keeping with its investment objective, the HVA Fund
also invests in instruments permitted under Rule 2a-7 under the 1940 Act.
Similar to the U.S. Government Fund, each investment must have a maturity of 397
days or less and the average maturity of the portfolio must not exceed 90 days.
The primary difference between the investment policies of the two Funds is
that the U.S. Government Fund invests primarily in short-term obligations that
are U.S. Government Securities whereas the HVA Fund may invest in U.S.
Government Securities but does not primarily invest in such securities. HVA Fund
invests primarily in non-governmental, short-term obligations such as short-term
commercial paper of corporations. Although investments made for either Fund must
be in compliance with Rule 2a-7 and therefore are regarded as relatively low
risk, investments in U.S. Government Securities may be viewed as involving
slightly less risk than other Rule 2a-7 short-term obligations.
The Directors of U.S. Government Fund believe that shareholders will be
protected and benefited under the investment objectives, policies and
restrictions of the HVA Fund. The Directors of U.S. Government Fund have
considered the differences between the investment objectives and policies of
U.S. Government Fund and the HVA Fund and determined that the investment
objective of the HVA Fund is consistent with the objective of a shareholder
seeking maximum current income consistent with preservation of capital. The
Directors have determined that in light of the stringent requirements of Rule
2a-7, shareholders of U.S. Government Fund will not be exposed to materially
greater investment risks by virtue of HVA Fund's investment objectives and
policies.
To summarize, shareholders of U.S. Government Fund will be invested in the
HVA Fund which has a substantially identical investment objective and which has
policies and restrictions comparable to those of U.S. Government Fund. To the
extent there are differences, the Directors of U.S. Government Fund believe that
such differences are not disadvantageous to shareholders.
SHAREHOLDERS MAY COMPARE THE RESPECTIVE INVESTMENT POLICIES AND RESTRICTIONS
OF U.S. GOVERNMENT FUND, ON THE ONE HAND, AND OF HVA FUND ON THE OTHER, BY
REFERRING TO THE ENCLOSED COMBINED PROSPECTUS OF U.S. GOVERNMENT FUND AND HVA
FUND AND THE COMBINED STATEMENT OF ADDITIONAL INFORMATION WHICH MAY BE REQUESTED
BY SHAREHOLDERS. YOU ARE URGED TO DO SO IN CONSIDERING HOW TO VOTE ON THE
REORGANIZATION.
INFORMATION ABOUT THE REORGANIZATION
THE AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
The proposed Plan between U.S. Government Fund and HVA Fund provides that
U.S. Government Fund will convey, transfer and deliver to the HVA Fund all of
the existing assets of U.S. Government Fund. In consideration thereof, HVA Fund
agrees to cause the HVA Fund (a) to assume and pay all of the obligations and
liabilities of U.S. Government Fund to the extent that they exist on or after
the Effective Time of the Reorganization and (b) to deliver to U.S. Government
Fund full and fractional shares of common stock of HVA Fund, par value $0.10 per
share, ("HVA Fund Shares") equal to that number of full and fractional shares of
U.S. Government Fund then outstanding as determined based on the relative net
asset value per share of U.S. Government Fund and HVA Fund as of the close of
the New York Stock Exchange on the last business day immediately preceding the
Reorganization, as described more fully in the Plan (see, Exhibit A attached
hereto). The Plan also provides that at the Effective Time of the
Reorganization, U.S. Government Fund will liquidate and distribute pro rata to
its shareholders the HVA Fund Shares received by U.S. Government Fund pursuant
to the Reorganization. Such liquidation and distribution will be accompanied by
the establishment of an open account on the share records of HVA Fund in the
name of each shareholder of U.S. Government Fund and representing the respective
pro rata number of HVA Fund Shares due each such shareholder. Simultaneously
with such crediting of HVA Fund Shares to the shareholders of U.S. Government
Fund, U.S. Government Fund shares held by such shareholders shall be canceled.
The consummation of the Plan is subject to the conditions set forth therein.
The Plan may be terminated and the Reorganization abandoned at any time, before
or after approval by shareholders prior to the Effective Time of Reorganization
by either of the parties to the Plan, if any material condition set forth in
that Plan has not been fulfilled or a material default or
5
<PAGE>
material breach of the Plan has been made by the other party. A form of the Plan
is attached as Exhibit A to this Prospectus/ Proxy Statement.
In accordance with the Plan, Hartford Life is responsible for the payment of
expenses incurred in connection with the Reorganization.
DESCRIPTION OF SHARES OF THE HVA FUND
Full and fractional shares of the HVA Fund will be issued to the
shareholders of U.S. Government Fund in accordance with the procedures described
under the Plan. Under its Articles of Incorporation, HVA Fund is currently
authorized to issue up to 800 million shares of its common stock.
FEDERAL INCOME TAX CONSEQUENCES
The Directors of HVA Fund will receive an opinion from tax counsel of The
Hartford to the effect that, on the basis of the existing provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), current administrative
rules and court decisions, for Federal income tax purposes, the Reorganization
qualifies as a tax-free reorganization under Section 368(a)(1)(D) of the Code,
and, in addition: (i) no gain or loss will be recognized by U.S. Government Fund
or the HVA Fund upon the transfer of the assets of the U.S. Government Fund to
the HVA Fund in exchange for shares of the HVA Fund; (ii) no gain or loss will
be recognized by shareholders of U.S. Government Fund upon the exchange of the
shares of U.S. Government Fund for HVA Fund shares; (iii) the holding period and
tax basis of HVA Fund shares received by each shareholder of U.S. Government
Fund pursuant to the Reorganization will be the same as the holding period and
tax basis of shares of U.S. Government Fund held by such shareholder immediately
prior to the exchange, and (iv) the holding period and tax basis of the assets
of U.S. Government Fund acquired by the HVA Fund will be the same as the holding
period and tax basis which U.S. Government Fund had in such assets prior to the
Reorganization.
PRO FORMA FINANCIAL INFORMATION
CAPITALIZATION
The following table shows the capitalization of U.S. Government Fund and the
HVA Fund as of December 31, 1996, and on a pro forma basis as of that date
giving effect to the proposed acquisition of assets at net asset value.
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND HVA FUND
--------------------- ---------------
<S> <C> <C>
NET ASSETS.............................................................. $11,730,142 $542,585,576
NET ASSET VALUE PER SHARE............................................... $1.00 $1.00
SHARES OUTSTANDING...................................................... 11,730,142 542,585,576
<CAPTION>
PRO-FORMA COMBINED
--------------------
<S> <C>
NET ASSETS.............................................................. $554,315,718
NET ASSET VALUE PER SHARE............................................... $1.00
SHARES OUTSTANDING...................................................... 554,315,718
</TABLE>
AVAILABLE INFORMATION ABOUT U.S. GOVERNMENT FUND
AND THE HVA FUND
Information about U.S. Government Fund and HVA Fund is incorporated by
reference from the current combined Prospectus for U.S. Government Fund and HVA
Fund, dated May 1, 1997, which is enclosed with this Prospectus/Proxy Statement.
Additional information is included in the Statement of Additional Information of
U.S. Government Fund and HVA Fund, dated May 1, 1997, which has been filed as a
part of the Statement of Additional Information relating to this
Prospectus/Proxy Statement ("Statement") and is incorporated herein by
reference. A copy of the Statement of Additional Information for U.S. Government
Fund and HVA Fund can be obtained without charge by writing to Hartford Life
Insurance Companies, Variable Products Operations, Hartford Plaza, Hartford, CT
06115 or by calling 1-(800) 862-6668. U.S. Government Fund and HVA Fund file
proxy materials, reports and other information with the Securities and Exchange
Commission. These reports can be inspected and copied at the Public Reference
Facilities maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such materials can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.
EXPERTS
Kevin J. Carr, Counsel of The Hartford, has rendered the legal opinion
relating to the validity of the securities being offered pursuant to this
Prospectus/Proxy Statement in connection with the proposed Reorganization.
PROPOSAL: APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
In order to approve the Reorganization the affirmative vote of holders of
two-thirds of the outstanding shares of U.S. Government Fund is required.
6
<PAGE>
THE DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, OF U.S. GOVERNMENT FUND
RECOMMEND APPROVAL OF THIS AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION.
OTHER INFORMATION
VOTING INFORMATION
Proxies are being solicited by U.S. Government Fund for the Special Meeting
of shareholders to be held on June 19, 1997, at the offices of Hartford Life
Insurance Company, 200 Hopmeadow Street, Simsbury, Connecticut 06089, or at such
later time made necessary by adjournment. Proxies are solicited by mail. The
cost of this solicitation will be borne by Hartford Life. Shares of U.S.
Government Fund are held only by DC Variable Account I and Separate Account Two.
Hartford Life has informed U.S. Government Fund that shares held in Separate
Account DC Variable Account I and Separate Account Two will be voted by Hartford
Life in accordance with instructions received from Contractowners. A proxy may
be revoked at any time at or before the meeting by giving notice to Lowndes A.
Smith, Chairman of the Board, U.S. Government Fund, Hartford Plaza, Hartford,
Connecticut 06115.
As of May 5, 1997, the officers and Directors of U.S. Government Fund as a
group beneficially owned less than 1% of the outstanding shares of U.S.
Government Fund, and, to the best knowledge of U.S. Government Fund, no person
other than DC Variable Account I and Separate Account Two beneficially owned 5%
or more of the outstanding shares of U.S. Government Fund.
As of May 5, 1997, the officers and Directors of HVA Fund as a group
beneficially owned less than 1% of the outstanding shares of the HVA Fund, and
to the best knowledge of HVA Fund, no person other than Separate Account One,
Separate Account Two, Separate Account Five, DC Variable Account I, Separate
Account Variable Life One, Separate Account Variable Life Two, ICMG Secular
Trust Separate Account, all of which are separate accounts owned by Hartford
Life, or Separate Account One, Separate Account Five and ICMG Registered
Variable Life Separate Account One, all of which are separate accounts owned by
Hartford Life and Annuity, beneficially owned 5% or more of the outstanding
shares of HVA Fund.
As of May 5, 1997, of the outstanding shares of U.S. Government Fund,
were owned by DC Variable Account I, or % of outstanding shares and
of the outstanding shares or % of U.S. Government Fund were owned by
Separate Account Two. As a result, Hartford Life may be considered to control
U.S. Government Fund. As of May 5, 1997, of the outstanding shares of HVA
Fund, ( %) were owned by the Separate Account One, ( %) were
owned by the Separate Account Two, ( %) were owned by the Separate
Account Five, ( %) were owned by the DC Variable Account I,
( %) were owned by the Separate Account Variable Life One, ( %) were
owned by the Separate Account Variable Life Two, ( %) were owned by the
ICMG Secular Trust Separate Account, all of which are separate accounts owned by
Hartford Life, and ( %) were owned by Separate Account One,
( %) were owned by Separate Account Five and ( %) were owned by ICMG
Registered Variable Life Separate Account One, all of which are separate
accounts owned by Hartford Life and Annuity. As a result, Hartford Life and
Hartford Life and Annuity may be considered to control HVA Fund.
MISCELLANEOUS
OTHER BUSINESS
The Directors know of no other business to be brought before the Meeting.
However, if any other matters come before the Meeting, it is the intention that
the proxies which do not contain specific restrictions to the contrary will be
voted on such matters in accordance with the judgment of the persons named in
the enclosed form of proxy.
SHAREHOLDERS ARE URGED TO SIGN THEIR PROXIES AND RETURN THEM PROMPTLY TO
U.S. GOVERNMENT FUND. PLEASE NOTE THE FORM OF THE NAME OR NAMES PRINTED ON THE
PROXY. IT IS THE FORM IN WHICH THE SIGNATURE OR SIGNATURES SHOULD APPEAR ON THE
PROXY.
By Order of the Directors,
Michael O'Halloran
Secretary
7
<PAGE>
EXHIBIT A
PLAN OF REORGANIZATION AND LIQUIDATION
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1997, by and between the HVA Money Market Fund, Inc.
(the "Acquiring Fund"), a Maryland corporation, and the Hartford U.S. Government
Money Market Fund, Inc. (the "Acquired Fund"), also a Maryland corporation. The
Acquiring Fund and the Acquired Fund have their respective principal places of
business at Hartford Plaza, Hartford, Connecticut 06115.
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a) of the United States Internal Revenue Code
of 1986, as amended (the "Code"), with respect to the proposed reorganization of
the Acquired Fund, pursuant to which the Acquired Fund will become part of the
Acquiring Fund (the "Reorganization"). Specifically, this Agreement is intended
to be and is adopted for the purpose of providing for the Reorganization of the
Acquired Fund into the Acquiring Fund. The Reorganization will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for (i) shares of common stock in the Acquiring Fund (the
"Acquiring Fund Shares") and (ii) the assumption by the Acquiring Fund of all
the liabilities of the Acquired Fund, and the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund, as provided herein, all upon
the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are open-end, registered
investment companies of the management type and the Acquired Fund owns
securities which generally are assets of the character in which such Acquiring
Fund is permitted to invest;
WHEREAS, the Board of Directors of the Acquiring Fund and the Acquired Fund
have determined, with respect to the Reorganization, that the exchange of all of
the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of
all the liabilities of the Acquired Fund by the Acquiring Fund is in the best
interests of the Acquired Fund and the Acquiring Fund as well as the best
interests of holders of variable life insurance policies and variable annuity
contracts funded by shares of the Acquiring Fund and the Acquired Fund and that
the interests of such existing contract holders would not be diluted as a result
of this transaction;
WHEREAS, the purpose of the Reorganization is to combine the assets of the
Acquiring Fund with those of the Acquired Fund in an attempt to achieve greater
operating economies and increased portfolio diversification.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree, with
respect to the Reorganization, as follows:
1. THE TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN
EXCHANGE FOR THE ACQUIRING FUND SHARES, AND THE ASSUMPTION OF ALL THE
LIABILITIES OF THE ACQUIRED FUND
1.1 A closing shall take place as provided for in paragraph 3.1 ("Closing")
and the provisions of paragraphs 1 through 8 of this Agreement shall apply. At
the Closing, subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired Fund
agrees to transfer all of the Acquired Fund's assets, as set forth in paragraph
1.2, to the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor:
(i) to deliver to the Acquired Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by dividing the value of
the Acquired Fund's net assets computed in the manner and as of the time and
date set forth in paragraph 2.1 by the net asset value of one Acquiring Fund
Share computed in the manner and as of the time and date set forth in paragraph
2.2; and (ii) to assume all the liabilities of the Acquired Fund, as set forth
in paragraph 1.3.
1.2 The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends or interest
receivable which are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the closing date
provided in paragraph 3.1 (the "Closing Date").
1.3 The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume all liabilities, expenses, costs, charges, and reserves reflected on an
unaudited statement of assets and liabilities of the Acquired Fund prepared by
the administrator of the Acquiring Fund and the Acquired Fund, as of the
Valuation Date (as defined in paragraph 2.1), in accordance with generally
accepted accounting principles consistently applied from the prior audited
period.
A-1
<PAGE>
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Fund will distribute pro rata to the Acquired Fund's shareholders
of record, determined as of immediately after the close of business on the
Closing Date (the "Acquired Fund Shareholders"), the Acquiring Fund Shares
received by the Acquired Fund pursuant to paragraph 1.1. Such distribution will
be accomplished by the transfer of the Acquiring Fund Shares then credited to
the account of the Acquired Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the Acquired
Fund Shareholders and representing the respective pro rata number of the
Acquiring Fund Shares due such shareholders. All issued and outstanding shares
of the Acquired Fund will simultaneously be canceled on the books of the
Acquired Fund, although share certificates representing interests in the
Acquired Fund will represent a number of Acquiring Fund Shares after the Closing
Date as determined in accordance with Section 2.3. The Acquiring Fund shall not
issue certificates representing the Acquiring Fund Shares in connection with
such exchange. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent.
1.5 As soon as practicable after the Closing, the Acquired Fund shall take
all the necessary measures under Maryland law and the Acquired Fund's Articles
of Incorporation to effect a complete dissolution of the Acquired Fund and to
de-register the Acquired Fund under the Investment Company Act of 1940, as
amended (the "1940 Act").
2. VALUATION
2.1 The value of the Acquired Fund's assets to be acquired by the Acquiring
Fund hereunder shall be the value of such assets computed as of immediately
after the close of business of the New York Stock Exchange (the "NYSE") at 4:00
P.M., Eastern Time, on the Closing Date (such time and date being hereinafter
called the "Valuation Date"), using the valuation procedures set forth in the
Acquired Fund's Articles of Incorporation and the Acquired Fund's then-current
prospectus or statement of additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net asset
value per share computed as of immediately after the close of business of the
NYSE on the Valuation Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation and the Acquiring Fund's then-current
prospectus or statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's assets shall be
determined by dividing the value of the net assets of the Acquired Fund
determined using the same valuation procedures referred to in paragraph 2.1 by
the net asset value of an Acquiring Fund Share determined in accordance with
paragraph 2.2.
2.4 All computations of value for the Acquired Fund and the Acquiring Fund
shall be made by Hartford Life Insurance Company ("HL").
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be , 1997 or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 P.M., Eastern Time.
The Closing shall be held at the offices of the Acquiring Fund, Hartford Plaza,
Hartford, Connecticut 06115 or at such other time and/or place as the parties
may agree.
3.2 State Street Bank and Trust, as custodian for the Acquired Fund (the
"Custodian"), shall deliver at the Closing a certificate of an authorized
officer stating that: (i) the Acquired Fund's portfolio securities, cash, and
any other assets shall have been delivered in proper form to the Acquiring Fund
within two business days prior to or on the Closing Date; and (ii) all necessary
taxes, including all applicable Federal and state stock transfer stamps, if any,
shall have been paid, or provision for payment shall have been made, in
conjunction with the delivery of the Acquired Fund's portfolio securities.
3.3 In the event that, on the Valuation Date, (a) the NYSE shall be closed
to trading or trading thereon shall be restricted or (b) trading or the
reporting of trading on the NYSE or elsewhere shall be disrupted, the Closing
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored; provided
that, if trading shall not be fully resumed and reporting restored on or before
, 1997, this Agreement may be terminated by either the Acquired Fund
or the Acquiring Fund upon the giving of written notice to the other party.
A-2
<PAGE>
3.4 HL shall deliver at the Closing a certificate of an authorized officer
stating that their records contain the names and addresses of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares owned
by each such shareholder immediately prior to the Closing. The Acquiring Fund
shall issue and deliver a confirmation evidencing the Acquiring Fund Shares to
be credited on the Closing Date to the Secretary of the Acquired Fund or provide
evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have
been credited to the Acquired Fund's account on the books of the Acquiring Fund.
At the Closing, each party shall deliver to the other such bills of sales,
checks, assignments, share certificates, if any, receipts, or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Acquired Fund, represents and warrants to the Acquiring Fund as
follows:
(a) The Acquired Fund is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Maryland;
(b) The Acquired Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission"), as an investment company
under the 1940 Act, and the registration of its shares, under the Securities Act
of 1933, as amended (the "1933 Act"), are in full force and effect;
(c) The Acquired Fund is not in, and the execution, delivery, and
performance of this Agreement will not result in, a material violation of the
Acquired Fund's Articles of Incorporation or By-Laws or of any agreement,
indenture, instrument, contract, lease, or other undertaking to which the
Acquired Fund is a party or bound;
(d) The Acquired Fund has no material contracts or other commitments (other
than this Agreement) which will be terminated with liability to the Acquired
Fund prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to their knowledge threatened against the Acquired Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect the Acquired Fund's financial condition or the conduct of the
Acquired Fund's business. The Acquired Fund knows of no facts which might form
the basis for the institution of such proceedings and the Acquired Fund is not a
party to or subject to the provisions of any order, decree, or judgment of any
court or governmental body which materially and adversely affects the business
or the ability of the Acquired Fund to consummate the transactions herein
contemplated;
(f) The Statement of Assets and Liabilities of the Acquired Fund at December
31, 1996 has been audited by Arthur Andersen LLP, independent public
accountants, and is in accordance with generally accepted accounting principles
consistently applied, and such statement (a copy of which has been furnished to
the Acquiring Fund) fairly reflects the financial condition of the Acquired Fund
as of such date, and there are no known contingent liabilities of the Acquired
Fund as of such date not disclosed therein;
(g) Since December 31, 1996, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities, or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed to and
accepted by the Acquiring Fund. For the purposes of this subparagraph (g), a
decline in net asset value per share of the Acquired Fund, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the Closing Date, all material Federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such date
shall have been filed and are or will be correct, and all Federal and other
taxes shown as due or required to be shown as due on said returns and reports
shall have been paid or provision shall have been made for the payment thereof,
and to the best knowledge of the Acquired Fund no such return is currently under
audit and no assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such;
A-3
<PAGE>
(j) The authorized capital of the Acquired Fund consists of 100 million
shares of common stock, $0.10 par value per share, all of one class, at the date
hereof. All issued and outstanding shares of the Acquired Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid, and
non-assessable by the Acquired Fund. All of the issued and outstanding shares of
the Acquired Fund will, at the time of Closing, be held by the persons and in
the amount set forth in the records of HL, on behalf of the Acquired Fund as
provided in paragraph 3.4. The Acquired Fund does not have outstanding any
options, warrants, or other rights to subscribe for or to purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into any
of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring Fund
pursuant to paragraph 1.2 and full right, power, and authority to sell, assign,
transfer, and deliver such assets hereunder, and, upon delivery and payment for
such assets, the Acquiring Fund will acquire good and marketable title thereto,
subject to any restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund;
(l) The execution, delivery, and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action on the
part of the Acquired Fund's directors, and, subject to the approval of the
Acquired Fund Shareholders, this Agreement will constitute a valid and binding
obligation of the Acquired Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights, and to
general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials, and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations thereunder
applicable thereto; and
(n) The proxy statement of the Acquired Fund (the "Proxy Statement") to be
included in the Registration Statement referred to in paragraph 5.6 (other than
information therein that relates to the Acquiring Fund) will, on the effective
date of the Registration Statement and on the Closing Date, not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading.
4.2 The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
(a) The Acquiring Fund is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland;
(b) The Acquiring Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission, as an investment company under the 1940 Act, and the registration of
its shares, under the 1933 Act, are in full force and effect;
(c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and marketable
title to the Acquiring Fund's assets;
(e) The Acquiring Fund is not in, and the execution, delivery, and
performance of this Agreement will not result in, a material violation of the
Acquiring Fund's Articles of Incorporation or By-Laws or of any agreement,
indenture, instrument, contract, lease, or other undertaking to which the
Acquiring Fund is a party or bound;
(f) No material litigation or administrative proceeding or investigation of
or before any court or governmental body is presently pending or threatened
against the Acquiring Fund or any of their properties or assets, except as
previously disclosed in writing to the Acquired Fund. The Acquiring Fund knows
of no facts which might form the basis for the institution of such proceedings
and the Acquiring Fund is not a party to or subject to the provisions of any
order, decree, or judgment of any
A-4
<PAGE>
court or governmental body which materially and adversely affects the business
or the ability of the Acquiring Fund to consummate the transactions contemplated
herein;
(g) The Statement of Assets and Liabilities of the Acquiring Fund at
December 31, 1996, audited by Arthur Andersen LLP, independent public
accountants, and a copy of which has been furnished to the Acquired Fund, fairly
and accurately reflects the financial condition of the Acquiring Fund as of such
date in accordance with generally accepted accounting principles consistently
applied;
(h) Since December 31, 1996, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities, or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred. For the purposes of this
subparagraph (h), a decline in net asset value per share of the Acquiring Fund
shares, the discharge of Acquiring Fund liabilities, or the redemption of
Acquiring Fund shares by Acquiring Fund shareholders shall not constitute a
material adverse change;
(i) At the Closing Date, all material Federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed by such date
shall have been filed and are or will be correct, and all Federal and other
taxes shown as due or required to be shown as due on said returns and reports
shall have been paid or provision shall have been made for the payment thereof,
and, to the best knowledge of the Acquiring Fund, no such return is currently
under audit and no assessment has been asserted with respect to such returns;
(j) For each taxable year of its operation, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such;
(k) The authorized capital of the Acquiring Fund consists of 800 million
shares of common stock, $0.10 par value per share, all of one class, at the date
hereof. All issued and outstanding Acquiring Fund shares are, and at the Closing
Date will be, duly and validly issued and outstanding, fully paid, and
non-assessable by the Acquiring Fund. The Acquiring Fund does not have
outstanding any options, warrants, or other rights to subscribe for or to
purchase the Acquiring Fund Shares, nor is there outstanding any security
convertible into the Acquiring Fund shares;
(l) The execution, delivery, and performance of this Agreement will have
been fully authorized prior to the Closing Date by all necessary action, if any,
on the part of the directors of the Acquiring Fund and this Agreement will
constitute a valid and binding obligation of the Acquiring Fund enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights, and to general equity principles;
(m) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms
of this Agreement, will, at the Closing Date, have been duly authorized and,
when so issued and delivered, will be duly and validly issued Acquiring Fund
Shares, and will be fully paid and non-assessable by the Acquiring Fund;
(n) The information to be furnished by the Acquiring Fund for use in
registration statements, proxy materials, and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto;
(o) The Proxy Statement to be included in the Registration Statement (only
insofar as it relates to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statement herein, in light of the circumstances
under which such statements were made, not materially misleading; and
(p) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
A-5
<PAGE>
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 The Acquiring Fund and the Acquired Fund each will operate its business
in the ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions, and any other distribution
that may be advisable.
5.2 The Acquired Fund will call a meeting of the Acquired Fund Shareholders
to consider and act upon this Agreement and to take all other action necessary
to obtain approval of the transactions contemplated herein.
5.3 The Acquired Fund covenants that the Acquiring Fund Shares to be issued
hereunder are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.4 The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the shares of the Acquired Fund.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund and the
Acquired Fund will each take, or cause to be taken, all action, and do, or cause
to be done, all things, reasonably necessary, proper, or advisable to consummate
and make effective the transactions contemplated by this Agreement.
5.6 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement, referred to in paragraph 4.1(n), all to
be included in a combined Registration Statement/Proxy Statement on Form N-14 of
the Acquiring Fund (the "Registration Statement"), in compliance with the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
1940 Act, in connection with the meeting of the Acquired Fund Shareholders to
consider approval of this Agreement and the transactions contemplated herein
(the "Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions provided
for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
hereunder on or before the Closing Date, and, in addition thereto, to the
following further conditions:
6.1 All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date; and
6.2 The Acquiring Fund shall have delivered to the Acquired Fund, on the
Closing Date, a certificate executed in the Acquiring Fund's name by its
President or Vice President, and its Treasurer or Controller, in a form
reasonably satisfactory to the Acquired Fund, and dated as of the Closing Date,
to the effect that the representations and warranties of the Acquiring Fund made
in this Agreement are true and correct at and as of the Closing Date, except as
these representations and warranties may be affected by the transactions
contemplated by this Agreement and as to such other matters as the Acquired Fund
shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the Acquired
Fund of all of the obligations to be performed by the Acquired Fund hereunder on
or before the Closing Date and, in addition thereto, to the following
conditions:
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct in all material respects as of the date
hereof and, except as these representations and warranties may be affected by
the transactions contemplated by this Agreement, as of the Closing Date with the
same force and effect as if made on and as of the Closing Date;
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, as of the Closing Date,
certified by the Controller of the Acquired Fund; and
A-6
<PAGE>
7.3 The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date, a certificate executed in the Acquired Fund's name by the Acquired
Fund's President or Vice President, and the Acquired Fund's Treasurer or
Controller, in form and substance satisfactory to the Acquiring Fund, and dated
as of the Closing Date, to the effect that the representations and warranties of
the Acquired Fund, with respect to the Acquired Fund, made in this Agreement are
true and correct at and as of the Closing Date, except as these representations
and warranties may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Acquiring Fund shall reasonably
request.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date, with respect to the Acquired Fund or the Acquiring Fund, then
the other party to this Agreement shall, at its option, not be required to
consummate the transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of
Common Stock, $.10 par value per share, of the Acquired Fund in accordance with
the provisions of the Acquired Fund's Articles of Incorporation and By-Laws, and
certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, the Acquiring Fund or the Acquired Fund may not waive the conditions
set forth in this paragraph 8.1;
8.2 On the Closing Date, no action, suit, or other proceeding shall be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or to obtain damages or other relief in
connection with, this Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders, and
permits of Federal, state, and local regulatory authorities deemed necessary by
the Acquiring Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where failure
to obtain any such consent, order, or permit would not involve a risk of a
material adverse effect on the assets or properties of the Acquiring Fund or the
Acquired Fund, provided that the parties hereto may, for themselves, waive any
of such conditions;
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending,
threatened, or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of tax legal counsel,
addressed to the Acquiring Fund and the Acquired Fund, substantially to the
effect that the transactions contemplated by this Agreement shall constitute a
tax-free reorganization for Federal income tax purposes. The delivery of such
opinion is conditioned upon receipt by tax legal counsel of representations that
such firm shall request of the Acquiring Fund and the Acquired Fund.
Notwithstanding anything herein to the contrary, the Acquiring Fund or the
Acquired Fund may not waive the conditions set forth in this paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1 The Acquiring Fund and the Acquired Fund each represent and warrant to
the other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2 HL will bear the aggregate expenses and costs of the Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund agree that neither party has
made any representation, warranty, or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this
Agreement, or in any document delivered pursuant hereto or in connection
herewith, shall survive the consummation of the transactions contemplated
hereunder.
A-7
<PAGE>
11. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by either party by resolution of either Fund's Board of Directors
at any time prior to the Closing Date, if circumstances should develop that, in
the opinion of such Board of Directors, make proceeding with the Agreement
inadvisable.
12. WAIVER
The Acquiring Fund and the Acquired Fund, after consultation with each
Fund's counsel and by consent of the Fund's Board of Directors, may waive any
condition to the respective obligations of the Acquiring Fund and the Acquired
Fund hereunder, except as provided herein.
13. AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of each Fund;
provided, however, that, following the Meeting of the Acquired Fund Shareholders
called by the Acquired Fund pursuant to paragraph 5.2 of this Agreement, no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Shares to be issued to the Acquired Fund
Shareholders under this Agreement to the detriment of such shareholders without
their further approval.
14. NOTICES
Any notice, report, statement, or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, or certified mail addressed to each Fund at Hartford Plaza,
Hartford, Connecticut 06115.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut.
15.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or to give any
person, firm, or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
15.5 It is expressly agreed that the obligations of Acquiring Fund and the
Acquired Fund hereunder shall not be binding upon any of the directors,
shareholders, nominees, officers, agents, or employees of the Fund personally,
but shall bind only the corporate property of Acquiring Fund and the Acquired
Fund, as provided in the Articles of Incorporation of each Fund. The execution
and delivery by such officers of each Fund shall not be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the corporate property of the Acquiring Fund and
the Acquired Fund as provided in the Articles of Incorporation of each Fund.
A-8
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President or Vice President and its seal to be affixed hereto
and attested by its Secretary or Assistant Secretary.
<TABLE>
<S> <C>
Attest: [Seal] HVA MONEY MARKET FUND, INC.
- ---------------------------------------------------- ----------------------------------------------------
By: By:
Title: Title:
Attest:
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
[Seal]
- ---------------------------------------------------- ----------------------------------------------------
By: By:
Title: Title:
</TABLE>
A-9
<PAGE>
Combined Prospectus for HVA Money Market Fund, Inc.
and U.S. Government Money Market Fund, Inc.
dated as of May 1, 1997
<PAGE>
HARTFORD MUTUAL FUNDS
- ------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
SUPPLEMENT DATED MARCH 3, 1997
TO THE PROSPECTUS DATED MAY 1, 1996,
AS REVISED AUGUST 9, 1996
Effective March 3, 1997, The Hartford Investment Management Company,
investment manager to each of the Hartford Mutual Funds (the "Funds") and an
indirect wholly owned subsidiary of ITT Hartford Group, Inc. ("The Hartford"),
has changed its name to HL Investment Advisors, Inc. On that same date a newly
formed wholly owned subsidiary of The Hartford has been renamed The Hartford
Investment Management Company ("HIMCO"). HL Investment Advisors, Inc. has
entered into an agreement with HIMCO for HIMCO to provide investment services to
HL Investment Advisors in connection with the Hartford Index Fund, Hartford Bond
Fund, Hartford Mortgage Securities Fund, Hartford U.S. Government Money Market
Fund and HVA Money Market Fund. As a corporate affiliate of HL Investment
Advisors, Inc., HIMCO will be reimbursed by HL Investment Advisors for the costs
it incurs in providing such services and will receive no other compensation.
Therefore, the investment management fees charged to the Funds will remain the
same. In addition, the personnel responsible for managing the Funds has not
changed. For additional information on the investment management of the Funds
please see "Management of the Funds" in the prospectus.
HV-2132
<PAGE>
HARTFORD MUTUAL FUNDS
P.O. BOX 2999
HARTFORD, CT 06104-2999
PROSPECTUS -- MAY 1, 1996
REVISED EFFECTIVE AUGUST 9, 1996
This Prospectus contains information relating to twelve mutual funds offered
hereby (individually, a "Fund," collectively, the "Funds" or "Hartford Mutual
Funds"), each registered as a diversified open-end management investment company
with the Securities and Exchange Commission, that are made available to serve as
the underlying investment vehicles for certain variable annuity and variable
life insurance separate accounts of Hartford Life Insurance Company and ITT
Hartford Life and Annuity Insurance Company (collectively, the "ITT Hartford
Life Insurance Companies"). The Funds, which have different investment
objectives and policies, are: Hartford Capital Appreciation Fund, Inc., Hartford
Dividend and Growth Fund, Inc., Hartford Index Fund, Inc., Hartford
International Opportunities Fund, Inc., Hartford Small Company Fund, Inc.,
Hartford Stock Fund, Inc., Hartford Advisers Fund, Inc., Hartford International
Advisers Fund, Inc., Hartford Bond Fund, Inc., Hartford Mortgage Securities
Fund, Inc., HVA Money Market Fund, Inc. and Hartford U.S. Government Money
Market Fund, Inc. The investment objective of each Fund is the first sentence of
each of the following:
STOCK FUNDS
HARTFORD CAPITAL APPRECIATION FUND, INC. seeks to achieve growth of capital
by investing in securities selected solely on the basis of potential for capital
appreciation; income, if any, is an incidental consideration. The Capital
Appreciation Fund invests primarily in equity securities and securities
convertible into equity securities.
HARTFORD DIVIDEND AND GROWTH FUND, INC. seeks to achieve a high level of
current income consistent with growth of capital and reasonable investment risk.
The Dividend and Growth Fund invests primarily in equity securities and
securities convertible into equity securities that typically have above average
income yield and favorable prospects for capital appreciation.
HARTFORD INDEX FUND, INC. seeks to provide investment results which
approximate the price and yield performance of publicly-traded common stocks in
the aggregate. The Index Fund attempts to approximate the capital performance
and the dividend income of the Standard & Poor's 500 Composite Stock Price
Index.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC. seeks to achieve long-term
total rate of return consistent with prudent investment risk through investment
primarily in equity securities issued by non-U.S. companies.
HARTFORD SMALL COMPANY FUND, INC. seeks growth of capital by investing
primarily in equity securities selected on the basis of potential for capital
appreciation. The Fund invests primarily in equity securities of companies with
less than $2 billion in market capitalization.
HARTFORD STOCK FUND, INC. seeks to achieve long-term capital growth
primarily through capital appreciation, with income a secondary consideration,
by investing in primarily equity securities. Its portfolio emphasizes
high-quality growth companies.
ASSET ALLOCATION FUNDS
HARTFORD ADVISERS FUND, INC. seeks to achieve maximum long-term total rate
of return consistent with prudent investment risk by investing in common stock
and other equity securities, bonds and other debt securities, and money market
instruments. The Advisers Fund actively allocates its assets among these asset
categories based on fundamental analysis, not on short-term market timing.
HARTFORD INTERNATIONAL ADVISERS FUND, INC. seeks to achieve maximum
long-term total rate of return consistent with prudent investment risk. The
International Advisers Fund's assets will be diversified among at least five
countries, and will be allocated among equity and debt securities and money
market instruments based on fundamental analysis, not on short-term market
timing.
BOND FUNDS
HARTFORD BOND FUND, INC. seeks to achieve maximum current income consistent
with preservation of capital by investing primarily in fixed-income securities.
HARTFORD MORTGAGE SECURITIES FUND, INC. seeks to achieve maximum current
income consistent with safety of principal and maintenance of liquidity by
investing primarily in mortgage-related securities, including securities issued
by the Government National Mortgage Association.
MONEY MARKET FUNDS
HVA MONEY MARKET FUND, INC. seeks to achieve maximum current income
consistent with liquidity and preservation of capital. This Fund invests in
short-term money market instruments.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC. seeks to achieve maximum
current income consistent with preservation of capital. This Fund invests in
short-term money market instruments.
- --------------------------------------------------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT A FUND THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. PLEASE READ AND RETAIN THIS
PROSPECTUS FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE FUNDS HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A STATEMENT OF ADDITIONAL
INFORMATION DATED MAY 1, 1996, REVISED EFFECTIVE AUGUST 9, 1996, WHICH HAS BEEN
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AND WILL BE PROVIDED ON REQUEST
AND WITHOUT CHARGE. WRITE "HARTFORD FAMILY OF FUNDS, C/O INDIVIDUAL ANNUITY
OPERATIONS," P.O. BOX 2999, HARTFORD, CT 06104-2999.
- --------------------------------------------------------------------------------
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 FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER BY THE FUNDS 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 FUNDS TO MAKE SUCH OFFER.
- --------------------------------------------------------------------------------
AN INVESTMENT IN EITHER OF THE MONEY MARKET FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EITHER OF THE
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00
PER SHARE.
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC. MAY INVEST UP TO 15% OF ITS ASSETS IN
HIGH YIELD DEBT SECURITIES. INVESTMENTS OF THIS TYPE INVOLVE COMPARATIVELY
HIGHER RISKS, INCLUDING PRICE VOLATILITY AND RISK OF DEFAULT IN THE PAYMENT OF
INTEREST AND PRINCIPAL, THAN HIGHER-QUALITY DEBT SECURITIES. SEE "COMMON
INVESTMENT POLICIES AND RISK FACTORS."
- --------------------------------------------------------------------------------
<PAGE>
2 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Glossary.............................................................. 3
Financial Highlights.................................................. 4
The Funds............................................................. 15
Investment Objectives and Policies of the Funds....................... 15
Common Investment Policies and Risk Factors........................... 23
Repurchase Agreements............................................... 23
Illiquid Securities................................................. 23
When-Issued and Delayed-Delivery Securities......................... 24
Other Investment Companies.......................................... 24
Currency Transactions............................................... 24
Options and Futures Contracts....................................... 25
Non-U.S. Securities, Including ADRs and GDRs........................ 26
Small Capitalization Securities..................................... 27
Mortgage-Related Securities......................................... 27
Asset-Backed Securities............................................. 28
Swap Agreements..................................................... 28
Money Market Instruments............................................ 29
Investment Grade Securities......................................... 29
High Yield Securities............................................... 29
Other Risk Factors.................................................. 29
Management of the Funds............................................... 30
Investment Advisory and Management Services......................... 30
Investment Sub-Advisory Services.................................... 31
Portfolio Managers.................................................. 32
Administrative Services for the Funds................................. 32
Expenses of the Funds................................................. 32
Performance Related Information....................................... 33
Dividends............................................................. 33
Net Asset Value....................................................... 33
Purchase of Fund Shares............................................... 34
Sale and Redemption of Shares......................................... 34
Federal Income Taxes.................................................. 34
Ownership and Capitalization of the Funds............................. 34
Capital Stock....................................................... 34
Voting.............................................................. 35
Other Rights........................................................ 35
General Information................................................... 35
Reports to Shareholders............................................. 35
Custodian, Transfer and Dividend Disbursing Agents.................. 35
"Majority" Defined.................................................. 35
Pending Legal Proceedings........................................... 35
Requests for Information............................................ 35
Appendix -- Ratings of Bonds and Commercial Paper..................... 36
</TABLE>
There is the possibility that an individual Fund may be held liable for a
misstatement, inaccuracy or incomplete disclosure in this Prospectus concerning
the other Fund(s).
Additional information about the performance of each Fund, including
Management's Discussion and Analysis of results, is contained in the Funds'
annual report to shareholders, which may be obtained without charge by calling
1-800-862-6668.
<PAGE>
HARTFORD MUTUAL FUNDS 3
- --------------------------------------------------------------------------------
GLOSSARY
ADRs: American Depository Receipts
CFTC: Commodity Futures Trading Commission
CMOs: Collateralized Mortgage Obligations
Code: Internal Revenue Code of 1986, as amended
FHLMC: Federal Home Loan Mortgage Corporation
FNMA: Federal National Mortgage Association
GDRs: Global Depository Receipts
GNMA: Government National Mortgage Association
IMF: International Monetary Fund
Moody's: Moody's Investors Service, Inc.
NYSE: New York Stock Exchange
1940 Act: Investment Company Act of 1940, as amended
SEC: Securities and Exchange Commission
S&P: Standard & Poor's Corporation
World Bank: International Bank for Reconstruction and Development
<PAGE>
4
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
----------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING OF
PERIOD......... $ 2.860 $ 3.052 $ 2.634 $ 2.607 $ 1.709 $ 2.020 $ 1.678 $ 1.341 $ 1.482 $ 1.423
NET INVESTMENT
INCOME......... 0.030 0.011 0.003 0.008 $ 0.021 $ 0.029 $ 0.023 $ 0.015 $ 0.025 $ 0.019
NET REALIZED AND
UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS.... 0.785 0.070 0.526 0.388 0.898 (0.246) 0.376 0.337 (0.075) 0.106
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM
INVESTMENT
OPERATIONS..... 0.815 0.081 0.529 0.396 0.919 (0.217) 0.399 0.352 (0.050) 0.125
DIVIDENDS FROM
NET INVESTMENT
INCOME......... (0.030) (0.011) (0.003) (0.008) (0.021) (0.029) (0.023) (0.015) (0.025) (0.019)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES..... (0.155) (0.262) (0.108) (0.361) 0.000 (0.065) (0.034) 0.000 (0.066) (0.047)
RETURN OF
CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM
DISTRIBUTIONS... (0.185) (0.273) (0.111) (0.369) (0.021) (0.094) (0.057) (0.015) (0.091) (0.066)
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
NET INCREASE
(DECREASE) IN
NET ASSETS..... 0.630 (0.192) 0.418 0.027 0.898 (0.311) 0.342 0.337 (0.141) 0.059
NET ASSET VALUE
AT END OF
PERIOD......... $ 3.490 $ 2.860 $ 3.052 $ 2.634 $ 2.607 $ 1.709 $ 2.020 $ 1.678 $ 1.341 $ 1.482
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL RETURN.... 30.25% 2.50% 20.80% 16.98% 53.99% (10.90)% 24.11% 26.37% (4.31)% 9.03%
NET ASSETS (IN
THOUSANDS)..... 2,157,892 1,158,644 778,904 300,373 158,046 56,032 59,922 34,226 26,123 22,556
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS......... 0.68% 0.72% 0.76% 0.87% 0.92% 0.96% 0.94% 0.97% 1.01% 1.12%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSET.......... 0.95% 0.40% 0.12% 0.36% 0.92% 1.58% 1.25% 0.91% 1.27% 1.23%
PORTFOLIO
TURNOVER
RATE........... 78.6% 73.3% 91.4% 100.3% 107.2% 51.8% 35.0% 48.9% 68.7% 53.9%
</TABLE>
<PAGE>
HARTFORD DIVIDEND & GROWTH FUND, INC. 5
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE
OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
-----------------------
YEAR
ENDED 03/08/94-
1995 12/31/94(A)
--------- -----------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 0.994 $ 1.000
NET INVESTMENT INCOME............................. 0.033 0.024
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS...................................... 0.317 (0.005)
--------- -----------
TOTAL FROM INVESTMENT OPERATIONS.................. 0.350 0.019
DIVIDENDS FROM NET INVESTMENT INCOME.............. (0.033) (0.024)
DISTRIBUTION FROM NET REALIZED GAINS ON
SECURITIES....................................... 0.000 (0.001)
RETURN OF CAPITAL................................. 0.000 0.000
--------- -----------
TOTAL FROM DISTRIBUTIONS.......................... (0.033) (0.025)
--------- -----------
NET INCREASE (DECREASE) IN NET ASSETS............. 0.317 (0.006)
NET ASSET VALUE AT END OF PERIOD.................. $ 1.311 $ 0.994
--------- -----------
--------- -----------
TOTAL RETURN...................................... 36.37% 1.96%
NET ASSETS (IN THOUSANDS)......................... 265,070 55,066
RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS........................................... 0.77% 0.83%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSET............................................ 2.91% 3.52%*
PORTFOLIO TURNOVER RATE........................... 41.4% 27.8%
</TABLE>
- ------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission on
March 8, 1994.
* Annualized
<PAGE>
6 HARTFORD INDEX FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED 05/01/87-
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87(A)
--------- --------- --------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD..... $ 1.522 $ 1.546 $ 1.450 $ 1.390 $ 1.134 $ 1.220 $ 0.960 $ 0.854 $ 1.000
NET INVESTMENT INCOME.... 0.044 0.038 0.035 0.033 0.036 0.037 0.029 0.030 0.016
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............. 0.507 (0.024) 0.096 0.060 0.294 (0.086) 0.260 0.106 (0.144)
--------- --------- --------- -------- -------- -------- -------- -------- -----------
TOTAL FROM INVESTMENT
OPERATIONS.............. 0.551 0.014 0.131 0.093 0.330 (0.049) 0.289 0.136 (0.128)
DIVIDENDS FROM NET
INVESTMENT INCOME....... (0.044) (0.038) (0.035) (0.033) (0.036) (0.037) (0.029) (0.030) (0.016)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES.............. (0.001) 0.000 0.000 0.000 (0.038) 0.000 0.000 0.000 (0.002)
RETURN OF CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- -------- -------- -------- -------- -------- -----------
TOTAL FROM
DISTRIBUTIONS........... (0.045) (0.038) (0.035) (0.033) (0.074) (0.037) (0.029) (0.030) (0.018)
--------- --------- --------- -------- -------- -------- -------- -------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS........... 0.506 (0.024) 0.096 0.060 0.256 (0.086) 0.260 0.106 (0.146)
NET ASSET VALUE AT END OF
PERIOD.................. $ 2.028 $ 1.522 $ 1.546 $ 1.450 $ 1.390 $ 1.134 $ 1.220 $ 0.960 $ 0.854
--------- --------- --------- -------- -------- -------- -------- -------- -----------
--------- --------- --------- -------- -------- -------- -------- -------- -----------
TOTAL RETURN............. 36.55% 0.94% 9.12% 6.82% 29.53% (3.99)% 30.47% 16.35% (12.91)%
NET ASSETS (IN
THOUSANDS).............. 318,253 157,660 140,396 82,335 47,770 26,641 19,456 10,050 7,212
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS.................. 0.39% 0.45% 0.49% 0.60% 0.67% 0.91% 1.10% 1.23% 1.35%*
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSET................... 2.46% 2.50% 2.36% 2.48% 2.89% 3.27% 2.60% 3.29% 2.39%*
PORTFOLIO TURNOVER
RATE.................... 1.5% 1.8% 0.8% 1.2% 6.7% 25.5% 12.9% 20.9% 1.9%
</TABLE>
- ------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on May 1, 1987.
* Annualized
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC. 7
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
---------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED 07/02/90-
1995 1994 1993 1992 1991 12/31/90(A)
--------- --------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD.................... $ 1.176 $ 1.215 $ 0.917 $ 0.973 $ 0.871 $ 1.000
NET INVESTMENT INCOME......... 0.020 0.016 0.009 0.013 0.011 0.015
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS.................. 0.141 (0.039) 0.298 (0.056) 0.102 (0.129)
--------- --------- --------- -------- -------- -----------
TOTAL FROM INVESTMENT
OPERATIONS................... 0.161 (0.023) 0.307 (0.043) 0.113 (0.114)
DIVIDENDS FROM NET INVESTMENT
INCOME....................... (0.020) (0.016) (0.009) (0.013) (0.011) (0.015)
DISTRIBUTION FROM NET REALIZED
GAINS ON SECURITIES.......... (0.011) 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL............. 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- -------- -------- -----------
TOTAL FROM DISTRIBUTIONS...... (0.031) (0.016) (0.009) (0.013) (0.011) (0.015)
--------- --------- --------- -------- -------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS....................... 0.130 (0.039) 0.298 (0.056) 0.102 (0.129)
NET ASSET VALUE AT END OF
PERIOD....................... $ 1.306 $ 1.176 $ 1.215 $ 0.917 $ 0.973 $ 0.871
--------- --------- --------- -------- -------- -----------
--------- --------- --------- -------- -------- -----------
TOTAL RETURN.................. 13.93% (1.94)% 33.73% (4.43)% 13.00% (11.76)%
NET ASSETS (IN THOUSANDS)..... 686,475 563,765 281,608 47,560 22,854 9,352
RATIO OF OPERATING EXPENSES TO
AVERAGE NET ASSETS........... 0.86% 0.85% 1.00% 1.23% 1.24% 1.04%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSET......... 1.60% 1.42% 0.84% 1.40% 1.17% 2.65%*
PORTFOLIO TURNOVER RATE....... 55.6% 46.4% 31.8% 25.1% 24.7% 3.0%
</TABLE>
- ------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on July 2, 1990.
* Annualized
<PAGE>
8 HARTFORD STOCK FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING
OF PERIOD..... $ 2.801 $ 3.099 $ 2.965 $ 2.927 $ 2.452 $ 2.775 $ 2.304 $ 1.977 $ 2.177 $ 2.107
NET INVESTMENT
INCOME........ 0.070 0.061 0.053 0.051 $ 0.059 $ 0.070 $ 0.065 $ 0.045 $ 0.045 $ 0.049
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS... 0.840 (0.111) 0.339 0.219 0.532 (0.179) 0.522 0.327 0.084 0.196
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS.... 0.910 (0.050) 0.392 0.270 0.591 (0.109) 0.587 0.372 0.129 0.245
DIVIDENDS FROM
NET INVESTMENT
INCOME........ (0.070) (0.061) (0.053) (0.051) (0.059) (0.070) (0.065) (0.045) (0.045) (0.049)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES.... (0.114) (0.187) (0.205) (0.181) (0.057) (0.144) (0.051) 0.000 (0.284) (0.126)
RETURN OF
CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
DISTRIBUTIONS... (0.184) (0.248) (0.258) (0.232) (0.116) (0.214) (0.116) (0.045) (0.329) (0.175)
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
NET INCREASE
(DECREASE) IN
NET ASSETS.... 0.726 (0.298) 0.134 0.038 0.475 (0.323) 0.471 0.327 (0.200) 0.070
NET ASSET VALUE
AT END OF
PERIOD........ $ 3.527 $ 2.801 $ 3.099 $ 2.965 $ 2.927 $ 2.452 $ 2.775 $ 2.304 $ 1.977 $ 2.177
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN... 34.10% (1.89)% 14.34% 10.04% 24.58% (3.87)% 26.02% 19.00% 5.41% 12.33%
NET ASSETS (IN
THOUSANDS).... 1,876,884 1,163,158 968,425 569,903 406,489 257,553 266,756 187,511 170,319 148,126
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS........ 0.48% 0.50% 0.53% 0.57% 0.60% 0.66% 0.64% 0.65% 0.65% 0.66%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSET......... 2.23% 2.17% 1.86% 1.90% 2.14% 2.76% 2.31% 2.08% 1.83% 2.24%
PORTFOLIO
TURNOVER
RATE.......... 52.9% 63.8% 69.0% 69.8% 24.3% 20.2% 24.4% 22.9% 27.0% 25.7%
</TABLE>
<PAGE>
HARTFORD ADVISERS FUND, INC. 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING
OF PERIOD..... $ 1.600 $ 1.752 $ 1.676 $ 1.649 $ 1.436 $ 1.543 $ 1.332 $ 1.213 $ 1.227 $ 1.179
NET INVESTMENT
INCOME........ 0.064 0.054 0.050 0.059 $ 0.063 $ 0.074 $ 0.062 $ 0.051 $ 0.051 $ 0.054
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS... 0.377 (0.100) 0.145 0.070 0.223 (0.059) 0.221 0.119 0.025 0.089
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS.... 0.441 (0.046) 0.195 0.129 0.286 0.015 0.283 0.170 0.076 0.143
DIVIDENDS FROM
NET INVESTMENT
INCOME........ (0.064) (0.054) (0.050) (0.059) (0.063) (0.074) (0.062) (0.051) (0.051) (0.054)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES.... (0.019) (0.052) (0.069) (0.043) (0.010) (0.048) (0.010) 0.000 (0.039) (0.041)
RETURN OF
CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
DISTRIBUTIONS... (0.083) (0.106) (0.119) (0.102) (0.073) (0.122) (0.072) (0.051) (0.090) (0.095)
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
NET INCREASE
(DECREASE) IN
NET ASSETS.... 0.358 (0.152) 0.076 0.027 0.213 (0.107) 0.211 0.119 (0.014) 0.048
NET ASSET VALUE
AT END OF
PERIOD........ $ 1.958 $ 1.600 $ 1.752 $ 1.676 $ 1.649 $ 1.436 $ 1.543 $ 1.332 $ 1.213 $ 1.227
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN... 28.34% (2.74)% 12.25% 8.30% 20.33% 1.26% 21.72% 14.24% 6.08% 12.70%
NET ASSETS (IN
THOUSANDS).... 4,262,769 3,034,034 2,426,550 985,747 631,424 416,839 371,917 264,750 239,704 127,214
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS........ 0.65% 0.65% 0.69% 0.78% 0.81% 0.89% 0.89% 0.90% 0.91% 0.98%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSET......... 3.57% 3.34% 3.07% 3.55% 4.13% 4.65% 4.14% 3.93% 4.00% 4.36%
PORTFOLIO
TURNOVER
RATE.......... 63.5% 60.0% 55.3% 72.8% 42.1% 35.7% 33.5% 30.9% 28.3% 23.3%
</TABLE>
<PAGE>
10 HARTFORD INTERNATIONAL ADVISERS FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE
OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
----------------------
03/01/95-
12/31/95(A)
----------------------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 1.000
NET INVESTMENT INCOME............................. 0.030
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS...................................... 0.126
-------
TOTAL FROM INVESTMENT OPERATIONS.................. 0.156
DIVIDENDS FROM NET INVESTMENT INCOME.............. (0.030)
DISTRIBUTION FROM NET REALIZED GAINS ON
SECURITIES....................................... (0.017)
RETURN OF CAPITAL................................. 0.000
-------
TOTAL FROM DISTRIBUTIONS.......................... (0.047)
-------
NET INCREASE (DECREASE) IN NET ASSETS............. 0.109
NET ASSET VALUE AT END OF PERIOD.................. $ 1.109
-------
-------
TOTAL RETURN...................................... 15.84%
NET ASSETS (IN THOUSANDS)......................... 31,264
RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS........................................... 0.65%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSET............................................ 3.36%*
PORTFOLIO TURNOVER RATE........................... 47.2%
</TABLE>
- ------------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on March 1, 1995.
* Annualized. In 1995, a portion of the International Advisers Fund's
management fees were waived. Without this waiver, the ratio of operating
expenses to average net assets would have been 1.229%.
<PAGE>
HARTFORD BOND FUND, INC. 11
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF
PERIOD.................. $ 0.926 $ 1.044 $ 1.024 $ 1.061 $ 0.979 $ 0.976 $ 0.945 $ 0.952 $ 1.033 $ 1.007
NET INVESTMENT INCOME.... 0.064 0.060 0.062 0.074 $ 0.072 $ 0.075 $ 0.079 $ 0.077 $ 0.080 $ 0.091
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............. 0.102 (0.100) 0.039 (0.019) 0.082 0.003 0.031 (0.007) (0.081) 0.026
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS.............. 0.166 (0.040) 0.101 0.055 0.154 0.078 0.110 0.070 (0.001) 0.117
DIVIDENDS FROM NET
INVESTMENT
INCOME.................. (0.064) (0.060) (0.062) (0.074) (0.072) (0.075) (0.079) (0.077) (0.080) (0.091)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES.............. 0.000 (0.018) (0.019) (0.018) 0.000 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
TOTAL FROM
DISTRIBUTIONS........... (0.064) (0.078) (0.081) (0.092) (0.072) (0.075) (0.079) (0.077) (0.080) (0.091)
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS........... 0.102 (0.118) 0.020 (0.037) 0.082 0.003 0.031 (0.007) (0.081) 0.026
NET ASSET VALUE AT END OF
PERIOD.................. $ 1.028 $ 0.926 $ 1.044 $ 1.024 $ 1.061 $ 0.979 $ 0.976 $ 0.945 $ 0.952 $ 1.033
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
TOTAL RETURN............. 18.49% (3.95)% 10.24% 5.53% 16.43% 8.39% 12.10% 7.60% (0.01)% 12.19%
NET ASSETS (IN
THOUSANDS).............. 342,495 247,458 239,602 128,538 97,377 70,915 61,602 54,215 50,037 57,160
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS.................. 0.53% 0.55% 0.57% 0.64% 0.66% 0.67% 0.67% 0.69% 0.69% 0.71%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSET................... 6.51% 6.23% 5.93% 7.21% 7.29% 7.82% 8.09% 8.12% 8.15% 8.93%
PORTFOLIO TURNOVER
RATE.................... 215.0% 328.8% 494.3% 434.1% 337.0% 161.6% 225.0% 230.3% 53.3% 46.7%
CURRENT YIELD *.......... 6.46% 7.19% 4.93% 6.48% 6.62% 8.17% 7.92% 9.15% 8.67% 8.82%
</TABLE>
- ------------------------------
* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are insured
and/or pay a fixed yield for a stated period of time, or other investment
companies. In addition, information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
<PAGE>
12 HARTFORD MORTGAGE SECURITIES FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
---------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD.... $ 0.984 $ 1.075 $ 1.079 $ 1.115 $ 1.054 $ 1.045 $ 1.006 $ 1.011 $ 1.087 $ 1.077
NET INVESTMENT INCOME... 0.068 0.068 0.071 0.086 $ 0.088 $ 0.087 $ 0.088 $ 0.087 $ 0.093 $ 0.104
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............ 0.087 (0.086) (0.004) (0.036) 0.061 0.009 0.039 (0.005) (0.067) 0.010
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
TOTAL FROM INVESTMENT
OPERATIONS............. 0.155 (0.018) 0.067 0.050 0.149 0.096 0.127 0.082 0.026 0.114
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.068) (0.068) (0.071) (0.086) (0.088) (0.087) (0.088) (0.087) (0.093) (0.104)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES............. 0.000 (0.005) 0.000 0.000 0.000 0.000 0.000 0.000 (0.009) 0.000
RETURN OF CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
TOTAL FROM
DISTRIBUTIONS.......... (0.068) (0.073) (0.071) (0.086) (0.088) (0.087) (0.088) (0.087) (0.102) (0.104)
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS.......... 0.087 (0.091) (0.004) (0.036) 0.061 0.009 0.039 (0.005) (0.076) 0.010
NET ASSET VALUE AT END
OF PERIOD.............. $ 1.071 $ 0.984 $ 1.075 $ 1.079 $ 1.115 $ 1.054 $ 1.045 $ 1.006 $ 1.011 $ 1.087
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
TOTAL RETURN............ 16.17% (1.61)% 6.31% 4.64% 14.71% 9.70% 13.13% 8.38% 2.64% 11.13%
NET ASSETS (IN
THOUSANDS)............. 327,565 304,147 365,198 258,711 162,484 105,620 85,908 85,075 84,075 100,518
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS................. 0.47% 0.48% 0.49% 0.56% 0.58% 0.58% 0.58% 0.60% 0.61% 0.62%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSET.................. 6.50% 6.65% 6.49% 7.96% 8.25% 8.42% 8.64% 8.56% 9.02% 9.57%
PORTFOLIO TURNOVER
RATE................... 489.4% 365.7% 183.4% 277.2% 152.2% 85.6% 91.3% 185.0% 143.6% 103.1%
CURRENT YIELD *......... 6.90% 7.84% 5.73% 7.51% 8.16% 8.21% 8.28% 9.12% 9.41% 8.90%
</TABLE>
- ------------------------------
* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are insured
and/or pay a fixed yield for a stated period of time, or other investment
companies. In addition, information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
<PAGE>
HVA MONEY MARKET FUND, INC. 13
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
-----------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF
PERIOD............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
NET INVESTMENT
INCOME............... 0.056 0.039 0.029 0.036 $ 0.059 $ 0.078 $ 0.088 $ 0.071 $ 0.063 $ 0.066
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS.......... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
TOTAL FROM INVESTMENT
OPERATIONS........... 0.056 0.039 0.029 0.036 0.059 0.078 0.088 0.071 0.063 0.066
DIVIDENDS FROM NET
INVESTMENT INCOME.... (0.056) (0.039) (0.029) (0.036) (0.059) (0.078) (0.088) (0.071) (0.063) (0.066)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES........... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL..... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
TOTAL FROM
DISTRIBUTIONS........ (0.056) (0.039) (0.029) (0.036) (0.059) (0.078) (0.088) (0.071) (0.063) (0.066)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
NET INCREASE
(DECREASE) IN NET
ASSETS............... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
NET ASSET VALUE AT END
OF
PERIOD............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
TOTAL RETURN.......... 5.74% 3.95% 2.94% 3.63% 6.01% 8.09% 9.10% 7.40% 6.49% 6.77%
NET ASSETS (IN
THOUSANDS)........... 339,709 321,465 234,088 190,246 177,483 194,462 129,808 127,346 104,002 79,683
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS........... 0.45% 0.47% 0.48% 0.53% 0.54% 0.57% 0.58% 0.58% 0.58% 0.58%
RATIO OF NET
INVESTMENT INCOME TO
AVERAGE NET ASSET.... 5.57% 3.99% 2.91% 3.60% 5.88% 7.80% 8.75% 7.19% 6.36% 6.56%
PORTFOLIO TURNOVER
RATE................. -- -- -- -- -- -- -- -- -- --
CURRENT YIELD *....... 5.40% 5.43% 2.89% 3.09% 4.66% 7.73% 8.21% 8.49% 7.17% 5.45%
EFFECTIVE YIELD *..... 5.54% 5.58% 2.93% 3.14% 4.79% 8.03% 8.55% 8.85% 7.43% 5.60%
</TABLE>
- ------------------------------
* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are insured
and/or pay a fixed yield for a stated period of time, or other investment
companies. In addition, information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
<PAGE>
14 HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information, insofar as it relates to each of the five years
in the period ended December 31, 1995, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
--------------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE AT
BEGINNING OF
PERIOD....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
NET INVESTMENT
INCOME....... 0.054 0.036 0.027 0.032 $ 0.055 $ 0.073 $ 0.081 $ 0.067 $ 0.056 $ 0.061
NET REALIZED
AND
UNREALIZED
GAINS
(LOSSES) ON
INVESTMENTS... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
TOTAL FROM
INVESTMENT
OPERATIONS... 0.054 0.036 0.027 0.032 0.055 0.073 0.081 0.067 0.056 0.061
DIVIDENDS FROM
NET
INVESTMENT
INCOME....... (0.054) (0.036) (0.027) (0.032) (0.055) (0.073) (0.081) (0.067) (0.056) (0.061)
DISTRIBUTION
FROM NET
REALIZED
GAINS ON
SECURITIES... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
RETURN OF
CAPITAL...... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
TOTAL FROM
DISTRI
BUTIONS...... (0.054) (0.036) (0.027) (0.032) (0.055) (0.073) (0.081) (0.067) (0.056) (0.061)
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
NET INCREASE
(DECREASE) IN
NET ASSETS... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
NET ASSET
VALUE AT END
OF
PERIOD....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
-------- ----------- ----------- -------- -------- -------- ----------- ----------- ----------- -----------
TOTAL
RETURN....... 5.52% 3.67% 2.68% 3.22% 5.61% 7.52% 8.43% 6.92% 5.75% 6.29%
NET ASSETS (IN
THOUSANDS)... 10,070 9,619 9,449 10,525 11,257 10,496 7,814 7,262 5,688 5,812
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS....... 0.57% 0.58% 0.58% 0.75% 0.73% 0.73% 0.77% 0.75% 0.66% 0.60%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSET........ 5.38% 3.63% 2.65% 3.19% 5.48% 7.29% 8.14% 6.76% 5.57% 6.08%
PORTFOLIO
TURNOVER
RATE......... -- -- -- -- -- -- -- -- -- --
CURRENT YIELD
*............ 5.47% 5.14% 2.67% 2.69% 4.24% 7.59% 7.53% 8.27% 6.17% 5.26%
EFFECTIVE
YIELD *...... 5.62% 5.27% 2.71% 2.72% 4.31% 7.88% 7.82% 8.62% 6.36% 5.40%
</TABLE>
- ------------------------------
* THE YIELD INFORMATION WILL FLUCTUATE AND PUBLICATION OF YIELD MAY NOT PROVIDE
A BASIS FOR COMPARISON WITH BANK DEPOSITS, OTHER INVESTMENTS WHICH ARE INSURED
AND/OR PAY A FIXED YIELD FOR A STATED PERIOD OF TIME, OR OTHER INVESTMENT
COMPANIES. IN ADDITION, INFORMATION MAY BE OF LIMITED USE FOR COMPARATIVE
PURPOSES BECAUSE IT DOES NOT REFLECT CHARGES IMPOSED AT THE SEPARATE ACCOUNT
LEVEL WHICH, IF INCLUDED, WOULD DECREASE THE YIELD.
<PAGE>
HARTFORD MUTUAL FUNDS 15
- --------------------------------------------------------------------------------
THE FUNDS
The Funds are made available to serve as the underlying investment vehicles
for certain variable annuity and variable life insurance separate accounts of
ITT Hartford Life Insurance Companies. The Hartford Investment Management
Company, Inc. ("HIMCO" or the "Adviser") serves as investment adviser to
Hartford Index Fund, Inc., Hartford Bond Fund, Inc., Hartford Mortgage
Securities Fund, Inc., HVA Money Market Fund, Inc. and Hartford U.S. Government
Money Market Fund, Inc. and as investment manager to Hartford Capital
Appreciation Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford
International Opportunities Fund, Inc., Hartford Small Company Fund, Inc.,
Hartford Stock Fund, Inc., Hartford Advisers Fund, Inc., and Hartford
International Advisers Fund, Inc. Wellington Management Company ("WMC" or the
"Sub-Adviser") serves as investment sub-adviser to Hartford Capital Appreciation
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Small Company Fund, Inc., Hartford Stock
Fund, Inc., Hartford Advisers Fund, Inc., and Hartford International Advisers
Fund, Inc.
INVESTMENT OBJECTIVES AND
POLICIES OF THE FUNDS
The Funds have different investment objectives and policies, as described
below. The differences in objectives and policies among the Funds can be
expected to affect the return of each Fund and the degree of market and
financial risk to which each Fund is subject. For more information about the
investment strategies employed by the Funds, see "Common Investment Policies and
Risk Factors." The investment objective of each Fund is fundamental and cannot
be changed without the affirmative vote of a majority of the outstanding voting
securities of the particular Fund. All other policies not specifically
designated as fundamental are nonfundamental and may be changed by the Board of
Directors of the particular Fund. See the Statement of Additional Information
for a complete listing of investment restrictions.
HARTFORD CAPITAL APPRECIATION FUND, INC.
Hartford Capital Appreciation Fund, Inc. (the "Capital Appreciation Fund")
was incorporated in 1983 under Maryland law.
INVESTMENT OBJECTIVE.
The Capital Appreciation Fund seeks to achieve growth of capital by
investing in securities selected solely on the basis of potential for capital
appreciation; income, if any, is an incidental consideration.
INVESTMENT POLICIES.
The Capital Appreciation Fund seeks to achieve its objective by investing
primarily in equity securities and securities convertible into equity
securities. The Sub-Adviser identifies, through fundamental analysis, companies
that it believes have substantial near-term capital appreciation potential
regardless of company size or industry sector. This approach is sometimes
referred to as a "stock picking" approach and results in having all market
capitalization sectors (i.e., small, medium, and large companies) represented in
the portfolio. Small and medium companies are selected primarily on the basis of
dynamic earnings growth potential. Larger companies are selected primarily based
on the expectation for a catalyst event that will trigger stock price
appreciation. 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.
The Capital Appreciation Fund will invest primarily in securities issued by
U.S. companies but may also invest in securities issued by non-U.S. companies,
including those traded in U.S. markets and non-U.S. markets. Under normal
circumstances, securities of non-U.S. companies will not exceed 20% of the
Capital Appreciation Fund's total assets. The Capital Appreciation Fund's
investments in securities of non-U.S. companies may include ADRs and GDRs. When
selecting securities of non-U.S. issuers, the Sub-Adviser also will evaluate the
economic and political climate and the principal securities markets of the
country in which an issuer is located. The Capital Appreciation Fund will be
subject to certain risks as a result of its ability to invest in the securities
of non-U.S. companies. See "Common Investment Policies and Risk Factors."
From time to time, the Capital Appreciation Fund may invest in debt
securities. The non-convertible debt securities in which the Capital
Appreciation Fund may invest include debt securities assigned within the four
highest bond rating categories by Moody's or S&P, i.e., investment grade, or
considered to be of comparable quality as determined by the Sub-Adviser. In
addition, the Capital Appreciation Fund may invest up to 5% of total assets in
high yield debt securities, commonly known as "junk bonds." Such securities are
rated as low as "C" by Moody's and S&P, or if unrated, are of comparable quality
as determined by the Sub-Adviser. See "Common Investment Policies and Risk
Factors."
Although the Capital Appreciation Fund intends to be fully invested in
equity and debt securities, it may hold cash or cash equivalents and may invest
any portion or all of its assets in high quality money market instruments in the
following circumstances: (1) during periods when the Sub-Adviser deems it
necessary for temporary defensive
<PAGE>
16 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
purposes; (2) to meet liquidity needs; or (3) in anticipation of investment of
its assets.
The Capital Appreciation Fund may invest up to 10% of its total assets in
illiquid securities and may from time to time purchase securities on a
when-issued or delayed delivery basis. In addition, the Capital Appreciation
Fund may invest to a limited extent in other investment companies and may enter
into certain currency transactions. Finally, the Capital Appreciation Fund may
invest in options, futures, and options on futures. See "Common Investment
Policies and Risk Factors."
HARTFORD DIVIDEND AND GROWTH FUND, INC.
Hartford Dividend and Growth Fund, Inc. (the "Dividend and Growth Fund") was
incorporated in 1993 under Maryland law.
INVESTMENT OBJECTIVE.
The Dividend and Growth Fund seeks to achieve a high level of current income
consistent with growth of capital and reasonable investment risk.
INVESTMENT POLICIES.
The Dividend and Growth Fund seeks to achieve its objective by investing
primarily in equity securities and securities convertible into equity securities
that typically have above average income yield and whose prospects for capital
appreciation are considered favorable by the Sub-Adviser. The Sub-Adviser uses
fundamental analysis to evaluate a security for purchase or sale by the Dividend
and Growth 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. As a key component of the fundamental analysis done for the
Dividend and Growth Fund, the Sub-Adviser evaluates a company's ability to
sustain and potentially increase its dividend. The Dividend and Growth Fund's
portfolio will be broadly diversified by industry and company; the Fund seeks to
diversify its investments over a carefully selected list of securities in order
to moderate the risks inherent in equity investments.
The Dividend and Growth Fund will invest primarily in securities issued by
U.S. companies but may also invest in securities issued by non-U.S. companies,
including those traded in U.S. markets and non-U.S. markets. Under normal
circumstances, securities of non-U.S. companies will not exceed 20% of the
Dividend and Growth Fund's total assets. The Dividend and Growth Fund's
investments in securities of non-U.S. companies may include ADRs and GDRs. When
selecting securities of non-U.S. issuers, the Sub-Adviser also will evaluate the
economic and political climate and the principal securities markets of the
country in which an issuer is located. The Dividend and Growth Fund will be
subject to certain risks as a result of its ability to invest in the securities
of non-U.S. companies. See "Common Investment Policies and Risk Factors."
From time to time, the Dividend and Growth Fund may invest in debt
securities. The non-convertible debt securities in which the Dividend and Growth
Fund may invest include debt securities assigned within the four highest bond
rating categories by Moody's or S&P, i.e., investment grade, or considered to be
of comparable quality as determined by the Sub-Adviser.
Although the Dividend and Growth Fund intends to be fully invested in equity
and debt securities, it may hold cash or cash equivalents and may invest any
portion or all of its assets in high quality money market instruments in the
following circumstances: (1) during periods when the Sub-Adviser deems it
necessary for temporary defensive purposes; (2) to meet liquidity needs; or (3)
in anticipation of investment of its assets.
The Dividend and Growth Fund may invest up to 15% of its total assets in
illiquid securities and may from time to time purchase securities on a
when-issued or delayed delivery basis. In addition, the Dividend and Growth Fund
may invest to a limited extent in other investment companies and may engage in
certain currency transactions. Finally, the Dividend and Growth Fund may invest
in options, futures, and options on futures. See "Common Investment Policies and
Risk Factors."
HARTFORD INDEX FUND, INC.
Hartford Index Fund, Inc. (the "Index Fund") was incorporated in 1983 under
Maryland law.
INVESTMENT OBJECTIVE.
The Index Fund seeks to provide investment results which approximate the
price and yield performance of publicly-traded common stocks in the aggregate.
INVESTMENT POLICIES.
The Index Fund uses the Standard & Poor's 500 Composite Stock Price Index
(the "Index") as its standard performance comparison because it represents a
significant proportion of the total market value of all common stocks, is well
known to investors and, in the opinion of the management of the Index Fund, is
representative of the performance of publicly-traded common stocks. Therefore,
the Index Fund attempts to approximate the capital performance and dividend
income of the Index.
The Index Fund will generally invest in no fewer than 475 stocks. The
Adviser will select stocks for the Index Fund's portfolio after taking into
account their individual weights in the Index. Temporary cash balances, normally
not expected to exceed 2% of the Index Fund's net assets, may be invested in
short-term money market instruments. The Index Fund may invest in ADRs and GDRs.
The Index
<PAGE>
HARTFORD MUTUAL FUNDS 17
- --------------------------------------------------------------------------------
Fund may also from time to time enter into stock index futures contracts and
options on such futures contracts to maintain optimal exposure to the Index and
to hedge against changes in security prices. See "Common Investment Policies and
Risk Factors."
The Index is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. S&P chooses the stocks to be included in
the Index on a proprietary basis. The weightings of stocks in the Index are
based on each stock's relative total market value, that is, its market price per
share times the number of shares outstanding. Because of this weighting, as of
December 31, 1995, approximately fifty percent of the Index was composed of the
fifty-nine largest companies, the five largest being General Electric Co., AT&T
Corp., Exxon Corp., Coca-Cola Company and Merck and Co.
No attempt is made to "manage" the Index Fund's portfolio in the traditional
sense, using economic, financial and market analysis, nor will the adverse
financial situation of a company directly result in its elimination from the
Index Fund's portfolio unless, of course, the company is removed from the Index.
From time to time administrative adjustments may be made in the Index Fund's
portfolio because of mergers, changes in the composition of the Index and
similar reasons.
The Index Fund's management believes that the "indexing" approach described
above is an effective method of substantially duplicating percentage changes in
the Index. It is a reasonable expectation that the correlation between the
performance of the Index Fund (before expenses) and that of the Index will be
above 98%; a figure of 100% would indicate perfect correlation. The Index Fund
is regularly monitored to determine if it is meeting its targeted performance.
In the event of any deviation from the targeted performance, the security
holdings of the Index Fund are rebalanced to better replicate the index. At some
time in the future, the Board of Directors of the Index Fund may, subject to
shareholder approval, select another index if such a standard of comparison is
deemed to be more representative of the performance of common stocks.
The Index Fund's ability to approximate the performance of the Index will
depend to some extent on the size of cash flows into and out of the Index Fund.
Investment changes to accommodate these cash flows will be made to maintain the
similarity of the Index Fund's portfolio to the Index, to the maximum
practicable extent.
"Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-", "S&P
500-Registered Trademark-", "Standard & Poor's 500", and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by the Hartford
Life Insurance Company. The Index Fund is not sponsored, endorsed, sold or
promoted by S&P. S&P makes no representation or warranty, express or implied, to
the shareholders of the Index Fund, regarding the advisability of investing in
securities generally or in the Index Fund particularly or the ability of the S&P
500 Index to track general stock market performance. S&P's only relationship to
Hartford Life Insurance Company is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Index Fund or Hartford Life Insurance
Company. S&P has no obligation to take the needs of the Index Fund or its
shareholders, or Hartford Life Insurance Company, into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the net asset value of the
Index Fund or the timing of the issuance or sale of shares in the Index Fund.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Index Fund.
In addition, S&P does not guarantee the accuracy and/ or the completeness of
the S&P 500 Index or any data included therein and S&P shall have no liability
for any errors, omissions, or interruptions therein. S&P makes no warranty,
express or implied, as to results to be obtained by the Index Fund, its
shareholders or any other person or entity from the use of the S&P 500 Index or
any data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Hartford International Opportunities Fund, Inc. (the "International
Opportunities Fund") was incorporated in 1990 under Maryland law.
INVESTMENT OBJECTIVE.
The International Opportunities Fund seeks to achieve long-term total rate
of return consistent with prudent investment risk through investment primarily
in equity securities issued by non-U.S. companies.
INVESTMENT POLICIES.
The International Opportunities Fund seeks to achieve its investment
objective by investing in a diversified portfolio of primarily equity securities
which covers a broad range of countries, industries, and companies. The
International Opportunities Fund anticipates that, under normal market
conditions, it will diversify its investments among a minimum of five countries;
the Fund will not invest more than 20% of its net assets in securities of
issuers located in any one country, except that it may invest up to 35% of its
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18 HARTFORD MUTUAL FUNDS
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net assets in securities of issuers located in any one of the following
countries: Australia, Canada, France, Japan, the United Kingdom or Germany.
Securities in which the International Opportunities Fund invests are
denominated in both U.S. dollars and non-U.S. currencies (including the European
Currency Unit) and generally are traded on non-U.S. markets.
Under normal market conditions, at least 70% of the International
Opportunities Fund's total assets will be invested in equity securities issued
by non-U.S. companies. Equity securities in which the International
Opportunities Fund invests include common stocks, preferred stocks, convertible
securities, and warrants and rights to acquire such securities. The
International Opportunities Fund may invest in ADRs and GDRs. See "Common
Investment Policies and Risk Factors." Equity investments are selected on the
basis of fundamental analysis to identify those markets and securities that
provide capital appreciation potential. 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. In analyzing companies for
investment, the Sub-Adviser looks for, among other things, a strong balance
sheet, attractive industry dynamics, strong competitive advantages, and
attractive relative value within the context of a security's primary trading
market. In addition to fundamental analysis of companies and industries, the
Sub-Adviser evaluates the economic and political environments of the countries
in which the securities are traded. The International Opportunities Fund's
investments in debt securities will be substantially similar to the debt
securities investments permitted for the International Advisers Fund. See
"Hartford International Advisers Fund, Inc. -- Investment Policies."
Although the International Opportunities Fund intends to be fully invested
in equity and debt securities, it may hold cash and cash equivalents (U.S.
dollars, non-U.S. currencies, multinational currency units) and may invest any
portion or all of its assets in high quality money market instruments of U.S.,
non-U.S., or supranational issuers in the following circumstances: (1) during
periods when the Sub-Adviser deems it necessary for temporary defensive
purposes; (2) to meet liquidity needs; or (3) in anticipation of investment of
its assets. The International Opportunities Fund may invest in non-U.S. money
market funds and commingled pools offered by non-U.S. banks.
The International Opportunities Fund will be subject to certain risks as a
result of its ability to invest in the securities of non-U.S. companies. The
International Opportunities Fund is permitted to invest up to 15% of its total
assets in illiquid securities and may from time to time purchase securities on a
when-issued or delayed delivery basis. In addition, the International
Opportunities Fund may invest to a limited extent in other investment companies
and enter into certain currency transactions. Finally, the International
Opportunities Fund is permitted to invest in options, futures and options on
futures. See "Common Investment Policies and Risk Factors."
HARTFORD SMALL COMPANY FUND, INC.
Hartford Small Company Fund, Inc. (the "Small Company Fund") was
incorporated under Maryland law in 1996.
INVESTMENT OBJECTIVE.
The Small Company Fund seeks growth of capital by investing primarily in
equity securities selected on the basis of potential for capital appreciation.
INVESTMENT POLICIES.
Under normal market and economic conditions at least 65% of the Small
Company Fund's total assets are invested in equity securities of companies which
have less than $2 billion in market capitalization ("Small Capitalization
Securities"). The Sub-Adviser identifies, through fundamental analysis,
companies that it believes have substantial near-term capital appreciation
potential regardless of industry sector. However, overall industry exposure is
monitored by the Sub-Adviser so as to maintain broad industry diversification.
In selecting investments the Sub-Adviser considers securities of companies that,
in its opinion, have potential for above-average earnings growth, are
undervalued in relation to their investment potential, have business and/or
fundamental financial characteristics that are misunderstood by investors, or
are relatively obscure i.e., undiscovered by the overall investment community.
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.
The Small Company Fund will invest primarily in securities issued by U.S.
companies but also may invest in securities issued by non-U.S. companies,
including those traded in U.S. markets and non-U.S. markets. Under normal
circumstances, securities of non-U.S. Companies will not exceed 20% of the Small
Company Fund's total assets. The Small Company Fund's investments in securities
of non-U.S. companies may include ADRs and GDRs. Under normal market and
economic conditions, the Small Company Fund may invest up to 35% of the Fund's
assets in debt securities and securities issued or guaranteed by the U.S.
Government and its agencies or instrumentalities when the Sub-Adviser determines
that such investments are attractive relative to common stocks.
Although the Small Company Fund intends to be fully invested in equity and
debt securities, it may hold cash or
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HARTFORD MUTUAL FUNDS 19
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cash equivalents and may invest any portion or all of its assets in high quality
money market instruments in the following circumstances: (1) during periods when
the Sub-Adviser deems it necessary for temporary defensive purposes; (2) to meet
liquidity needs; or (3) in anticipation of investment of its assets.
The Small Company Fund is permitted to invest up to 15% of its total assets
in illiquid securities and may purchase securities on a when-issued or delayed
delivery basis. The Small Company Fund may also invest in initial public
offerings. In addition, the Small Company Fund may invest to a limited extent in
other investment companies and may enter into certain currency transactions.
Finally, the Small Company Fund may invest in options, futures, and options on
futures. See "Common Investment Policies and Risk Factors" for information
regarding additional investment policies and risks of the Fund.
HARTFORD STOCK FUND, INC.
Hartford Stock Fund, Inc. (the "Stock Fund") was incorporated in 1976 under
Maryland law.
INVESTMENT OBJECTIVE.
The Stock Fund seeks to achieve long-term capital growth primarily through
capital appreciation, with income a secondary consideration, by investing in
primarily equity securities.
INVESTMENT POLICIES.
The Stock Fund seeks to achieve its objective by investing primarily in
equity securities and securities convertible into equity securities, using a
two-tiered investment approach. First, under what is sometimes referred to as a
"top down" approach, the Sub-Adviser analyzes the macro economic and investment
environment. This includes an evaluation of economic conditions, U.S. fiscal and
monetary policy, demographic trends, and investor sentiment. Through top down
analysis, the Sub-Adviser anticipates secular and cyclical changes and
identifies industries and economic sectors that are expected to grow faster than
the overall economy.
Second, top down analysis is followed by what is sometimes referred to as a
"bottom up" approach, which is the use of fundamental analysis to identify
specific securities for purchase or sale. The Stock Fund's portfolio emphasizes
high-quality growth companies. The key characteristics of high-quality growth
companies include a leadership position within an industry, a strong balance
sheet, a high return on equity, sustainable or increasing dividends, a strong
management team, and a globally competitive position. 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.
The Stock Fund will invest primarily in securities issued by U.S. companies
but may also invest in securities issued by non-U.S. companies, including those
traded in U.S. markets and non-U.S. markets. Under normal circumstances,
securities of non-U.S. companies will not exceed 20% of the Stock Fund's total
assets. The Stock Fund's investments in securities of non-U.S. companies may
include ADRs and GDRs. When selecting securities of non-U.S. issuers, the Sub-
Adviser also will evaluate the economic and political climate and the principal
securities markets of the country in which an issuer is located. The Stock Fund
will be subject to certain risks as a result of its ability to invest in the
securities of non-U.S. companies. See "Common Investment Policies and Risk
Factors." From time to time, the Stock Fund may invest in debt securities. The
non-convertible debt securities in which the Stock Fund may invest include debt
securities assigned within the four highest bond rating categories by Moody's or
S&P, i.e., investment grade, or considered to be of comparable quality as
determined by the Sub-Adviser.
Although the Stock Fund intends to be fully invested primarily in equity
securities and securities convertible into equity securities it may hold cash or
cash equivalents and may invest any portion or all of its assets in high quality
money market instruments in the following circumstances: (1) during periods when
the Sub-Adviser deems it necessary for temporary defensive purposes; (2) to meet
liquidity needs; or (3) in anticipation of investment of its assets.
The Stock Fund may invest up to 10% of its total assets in illiquid
securities and may from time to time purchase securities on a when-issued or
delayed delivery basis. In addition, the Stock Fund may invest to a limited
extent in other investment companies and may enter into certain currency
transactions. Finally, the Stock Fund may invest in options, futures and options
on futures. See "Common Investment Policies and Risk Factors."
HARTFORD ADVISERS FUND, INC.
Hartford Advisers Fund, Inc. (the "Advisers Fund") was incorporated in 1982
under Maryland law.
INVESTMENT OBJECTIVE.
The Advisers Fund seeks to achieve maximum long-term total rate of return
consistent with prudent investment risk by investing in common stock and other
equity securities, bonds and other debt securities, and money market
instruments.
INVESTMENT POLICIES.
The Advisers Fund seeks to achieve its objective through the active
allocation of its assets among the asset categories of equity and debt
securities and money market instruments, based upon the Sub-Adviser's judgment
of the projected investment environment for financial assets, relative
fundamental values and attractiveness of each asset category, and expected
future returns of each asset category.
<PAGE>
20 HARTFORD MUTUAL FUNDS
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The Sub-Adviser will base its asset allocation decisions on fundamental analysis
and will not attempt to make short-term market timing decisions among asset
categories. As a result, shifts in asset allocation are expected to be gradual
and continuous and the Advisers Fund will normally have some portion of its
assets invested in each asset category. The Advisers Fund does not have
percentage limitations on the amount allocated to each asset category.
The Advisers Fund's investments in equity securities and securities that are
convertible into equity securities will be substantially similar to the
investments permitted for the Stock Fund. See "Hartford Stock Fund, Inc. --
Investment Policies." The Advisers Fund's investments in debt securities will be
substantially similar to the investments permitted for the Bond Fund. See
"Hartford Bond Fund, Inc. -- Investment Policies." In the event a security owned
by the Advisers Fund is downgraded to a rating category below investment grade,
the Advisers Fund generally will sell it within a reasonable period thereafter
based on the Sub-Adviser's outlook for the issuer and the security.
The Advisers Fund will invest primarily in securities issued by U.S.
companies but may also invest in securities issued by non-U.S. companies,
including those traded in U.S. markets and non-U.S. markets. Under normal
circumstances, securities of non-U.S. companies will not exceed 20% of the
Advisers Fund's total assets. The Advisers Fund's investments in securities of
non-U.S. companies may include ADRs and GDRs. When selecting securities of non-
U.S. issuers, the Sub-Adviser also will evaluate the economic and political
climate and the principal securities markets of the country in which an issuer
is located. The Advisers Fund will be subject to certain risks as a result of
its ability to invest in the securities of non-U.S. companies. See "Common
Investment Policies and Risk Factors."
The Advisers Fund may hold cash and cash equivalents and may invest any
portion or all of its assets in high quality money market instruments in the
following circumstances: (1) when the Sub-Adviser expects returns on such
instruments to be attractive relative to investments in equity and debt
securities; (2) during periods when the Sub-Adviser deems it necessary for
temporary defensive purposes; (3) to meet liquidity needs; or (4) in
anticipation of investment of its assets.
The Advisers Fund may invest up to 10% of its total assets in illiquid
securities and may from time to time purchase securities on a when-issued or
delayed delivery basis. In addition, the Advisers Fund may invest to a limited
extent in other investment companies and enter into certain currency
transactions. Finally, the Advisers Fund may invest in options, futures, and
options on futures. See "Common Investment Policies and Risk Factors."
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
Hartford International Advisers Fund, Inc. (the "International Advisers
Fund") was incorporated in 1994 under Maryland law.
INVESTMENT OBJECTIVE.
The International Advisers Fund seeks to achieve maximum long-term total
rate of return consistent with prudent investment risk.
INVESTMENT POLICIES.
The International Advisers Fund seeks to achieve its objective through the
active allocation of its assets among the asset categories of equity and debt
securities and money market instruments, based upon its judgment of the
projected investment environment for financial assets, relative fundamental
values and attractiveness of each asset category, and expected future returns of
each asset category. The Sub-Adviser will base its asset allocation decisions on
fundamental analysis and will not attempt to make short-term timing decisions
among asset categories. As a result, shifts in asset allocation are expected to
be gradual and continuous and the International Advisers Fund will normally have
some portion of its assets invested in each asset category at all times. The
International Advisers Fund does not have percentage limitations on the amount
allocated to each asset category.
The International Advisers Fund will consist of a diversified portfolio of
securities covering a broad range of countries, industries, and companies. The
International Advisers Fund anticipates that, under normal market conditions, it
will diversify its investments among a minimum of five countries; the Fund will
not invest more than 20% of its net assets in securities of issuers located in
any one country, except that it may invest up to 35% of its net assets in
securities of issuers located in any one of the following countries: Australia,
Canada, France, Japan, the United Kingdom or Germany.
Securities in which the International Advisers Fund invests are denominated
in both U.S. dollars and non-U.S. currencies (including the European Currency
Unit) and generally are traded on non-U.S. markets.
The International Advisers Fund's investments in equity securities will be
substantially similar to the equity securities investments permitted for the
International Opportunities Fund. See "Hartford International Opportunities
Fund, Inc. -- Investment Policies."
The International Advisers Fund's investments in debt securities include,
but are not limited to: (1) debt securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (2) debt obligations issued or
guaranteed by a non-U.S. sovereign government or one of its agencies or
political subdivisions, including Brady Bonds
<PAGE>
HARTFORD MUTUAL FUNDS 21
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(see "Common Investment Policies and Risk Factors"); (3) debt obligations issued
or guaranteed by supranational organizations such as the World Bank; (4) debt
obligations of non-U.S. banks and bank holding companies; (5) non-U.S. corporate
debt securities; (6) debt obligations of U.S. banks and corporations; (7)
non-U.S. commercial paper; (8) asset-backed securities and mortgage-related
securities, including CMOs; these debt securities will be rated investment grade
by Moody's or S&P, or, if unrated, will be determined by the Sub-Adviser to be
of comparable quality (see "Common Investment Policies and Risk Factors"); and
(9) repurchase agreements involving any of the foregoing. The International
Advisers Fund's investments in debt securities will be based on an analysis of
such factors as yield, credit quality, economic policies, inflation rates, and
the pace of economic growth in various markets.
Debt securities in which the International Advisers Fund may invest include
investment grade, non-convertible debt securities assigned within the four
highest bond rating categories by Moody's or S&P, or, if unrated, which are
determined by the Sub-Adviser to be of comparable quality. In addition, the
International Advisers Fund may invest up to 15% of its total assets in high
yield debt securities, commonly known as "junk bonds." Such securities are rated
as low as "C" by Moody's and by S&P, or, if unrated, are of comparable quality
as determined by the Sub-Adviser. See "Common Investment Policies and Risk
Factors."
The International Advisers Fund may hold cash and cash equivalents (U.S.
dollars, non-U.S. currencies, multinational currency units) and may invest any
portion or all of its assets in high quality money market instruments,
including, but not limited to, instruments of U.S., non-U.S., or supranational
issuers. These money market instruments may also include non-U.S. money market
funds and commingled pools offered by non-U.S. banks. The International Advisers
Fund may invest in high quality money market instruments in the following
circumstances: (1) when the Sub-Adviser expects returns on such instruments to
be attractive relative to investments in equity and debt securities; (2) during
periods when the Sub-Adviser deems it necessary for temporary defensive
purposes; (3) to meet liquidity needs; or (4) in anticipation of investment of
its assets.
The International Advisers Fund will be subject to certain risks as a result
of its ability to invest in the securities of non-U.S. companies. The
International Advisers Fund may invest up to 15% of its total assets in illiquid
securities and may from time to time purchase securities on a when-issued or
delayed delivery basis. In addition, the International Advisers Fund may invest
to a limited extent in other investment companies and may enter into certain
currency transactions. Finally, the International Advisers Fund may invest in
options, futures, and options on futures. See "Common Investment Policies and
Risk Factors."
HARTFORD BOND FUND, INC.
Hartford Bond Fund, Inc. (the "Bond Fund") was incorporated in 1982 under
Maryland law.
INVESTMENT OBJECTIVE.
The Bond Fund seeks to achieve maximum current income consistent with
preservation of capital by investing primarily in fixed-income securities.
INVESTMENT POLICIES.
The Bond Fund's investments in bonds and other debt securities include: (i)
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities; (ii) publicly-traded,
non-convertible debt securities issued or guaranteed by U.S. corporations or
other issuers and rated investment grade by Moody's or S&P, or, if unrated,
determined by the Adviser to be of comparable quality; (iii) asset-backed
securities and mortgage-related securities, including CMOs, which are rated
investment grade by Moody's or S&P, or, if unrated, which are determined by the
Adviser to be of comparable quality (see "Common Investment Policies and Risk
Factors"); (iv) 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 and rated investment grade
by Moody's or S&P, or, if unrated, which are determined by the Adviser to be of
comparable quality. In addition, up to 20% of the total assets of the Bond Fund
may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's or "BB" by S&P) or, if unrated, are determined
to be of comparable quality by the Adviser. Securities rated below investment
grade are commonly referred to as "high yield-high risk securities" or "junk
bonds". Bonds and other debt securities owned by the Bond Fund will be
denominated in U.S. dollars. In the event a security owned by the Bond Fund is
downgraded to a rating category below "Ba" or "BB", the Bond Fund generally will
sell it within a reasonable period thereafter based on the Adviser's outlook for
the issuer and the security.
The Bond Fund will invest primarily in securities issued by U.S. companies
but may also invest in securities issued by non-U.S. companies, including those
traded in U.S. markets and non-U.S. markets. Under normal circumstances,
securities of non-U.S. companies will not exceed 20% of the Bond Fund's total
assets. When selecting securities of non-U.S. issuers, the Adviser also will
evaluate the economic and political climate, and the principal securities
markets of the country in which an issuer is located. The Bond Fund will be
subject to certain risks as a result of its ability to invest in the securities
of non-U.S. companies. See "Common Investment Policies and Risk Factors."
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22 HARTFORD MUTUAL FUNDS
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The Bond Fund will invest at least 65% of its total assets in bonds and debt
securities with a maturity of at least one year. The Bond Fund may invest up to
15% of its total assets in preferred stocks, convertible securities, and
securities carrying warrants to purchase equity securities. The Bond Fund will
not invest in common stocks directly, but may retain, for reasonable periods of
time, common stocks acquired upon conversion of debt securities or upon exercise
of warrants acquired with debt securities.
Although the Bond Fund intends to be fully invested in equity and debt
securities, it may hold cash or cash equivalents and may invest any portion or
all of its assets in high quality money market instruments in the following
circumstances: (1) during periods when the Adviser deems it necessary for
temporary defensive purposes; (2) to meet liquidity needs; or (3) in
anticipation of investment of its assets.
The Bond Fund may invest up to 10% of its total assets in illiquid
securities and may from time to time purchase securities on a when-issued or
delayed delivery basis. In addition, the Bond Fund may invest to a limited
extent in other investment companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
Hartford Mortgage Securities Fund, Inc. (the "Mortgage Securities Fund") was
incorporated in 1984 under Maryland law.
INVESTMENT OBJECTIVE.
The Mortgage Securities Fund seeks maximum current income consistent with
safety of principal and maintenance of liquidity by investing primarily in
mortgage-related securities, including securities issued by the Government
National Mortgage Association.
INVESTMENT POLICIES.
The Mortgage Securities Fund seeks to achieve its objective by investing,
under normal circumstances, at least 65% of its total assets in high quality
mortgage-related securities either (i) issued by U.S. Government agencies,
instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
or S&P or, if not rated, which are of equivalent investment quality as
determined by the Adviser. At times the Mortgage Securities Fund may invest in
mortgage-related securities not meeting the foregoing investment quality
standards when the Adviser deems such investments to be consistent with the
Fund's investment objective; however, no such investments will be made in excess
of 20% of the value of the Fund's total assets. Such investments will be
considered mortgage-related securities for purposes of the policy that the Fund
invest at least 65% of the value of its total assets in mortgage-related
securities, including securities issued by the GNMA. See "Common Investment
Policies and Risk Factors."
Consistent with its objective, the Mortgage Securities Fund may seek to
increase its current return by writing covered call or covered put options with
respect to some or all of the securities held in its portfolio. In addition,
through the writing and purchase of options and the purchase and sale of
interest rate futures contracts and related options, the Mortgage Securities
Fund may at times seek to reduce fluctuations in net asset value by hedging
against a decline in the value of securities owned by the Fund or an increase in
the price of securities which the Fund plans to purchase. The Mortgage
Securities Fund may also invest up to 10% of its total assets in illiquid
securities, purchase asset-backed securities, and enter into swap transactions.
See "Common Investment Policies and Risk Factors."
Although the Mortgage Securities Fund intends to be fully invested in debt
securities, it may hold cash or cash equivalents and invest any portion or all
of its assets in high quality money market instruments in the following
circumstances: (1) during periods when the Sub-Adviser deems it necessary for
temporary defensive purposes; (2) to meet liquidity needs; or (3) in
anticipation of investment of its assets.
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
Hartford U.S. Government Money Market Fund, Inc. (the "U.S. Government Money
Market Fund") was incorporated in 1982 under Maryland law.
INVESTMENT OBJECTIVE.
The U.S. Government Money Market Fund seeks to achieve maximum current
income consistent with preservation of capital.
INVESTMENT POLICIES.
The U.S. Government Money Market Fund's portfolio will consist entirely of
cash and investments permitted by Rule 2a-7 under the 1940 Act. Each has an
effective maturity date of 397 days or less, computed in accordance with Rule
2a-7, from date of purchase. The average maturity of the portfolio will vary
according to the Adviser's appraisal of money market conditions and will not
exceed 90 days.
The U.S. Government Money Market Fund seeks to achieve its objective by
investing in short-term, marketable obligations issued or guaranteed by the U.S.
Government or by agencies or instrumentalities of the U.S. Government, whether
or not they are guaranteed by the full faith and credit of the U.S. government.
HVA MONEY MARKET FUND, INC.
HVA Money Market Fund, Inc. (the "Money Market Fund") was incorporated in
1982 under Maryland law.
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HARTFORD MUTUAL FUNDS 23
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INVESTMENT OBJECTIVE.
The Money Market Fund seeks to achieve maximum current income consistent
with liquidity and preservation of capital.
INVESTMENT POLICIES.
The Money Market Fund's portfolio will consist entirely of cash and
investments permitted under Rule 2a-7 of the 1940 Act. Each has an effective
maturity date of 397 days or less computed in accordance with Rule 2a-7. The
average maturity of the portfolio will vary according to the Adviser's appraisal
of money market conditions and will not exceed 90 days.
The Money Market Fund seeks to achieve its objective by investing in money
market securities such as, but not limited to: (a) banker's acceptances; (b)
obligations of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (c) short-term corporate obligations, including commercial
paper, notes, and bonds; (d) other short- term debt obligations; (e) 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; and (f) asset-backed securities. See "Common Investment Policies and Risk
Factors." Under normal circumstances, foreign securities will not exceed 25% of
the Money Market Fund's total assets.
The Money Market Fund will make portfolio investments primarily in
anticipation of or in response to changing economic and money market conditions
and trends. However, it is anticipated that from time to time the Money Market
Fund will take advantage of temporary disparities in the yield relationships
among the different segments of the money market or among particular instruments
within the same segment of the market, to make purchases and sales when the
Adviser deems that such transactions will improve the yield or return of the
portfolio.
COMMON INVESTMENT POLICIES AND RISK FACTORS
REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with respect to securities
issued or guaranteed by the U.S. Government, with commercial banks having a
minimum capital base of $500 million and assets in excess of $1 billion or with
recognized government securities dealers with a minimum capital base of $100
million. The Funds' Boards of Directors have 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 the Adviser's and Sub-Adviser's compliance with such standards.
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 a Fund to the seller. The resale
price normally is in excess of the purchase price, reflecting an agreed upon
market rate. The rate is effective for the period of time a Fund is invested in
the agreement and is not related to the coupon rate on the underlying security.
The period of these repurchase agreements will usually be short, from overnight
to one week, and at no time will a Fund invest in repurchase agreements for a
period of more than one year. The securities which are subject to repurchase
agreements, however, may have maturity dates in excess of one year from the
effective date of the repurchase agreement. A Fund will always receive as
collateral securities whose market value, including accrued interest, will be at
least equal to 100% of the dollar amount invested by a Fund in each agreement,
and a Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer. If the seller defaults, a Fund might incur a
loss if the value of the collateral securing the repurchase agreement declines
and may incur disposition costs in connection with liquidating the collateral. A
Fund may not enter into a repurchase agreement with more than seven days to
maturity if, as a result, more than 10% of the Fund's total assets would be
invested in such repurchase agreements together with any other investment for
which market quotations are not readily available.
ILLIQUID SECURITIES
Each Fund, except the Index Fund, is permitted to invest in illiquid
securities. No illiquid securities will be acquired if upon the purchase more
than 10% or 15% of the value of a Fund's total assets, varying by Fund (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 Money Market Fund), would consist of these
securities. "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 a Fund's net asset value.
Under current interpretations of the SEC Staff, the following securities in
which a 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
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24 HARTFORD MUTUAL FUNDS
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readily marketable; and (4) any other securities in which a Fund may invest that
are not readily marketable.
These Funds may purchase without limit, however, certain restricted
securities that can be resold to qualifying institutions pursuant to a
regulatory exemption under Rule 144A under the 1933 Act ("Rule 144A
securities"). If a dealer or institutional trading market exists for Rule 144A
securities, such securities are deemed to be liquid and thus treated as exempt
from a Fund's 10% or 15% limitation on the investment in illiquid securities.
Under the supervision of the Board of Directors, the Adviser or Sub-Adviser
determines the liquidity of Rule 144A securities and, through reports from the
Adviser or Sub-Adviser, the Board of Directors monitors trading activity in
these securities. In reaching liquidity decisions, the Adviser or Sub-Adviser
will consider, among other things, the following factors: (1) the frequency of
trades and price quotes for the security; (2) the number of dealers willing to
purchase or sell the security and the number of other potential purchasers; (3)
dealer undertakings to make a market in the security; and (4) the nature of the
security and the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the procedures for transfer).
Because institutional trading in Rule 144A securities is relatively new, it is
difficult to predict accurately how these markets will develop. If institutional
trading in Rule 144A securities declines, a Fund's liquidity could be adversely
affected to the extent that a Fund is invested in such securities.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
The Capital Appreciation Fund, the Dividend and Growth Fund, the
International Opportunities Fund, the Small Company Fund, the Stock Fund, the
Index Fund, the Advisers Fund, the International Advisers Fund, the Bond Fund
and the Mortgage Securities Fund may 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 these Funds generally purchase securities on a when-issued or
delayed-delivery basis with the intention of acquiring the securities, the Funds
may sell the securities before the settlement date, if the Adviser or
Sub-Adviser deems it advisable. At the time a Fund makes the commitment to
purchase securities on a when-issued or delayed-delivery 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
Funds' custodian will maintain, in a segregated account of the Fund, 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; the custodian
will likewise segregate securities sold on a delayed-delivery basis.
OTHER INVESTMENT COMPANIES
The Capital Appreciation Fund, the Dividend and Growth Fund, the
International Opportunities Fund, the Small Company Fund, the Bond Fund, the
Stock Fund, the Advisers Fund, and the International Advisers Fund are permitted
to invest in other investment companies. Securities issued in certain countries
are currently accessible to the Funds only through such investments. The
investment in other investment companies is limited in amount by the 1940 Act,
and will involve the indirect payment of a portion of the expenses, including
advisory fees, of such other investment companies. No Fund may acquire more than
3% of the outstanding voting securities of any other investment company, and no
Fund may have more than 5% of its total assets invested in any other investment
company. See "Investment Restrictions of the Funds" in the Statement of
Additional Information.
CURRENCY TRANSACTIONS
The Capital Appreciation Fund, the Dividend and Growth Fund, the
International Opportunities Fund, the Small Company Fund, the Stock Fund, the
Advisers Fund and the International Advisers 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, exchange-listed and over-the-
counter ("OTC") currency futures contracts and options thereon, exchange listed
and OTC options on currencies, and currency swaps.
These Funds may invest in forward currency contracts, which 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. In
addition, these Funds may engage in currency swaps, which are agreements to
exchange cash flows based on the notional difference among two or more
currencies. See "Swap Agreements." These Funds also may engage in
exchange-listed and OTC currency futures contracts and options thereon, and
exchange listed and OTC options on currencies. See "Options and Futures
Contracts."
These Funds may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to increase or decline
in value relative to other currencies to which the Funds have, or in which the
Funds expect to have, exposure. To reduce the effect of currency fluctuation on
the value of existing or anticipated holdings of their securities, these Funds
may also engage in proxy hedging. Proxy hedging is used when the currency to
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HARTFORD MUTUAL FUNDS 25
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which a portfolio holding is exposed is difficult to hedge generally or
difficult to hedge against the U.S. dollar. Proxy hedging entails entering into
a forward contract to buy U.S. dollars and to sell a currency, the changes in
the value of which generally are considered to be linked to the currency to
which the portfolio holding is exposed. The amount of the contract would not
exceed the market value of the Fund's securities denominated in the linked
currency.
The use of currency transactions to protect the value of a Fund's assets
against a decline in the value of a currency does not eliminate fluctuations in
the value of the Fund's underlying securities. Further, these Funds may enter
into currency transactions only with counterparties that the Sub-Adviser deems
to be creditworthy.
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 Funds, for cash flow management, and, to a lesser
extent, to enhance returns, the Capital Appreciation Fund, the Dividend and
Growth Fund, the Index Fund, the International Opportunities Fund, the Small
Company Fund, the Stock Fund, the Advisers Fund, the International Advisers
Fund, the Bond Fund and the Mortgage Securities Fund may employ certain hedging,
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. A
Fund's ability to engage in these practices may be limited by tax considerations
and certain other legal considerations.
These Funds may write covered call options or purchase covered put options
on portfolio securities as a partial hedge (to the extent of the premium
received less transaction costs) against a decline in the value of portfolio
securities and in circumstances in which the Adviser or the Sub-Adviser
anticipates that the price of the underlying securities will not increase above
the exercise price of the option by an amount greater than the premium received
(less transaction costs incurred) by the Fund. This strategy limits potential
capital appreciation in the portfolio securities subject to the put or call
option.
These Funds 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 particular Fund holds in its portfolio or
that it intends to purchase. For example, if a 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 a 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, these Funds may purchase put and call options and write covered
put and call options on aggregates of equity and debt securities, indices of
prices of equity and debt securities and other financial indices, 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.
These Funds may write covered options only. "Covered" means that, so long as
a Fund is obligated as the writer of a call option, 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. A Fund will cover any put option it writes by maintaining a
segregated account with its custodian as described above. A Fund will not write
covered call options on portfolio securities representing more than 25% of the
value of its total assets.
To hedge against fluctuations in currency exchange rates, these Funds 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, a Fund may use foreign currency futures contracts when 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 the Fund 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
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26 HARTFORD MUTUAL FUNDS
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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.
These Funds also may purchase call or put options on foreign currency
futures contracts to obtain a fixed foreign exchange rate at limited risk. A
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. A 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. portfolio securities. A 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 in which the Fund anticipates that the foreign
exchange rate will not increase above the exercise price of the option by an
amount greater than the premium received (less transaction costs incurred by the
Fund). This strategy will limit potential capital appreciation in the underlying
currency.
To the extent that a Fund enters into futures contracts, options on futures
contracts and options on foreign currencies that are traded on an exchange
regulated by the 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 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 any one 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 be subject were such
strategies not employed. Such risks include: (1) dependence on a Fund's ability
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 a 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 a
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 a 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 a Fund would have been in a better position had it not
used such a strategy at all.
NON-U.S. SECURITIES, INCLUDING ADRS AND GDRS
Each Fund, except the Mortgage Securities Fund and the U.S. Government Money
Market Fund, is permitted to invest a portion of its assets in non-U.S.
securities, including, in the case of permitted equity investments, ADRs and
GDRs, as described under each Fund's investment objective and policies. 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.
The International Opportunities Fund and the International Advisers Fund are
permitted to invest in Brady Bonds, which are debt securities issued under the
framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external commercial bank debt. In restructuring
its external debt under the Brady Plan framework, a debtor nation negotiates
with its existing bank lenders as well as multilateral institutions such as the
World Bank and the IMF. The Brady Plan framework, as it has developed,
contemplates the exchange of commercial bank debt for newly issued bonds ("Brady
Bonds"). Brady Bonds may also be issued in respect of new money being advanced
by existing lenders in connection with debt restructuring. Agreements
implemented under the Brady Plan to date are designed to achieve debt and
debt-service reduction through specific options negotiated by a debtor nation
with its creditors. As a result, the financial
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HARTFORD MUTUAL FUNDS 27
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packages offered by each country differ. Brady Bonds issued to date may be
purchased and sold in the secondary markets through U.S. securities dealers and
other financial institutions and are generally maintained through European
securities depositories. See also "High Yield Securities."
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. investments 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 obligors 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
Funds may invest have 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.
SMALL CAPITALIZATION SECURITIES
All Funds except the Bond Fund, Mortgage Securities Fund, Money Market Fund
and U.S. Government Money Market 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 dependant 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.
MORTGAGE-RELATED SECURITIES
The mortgage-related securities in which the International Opportunities
Fund, International Advisers Fund, Advisers Fund and Bond Fund may invest, and
the Mortgage Securities Fund principally invests, provide funds for mortgage
loans made to residential home buyers. These include securities which represent
interests in pools of mortgage loans made by lenders such as savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled for sale to investors (such as the Funds) by various
governmental, government-related and private organizations. These Funds may also
invest in similar mortgage-related securities which provide funds for
multi-family residences or commercial real estate properties. CMOs will also be
considered mortgage-related securities.
Interests in pools of mortgage-related securities differ from other forms of
debt securities, which normally provide for periodic payment of interest in
fixed amounts with principal payments at maturity or specified call dates.
Instead, these securities provide a monthly payment which consists of both
interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on their mortgage
loans, net of any fees paid to the issuer, servicer, insurer or guarantor of
such securities. Additional payments are caused by repayments of principal
resulting from the sale of the underlying property, refinancing or foreclosure,
net of fees or costs which may be incurred. Some mortgage-related securities
(such as GNMA securities) are described as "modified pass-through." These
securities entitle the holder to receive all interest and principal payments
owed on the mortgage pool, net of certain fees, regardless of whether or not the
mortgagor actually makes the payment.
The principal governmental (i.e., backed by the full faith and credit of the
U.S. Government) guarantor of mortgage-related securities is the GNMA. GNMA is a
wholly-owned United States Government corporation within the Department of
Housing and Urban Development. GNMA is authorized to guarantee, with the full
faith and credit of the U.S. Government, the timely payment of principal and
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28 HARTFORD MUTUAL FUNDS
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interest on securities known as Ginnie Maes issued by institutions approved by
GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of FHA-insured or VA-guaranteed mortgages.
Government-related (i.e., not backed by the full faith and credit of the
U.S. Government) guarantors include the FNMA and the FHLMC. FNMA is a
government-sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers
which include state and federally-chartered savings and loan associations,
mutual savings banks, commercial banks and credit unions and mortgage bankers.
Pass-through securities known as Fannie Maes issued by FNMA are guaranteed as to
timely payment of principal and interest by FNMA but are not backed by the full
faith and credit of the U.S. Government. FHLMC is a corporate instrumentality of
the U.S. Government created by Congress in 1970 for the purpose of increasing
the availability of mortgage credit for residential housing. Its stock is owned
by the twelve Federal Home Loan Banks. FHLMC issues Participation Certificates
("PCs") known as Freddy Macs which represent interests in mortgages from
portfolios created by FHLMC. FHLMC guarantees the timely payment of interest and
ultimate collection of principal but PCs are not backed by the full faith and
credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, investment banks, mortgage bankers and other secondary market issuers
also create pass-through pools of conventional residential mortgage loans. Such
issuers may in addition be the originators of the underlying mortgage loans as
well as the guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal in these pools is supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance. The insurance and guarantees are issued by government entities,
private insurers and the mortgage poolers. Such insurance and guarantees and the
credit worthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets a Fund's investment quality standards.
There can be no assurance that the private insurers can meet their obligations
under the policies. These Funds may buy mortgage-related securities without
insurance or guarantees if through an examination of the loan experience and
practices of the poolers the Adviser or Sub-Adviser determines that the
securities meet the Fund's quality standards. Although the market for such
securities is becoming increasingly liquid, securities issued by certain private
organizations may not be readily marketable.
These Funds may invest in CMOs, which are securities collateralized by
mortgages or mortgage-backed securities. CMOs are issued with a variety of
classes or series, which have different maturities.
These Funds expect that governmental, government-related or private entities
may create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be
alternative mortgage instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may differ from
customary long-term fixed rate mortgages. These Funds may invest in stripped
mortgage-backed securities, which security is separated into the interest and
principal component of a mortgage backed security and are sold as separate
securities. As new types of mortgage-related securities are developed and
offered to investors, the Adviser or Sub-Adviser will, consistent with a Fund's
investment objective, policies and quality standards, consider making
investments in such new types of securities.
ASSET-BACKED SECURITIES
The International Opportunities Fund, the International Advisers Fund, the
Advisers Fund, the Bond Fund, the Mortgage Securities Fund, and the Money Market
Fund may invest in asset-backed securities. The securitization techniques used
for asset-backed securities are similar to those used for mortgage-related
securities. The collateral for these securities has included home equity loans,
automobile and credit card receivables, boat loans, computer leases, airplane
leases, mobile home loans, recreational vehicle loans and hospital account
receivables. These Funds may invest in these and other types of asset-backed
securities that may be developed in the future.
SWAP AGREEMENTS
Each Fund, except the Index Fund, the U.S. Government Money Market Fund and
the Money Market 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.
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HARTFORD MUTUAL FUNDS 29
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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 a Fund's investment exposure from one
type of investment to another. For example, if a 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 a Fund's
investments and its share price and yield.
MONEY MARKET INSTRUMENTS
The Funds may invest in high quality money market instruments, including,
but not limited to: (1) securities issued or guaranteed by governments, their
agencies or instrumentalities; (2) commercial paper; (3) certificates of
deposit; (4) bankers' acceptances and other bank obligations; and (5) repurchase
agreements involving any of the foregoing. The U.S. Government Money Market Fund
may only invest in high quality money market instruments, issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
INVESTMENT GRADE SECURITIES
The U.S. Government Money Market Fund and the Money Market Fund are
permitted to invest only in high-quality short-term instruments as defined by
Rule 2a-7 under the 1940 Act. Each of the other Funds is permitted to invest in
investment grade securities (i.e., rated as low as "Baa" by Moody's and as low
as "BBB" by S&P, and unrated securities of comparable quality as determined by
the Adviser or Sub-Adviser). 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 the Adviser or Sub-Adviser) 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 bonds lack outstanding investment characteristics and
do have speculative characteristics.
HIGH YIELD SECURITIES
To the extent described in their investment policies, the Capital
Appreciation Fund, the International Opportunities Fund and the International
Advisers Fund are permitted to invest in high yield securities, commonly known
as "junk bonds" (i.e., rated as low as "C" by Moody's and by S&P, and unrated
securities of comparable quality as determined by the Sub-Adviser). In addition,
up to 20% of the total assets of the Bond Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
or "BB" by S&P) or, if unrated, are determined to be of comparable quality by
the Adviser. 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 in
the lower rating categories, including their speculative characteristics, are
set forth in the Appendix to this Prospectus. These securities are considered to
have extremely poor prospects of ever attaining any real investment standing, to
have a current identifiable vulnerability to default, to be unlikely to have the
capacity to pay interest and repay principal when due in the event of adverse
business, financial or economic conditions, and/or to be in default or not
current in the payment of interest or principal. 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 a Fund with a commensurate effect on the value of
the Fund's shares.
OTHER RISK FACTORS
As mutual funds that primarily invest in equity and/or debt securities, each
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 Funds invest will tend to
increase when interest rates are falling and to decrease when interest rates are
rising.
No Fund should 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 any investment company.
There can be no assurance that the investment objectives of the Funds will
be met. In addition, the risk inherent in investing in the Funds is common to
any security -- the
<PAGE>
30 HARTFORD MUTUAL FUNDS
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net asset value will fluctuate in response to changes in economic conditions,
interest rates and the market's perception of the underlying portfolio
securities of each Fund.
HIMCO, as Adviser to certain Funds, and WMC, as Sub-Adviser to certain
Funds, attempt, in pursuit of a Fund's investment objective, to select
appropriate individual securities for inclusion in a Fund's portfolio. In
addition, HIMCO and WMC attempt 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 HIMCO's and WMC's success not
only in selecting individual securities, but also in identifying attractive
asset classes to determine the total mix of invested assets.
MANAGEMENT OF THE FUNDS
Each Fund's Board of Directors manages the business and affairs of that 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.
INVESTMENT ADVISORY AND MANAGEMENT SERVICES
HIMCO serves as investment adviser or manager to each Fund pursuant to
written agreements entered into between HIMCO and each Fund. HIMCO serves as
investment adviser to the Bond Fund, Money Market Fund, U.S. Government Money
Market Fund, Mortgage Securities Fund, and Index Fund. HIMCO serves as
investment manager to the Capital Appreciation Fund, Dividend and Growth Fund,
International Opportunities Fund, Stock Fund, Advisers Fund, International
Advisers Fund and Small Company Fund.
For 1995, the advisory and management fees for the Funds were as follows:
Advisers Fund, $16,044,763; Capital Appreciation Fund, $7,715,873; Bond Fund,
$906,000; Dividend and Growth Fund, $757,373; Index Fund, $447,326;
International Opportunities Fund, $3,213,660; International Advisers Fund $0;
Money Market Fund, $762,534; Mortgage Securities Fund, $790,058; Stock Fund,
$4,134,925; and U.S. Government Money Market Fund, $24,282.
Under the terms of the Investment Advisory Agreements, HIMCO has
responsibility for the investment decisions with respect to the assets of the
Bond Fund, the Money Market Fund, the U.S. Government Money Market Fund, the
Mortgage Securities Fund and the Index Fund. HIMCO continuously provides the
Funds' Board of Directors with an investment program for its consideration and,
upon approval of the program by the Board, HIMCO implements the same by placing
orders for the purchase or sale of securities.
The investment advisory fee for the Money Market Fund, the U.S. Government
Money Market Fund and the Mortgage Securities Fund is .25% annually of the value
of the average daily net assets of each Fund. The investment advisory fee for
the Index Fund is .20% annually of the value of the average daily net assets of
the Fund. The investment advisory fee for the Bond Fund is:
.325% annually of the value of the average daily net assets of the Fund up
to $250,000,000;
.30% annually of the value of the next $250,000,000 of the average daily net
assets of the Fund;
.275% annually of the value of the next $500,000,000 of the average daily
net assets of the Fund;
.25% annually of the value of the average daily net assets of the Fund in
excess of $1,000,000,000.
Under the terms of the Investment Management Agreements, HIMCO, subject to
the supervision of the Funds' Board of Directors, provides investment management
supervision to the Stock Fund, the Advisers Fund, the Capital Appreciation Fund,
the International Opportunities Fund, the Small Company Fund, the Dividend and
Growth Fund and the International Advisers Fund in accordance with the Funds'
investment objectives, policies and restrictions. HIMCO's responsibilities
include: (1) Engaging, subject to consultation with the Funds' Board of
Directors, the services of one or more firms to serve as investment sub-adviser
to the Funds; (2) Reviewing from time to time the investment policies and
restrictions of the Funds in light of the Funds' performance and otherwise and,
after consultation with the investment sub-adviser, recommending any appropriate
changes to the Funds' Board of Directors; (3) Supervising the investment program
prepared for the Funds by the investment sub-adviser; (4) Monitoring on a
continuing basis the performance of the Funds' portfolio securities; (5)
Arranging for the provision of such economic and statistical data as HIMCO shall
determine or as may be requested by the Funds' Board of Directors; (6) Providing
the Funds' Board of Directors with such information concerning important
economic and political developments as HIMCO shall deem appropriate or as shall
be requested by the Funds' Board of Directors.
For services rendered to the Funds, HIMCO charges a monthly fee based on the
following annual rates as applied to the average of the calculated daily net
asset value of the Funds.
Advisers Fund, Capital Appreciation Fund, Dividend and Growth Fund,
International Advisers Fund, International Opportunities Fund and Small Company
Fund:
.575% annually of the value of the average daily net assets of the Fund up
to $250,000,000;
<PAGE>
HARTFORD MUTUAL FUNDS 31
- --------------------------------------------------------------------------------
.525% annually of the next $250,000,000 of the value of the average daily
net assets of the Fund;
.475% annually of the next $500,000,000 of the value of the average daily
net assets of the Fund;
.425% annually of the value of the average daily net assets of the Fund in
excess of $1,000,000,000.
HIMCO has agreed to waive its fees for the Small Company Fund until the
assets of this Fund (excluding assets contributed by companies affiliated with
HIMCO) first reach $20 million.
Stock Fund:
.325% annually of the value of the average daily net assets of the Fund up
to $250,000,000;
.300% annually of the value of the next $250,000,000 of the average daily
net assets of the Fund;
.275% annually of the next $500,000,000 of the value of the average daily
net assets of the Fund;
.250% annually of the value of the average daily net assets of the Fund in
excess of $1,000,000,000.
HIMCO, Hartford Plaza, Hartford, Connecticut 06115, is a wholly-owned
subsidiary of Hartford Life Insurance Company ("HL") and was organized under the
laws of the State of Connecticut in 1981. HIMCO also serves as investment
adviser to several other HL-sponsored funds which are also registered with the
SEC. HL is ultimately owned by Hartford Fire Insurance Company, one of the
largest multiple lines insurance carriers in the United States. Hartford Fire
Insurance Company is a subsidiary of ITT Hartford Group, Inc.
Certain officers of the Funds are also officers and/or directors of HIMCO;
Joseph H. Gareau is a Director and the President of HIMCO; Andrew W. Kohnke is a
Managing Director and a Director of HIMCO; J. Richard Garrett is the Treasurer
of HIMCO; and Charles M. O'Halloran is a Director, Secretary and General Counsel
of HIMCO.
INVESTMENT SUB-ADVISORY SERVICES
WMC serves as Sub-Adviser to the Capital Appreciation Fund, Dividend and
Growth Fund, International Opportunities Fund, Stock Fund, Advisers Fund,
International Advisers Fund and Small Company Fund pursuant to written contracts
entered into between HIMCO and WMC.
In connection with its service as sub-adviser to these Funds, WMC 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 these Funds and to the general supervision of the Company's
Board of Directors and HIMCO) and places, in the name of the Funds, all orders
for execution of these Funds' portfolio transactions. In conjunction with such
activities, WMC regularly furnishes reports to the Company's Board of Directors
concerning economic forecasts, investment strategy, portfolio activity and
performance of the Funds.
Under the terms of the Investment Sub-Advisory Agreements, WMC provides an
investment program to HIMCO for use by HIMCO in rendering services to these
Funds. WMC 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 these Funds and to the supervision of
the Funds' Board of Directors and HIMCO) and places, in the name of the Funds,
all orders for execution of these Funds' portfolio transactions. In conjunction
with such activities, WMC regularly furnishes reports to these Funds' Board of
Directors concerning economic forecasts, investment strategy, portfolio activity
and performance of the Funds.
For services rendered to these Funds, WMC charges a quarterly fee to HIMCO.
The Funds will not pay WMC's fee nor any part thereof, nor will the Funds have
any obligation or responsibility to do so. WMC's quarterly fee is based upon the
following annual rates as applied to the average of the calculated daily net
asset value of each Fund.
Advisers Fund, Stock Fund and Dividend and Growth Fund:
.325% annually of the value of the average daily net assets of the Fund up
to $50,000,000;
.25% annually of the next $100,000,000 of the value of the average daily net
assets of the Fund;
.20% annually of the next $350,000,000 of the value of the average daily net
assets of the Fund;
.15% annually of the value of the average daily net assets of the Fund in
excess of $500,000,000.
Capital Appreciation Fund, International Opportunities Fund, Small Company Fund
and International Advisers Fund:
.40% annually of the value of the average daily net assets of the Fund up to
$50,000,000;
.30% annually of the next $100,000,000 of the value of the average daily net
assets of the Fund;
.25% annually of the next $350,000,000 of the value of the average daily net
assets of the Fund;
.20% annually of the value of the average daily net assets of the Fund in
excess of $500,000,000.
WMC has agreed to waive its fees for the Small Company Fund until the assets
of the Fund (excluding assets contributed by companies affiliated with HIMCO)
first reach $20 million.
<PAGE>
32 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
WMC is a professional investment counseling firm which provides investment
services to investment companies, employee benefit plans, endowments,
foundations, and other institutions and individuals. As of December 31, 1995,
WMC held discretionary management authority with respect to approximately $109
billion of client assets. WMC and its predecessor organizations have provided
investment advisory services to investment companies since 1933 and to
investment counseling clients since 1960. WMC, 75 State Street, Boston, MA
02109, is a Massachusetts general partnership, of which the following persons
are managing partners: Robert W. Doran, Duncan M. McFarland, and John R. Ryan.
PORTFOLIO MANAGERS
Saul J. Pannell, Senior Vice President of WMC, serves as portfolio manager
to the Capital Appreciation Fund. Mr. Pannell has been a portfolio manager with
WMC since 1979.
Laurie A. Gabriel, CFA and Senior Vice President of WMC, serves as portfolio
manager to the Dividend and Growth Fund. Ms. Gabriel joined WMC in 1976. She has
been a quantitative research analyst with WMC since 1986, and took on portfolio
management responsibilities in 1987.
The International Opportunities Fund is managed by WMC's Global Equity
Strategy Group, headed by Trond Skramstad, Senior Vice President of WMC. The
Global Equity Strategy Group is comprised of global portfolio managers and
senior investment professionals. No person or persons is primarily responsible
for making recommendations to or within the Global Equity Strategy Group. Prior
to joining WMC in 1993, Mr. Skramstad was a global equity portfolio manager at
Scudder, Stevens & Clark since 1990.
Kenneth L. Abrams, Senior Vice President of WMC, serves as portfolio manager
to the Small Company Fund. Mr. Abrams has been an emerging company research
analyst with WMC since 1986 and has been a portfolio manager with WMC since
1990.
Rand L. Alexander, Senior Vice President of WMC, serves as portfolio manager
to the Stock Fund. Mr. Alexander has been a portfolio manager with WMC since
1990.
Paul D. Kaplan, Senior Vice President of WMC, serves as portfolio manager to
the Advisers Fund. Mr. Kaplan manages the fixed income component of the Advisers
Fund. He has been a portfolio manager with WMC since 1982. Rand L. Alexander,
who is portfolio manager to the Stock Fund, manages the equity component of the
Advisers Fund.
The equity component of the International Advisers Fund is managed by WMC's
Global Equity Strategy Group, headed by Trond Skramstad. The debt component of
the International Advisers Fund is managed by Robert Evans, Vice President of
WMC. Prior to joining WMC as a portfolio manager in 1995, Mr. Evans was a Senior
Global Fixed Income Portfolio Manager with Pacific Investment Management Company
from 1991 through 1994, and in the Global Fixed Income Department of Lehman
Brothers International in London, England and New York City, New York from 1985
through 1990.
The Bond Fund is managed by Alison D. Granger. Ms. Granger, a Senior Vice
President of HIMCO and Assistant Vice President of Hartford Life Insurance
Company, joined ITT Hartford in 1993 as a senior corporate bond trader. She
became Director of Trading in 1994 and a portfolio manager in 1995. Prior to
joining ITT Hartford, Ms. Granger was a corporate bond portfolio manager at The
Home Insurance Company and Axe-Houghton Management. Ms. Granger has over fifteen
years of experience with fixed income investments.
The Mortgage Securities Fund is managed by Timothy J. Wilhide. Mr. Wilhide
is a Portfolio Manager and Vice President of HIMCO. He has 17 years of
experience in the fixed income markets. Prior to joining ITT Hartford in June
1994, Mr. Wilhide was vice president and fixed income manager for J.P. Morgan &
Co. He received his B.A. from Gannon University and his MBA from the University
of Delaware.
ADMINISTRATIVE SERVICES
FOR THE FUNDS
An Administrative Services Agreement between each Fund and HL provides that
HL will manage the business affairs and provide administrative services to each
Fund. Under the terms of these Agreements, HL will provide the following:
administrative personnel, services, equipment and facilities and office space
for proper operation of the Funds. HL has also agreed to arrange for the
provision of additional services necessary for the proper operation of the
Funds, although the Funds pay for these services directly. See "Expenses of the
Funds." As compensation for the services to be performed by HL, each Fund pays
to HL, 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 FUNDS
Each Fund shall assume and pay the following costs and expenses: interest;
taxes; brokerage charges (which may be to affiliated broker-dealers); costs of
preparing, printing
<PAGE>
HARTFORD MUTUAL FUNDS 33
- --------------------------------------------------------------------------------
and filing any amendments or supplements to the registration forms of each 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 HL),
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 each Fund other than those
who are also officers of HL; industry membership dues; all annual and semiannual
reports and prospectuses mailed to each 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 each 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 each Fund's shareholders and other miscellaneous expenses related
directly to the Funds' operations and interest.
The total expenses of each Fund including administrative and investment
advisory fees for 1995 as a percentage of the Funds' average net assets were as
follows: Stock Fund, .48%; Bond Fund, .53%; Money Market Fund, .45%; U.S.
Government Money Market Fund, .57%; Advisers Fund, .66%; Capital Appreciation
Fund, .68%; Mortgage Securities Fund, .68%; Index Fund .39%; International
Opportunities Fund, .86%; Dividend and Growth Fund, .77%; International Advisers
Fund, .65%. The Small Company Fund did not commence operations in 1995.
PERFORMANCE RELATED INFORMATION
The Funds may advertise certain performance related information. Performance
information about a Fund is based on the Fund's past performance only and is no
indication of future performance.
Each Fund may include its total return in advertisements or other sales
material. When a 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).
The U.S. Government Money Market Fund and the Money Market Fund may
advertise yield and effective yield. The yield of each of those Funds is based
upon the income earned by the Fund over a seven-day period and then annualized,
i.e. the income earned in the period is assumed to be earned every seven days
over a 52-week period and stated as a percentage of the investment. Effective
yield is calculated similarly but when annualized, the income earned by the
investment is assumed to be reinvested in Fund shares and thus compounded in the
course of a 52-week period.
DIVIDENDS
The shareholders of each Fund shall be entitled to receive such dividends as
may be declared by each Fund's Board of Directors, from time to time based upon
the investment performance of the assets making up that Fund's portfolio. The
policy with respect to each Fund, except the U.S. Government Money Market Fund
and the Money Market Fund, is to pay dividends from net investment income
monthly and to make distributions of realized capital gains, if any, once each
year. The U.S. Government Money Market Fund and the Money Market Fund declare
dividends on a daily basis and pay them monthly.
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.
NET ASSET VALUE
The net asset value of each Fund's shares will be determined as of the close
of business (currently 4:00 P.M. Eastern Time) on each day the NYSE is open for
trading. Orders for the purchase of a Fund's shares received prior to the close
of the NYSE on any day on which the Fund is open for business will be priced at
the per-share net asset value determined as of the close of the NYSE. Orders
received after the close of the NYSE or on a day on which the NYSE or a Fund are
not open for business will be priced at the per-share net asset value next
determined. The per-share net asset value of the shares each Fund will be
determined by dividing the value of the Fund's assets, less the liabilities, by
the number of outstanding shares issued by the Fund.
Equity securities are valued at the last sales price as of the time when the
valuation is being made. If no sales 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 the asked prices. Debt securities (other
than short-term obligations) including
<PAGE>
34 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
mortgage-backed securities, 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. Short-term investments with
a maturity of 60 days or less when purchased are valued at cost plus interest
earned (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
using the value of the investment on the 61st day. 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.
Assets for which market quotations are not readily available are valued at
fair value as determined in good faith by or under the direction of a Fund's
Board of Directors.
PURCHASE OF FUND SHARES
Fund shares are made available to serve as the underlying investment
vehicles for variable annuity and variable life insurance separate accounts of
ITT Hartford Life Insurance Companies. Shares of the Funds are sold on a no-load
basis at their net asset values. See "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 ITT 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 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.
SALE AND REDEMPTION
OF SHARES
The shares of each 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.
Hartford Equity Sales Company, Inc., Hartford, Connecticut, is the Fund's
principal underwriter. 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 Funds.
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 a Fund of securities owned by it is
not reasonably practicable, or (b) it is not reasonably practicable for a 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 Funds.
FEDERAL INCOME TAXES
Each Fund has elected and intends to qualify under Part I of Subchapter M of
the Code. Each Fund intends to distribute all of its net income and gains to
shareholders. Such distributions are taxable income and capital gains. Each Fund
will inform shareholders of the amount and nature of such income and gains. Each
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. Each 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 Funds' shares by
the insurer, reference should be made to the section entitled "Federal Tax
Considerations" in the appropriate separate account prospectus.
If eligible, each Fund may make an election to pass through to its
shareholders, ITT 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
ITT 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 ITT Hartford Life Insurance Companies.
OWNERSHIP AND CAPITALIZATION OF THE FUNDS
CAPITAL STOCK
As of the date of this prospectus, the authorized capital stock of the Funds
consisted of the following shares at a par value of $.10 per share: Advisers
Fund, 4 billion; Capital
<PAGE>
HARTFORD MUTUAL FUNDS 35
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Appreciation Fund, 2 billion; Bond Fund, 800 million; Dividend and Growth Fund,
750 million; Index Fund, 400 million; International Opportunities Fund, 1.5
billion; Small Company Fund, 750 million; Money Market Fund, 800 million;
Mortgage Securities Fund, 800 million; Stock Fund, 2 billion; U.S. Government
Money Market Fund, 100 million; International Advisers Fund, 750 million.
As of December 31, 1995, Hartford Life Insurance Company owned 10,000,000
shares (35.5%) of the International Advisers Fund.
At December 31, 1995, certain HL group pension contracts held direct
interests in shares of the Funds as follows:
<TABLE>
<CAPTION>
SHARES %
------------ ---------
<S> <C> <C>
Hartford Advisers Fund, Inc................ 11,995,216 .55
Hartford Capital Appreciation Fund, Inc.... 9,760,293 1.58
Hartford Index Fund, Inc................... 12,029,208 7.67
Hartford International Opportunities Fund,
Inc....................................... 5,692,699 1.07
Hartford Mortgage Securities Fund, Inc..... 15,512,929 5.07
Hartford Stock Fund, Inc................... 70,084 .01
</TABLE>
VOTING
Each shareholder shall be entitled to one vote for each share of the Funds
held upon all matters submitted to the shareholders generally. With respect to
the Funds' 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 ITT Hartford Life Insurance
Companies shall be the shareholders of record. Each of the ITT 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
Funds 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." There are no shareholder
pre-emptive rights. Upon liquidation of a Fund, the shareholders of that 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 Funds will issue unaudited semiannual reports showing current
investments in each Fund and other information and annual financial statements
examined by independent auditors for the Funds.
CUSTODIAN, TRANSFER AND
DIVIDEND DISBURSING AGENTS
State Street Bank and Trust Company, Boston, Massachusetts, serves as
custodian of the Funds' assets. Hartford Life Insurance Company, P.O. Box 2999,
Hartford, Connecticut 06104-2999, serves as Transfer and Dividend Disbursing
Agent for the Funds.
"MAJORITY" DEFINED
As used in this Prospectus, the term "majority of the Fund's outstanding
shares" means the vote of: (1) 67% or more of each Fund's shares present at a
meeting, if the holders of more than 50% of the outstanding shares of each Fund
are present or represented by proxy, or (2) more than 50% of each Fund's
outstanding shares, whichever is less.
PENDING LEGAL PROCEEDINGS
As of the date of this Prospectus, there are no pending legal proceedings
involving the Funds or the Adviser or Sub-Adviser 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 Family of Funds", c/o
Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
36 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
APPENDIX
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.
<PAGE>
HARTFORD MUTUAL FUNDS 37
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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 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
HVA MONEY MARKET FUND, INC.
Hartford Plaza
Hartford, Connecticut 06115
Telephone Number: (800) 862-6668
c/o Variable Products Operations
ITT Hartford Group, Inc.
This Statement of Additional Information ("Statement") is not a prospectus.
A Prospectus/Proxy Statement dated May 12, 1997, relating to the Reorganization
may be obtained from HVA Money Market Fund, Inc. by writing to Hartford Life
Insurance Companies, Variable Products Operations, Hartford Plaza, Hartford,
Connecticut 06115 or calling (800) 862-6668. This Statement of Additional
Information relates to, and should be read in connection with, such
Prospectus/Proxy Statement.
The date of this Statement of Additional Information is May 12, 1997.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD CAPITAL APPRECIATION FUND, INC.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
HARTFORD INDEX FUND, INC.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
HARTFORD SMALL COMPANY FUND, INC.
HARTFORD STOCK FUND, INC.
HARTFORD ADVISERS FUND, INC.
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
HARTFORD BOND FUND, INC.
HARTFORD MORTGAGE SECURITIES FUND, INC.
HVA MONEY MARKET FUND, INC.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
P.O. Box 2999
Hartford, CT 06104-2999
This Statement of Additional Information is not a prospectus. The
information contained herein should be read in conjunction with the prospectus.
To obtain a prospectus send a written request to: "Hartford Family of Funds,"
c/o Individual Annuity Operations, P.O. Box 2999, Hartford, Connecticut
06104-2999.
Date of Prospectus: May 1, 1996 revised effective August 9, 1996
Date of Statement of Additional Information: May 1, 1996 revised effective
August 9, 1996
Form HV-1743-11
<PAGE>
TABLE OF CONTENTS PAGE
INVESTMENT OBJECTIVES OF THE FUNDS. . . . . . . . . . . .
INVESTMENT RESTRICTIONS OF THE FUNDS. . . . . . . . . . .
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . .
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . .
CUSTODIAN AND TRANSFER AGENT. . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . .
PORTFOLIO BROKERAGE. . . . . . . . . . . . . . . . . . . .
DETERMINATION OF YIELD. . . . . . . . . . . . . . . . . .
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . .
2
<PAGE>
INVESTMENT OBJECTIVES OF THE FUNDS
HARTFORD CAPITAL APPRECIATION FUND, INC.:
To achieve growth of capital by investing in securities selected solely on
the basis of potential for capital appreciation; income, if any, is an
incidental consideration.
HARTFORD DIVIDEND AND GROWTH FUND, INC.:
To achieve a high level of current income consistent with growth of capital
and reasonable investment risk.
HARTFORD INDEX FUND, INC.:
To provide investment results that approximate the price and yield
performance of publicly-traded common stocks in the aggregate.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.:
To achieve long-term total return consistent with prudent investment risk
through investment primarily in equity securities issued by non-U.S. companies
HARTFORD SMALL COMPANY FUND, INC.:
To achieve growth of capital by investing primarily in equity securities
selected on the basis of potential for capital appreciation.
HARTFORD STOCK FUND, INC.:
To achieve long-term capital growth primarily through capital appreciation,
with income a secondary consideration, by investing in primarily equity
securities.
HARTFORD ADVISERS FUND, INC.:
To achieve maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments.
HARTFORD INTERNATIONAL ADVISERS FUND, INC.:
To achieve maximum long-term total rate of return consistent with prudent
investment risk.
3
<PAGE>
HARTFORD BOND FUND, INC.:
To achieve maximum current income consistent with preservation of capital
by investing primarily in fixed-income securities.
HARTFORD MORTGAGE SECURITIES FUND, INC.:
To achieve maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
HVA MONEY MARKET FUND, INC.:
To achieve maximum current income consistent with liquidity and
preservation of capital.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.:
To achieve maximum current income consistent with preservation of capital.
INVESTMENT RESTRICTIONS OF THE FUNDS
Each of the Funds is governed by a number of investment restrictions -
investment practices which are prohibited or which are only permitted to a
limited extent. Under the 1940 Act, investment restrictions must be designated
either "fundamental" or "nonfundamental." "Fundamental" restrictions may only be
changed with the approval of a majority of the outstanding voting securities of
a Fund. "Nonfundamental" restrictions may be changed with the approval of a
majority of a Fund's Board of Directors. Some restrictions are common to all
Funds, usually because governing law so requires. Others vary because of
differences in the objectives of the Funds or for historical reasons.
A. FUNDAMENTAL RESTRICTIONS
1. Issuer Concentration. 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 invested in the securities of any one issuer (except U.S. Government
securities). Except for the Capital Appreciation Fund and Small Company Fund,
no Fund will acquire more than 5% of the outstanding voting securities of any
one issuer.
2. Industry Concentration. No Fund will invest more than 25% of its
assets in the securities of issuers primarily engaged in any one industry;
however, this restriction shall not apply to investments in obligations of the
U.S. Government and its agencies and instrumentalities, bank certificates of
deposit, bankers' acceptances or instruments secured by these money market
instruments. In addition, for the Dividend and Growth Fund only, electric
utilities, natural gas
4
<PAGE>
utilities, water utilities and telecommunications issuers will be considered
separate, distinct industries.
3. Senior Securities. 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.
4. Borrowings. Except for the Dividend and Growth Fund, the International
Advisers Fund and the International Opportunities Fund, none of the Funds may
borrow amounts in excess of 5% of its assets, and borrowings 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.
5. Underwriting. No Fund will underwrite securities of other issuers.
6. Commodities. No Fund will purchase commodities or commodity contracts,
except for transactions in futures contracts and options on futures contracts.
7. Real Estate. No Fund will invest in real estate, except that each of
the Advisers 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.
8. Loans. 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.
B. NONFUNDAMENTAL RESTRICTIONS
9. Short Sales and Margin. No Fund will purchase securities on margin or
make short sales of securities, except that a 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.
10. Illiquid Securities. No Fund will invest more than 10% of its assets in
illiquid securities, except that the Dividend and Growth Fund, the International
Advisers Fund, the International Opportunities Fund and the Small Company Fund
may each invest up to 15% of its
5
<PAGE>
assets in illiquid securities, and except that the Index Fund may not invest in
illiquid securities at all.
11. Control. No Fund will, 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.
12. Pledges. No Fund will 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.
13. Other Investment Companies. The Index Fund, the Mortgage Securities
Fund and the money market funds will not purchase securities of other investment
companies. Each of the other Funds may not 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.
14. Geographic Concentration. Each of the International Advisers Fund and
the International Opportunities Fund will not invest more than 20% of its assets
in securities of issuers located in any one country, except that it may invest
up to 35% of its assets in any one of the following countries: Australia,
Canada, France, Japan, the United Kingdom or Germany.
ALL FUNDS
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.
PORTFOLIO TURNOVER
The portfolio turnover rates for the Bond Fund for 1993, 1994 and 1995 were
494.3%, 328.8% and 215%, respectively.
The portfolio turnover rates for the Stock Fund for 1993, 1994 and 1995
were 69.0%, 63.8% and 52.9%, respectively.
6
<PAGE>
The portfolio turnover rates for the Advisers Fund for 1993, 1994 and 1995
were 55.3%, 60.0% and 63.5%, respectively.
The portfolio turnover rates for the Capital Appreciation Fund for 1993,
1994 and 1995 were 91.4%, 73.3% and 78.6%, respectively.
The portfolio turnover rates for the Mortgage Securities Fund for 1993,
1994 and 1995 were 183.4%, 365.7% and 489.4%, respectively.
The portfolio turnover rates for the Index Fund for 1993, 1994 and 1995
were .8%, 1.8% and 1.5%, respectively.
The portfolio turnover rates for the International Advisers Fund for the
period February 28, 1995 to December 31, 1995 was 47.2 %.
The portfolio turnover rates for the International Opportunities Fund for
1993, 1994 and 1995 were 31.8%, 46.4% and 55.6%, respectively.
The portfolio turnover rates for the Dividend and Growth Fund for the
period March 8, 1994 to December 31, 1994 was 27.8%, and for 1995 was 41.4%.
Because of the short-term nature of their portfolio securities and market
conditions, no meaningful or accurate prediction can be made of the portfolio
turnover rate for the Money Market and U.S. Government Money Market Funds.
It is anticipated that the portfolio turnover rate of the Small Company
Fund will not exceed 100%.
Turnover rate is computed by determining the percentage relationship of the
lesser of purchases and sales of securities to the monthly average of the value
of securities owned for the fiscal year, exclusive of securities whose
maturities at the time of acquisition were one year or less. A high turnover
rate will result in increased brokerage expenses and the likelihood of some
short term gains which may be taxable to shareholders at ordinary income tax
rates (see "Federal Income Taxes" in the prospectus).
MANAGEMENT OF THE FUNDS
The directors and officers of the Funds and their principal business
occupations for the last five years are set forth below. Those directors who are
deemed to be "interested persons" of Hartford Life Insurance Company ("HL") as
that term is defined in the Investment Company Act of 1940, as amended, are
indicated by an asterisk next to their respective names.
Pursuant to a provision of each Fund's Bylaws, an Audit Committee has been
appointed for each of the Funds. This Committee is made up of those directors
who are not "interested persons" of HL. The functions of the Audit Committee
include, but are not limited to: (1)
7
<PAGE>
recommending to the Board of Directors the engagement of an independent auditor;
(2) reviewing the plan and results of such auditor's engagement; and (3)
reviewing the Fund's internal audit arrangements.
JOSEPH ANTHONY BIERNAT (age 68)
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, and served as Vice President-Client Services of
Wright Investors' Service, Bridgeport, Connecticut. Mr. Biernat presently is
consulting to organizations on financial matters, with the majority of time
spent with T.O. Richardson & Co., Farmington, Connecticut.
WINIFRED ELLEN COLEMAN (age 63)
Director
27 Buckingham Lane
West Hartford, CT 06117
Ms. Coleman has served as President of Saint Joseph College, West Hartford,
Connecticut since 1991.
JOSEPH HARRY GAREAU (age 48)*
Director and President
Hartford Plaza
Hartford, CT 06116
Mr. Gareau has served as the Executive Vice President and Chief Investment
Officer of ITT Hartford Insurance Group since April, 1993. Formerly, he served
as Senior Vice President (September, 1992 - April, 1993) and Vice President
(October, 1987 - September, 1992).
WILLIAM ATCHISON O'NEILL (age 65)
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 62)
Director
90 State House Square
Hartford, CT 06103
Mr. Pryor has served as Managing Director of Pryor & Clark Company,
Hartford, Connecticut since June, 1992. He served as Chairman of the Board of
Lydall, Inc. from 1985 until October, 1991 and formerly served as President and
Chief Executive Officer.
8
<PAGE>
LOWNDES ANDREW SMITH (age 56)*
Director and Chairman
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Smith has served as President, Chief Operating Officer, and Director of
ITT Hartford Insurance Group-Life Companies and as a Director of ITT Hartford
Insurance Group since November, 1989.
JOHN KELLEY SPRINGER (age 64)
Director
55 Farmington Avenue
Hartford, CT 06105
Mr. Springer has served as President and Chief Executive Officer of
Connecticut Health System, Inc., a hospital holding company, since 1986.
Formerly, he served as the President and Chief Executive Officer of Hartford
Hospital, Hartford, Connecticut.
PETER CUMMINS (age 58)
Vice President
Hartford Plaza
Hartford, CT 06115
Mr. Cummins has been Vice President of sales and marketing of the
Individual Life and Annuity Division of ITT Hartford Insurance Group-Life
Companies since 1989.
JAMES RICHARD GARRETT (age 50)
Vice President and Treasurer
Hartford Plaza
Hartford, CT 06115
Mr. Garrett has served as a Vice President of ITT Hartford Insurance Group
since 1989 and as Treasurer since 1983. Mr. Garrett is also the Treasurer of
HIMCO.
JOHN PHILIP GINNETTI (age 51)
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 ITT Hartford Insurance Group-Life Companies,
since 1994. From 1988 to 1994, he served as Senior Vice President and Director
of the Individual Life and Annuities Division of ITT Hartford Insurance
Group-Life Companies.
9
<PAGE>
ANDREW WILLIAM KOHNKE (age 37)
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 ITT Hartford Insurance Group-Life Companies. Mr,
Kohnke is also a Director and Managing Director of HIMCO.
THOMAS MICHAEL MARRA (age 37)
Vice President
P. O. Box 2999
Hartford, CT 06104-2999
Mr. Marra has served as Executive Vice President since 1996, Senior Vice
President since 1994, and Director of the Individual Life and Annuity Division
of ITT Hartford Insurance Group-Life Companies, since 1980.
CHARLES MINER O'HALLORAN (age 49)
Vice President, Secretary, and General Counsel
Hartford Plaza
Hartford, CT 06115
Mr. O'Halloran has served as Corporate Secretary since 1996, Vice President
since 1994, and Senior Associate General Counsel since 1988, of ITT Hartford
Insurance Group.
GEORGE RICHARD JAY (age 43)
Controller
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Jay has served as Secretary and Director, Life and Equity Accounting
and Financial Control of ITT Hartford Insurance Group-Life Companies since 1987.
10
<PAGE>
JAMES CUBANSKI (age 36)
Assistant Secretary
Hartford Plaza
Hartford, CT 06115
Mr. Cubanski has served as Director of Tax Administration of ITT Hartford
Insurance Group since July 1995. Formerly, he served as Director of Federal Tax
Administration (July, 1993-July, 1995), and Manager of Federal Taxes (February,
1991 - July, 1993).
COMPENSATION OF OFFICERS AND DIRECTORS.
None of the Funds pays salaries or any other compensation to any of its
officers or directors who are affiliated with ITT Hartford. The officers and
directors serve in the same capacity for each of the Funds and the unaffiliated
directors receive compensation for serving on the Board of all of the Funds.
The chart below sets forth the fees paid by the Funds to the unaffiliated
directors for the fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
JOSEPH A. WINIFRED E. WILLIAM A. MILLARD H. JOHN K.
BIERNAT COLEMAN O'NEILL PRYOR SPRINGER
<S> <C> <C> <C> <C> <C>
TOTAL
COMPENSATION
RECEIVED FROM
THE FUNDS $ 18,000 $ 13,500 $ 18,000 $ 16,000 $ 16,000
</TABLE>
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company, Boston, Massachusetts, serves as
Custodian of the Funds' assets. The Custodian is not involved in determining
investment policies of the Funds or their portfolio securities transactions. Its
services do not protect shareholders against possible depreciation of their
assets. The fees of State Street Bank are paid by the Funds and thus borne by
the Funds' shareholders. The Custodian maintains actual custody of the
securities of the Funds.
Hartford Life Insurance Company, Hartford Plaza, Hartford, Connecticut
06115, serves as Transfer and Dividend Disbursing Agent for the Funds. The
Transfer Agent issues and redeems shares of the Funds and disburses any
dividends declared by the Funds.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements and financial highlights included in this SAI and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
11
<PAGE>
PORTFOLIO BROKERAGE
In accordance with the terms of the Investment Advisory Agreements and
Sub-Investment Advisory Agreements, the investment adviser or sub-investment
adviser (the "Adviser") places all portfolio brokerage on behalf of the Funds.
The Adviser attempts to obtain, in all instances, the best price and execution
on all portfolio transactions. In some instances portfolio brokerage may be
through affiliated persons of the Funds.
Purchases and sales of debt securities issued or guaranteed by the U.S.
Government will usually be effected on a net basis with a securities dealer
acting as principal. Principal transactions may involve the payment of a fee or
commission. Securities transactions may also be effected directly with the
issuer without the payment of a fee or commission. The Adviser may also place
orders for the purchase of part of an issue of securities, on behalf of the
Funds, that is being underwritten at prices which will include the payment of an
underwriting fee or a commission to the members of the underwriting group from
whom the securities are purchased.
The Adviser has been authorized by the Boards of Directors of the Funds to
pay an execution-plus-research commission rate which is higher than an
execution-only commission rate in connection with portfolio securities
transactions executed on behalf of the Funds. Research services may include
statistical analysis and economic, market and individual security research. The
Adviser has been authorized by the Funds' Board of Directors to pay higher
commissions than other broker-dealers may charge for such transactions so long
as the Adviser determines in good faith (in accordance with the requirements of
the Securities Exchange Act of 1934, as amended) that the commissions paid are
reasonable in relation to the value of the brokerage and research and
statistical services provided either in terms of the particular transaction or
with respect to its overall account responsibilities. Evaluation of the
reasonableness of brokerage commissions is based on a broker's standard of
efficiency in executing and clearing a trade, and its ability to provide
information and services which help in the areas of research and portfolio
selection. There is no certainty that any research services thus acquired will
be beneficial to the Funds and under certain circumstances, other clients of the
Adviser may benefit from research and statistical services so received. Further,
by paying a higher commission to a broker-dealer under the circumstances
described, the amount of brokerage commissions which the Funds pay may tend to
increase.
Subject to applicable laws and regulations, the Adviser may also consider
the willingness of particular brokers to sell ITT Hartford's variable annuity or
variable life insurance contracts as a factor in the selection of brokers for
its portfolio transactions. At all times, the Adviser attempts to obtain best
price and execution.
The aggregate amount of brokerage commissions paid by the Stock Fund for
1993, 1994 and 1995 was $1,556,000, $1,872,000 and $1,839,000 , respectively.
The aggregate amount of brokerage commissions paid by the Advisers Fund in
1993, 1994 and 1995 was $2,366,000, $2,771,000 and $2,608,000, respectively.
12
<PAGE>
The aggregate amount of brokerage commissions paid by the Capital
Appreciation Fund in 1993, 1994 and 1995 was $1,595,000, $2,045,000 and
$3,069,000, respectively.
The aggregate amount of brokerage commissions paid by the Index Fund in
1993, 1994 and 1995 was $48,000, $24,000 and $66,000, respectively.
The aggregate amount of brokerage commissions paid by the International
Advisers Fund in 1995 was $76,000. The International Advisers Fund commenced
operations in 1995.
The aggregate amount of brokerage commissions paid by the International
Opportunities Fund in 1993, 1994 and 1995 was $785,000, $1,940,000 and
$1,986,000, respectively.
The aggregate amount of brokerage commissions paid by the Dividend and
Growth Fund in 1994 and 1995 was $65,000 and $303,000, respectively. The
Dividend and Growth Fund commenced operations in 1994.
Changes in the amounts of brokerage commissions paid reflect changes in
portfolio turnover rates.
No brokerage commissions were paid in 1993, 1994 or 1995 by the Bond Fund,
Money Market Fund, Mortgage Securities Fund, or U.S. Government Money Market
Fund. The Small Company Fund did not commence operations in 1995.
DETERMINATION OF YIELD
HVA Money Market Fund, Inc.
The Fund's yield quotations as they appear in advertising and sales
materials are calculated by a method prescribed by the rules of the Securities
and Exchange Commission.
Yield calculations of the Fund used for illustration purposes are based on
the consideration of a hypothetical account having a balance of exactly one
share at the beginning of a seven day period, which period will end on the date
of the most recent financial statements. The yield for the fund during this
seven day period will be the change in the value of the hypothetical account,
including dividends declared on the original share, dividends declared on any
shares purchased with dividends on that share, and any monthly account charges
or sales charges that would affect an account of average size, but excluding any
capital changes. The following is an example of this yield calculation for the
Fund based on a seven day period ending December 31, 1995.
Example:
Assumptions:
Value of a hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.000000
13
<PAGE>
Value of the same account* (excluding capital changes) at the end of the
seven day period: $1.001035
*This value would include the value of any additional shares purchased with
dividends from the original share, and all dividends declared on both the
original share and any such additional shares.
Calculation:
Ending account value $1.001035
Less beginning account value 1.000000
$ .001035
---------
Net change in account value
Base period return:
(adjusted change/beginning account value)
$.001035/$1.000000 = $.001035
$.001035 X (365/7) =
5.40%
---------
Current yield =
Effective yield = (1 +.001035)365/7 - 1 = 5.44%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies. In addition, the current
yield and effective yield information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
Hartford U.S. Government Money Market Fund, Inc.
The Fund's yield quotations as they appear in advertising and sales
materials are calculated by a method prescribed by the rules of the Securities
and Exchange Commission.
Yield calculations of the Fund used for illustrations purposes are based on
the consideration of a hypothetical account having a balance of exactly one
share at the beginning of a seven day period, which period will end on the date
of the most recent financial statements. The yield for the Fund during this
seven day period will be the change in the value of the hypothetical account,
including dividends declared on the original share, dividends declared on any
shares purchased with dividends on that share, and any monthly account charges
or sales charges that would affect an account of average size, but excluding any
capital changes. The following is an example of this yield calculation for the
fund based on a seven day period ending December 31, 1995.
14
<PAGE>
Example:
Assumptions:
Value of a hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.000000000
Value of the same account* (excluding capital changes) at the end of the
seven day period: $1.001049.
*This value would include the value of any additional shares purchased with
dividends from the original share, and all dividends declared on both the
original share and any such additional shares.
Calculation:
Ending account value $1.001049
Less beginning account value 1.000000
$ .001049
---------
Net change in account value
Base period return:
(adjusted change/beginning account value)
$.001049/$1.000000 = `$.001049
$.001049 X (365/7) =
5.47%
---------
Current yield =
Effective yield = (1 +.001049)365/7 - 1 =
5.62%
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies.
In addition, the current yield and effective yield information may be of
limited use for comparative purposes because it does not reflect charges imposed
at the Separate Account level which, if included, would decrease the yield.
At any time in the future, yields and total return may be higher or lower
than past yields and there can be no assurance that any historical results will
continue.
CALCULATION OF TOTAL RETURN
15
<PAGE>
As summarized in the Prospectus under the heading "Performance Related
Information", total return is a measure of the change in value of an investment
in a Fund over the period covered, which assumes any dividends or capital gains
distributions are reinvested in that Fund immediately rather than paid to the
investor in cash. The formula for total return used herein includes four steps:
(1) adding to the total number of shares purchased by a hypothetical $1,000
investment in the Fund all additional shares which would have been purchased if
all dividends and distributions paid or distributed during the period had been
immediately reinvested; (2) calculating the value of the hypothetical initial
investment of $1,000 as of the end of the period by multiplying the total number
of shares owned at the end of the period by the net asset value per share on the
last trading day of the period; (3) assuming redemption at the end of the period
and deducting any applicable contingent deferred sales charge and (4) dividing
this account value for the hypothetical investor by the initial $1,000
investment. Total return will be calculated for one year, five years and ten
years or some other relevant periods if a Fund has not been in existence for at
least ten years.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN
Each Fund may from time to time include its yield and/or total return in
advertisements or information furnished to present or prospective shareholders.
Each Fund may also from time to time include in advertisements the ranking of
those performance figures as categorized by recognized rating firms such as
Lipper Analytical Services and Morningstar, Inc.
The total return and yield may also be used to compare the performance of
the Funds against certain widely acknowledged outside standards or indices for
stock and bond market performance including those described below.
The Standard & Poor's 500 Stock Price Index (the "S&P 500") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of 500 stocks. The S&P 500 represents about 80% of the market value of all
issues traded on the New York Stock Exchange.
The NASDAQ Composite OTC Price Index (the "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks. The NASDAQ Index is composed entirely of
common stocks of companies traded over-the-counter and often through the
National Association of Securities Dealers Automated Quotations ("NASDAQ")
system. Only those over-the-counter stocks having only one market maker or
traded on exchanges are excluded.
The Lehman Government Bond Index (the "Lehman Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage backed securities, flower bonds and foreign targeted
issues are not included in the Lehman Government Index.
16
<PAGE>
The Morgan Stanley Capital International EAFE Index (the "EAFE Index")
is an unmanaged index, which includes over 1,000 companies representing the
stock markets of Europe, Australia, New Zealand, and the Far East., The EAFE
Index is weighted by market capitalization, and therefore, it has a heavy
representation in countries with large stock markets, such as Japan.
The Lehman Government/Corporate Bond Index (the "Lehman
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the Lehman Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P
500 (55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).
The Russell 2500 Index is a market value-weighted, unmanaged index
showing total return (i.e., principal changes with income) in the aggregate
market value of 2,500 stocks of publicly traded companies domiciled in the
United States. The Index includes stocks traded on the New York Stock Exchange
and the American Stock Exchange as well as in the over-the-counter market.
The Composite Index for the Capital Appreciation Fund is the Russell 2500
Index (60%)/S&P 500 Index (40%), both of which are mentioned above.
The manner in which total return and yield are calculated is described
above. The following table sets forth the average annual total return, and yield
where applicable, for each Fund through December 31, 1995.
TOTAL RETURN/YIELD
SINCE
1 YEAR 5 YEARS INCEPTION YIELD
------- ------- ------- -------
Capital Appreciation 30.25% 23.77% 15.50%
Dividend and Growth 36.37% ---- 19.93%
Index 36.55% 15.78% 11.81%
International Opportunities 13.93% 10.04% 6.75%
Stock 34.10% 15.59% 13.42%
Advisers 28.34% 12.80% 11.85%
International Advisers ---- ---- 15.84%
Bond 18.49% 9.06% 8.51% 6.46%
17
<PAGE>
SINCE
1 YEAR 5 YEARS INCEPTION YIELD
------- ------- ------- -------
Mortgage Securities 16.17% 7.84% 8.38% 6.90%
HVA Money Market 5.74% 4.45% 6.00%
US Government Money Market 5.52% 4.14% 5.55%
18
<PAGE>
HVA MONEY MARKET FUND, INC.
REGISTRATION STATEMENT ON FORM N-14
PART C - OTHER INFORMATION
<PAGE>
ITEM 15. INDEMNIFICATION.
Incorporated by reference to Item 27 of Registrant's registration statement
No. 2-81648 on Form N-1A, filed February 3, 1983.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
directors, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS.
1. Articles of Incorporation Incorporated by reference from the
original registration statement on
Form N-1A for the Registrant filed
February 3, 1983 (File No. 2-81648)
("Registrant's Form N-1A").
2. Bylaws Incorporated by reference from the
original registration statement on
Form N-1A for the Registrant filed
February 3, 1983 (File No. 2-81648).
3. Not applicable.
4. Agreement and Plan of
Reorganization and Liquidation Filed herewith as Exhibit A to Part A.
5. Not applicable
C-1
<PAGE>
6.1 Form of Investment Advisory Incorporated by reference from
Contract between the Registrant Registrant's Proxy Statement filed
and HL Investment Advisers, Inc. on September 19, 1984.
6.2 Form of Investment Services Agreement Filed herewith as Exhibit 6.2 to
between HL Investment Advisors, Inc. Part C.
and The Hartford Investment
Management Company
7. Not applicable.
8. Not applicable.
9.1 Form of Custodian Agreement between Incorporated by reference from
Registrant and The Chase Manhattan Post-Effective Amendment No. 17 to
Bank, N.A. the Registrant's Form N-1A filed on
April 23, 1996.
9.2 Custodian Agreement between Registrant Filed herewith as Exhibit 9.2 to
and State Street Bank and Trust Part C
Company
10. Not applicable.
11. Opinion and consent of counsel as Filed herewith as Exhibit 11
to the legality of the securities to Part C.
being registered.
12. Form of Opinion of Tax Counsel Filed herewith as Exhibit 12 to
Part C.
13. Not applicable.
14. Consent of Arthur Andersen LLP Filed herewith as Exhibit 14 to
Part C.
15. Not applicable.
16. Power of Attorney. Filed herewith as Exhibit 16 to
Part C.
17. Form of Proxy. Filed herewith as Exhibit 17 to
Part C.
ITEM 17. UNDERTAKINGS.
C-2
<PAGE>
(1) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act [17
CFR 230. 145c], the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
C-3
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant in the City of Hartford and State of
Connecticut on the 12th day of March, 1997.
Registrant:
HVA MONEY MARKET FUND, INC.
/s/ Joseph H. Gareau
---------------------------------
By: Joseph H. Gareau
Title: President
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
* President March 12, 1997
- ------------------------- (Chief Executive Officer
Joseph H. Gareau & Director)
* Controller March 12, 1997
- ------------------------ (Chief Accounting Officer)
George R. Jay
* Vice President & Treasurer March 12, 1997
- ------------------------- (Chief Financial Officer)
J. Richard Garrett
* Director March 12, 1997
- -------------------------
Joseph A. Biernat
C-4
<PAGE>
* Director March 12, 1997
- -------------------------
Winifred E. Coleman
* Director March 12, 1997
- -------------------------
William A. O'Neill
* Director March 12, 1997
- -------------------------
Millard H. Pryor, Jr.
* Director March 12, 1997
- -------------------------
Lowndes A. Smith
* Director March 12, 1997
- -------------------------
John K. Springer
/s/ Kevin J. Carr March 12, 1997
- -------------------------
* By Kevin J. Carr
Attorney-in-fact
C-5
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Page
- ----------- ----
6.2 Investment Services Agreement between HL
Investment Advisors, Inc. and The Hartford Investment
Management Company . . . . . . . . . . . . . . . . . . . . .
9.2 Custodian Agreement between Registrant and State Street
Bank and Trust Company . . . . . . . . . . . . . . . . . . .
11 Opinion and Consent of Counsel . . . . . . . . . . . . . . .
12 Form of Tax Opinion. . . . . . . . . . . . . . . . . . . . .
14 Consent of Arthur Andersen LLP . . . . . . . . . . . . . . .
16 Power of Attorney. . . . . . . . . . . . . . . . . . . . . .
17 Form of Proxy. . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
INVESTMENT SERVICES AGREEMENT
This investment services agreement is made by and between HL Investment
Advisors, Inc., a Connecticut corporation (the "Manager") and The Hartford
Investment Management Company, a Delaware corporation ("HIMCO").
WITNESSETH
WHEREAS, The Manager has entered into an agreement for the provision of
investment management services (the "Principal Advisory Contract") to HVA Money
Market Fund, Inc. (the "Fund") by the Manager, and
WHEREAS, The Manager wishes to engage HIMCO to provide investment management
services to the Fund, and
WHEREAS, HIMCO is willing to perform such services on behalf of the Fund 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. The Manager hereby employs HIMCO to provide investment management services
with respect to the assets of the Fund under the management of the Manager
and to perform the services hereinafter set forth subject to the terms and
conditions of the investment objectives, policies and restrictions of the
Fund, and HIMCO hereby accepts such employment and agrees during such
period to assume the obligations herein set forth for the compensation
herein provided.
2. HIMCO shall evaluate and implement an investment program appropriate for
the Fund which shall be amended and updated from time to time as financial
and other economic conditions change as determined by HIMCO and Manager.
3. HIMCO will make all determinations with respect to the investment of the
assets of the Fund 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 Fund'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 the
Fund's portfolio securities should be exercised.
4. HIMCO will regularly furnish reports to the Fund at periodic meetings of
the Fund's Board of Directors and at such other times as may be reasonably
requested by the Fund's Board of Directors, which reports shall include
HIMCO's economic outlook and
1
<PAGE>
investment strategy and a discussion of the portfolio activity and the
performance of the Fund since the last report. Copies of all such reports
shall be furnished to the Manager for examination and review within a
reasonable time prior to the presentation of such reports to the Fund's
Board of Directors.
5. HIMCO will select the brokers or dealers that will execute the purchases
and sales of portfolio securities for the Fund and place, in the name of
the Fund or its nominees, all such orders. When placing such orders, HIMCO
shall use its best efforts to obtain the best net security price available
for the Fund. Subject to and in accordance with any directions that the
Board of Directors may issue from time to time, HIMCO may also be
authorized to effect individual securities transactions at commission rates
in excess of the minimum commission rates available, if HIMCO determines in
good faith that such amount of commission was 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 HIMCO's
overall responsibilities with respect to the Fund and HIMCO'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. HIMCO will promptly communicate to the Board of Directors
such information relating to portfolio transactions as they may reasonably
request.
6. As compensation for the performance of the services by HIMCO hereunder, the
Manager shall, as promptly as possible after the last day of each calendar
year quarter, pay HIMCO the equivalent of all direct and indirect expenses
incurred in the performance of its duties under this agreement.
7. HIMCO 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 HIMCO shall have acted in good faith and with due care; provided,
however, that HIMCO shall be liable for 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. (a) This agreement shall become effective on March 3, 1997, shall continue
in effect for the same term as the Principal Advisory Contract and
shall be submitted to the Fund's Board of Directors for reapproval at
the same time as the Principal Advisory Contract. 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 the
majority of the members of the Board of Directors of the Fund or by a
vote of a majority of the outstanding voting securities of the Fund,
and (2) in either event, by the vote of a majority of the members of
the Fund'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.
2
<PAGE>
(b) This agreement (1) may be terminated at any time without the payment
of any penalty either by vote of the members of the Board of Directors
of the Fund or by a vote of a majority of the Fund's outstanding
voting securities, or by the Manager on sixty days' prior written
notice to HIMCO, (2) shall immediately terminate in the event of its
assignment, (3) may be terminated by HIMCO on ninety days' prior
written notice to the Manager, but such termination will not be
effective until the Fund or the Manager shall have contracted with one
or more persons to serve as a successor to HIMCO for the Fund and such
person(s) shall have assumed such position, and (4) will terminate
automatically upon termination of the investment management agreement
between the Manager and the Fund.
(c) As used in this agreement, the terms "assignment," "interested
parties" and "vote of a majority of the Fund'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 of such party or parties.
9. Nothing in this agreement shall limit or restrict the right of any partner,
officer, or employee of HIMCO 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 HIMCO to engage in any other business or to
render services of any kind to any other corporation, firm, individual or
association.
10. It is the intention of the parties hereto that by this Agreement HIMCO
shall provide Manager with such investment management and advisory services
as may be required by Manager in managing and advising the Fund pursuant to
the terms of the Principal Advisory Contract. No provision of this
Agreement shall be construed or interpreted to grant HIMCO any right or
authority not granted to Manager under the Principal Advisory Contract, or
to impose on HIMCO any duty or obligation not otherwise imposed on Manager
under the Principal Advisory Contract.
11. The Manager agrees that neither it nor any affiliate of the Manager will
use HIMCO's name or refer to HIMCO or HIMCO's clients in marketing and
promotional materials without prior notification to and authorization by
HIMCO, 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.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on the 3rd day of March, 1997.
HL INVESTMENT ADVISORS, INC.
/s/ Joseph H. Gareau
----------------------------
By: Joseph H. Gareau
Title: President
THE HARTFORD INVESTMENT
MANAGEMENT COMPANY
/s/ Andrew W. Kohnke
----------------------------
By: Andrew W. Kohnke
Title: Managing Director
4
<PAGE>
CUSTODIAN CONTRACT
Between
HVA MONEY MARKET FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<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 . . . . . . . . . . 1
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Availability of Federal Funds. . . . . . . . . . . . . . . . . . . 4
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased. . . . . . . . . . . . . . . . . . 6
2.9 Appointment of Agents. . . . . . . . . . . . . . . . . . . . . . . 6
2.10 Deposit of Securities in U.S. Securities System. . . . . . . . . . 6
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Ownership Certificates for Tax Purposes. . . . . . . . . . . . . . 9
2.14 Proxies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.15 Communications Relating to Fund
Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . 9
2.16 Reports to Fund by Independent Public
Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States. . . . . . . . . . . . . . . 10
3.1 Appointment of Foreign Sub-Custodians. . . . . . . . . . . . . . . 10
3.2 Assets to be Held. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . . . . . 10
3.4 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . . 11
3.6 Access of Independent Accountants of the Fund. . . . . . . . . . . 11
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Transactions in Foreign Custody Account. . . . . . . . . . . . . . 11
3.9 Liability of Foreign Sub-Custodians. . . . . . . . . . . . . . . . 12
3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . . . . . 12
3.12 Monitoring Responsibilities. . . . . . . . . . . . . . . . . . . . 13
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Tax Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6. Actions Permitted Without Express Authority . . . . . . . . . . . . . . 14
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10. Opinion of Fund's Independent Accountant. . . . . . . . . . . . . . . . 15
11. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . 16
12. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . 16
13. Effective Period, Termination and Amendment . . . . . . . . . . . . . . 17
14. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. Interpretive and Additional Provisions. . . . . . . . . . . . . . . . . 18
16. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . . . 19
17. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
18. Shareholder Communications Election . . . . . . . . . . . . . . . . . . 19
<PAGE>
CUSTODIAN CONTRACT
This Contract between HVA Money Market 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: That 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 its assets,
including securities it 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 agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $0.10 par value, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall 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, 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-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities 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 the Fund all non-cash property, to be held by it in
the United States, including all domestic investments owned by the
Fund, 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 the Custodian
acts as issuing and paying agent ("Direct Paper") which
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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 the Fund 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, 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 Fund 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 Fund;
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 portfolio securities of the Fund;
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 Fund or into the name of any nominee or nominees of the
Custodian or into 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 Fund, 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
2
<PAGE>
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 Fund, BUT ONLY against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
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 Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, BUT ONLY against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, 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
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, 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 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 Fund's currently
effective prospectus and statement of additional
3
<PAGE>
information ("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, 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 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
Fund or in the name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned exclusively to the Fund,
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 Fund, 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 Fund 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.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name 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 Fund, other than cash maintained by the Fund 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
the Fund 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 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.
4
<PAGE>
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund 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 the Fund which
are deposited into the Fund'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 United States registered securities held
hereunder to which the Fund 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 United
States bearer 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 the Fund'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 the Fund on United States 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 Fund is
properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Fund 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
Fund 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 Fund 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 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)
5
<PAGE>
against delivery of the receipt evidencing purchase by the Fund
of securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such securities
from the Fund 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 Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: 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 declared pursuant to the
governing documents of the Fund;
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, 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 the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund 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.
6
<PAGE>
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 SECURITIES IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain domestic securities owned by the Fund 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 domestic securities of the Fund 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;
2) The records of the Custodian with respect to domestic securities
of the Fund which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund 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 Fund. The Custodian shall transfer domestic
securities sold for the account of the Fund 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 Fund. Copies of
all advices from the U.S. Securities System of transfers of
domestic securities for the account of the Fund shall identify
the Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request. Upon request, the Custodian
shall furnish the Fund confirmation of each transfer to or from
the account of the Fund in the form of a written advice or notice
and shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the U.S. Securities System
for the account of the Fund.
7
<PAGE>
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the U.S. Securities System's accounting system,
internal accounting control and procedures for safeguarding
domestic securities deposited in the U.S. Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund 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 Fund has not
been made whole for any such loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The
Custodian may deposit and/or maintain securities owned by the Fund 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;
2) The Custodian may keep securities of the Fund 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
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account
of the Fund 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 Fund. The Custodian shall transfer securities
sold for the account of the Fund 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 Fund;
8
<PAGE>
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, 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 copies
of daily transaction sheets reflecting each day's transaction in
the U.S. Securities System for the account of the Fund;
6) The Custodian shall provide the Fund 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 establish and maintain a segregated account or accounts
for and on behalf of the Fund, 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, 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 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 Fund, (ii) for purposes of
segregating cash or government securities in connection with options
purchased, sold or written by the Fund or commodity futures contracts
or options thereon purchased or sold by the Fund, (iii) for the
purposes of compliance by the Fund 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, 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 the Fund held by it
and in connection with transfers of such 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 Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
9
<PAGE>
2.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund 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 and the maturity of
futures contracts purchased or sold by the Fund) received by the
Custodian from issuers of the domestic securities being held for the
Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by the
Custodian from issuers of the domestic securities whose tender or
exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Fund desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
2.16 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS The Custodian shall
provide the Fund, 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 domestic securities deposited and/or maintained in a U.S.
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.
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 Fund'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 Fund'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 Fund's foreign securities
transactions. The Custodian
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<PAGE>
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 Fund 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 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 System"). 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 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 Fund's assets
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 of the Fund's assets 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 the Fund; (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 Fund 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.
11
<PAGE>
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 Fund held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Fund'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 the Fund indicating, as to securities
acquired for the Fund, 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 the Fund and delivery of securities
maintained for the account of the Fund 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) 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
12
<PAGE>
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 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 Fund 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 the Fund 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 Fund 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 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.
13
<PAGE>
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 REPURCHASES OR REDEMPTIONS AND SALES OF SHARES OF THE FUND
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 the Fund, 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.
The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.
5. PROPER INSTRUCTIONS
Proper Instructions as used herein 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
14
<PAGE>
are satisfied that such procedures afford adequate safeguards for the Fund's
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:
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;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, 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 Fund
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 the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
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 Fund as described in the Fund's currently effective prospectus 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
15
<PAGE>
calculations of the net asset value per share and the daily income of the Fund
shall be made at the time or times described from time to time in the Fund's
currently effective prospectus.
9. RECORDS
The Custodian shall 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 the Fund 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 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. 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 and
the Custodian.
12. 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 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
16
<PAGE>
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 of 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 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 being liable for the payment of money or incurring liability of some
other form, the Fund, 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.
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 Fund 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 the Fund assets to
the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
17
<PAGE>
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 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 U.S.
Securities System, as required by Rule 17f-4 under the Investment Company Act of
1940, as amended and that the Custodian shall not 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; 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 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 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.
14. SUCCESSOR CUSTODIAN
If a successor custodian 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 then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities 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 and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
18
<PAGE>
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.
15. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund 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 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.
16. 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.
17. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
18. SHAREHOLDER COMMUNICATIONS ELECTION
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 it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities 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 does 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
consents or objects by checking one of the alternatives below.
19
<PAGE>
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.
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 22nd day of August, 1996.
ATTEST HVA MONEY MARKET FUND, INC.
/s/ Kevin J. Carr By /s/ George R. Jay
- --------------------- -------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Janice M. Duffy By /s/ Mark J. Bowler
- --------------------- -------------------------
Mark J. Bowler
Senior Vice President
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of HVA Money Market
Fund, Inc. for use as sub-custodians for the Fund's securities and other assets:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Argentina Citibank, N.A. Caja de Valores S.A.
Australia Westpac Banking Austraclear Limited;
Corporation
Reserve Bank Information and
Transfer System (RITS)
Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft Kontrollbank AG
der Sparkassen (Wertpapiersammelbank Division)
Bangladesh Standard Chartered Bank None
Belgium Generale Bank Caisse Interprofessionnelle
de Depots et de Virements
de Titres S.A. (CIK);
Banque Nationale de Belgique
Botswana Barclays Bank of Botswana Limited None
Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo
(Bovespa);
Banco Central do Brasil
Systema Especial de Liquidacao
e Custodia (SELIC)
Canada Canada Trustco The Canadian Depository
Mortgage Company for Securities Limited (CDS)
Chile Citibank, N.A. None
<PAGE>
<CAPTION>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
People's Republic of The Hongkong and Shanghai Shanghai Securities Central
China Banking Corporation Limited, Clearing and Registration
Shanghai and Shenzhen branches Corporation (SSCCRC);
Shenzhen Securities Registrars
Co., Ltd. and it designated
agent banks
Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
Cyprus Barclays Bank PLC None
Czech Republic Ceskoslovenska Obchodni Stredisko Cennych Papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
Denmark Den Danske Bank Vaerdipapircentralen -
The Danish Securities
Center (VP)
Ecuador Citibank, N.A. None
Egypt National Bank of Egypt None
Finland Merita Bank Limited The Central Share Register of
Finland
France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
Germany Dresdner Bank A.G. The Deutscher Kassenverein AG
Ghana Barclays Bank of Ghana Limited None
<PAGE>
<CAPTION>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Greece National Bank of The Central Securities Depository
Greece S.A. (Apothetirion Titlon A.E.)
Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
Hungary Citibank Budapest Rt. The Central Depository and Clearing
House (Budapest) Ltd.
(KELER Ltd.)
India Deutsche Bank AG None
Indonesia Standard Chartered Bank None
Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
Italy Morgan Guaranty Trust Monte Titoli S.p.A.;
Company Banca d'Italia
Japan The Sumitomo Trust Japan Securities Depository Center
& Banking Co., Ltd. (JASDEC);
Bank of Japan Net System
Jordan The British Bank of the None
Middle East
Kenya Barclays Bank of Kenya Limited None
Republic of Korea SEOULBANK Korea Securities Depository (KSD)
<PAGE>
<CAPTION>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Malaysia Standard Chartered Bank None
Malaysia Berhad
Mauritius The HongKong and Shanghai None
Banking Corporation Limited
Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
Banco de Mexico
Morocco Banque Commerciale du Maroc None
Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEF)
New Zealand ANZ Banking Group None;
(New Zealand) Limited
The Reserve Bank of
New Zealand,
Austraclear NZ
Norway Christiania Bank og Verdipapirsentralen -
Kreditkasse The Norwegian Registry
of Securities (VPS)
Pakistan Deutsche Bank AG None
Peru Citibank, N.A. Caja de Valores (CAVAL)
Philippines Standard Chartered Bank None
Poland Citibank Poland S.A. The National Depository
of Securities (Centrum
Krajowego Depozytu
Papierow Wartos'ciowych)
<PAGE>
<CAPTION>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Portugal Banco Comercial Portugues Central de Valores
Mobiliarios (Central)
Russia Credit Suisse
Singapore The Development Bank The Central Depository
of Singapore Ltd. (Pte) Limited (CDP)
Slovak Republic Ceskoslovenska Obchadna Stredisko cennych
Banka A.S. papierov (SCP);
National Bank of Slovakia
South Africa Standard Bank of None
South Africa Limited
Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores (SCLV);
Banco de Espana
Anotaciones en Cuenta
Sri Lanka The Hongkong and Shanghai The Central Depository
Banking Corporation Limited System (Pvt) Limited
Swaziland Barclays Bank of Swaziland None
Limited
Sweden Skandinaviska Enskilda Vardepapperscentralen -
Banken The Swedish Securities Register
Center (VPC)
Switzerland Union Bank of Switzerland Schweizerische Effekten -
Giro AG (SEGA)
Taiwan-R.O.C. Central Trust of China The Taiwan Securities
Central Depository
Company, Ltd. (TSCD)
Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
<PAGE>
<CAPTION>
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1996
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Turkey Citibank, N.A. Istanbul Stock Exchange
Settlement and Custody Co. Inc.
(I.M.K.B. Takas ve Saklama A.S.)
United Kingdom State Street Bank and None;
Trust Company
The Bank of England,
The Central Gilts Office (CGO)
The Central Moneymarkets Office
(CMO)
Uruguay Citibank, N.A. None
Venezuela Citibank, N.A. None
Zambia Barclays Bank of Zambia Limited None
Zimbabwe Barclays Bank of Zimbabwe Limited None
</TABLE>
Euroclear (The Euroclear System)/State Street London Limited
Cedel (Cedel Bank societe anonyme)/State Street London Limited
<PAGE>
February 11, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: HVA Money Market Fund, Inc.
Registration Statement on Form N-14
Dear Sirs:
As counsel of ITT Hartford Group, Inc., I am familiar with the HVA Money Market
Fund, Inc. (the "Fund"), an open-end, diversified management investment company
whose shares are the subject of a Registration Statement on Form N-14 (the
"Shares"). The Shares to be issued under this Registration Statement will be
issued in connection with a reorganization of the Hartford U.S. Government Money
Market Fund, Inc.
In connection with this opinion, I have reviewed relevant materials including
the Registration Statement, the Articles of Incorporation and proceedings of the
Board of Directors of the Fund.
Based upon this review, I am of the opinion that the Shares, when issued, will
have been legally and validly issued, fully paid and non-assessable.
I further consent to the use of this opinion as an exhibit to the above-
captioned Registration Statement and to my being named under the "Experts"
section therein.
Very truly yours,
/s/ Kevin J. Carr
Kevin J. Carr
Counsel
<PAGE>
- --------------------------------------------------------------------------------
T A X O P I N I O N
- --------------------------------------------------------------------------------
PRELIMINARY & TENTATIVE
DATE: October 22, 1996
TO: Board of Directors of the U.S. Government Money Market Fund
and HVA Money Market Fund
FROM: William B. Malchodi
Vice President & Director of Taxes
RE: TAXATION OF THE MERGER OF U.S. GOVERNMENT MONEY MARKET FUND
& HVA MONEY MARKET FUND
You have requested my opinion on certain Federal income tax consequences of the
Agreement and Plan of Reorganization (the "Agreement") between U.S. Government
Money Market Fund ("US") with and into HVA Money Market Fund ("HVA"). I have
not considered any non-income tax, or state, local or foreign income tax
consequences, and therefore, do not express an opinion regarding the treatment
that would be given the transaction by the applicable authorities on any non-
income tax or any state, local or foreign tax issue. I also express no opinion
on non-tax issues, such as corporate law or securities law matters. I express
no opinion other than that as stated immediately above, and neither this opinion
nor any prior statements are intended to imply or to be an opinion on any other
matters.
In rendering my opinion, I have relied upon the information contained in the
Agreement between US and HVA dated _______________, and certain representations
made by authorized representatives of US and HVA. I have not independently
audited or otherwise verified any of these facts or assumptions.
The Board of Directors has determined, for valid business purposes, that it
would be beneficial to HVA, US and the shareholders, for US to merge into HVA.
Accordingly, US and HVA have entered into the Agreement, pursuant to which, HVA
will acquire all of the assets and liabilities of US, solely in exchange for HVA
voting common stock. Following this exchange, US will distribute HVA voting
common stock to its shareholders in final liquidation of US.
In my opinion, the transaction should under current law constitute a tax-free
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986 as
amended (the "Code") and HVA and US will each be a party to the reorganization
within the meaning of Section 368(b) of the Code. No ruling has been sought
from the Internal Revenue Service as to the federal income tax
<PAGE>
consequences of the merger, and the opinion of counsel set forth below is not
binding on the Internal Revenue Service or any court.
As a tax-free reorganization, the transaction should have the following federal
income tax consequences for shareholders, US and HVA:
1. No gain or loss will be recognized by holders of US common stock as a
result of the exchange of such shares for shares of HVA common stock .
2. The tax basis of the shares of HVA common stock received by each
shareholder of US will equal the tax basis of such shareholder's
shares of US common stock.
3. The holding period for the shares of HVA common stock received by each
shareholder of US will include the holding period for the shares of US
common stock of such shareholder .
4. Neither HVA nor US will recognize gain or loss .
The opinion expressed herein is not binding on the IRS and there can be no
assurance that the IRS will not take a position contrary to the opinion
expressed herein. My opinion is rendered as of ______________________, 1997 and
I have no responsibility to update this opinion for events, transactions,
circumstances or changes in any of the facts, assumptions or representations
occurring after this date. This opinion is solely for the benefit of US, HVA
and their respective shareholders and is not intended to be relied upon by
anyone other than those parties specified.
- ----------------------------------
William B. Malchodi
Vice President & Director or Taxes
SLM/kap
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) incorporated by reference in this
Registration Statement on Form N-14 for the merger of Hartford U.S. Government
Money Market Fund, Inc. into HVA Money Market Fund, Inc.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
March 12, 1997
<PAGE>
EXHIBIT 16
----------
HARTFORD INDEX FUND, INC.
HARTFORD MONEY MARKET FUND, INC.
HARTFORD CAPITAL APPRECIATION FUND, INC.
HARTFORD BOND FUND, INC.
HARTFORD STOCK FUND, INC.
HVA MONEY MARKET FUND, INC.
HARTFORD ADVISERS FUND, INC.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
HARTFORD MORTGAGE SECURITIES FUND, INC.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
HARTFORD SMALL COMPANY FUND, INC.
POWER OF ATTORNEY
-----------------
Joseph A. Biernat Charles M. O'Halloran
Winifred E. Coleman William A. O'Neill
Joseph H. Gareau Millard H. Pryor, Jr.
J. Richard Garrett Lowndes A. Smith
George R. Jay John K. Springer
do hereby jointly and severally authorize Lynda Godkin, Allison MacInnis,
Kevin J. Carr, Charles M. O'Halloran or Scott K. Richardson, 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 any Mutual Fund named above.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
Dated: 1-24-96
/s/ Joseph A. Biernat
- ---------------------
Joseph A. Biernat
Dated: 1-24-96
/s/ Winifred E. Coleman
- -----------------------
Winifred E. Coleman
Dated: 1-24-96
/s/ Joseph H. Gareau
- ---------------------
Joseph H. Gareau
<PAGE>
Dated: 1-24-96
/s/ J. Richard Garrett
- ----------------------
J. Richard Garrett
Dated: 1-24-96
/s/ George R. Jay
- ---------------------
George R. Jay
Dated: 1-24-96
/s/ Charles M. O'Halloran
- -------------------------
Charles M. O'Halloran
Dated: 1-24-96
/s/ William A. O'Neill
- ----------------------
William A. O'Neill
Dated: 1-24-96
/s/ Millard H. Pryor, Jr.
- -------------------------
Millard H. Pryor, Jr.
Dated: 1-24-96
/s/ Lowndes A. Smith
- ---------------------
Lowndes A. Smith
Dated: 1-24-96
/s/ John K. Springer
- ---------------------
John K. Springer
<PAGE>
MAY 12, 1997
PROXY CARD
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD YOU AUTHORIZE THE PROXIES
TO VOTE YOUR SHARES AS MARKED BELOW.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC. THE UNDERSIGNED APPOINTS MICHAEL O'HALLORAN, KEVIN CARR
AND ANDREW KOHNKE WITH FULL POWER OF SUBSTITUTION TO EACH, TO VOTE ALL THE
SHARES OF HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC. ATTRIBUTABLE TO HIM
OR HER THROUGH INVESTMENT IN DC VARIABLE ACCOUNT I AND SEPARATE ACCOUNT TWO AT
THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT THE OFFICES OF HARTFORD LIFE
INSURANCE COMPANY, 200 HOPMEADOW STREET, SIMSBURY, CONNECTICUT 06089 ON JUNE 19,
1997 AT 1:30 P.M. AND AT ANY ADJOURNMENTS THEREOF.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATION MADE BELOW.
TO VOTE MARK AN X IN BLUE OR BLACK INK
FOR AGAINST ABSTAIN
/ / / / / / 1. TO APPROVE A PROPOSED AGREEMENT AND PLAN OF
REORGANIZATION AND LIQUIDATION OF THE
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND,
INC. AS MORE FULLY DESCRIBED IN THE
PROSPECTUS/PROXY STATEMENT.
THE DIRECTORS RECOMMEND VOTING "FOR" THE PROPOSAL.
SIGN HERE: DATE:
------------------------------ ---------------
SIGN HERE:
------------------------------
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
