Registration 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. _____
(Check appropriate box or boxes)
Exact name of Registrant as Specified in Charter:
HARTFORD SERIES FUND, INC.
Address of Principal Executive Offices:
P.O. Box 2999 Hartford, Connecticut 06104-2999
Registrant's Telephone Number: (860) 297-6443
Name and Address of Agent for Service:
Kevin J. Carr, Esq.
Investment Law Unit
The Hartford Financial Services Group, Inc.
55 Farmington Avenue Hartford, Connecticut 06105
Copy to:
John V. O'Hanlon
Dechert LLP
200 Clarendon Street, 27th Floor
Boston, MA 02116
Approximate Date of Proposed Public Offering:
As soon as possible following the effective date of this
Registration Statement.
The title of the securities being registered is shares of
common stock.
No filing fee is required because an indefinite number of shares of the
Registrant have previously been registered on Form N-1A (Registration Nos.
333-45431, 811-08629) pursuant to Rule 24f-2 under the Investment Company Act of
1940. The Registrant's Rule 24f-2 Notice for the fiscal year ended December 31,
2002 was filed on March 27, 2003. Pursuant to Rule 429 under the Securities Act
of 1933, this Registration Statement relates to the shares previously registered
on the aforesaid Registration Statement on Form N-1A.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
HARTFORD HLS SERIES FUND II, INC.
HARTFORD MULTISECTOR BOND HLS FUND
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
MAILING ADDRESS:
C/O INDIVIDUAL ANNUITY SERVICES
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
Dear Hartford Multisector Bond HLS Fund participants:
The Board of Directors of your Fund (the "Target Fund") is pleased to
submit a proposal to reorganize the Target Fund into a comparable mutual fund in
the Hartford fund family (the "Acquiring Fund"). As the owner of a variable life
insurance or variable annuity contract (a "Contract Owner") and an indirect
participant in the Target Fund, you are being asked to complete the enclosed
voting instruction form regarding this proposal.
For the reasons discussed below, and in order to avoid redundancy in its
product offerings, management of the Target Fund has recommended to your Fund's
Board of Directors that they approve your Fund's reorganization into the
Acquiring Fund which has similar investment objectives and policies. Management
believes that the Target Fund's shareholders should benefit from an investment
in a larger fund that is likely to have the ability to effect portfolio
transactions on more favorable terms and provide the Acquiring Fund's
sub-adviser with greater investment flexibility. Management also demonstrated
that the expense ratio for the Acquiring Fund is lower than the Target Fund and
that the larger aggregate net asset base of the combined Fund could enable it to
experience somewhat greater economies of scale by spreading certain costs of
operations over a larger asset base.
The Board considered various factors in reviewing each proposed
reorganization on behalf of Target Fund shareholders, including, but not limited
to, the following:
- The relative past and current growth in assets, historical investment
performance and perceived future prospects of each of the Funds,
including the inability of the Target Fund to attract significant assets.
- Given the Target Fund's relatively small size and The Hartford's
commitment to a streamlined family of funds, the reorganization would
allow shareholders to continue their investment in another fund as
opposed to liquidation, which is less practical for funds serving as
funding vehicles for variable life insurance policies and variable
annuity contracts.
- The Acquiring Fund has investment objectives and policies that are
similar to those of the Target Fund.
- Because the combination will result in the reorganized Fund having a
larger asset base, the Board believes that the reorganization may provide
shareholders and Contract Owners the benefit of economies of scale.
- The Acquiring Fund's expense ratio is lower than that of the Target Fund.
- The Funds' investment adviser or its affiliates will bear the customary
expenses associated with the reorganization.
- The reorganization will be effected on the basis of the relative net
asset values of the Acquiring Fund and the Target Fund, so that Target
Fund shareholders will receive Acquiring Fund shares having a total net
asset value equal to the total net asset value of their Target Fund
shares as of the closing of the reorganization.
- The reorganization is expected to be tax-free; it is anticipated that
neither shareholders nor Contract Owners will pay any federal income tax
as a result of the reorganization.
THE BOARD OF DIRECTORS BELIEVES THAT THE REORGANIZATION IS IN THE BEST
INTERESTS OF THE TARGET FUND AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR ITS APPROVAL.
If the proposal is approved, the Acquiring Fund will acquire all of the
assets and all of the liabilities of the Target Fund, which has similar
investment objectives and policies, and Acquiring Fund shares will be
distributed pro rata to Target Fund shareholders in complete liquidation of the
Target Fund. In order to accomplish the proposed reorganization, the Board of
Directors of the Target Fund submits for your approval an Agreement and Plan of
Reorganization that relates to your Fund.
Whether or not you plan to attend the meeting, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED VOTING INSTRUCTION FORM(S) SO THAT YOUR VOTE MAY BE
COUNTED. A POSTAGE-PAID ENVELOPE IS ENCLOSED FOR THIS PURPOSE. Following this
letter is a Q&A summarizing the reorganization and information on how you vote
your shares. Please read the entire prospectus/proxy statement carefully before
you vote.
Thank you for your prompt attention and participation.
Sincerely,
/s/ David M. Znamierowski
David M. Znamierowski,
President
PROXY STATEMENT Q&A
The following is important information to help you understand the proposal
on which you are being asked to vote. PLEASE READ THE ENTIRE PROXY STATEMENT.
WHY IS THIS REORGANIZATION BEING PROPOSED?
For the reasons discussed below, and in order to avoid redundancy in its
product offerings, management of the Target Fund has recommended to your Fund's
Board of Directors that they approve your Fund's reorganization into the
Acquiring Fund, which has similar investment objectives and policies. Your Board
of Directors has determined that the reorganization is in the best interests of
Target Fund shareholders and recommends that you vote FOR the reorganization.
Benefits to Target Fund shareholders will include the potential for the Fund, as
a result of having a larger asset base, to benefit from economies of scale. In
addition, Target Fund shareholders are expected to benefit from lower expense
ratios. As explained below, the reorganization is expected to be tax free to
Target Fund shareholders and Contract Owners.
WHEN WILL THIS REORGANIZATION TAKE PLACE?
If shareholder approval is obtained, the reorganization is scheduled to
take place on or about April 30, 2004.
IS THERE ANYTHING I NEED TO DO TO CONVERT MY SHARES?
No. Upon shareholder approval of the reorganization, the Target Fund shares
that fund benefits under your variable annuity or variable life insurance
contract automatically will be exchanged for shares of the Acquiring Fund. The
total value of the Acquiring Fund shares that a shareholder receives in the
reorganization will be the same as the total value of the Target Fund shares
held by the shareholder immediately before the reorganization.
WILL I INCUR TAXES AS A RESULT OF THIS REORGANIZATION?
This reorganization is expected to be a tax-free event to shareholders and
Contract Owners. Generally, neither shareholders nor Contract Owners will incur
capital gains or losses on the conversion from Target Fund shares into Acquiring
Fund shares as a result of this reorganization. However, you may redeem or
exchange your shares. If you choose to redeem or exchange your shares by
surrendering your contract or initiating a partial withdrawal, you may be
subject to taxes and a 10% tax penalty may apply.
WHEN SHOULD I VOTE?
Please vote as soon as possible, by completing, signing and returning the
enclosed voting instruction form(s). A postage-paid envelope is enclosed for
this purpose.
WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND OF THIS PROXY
SOLICITATION?
The Funds' investment adviser or its affiliates will bear the customary
expenses associated with the reorganization.
WHAT WILL HAPPEN IF I AM ENROLLED IN AN AUTOMATIC PURCHASE PROGRAM, DOLLAR COST
AVERAGING PROGRAM OR OTHER PROGRAM WITH ALLOCATIONS TO THE TARGET FUND UNDER MY
CONTRACT?
If your Contract is a variable annuity and you are enrolled in an automatic
purchase program, dollar cost averaging program or asset allocation program with
allocations directed to the Target Fund Sub-Account, upon the close of the New
York Stock Exchange on February 25, 2004, your enrollment in these programs will
continue, unless you change your program enrollments. If shareholder approval of
the reorganization is obtained, your enrollment will automatically be updated to
reflect the Acquiring Fund Sub-Account on or about April 30, 2004.
If your Contract is a variable life insurance policy and you are enrolled
in an automatic purchase program, dollar cost averaging program or asset
allocation program with allocations directed to the Target Fund Sub-Account,
your enrollment in these programs will end upon the close of the New York Stock
Exchange on February 25, 2004, unless you change your program enrollments prior
to that date.
WHAT WILL HAPPEN IF SHAREHOLDER APPROVAL OF THE REORGANIZATION IS OBTAINED AND
MY MOST RECENT ALLOCATION INSTRUCTIONS DIRECTED MY CONTRACT PREMIUM PAYMENTS TO
THE TARGET FUND?
For both variable annuities and variable life insurance policies, if
shareholder approval of the reorganization is obtained and your most recent
allocation instructions directed your Premium Payments to the Target Fund
Sub-Account in your Contract, your allocation instructions will automatically be
updated to reflect the Acquiring Fund Sub-Account on or about April 30, 2004.
WHAT WILL HAPPEN IF I AM ENROLLED IN AN AUTOMATIC INCOME PROGRAM WITH
REDEMPTIONS FROM MY CONTRACT SUB-ACCOUNT THAT INVESTS IN THE TARGET FUND?
For variable annuities, if shareholder approval of the reorganization is
obtained and you are enrolled in an automatic income program with the Target
Fund Sub-Account, your enrollment will automatically be updated to reflect the
Acquiring Fund Sub-Account on or about April 30, 2004.
HARTFORD HLS SERIES FUND II, INC.
HARTFORD MULTISECTOR BOND HLS FUND
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
MAILING ADDRESS:
C/O INDIVIDUAL ANNUITY SERVICES
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders of Hartford Multisector Bond HLS Fund
(the "Target Fund") will be held on April 20, 2004, at 10:00 a.m., Eastern Time
at the offices of HL Investment Advisors, LLC, 200 Hopmeadow Street, Simsbury,
Connecticut 06089, for the following purposes:
1. TO APPROVE A PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
("PLAN") BETWEEN THE TARGET FUND AND HARTFORD BOND HLS FUND (THE "ACQUIRING
FUND"), WHEREBY THE ACQUIRING FUND WOULD ACQUIRE ALL OF THE ASSETS AND ALL
OF THE LIABILITIES OF THE TARGET FUND IN EXCHANGE SOLELY FOR THE ACQUIRING
FUND'S VOTING SHARES, TO BE DISTRIBUTED PRO RATA BY THE TARGET FUND TO THE
HOLDERS OF ITS SHARES, IN COMPLETE LIQUIDATION OF THE TARGET FUND; AND
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
Shareholders of record at the close of business on February 27, 2004 are
entitled to vote at the meeting and any adjournments or postponements thereof.
The Target Fund issues and sells its shares to Variable Account C and
Variable Account D, which are separate accounts of Fortis Benefits Insurance
Company ("Fortis Benefits"), and to Separate Account A, which is a separate
account of First Fortis Life Insurance Company ("First Fortis"). (Separate
Account A, Variable Account C, and Variable Account D are referred to together
as the "Separate Accounts.") The Separate Accounts hold shares of mutual funds,
including the Target Fund, which fund benefits under flexible premium deferred
variable annuity contracts or flexible premium variable life insurance contracts
which are issued by Fortis Benefits and First Fortis. As the owners of the
assets held in the Separate Accounts, Fortis Benefits and First Fortis are the
shareholders of the Target Fund and are entitled to vote their shares of the
Target Fund. However, pursuant to applicable laws, Fortis Benefits and First
Fortis vote outstanding shares of the Target Fund in accordance with
instructions received from the owners of the annuity and life insurance
contracts. This Notice is being delivered to annuity and life insurance contract
owners who do not invest directly in or hold shares of the Target Fund, but who,
by virtue of their ownership of the contracts, have a beneficial interest in the
Target Fund as of the record date, so that they may instruct Fortis Benefits and
First Fortis how to vote the shares of the Target Fund which underlies their
contracts.
YOU CAN VOTE EASILY AND QUICKLY. JUST FOLLOW THE INSTRUCTIONS THAT APPEAR ON
YOUR ENCLOSED VOTING INSTRUCTION FORM.
Dated: [March 1], 2004 By Order of the Board of Directors,
/s/ Kevin J. Carr
Kevin J. Carr
Vice President and Secretary
HARTFORD BOND HLS FUND
(A SERIES OF HARTFORD SERIES FUND, INC.)
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
1-800-862-6668 (IF YOU ARE A VARIABLE ANNUITY OWNER)
1-800-231-5453 (IF YOU ARE A VARIABLE LIFE INSURANCE POLICY OWNER)
TO ACQUIRE THE ASSETS OF:
HARTFORD MULTISECTOR BOND HLS FUND
(A SERIES OF HARTFORD HLS SERIES FUND II, INC.)
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
1-800-862-6668 (IF YOU ARE A VARIABLE ANNUITY OWNER)
1-800-800-2000 (IF YOU ARE A VARIABLE LIFE INSURANCE POLICY OWNER)
PROSPECTUS/PROXY STATEMENT
[MARCH 1], 2004
This Prospectus/Proxy Statement describes a proposed Agreement and Plan of
Reorganization (the "Plan") pursuant to which shares of Hartford Bond HLS Fund,
a mutual fund in the Hartford family of mutual funds that has been set up to
fund benefits for variable annuity and variable life insurance products (the
"Acquiring Fund"), would be exchanged for the shares of Hartford Multisector
Bond HLS Fund, the mutual fund that currently serves as a funding vehicle for
your variable annuity or variable life insurance contract (the "Target Fund").
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Target Fund issues and sells its shares to separate accounts of Fortis
Benefits Insurance Company ("Fortis Benefits") and First Fortis Life Insurance
Company ("First Fortis"). These separate accounts hold shares of mutual funds,
including the Target Fund, which fund benefits under flexible premium deferred
variable annuity contracts or flexible premium variable life insurance contracts
which are issued by Fortis Benefits and First Fortis. Each separate account has
subaccounts, some of which invest in the Target Fund and certain other mutual
funds. Owners of the variable annuity and variable life insurance contracts
issued by Fortis Benefits and First Fortis ("Contract Owners") allocate the
value of their contracts among these subaccounts. As such, Contract Owners may
be indirect participants in the Target Fund. However, as the owners of the
assets held in the separate accounts, Fortis Benefits and First Fortis are
shareholders of the Target Fund.
The Target Fund and the Acquiring Fund are each diversified portfolios of
securities of an open-end management investment company. If the Plan is
approved, the Acquiring Fund, which has similar investment objectives and
policies, would acquire all of the assets and all of the liabilities of the
Target Fund, and Acquiring Fund shares would be distributed pro rata by the
Target Fund to the holders of its shares, in complete liquidation of the Target
Fund. As a result of the Plan, each Target Fund shareholder would become the
owner of Acquiring Fund shares having a total net asset value equal to the total
net asset value of such shareholder's holdings in the Target Fund. For a
comparison of the investment objectives of the Target Fund and the Acquiring
Fund and a summary of their investment policies, see "Summary -- Comparison of
Investment Objectives, Policies and Principal Risks of the Target Fund and
Acquiring Fund."
THE BOARD OF DIRECTORS OF THE TARGET FUND UNANIMOUSLY RECOMMENDS APPROVAL
OF THE PLAN.
You should retain this Prospectus/Proxy Statement for future reference. It
sets forth concisely the information about the Acquiring Fund that a prospective
investor should know before investing. This Prospectus/Proxy Statement is
accompanied by the Prospectus of the Acquiring Fund dated May 1, 2003, as
supplemented from time to time, into which the Target Fund would be reorganized,
which is incorporated herein by reference.(1) The Statements of Additional
Information for the Acquiring Fund (one relating to the Acquiring Fund's
Prospectus and a second one relating to this Prospectus/Proxy Statement, dated
May 1, 2003, as supplemented from time to time, and [March 1], 2004,
respectively), each containing additional information, have been filed with the
Securities and Exchange Commission ("SEC") and are incorporated herein by
reference.(2) Copies of the Statements of Additional Information may be obtained
without charge by writing or calling the Acquiring Fund at the address and
telephone number shown above.
This Prospectus/Proxy Statement is expected to be first mailed to Contract
Owners on or about [March 1], 2004, or as soon as practicable thereafter.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
- ---------------
(1) The Prospectus is incorporated herein by reference to Post Effective
Amendment No. 20 to the Registration Statement on Form N-1A of Hartford
Series Fund, Inc. (SEC File Nos. 33345431/811-08629).
(2) The Statement of Additional Information dated May 1, 2003 is incorporated
herein by reference to Post Effective Amendment No. 20 to the Registration
Statement on Form N-1A of Hartford Series Fund, Inc. (SEC File Nos.
33345431/811-08629), and the Statement of Additional Information dated
[March 1], 2004 is incorporated herein by reference to this Registration
Statement on Form N-14 of Hartford Series Fund, Inc. (SEC File No. 333-[ ]).
TABLE OF CONTENTS
<Table>
SUMMARY..................................................... 1
About the Proposed Reorganization......................... 1
Comparative Fee Tables.................................... 1
Comparison of Investment Objectives, Policies and
Principal Risks of the Target Fund and the Acquiring
Fund................................................... 2
Performance Information................................... 5
Comparison of Operations.................................. 8
Tax Consequences.......................................... 9
INFORMATION ABOUT THE REORGANIZATION........................ 9
Considerations by the Board of Directors.................. 9
Description of the Plan of Reorganization................. 10
Description of Acquiring Fund Shares...................... 11
Federal Income Tax Consequences........................... 11
Comparative Information on Shareholder Rights and
Obligations............................................ 12
Capitalization............................................ 12
INFORMATION ABOUT THE ACQUIRING FUND AND THE TARGET FUND.... 13
VOTING INFORMATION.......................................... 14
FORM OF AGREEMENT AND PLAN OF REORGANIZATION................ A-1
MANAGEMENT'S DISCUSSION OF THE ACQUIRING FUND'S
PERFORMANCE............................................... B-1
FINANCIAL HIGHLIGHTS TABLE FOR THE ACQUIRING FUND........... C-1
</Table>
i
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SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, the
Prospectus and Statement of Additional Information of the Acquiring Fund, the
Prospectus and Statement of Additional Information of the Target Fund, and the
Plan. The form of the Plan is attached as Appendix A to this Prospectus/Proxy
Statement.
ABOUT THE PROPOSED REORGANIZATION
The Board of Directors of Hartford HLS Series Fund II, Inc. has voted to
recommend approval of the Plan to shareholders of the Target Fund. Under the
Plan, the Acquiring Fund would acquire all of the assets and all of the
liabilities of the Target Fund in exchange solely for the Acquiring Fund's
voting shares to be distributed pro rata by the Target Fund to its shareholders
in complete liquidation and dissolution of the Target Fund (the
"Reorganization"). As a result of the Reorganization, each shareholder of the
Target Fund will become the owner of shares of the Acquiring Fund having a total
net asset value equal to the total net asset value of such shareholder's
holdings in the Target Fund on the date of the Reorganization.
As a condition to the Reorganization, the Acquiring Fund and the Target
Fund will receive an opinion of counsel to the effect that, based upon certain
facts, assumptions and representations, the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), so that neither the Acquiring Fund nor
the Target Fund nor the shareholders of the Target Fund nor Contract Owners will
recognize any gain or loss. Accordingly, the tax basis of the Acquiring Fund's
shares received by Target Fund shareholders will be the same as the tax basis of
their shares in the Target Fund.
The Target Fund offers a single class of shares, Class IA shares. The
Acquiring Fund offers Class IA and Class IB shares. Target Fund shareholders
will receive Acquiring Fund Class IA shares in the Reorganization. These shares
are similar to the Target Fund shares in that both Target Fund Class IA shares
and Acquiring Fund Class IA shares are offered without a front-end or contingent
deferred sales charge and neither Target Fund Class IA shares nor Acquiring Fund
Class IA shares are subject to Rule 12b-1 distribution fees or shareholder
servicing fees.
COMPARATIVE FEE TABLES (UNAUDITED)
The Target Fund and the Acquiring Fund, like all mutual funds, incur
certain expenses in their operations and shareholders pay these expenses
indirectly. These expenses include management fees as well as the costs of
maintaining accounts, administration and other activities. The following tables
(a) compare the fees and expenses as of December 31, 2003 for the Target Fund(3)
and the Class IA shares of the Acquiring Fund and (b) show the estimated fees
and expenses for Class IA shares of the Acquiring Fund on a pro forma basis as
of that date after giving effect to the Reorganization. The tables do not
reflect the fees and expenses associated with the variable annuity and variable
life insurance contracts for which the Target Fund and Acquiring Fund serve as
investment vehicles.
- ---------------
(3) The shares of each Target Fund were redesignated as Class IA shares as of
April 30, 2002.
1
<Table>
<Caption>
ACQUIRING TARGET
FUND FUND
---------- -----------
HARTFORD HARTFORD
BOND HLS MULTISECTOR PRO FORMA
FUND BOND HLS ESTIMATED
(CLASS IA) FUND COMBINED
---------- ----------- ----------
SHAREHOLDER FEES
(Fees Paid Directly From Your Investment)
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of the offering price)......................... None None None
Maximum Deferred Sales Charge (Load) (as a percentage of the
offering price)........................................... None None None
ANNUAL FUND OPERATING EXPENSES
(Expenses That Are Deducted From Fund Assets)
Management Fees............................................. 0.46% 0.75% 0.46%
Distribution and/or Service (12b-1) Fees.................... None None None
Other Expenses.............................................. 0.04% 0.07% 0.04%
Total Annual Fund Operating Expenses........................ 0.50% 0.82% 0.50%
</Table>
EXAMPLE (UNAUDITED). The following example is intended to help you compare
the cost of investing in the Target Fund(4) with the cost of investing in Class
IA shares of the Acquiring Fund. The example is based on the expense tables
above.
The example assumes that you invest $10,000 in each Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example assumes that your investment has a 5% return each year,
that each Fund's operating expenses remain the same and that all dividends and
distributions are reinvested. (The examples do not reflect the fees and expenses
associated with variable annuity and variable life insurance contracts for which
the Funds serve as investment vehicles.) Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Hartford Bond HLS Fund.............................. $51 $160 $280 $ 628
Hartford Multisector Bond HLS Fund.................. $84 $262 $455 $1,014
Pro Forma Combined.................................. $51 $160 $280 $ 628
</Table>
COMPARISON OF INVESTMENT OBJECTIVES, POLICIES AND PRINCIPAL RISKS OF THE TARGET
FUND AND
ACQUIRING FUND
This section contains comparisons of the investment objectives, policies
and principal risks of the Target Fund and the Acquiring Fund. The investment
objectives and policies of the Target Fund are similar to those of the Acquiring
Fund. The investment objectives of the Target Fund and the Acquiring Fund are
"non-fundamental," which means that they may be changed by the relevant Fund's
Board of Directors without shareholder approval. In addition to the policies set
forth below, the Acquiring Fund and the Target Fund are subject to certain
additional investment policies and limitations, described in their respective
Statements of Additional Information. Reference is hereby made to the Prospectus
and Statement of Additional Information of the Acquiring Fund, each dated May 1,
2003, as supplemented from time to time, and to the Prospectus and Statement of
Additional Information of the Target Fund, each dated May 1, 2003, as
supplemented from time to time (each such document for the Target Fund is filed
under SEC File Nos. 33-03920/811-4615), which set forth in full the investment
objectives, policies, strategies and limitations of the Acquiring Fund or Target
Fund, each of which is incorporated herein by reference thereto.
- ---------------
(4) The shares of each Target Fund were redesignated as Class IA shares as of
April 30, 2002.
2
<Table>
<Caption>
TARGET FUND ACQUIRING FUND
- ----------- --------------
HARTFORD MULTISECTOR BOND HLS FUND HARTFORD BOND HLS FUND
INVESTMENT OBJECTIVE: INVESTMENT OBJECTIVE:
Seeks to achieve a high level of current Seeks a high level of current income,
income consistent with reasonable concern for consistent with a competitive total return,
safety of principal as compared to bond funds with similar
investment objectives and policies
</Table>
INVESTMENT STRATEGY
Under normal circumstances, the Acquiring Fund invests at least 80% of its
assets in investment grade debt securities, or bonds. The bonds in which the
Acquiring Fund invests include (i) securities issued or guaranteed as to
principal or interest by the U.S. government, its agencies or instrumentalities;
(ii) non-convertible debt securities issued by U.S. corporations or other
issuers, including foreign governments or corporations; (iii) asset-backed and
mortgage-related securities; and (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 foreign
issuers. Under normal circumstances, the Target Fund invests at least 80% of its
assets in fixed-rate corporate debt securities and U.S. and foreign government
obligations.
The Target Fund may invest up to 35% of its total assets in non-investment
grade corporate bonds (securities rated "Ba" or lower by Moody's, "BB" or lower
by S&P, or unrated corporate bonds deemed by the Target Fund's sub-adviser to be
of comparable quality), commonly referred to as "high yield-high risk
securities" or "junk bonds," while the Acquiring Fund may invest up to 20% of
its assets in securities rated in the highest category of below investment grade
bonds, or securities which, if unrated, are determined by the Acquiring Fund's
sub-adviser to be of comparable quality. The Acquiring Fund invests at least 65%
of its total assets in debt securities with a maturity of at least one year, and
there is no other limit on the maturity of bonds held by the Acquiring Fund or
the average maturity of the Acquiring Fund's portfolio. The Acquiring Fund may
invest up to 15% of its total assets in preferred stocks, convertible
securities, and securities accompanied by warrants to purchase equity securities
and the Target Fund may also invest in preferred stock issues and convertible
corporate debt. The Acquiring 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. The Acquiring Fund may invest up to 30% of its total assets in debt
securities of foreign issuers and up to 10% of its total assets in non-dollar
securities. The Target Fund may invest up to 40% of its total assets in
securities of foreign governments and companies, including those in emerging
markets. The Target Fund's investments may include synthetic instruments with
economic characteristics similar to the Target Fund's direct investments, and
may include futures and options.
Hartford Investment Management Company ("Hartford Investment Management"),
the Acquiring Fund's sub-adviser, selects securities for the Acquiring Fund
based on what is sometimes referred to as a "top-down" analysis, designed to
determine which industries may benefit from current and future changes in the
economy. Hartford Investment Management then selects securities from selected
industries that, from a yield prospective, appear to be attractive. Hartford
Investment Management assesses such factors as a company's business environment,
balance sheet, income statement, anticipated earnings and management team.
The Target Fund's sub-adviser, A I M Capital Management, Inc. ("AIM")
focuses on securities that it believes have favorable prospects for current
income, consistent with its concern for safety of principal. The decision to
purchase a particular security is based on many factors, the most important of
which are the characteristics of the security (interest rate, term, call
provisions, etc.), the perceived financial stability and managerial strength of
the issuer, and diversification in the Fund. AIM considers whether to sell a
particular security when any one of these factors materially changes. It is
anticipated that the average effective duration of the Target Fund will be
between four and eight years.
3
PRINCIPAL RISKS
The primary risks of both Funds are interest rate and credit risk. When
interest rates rise, bond prices fall. Generally the longer a bond's maturity,
the more sensitive it is to this risk. Credit risk depends largely on the
perceived health of bond issuers. Generally, lower rated bonds have higher
credit risks. Each Fund is subject to income risk, which is the potential for a
decline in the Fund's income due to falling interest rates. The Funds are also
subject to the possibility that, under certain circumstances, especially during
periods of falling interest rates, a bond issuer will "call," or repay, its
bonds before their maturity date. That may force a Fund to invest the
unanticipated proceeds at lower interest rates, resulting in a decline in the
Fund's income.
High yield bonds and foreign investments may make the Funds more sensitive
to market or economic shifts in the U.S. and abroad. High yield bond prices can
fall on bad news about the economy, an industry or company. Share price, yield
and total return may fluctuate more than for bond funds that do not invest in
high yield bonds. This risk may be more prominent for the Target Fund than for
the Acquiring Fund, along with the risks of foreign investments, which may be
more risky than domestic investments. Investments in securities of foreign
issuers and non-dollar securities may be affected by fluctuations in currency
exchange rates, incomplete or inaccurate financial information on companies,
social upheavals and political actions ranging from tax code changes to
governmental collapse. Such risks are even greater with respect to securities of
issuers in countries with emerging market economies or emerging securities
markets.
The investment strategy of a Fund's sub-adviser significantly influences
the Fund's performance. With respect to the Target Fund, synthetic instruments
have additional risks. Synthetic instruments such as options and futures
contracts expose the Target Fund to additional risks and transaction costs.
Successful use of these instruments depends on the sub-adviser's ability to
forecast correctly the direction of market movements. The Target Fund's
performance could be worse than if it had not used these instruments if the
sub-adviser's judgment proves incorrect. In addition, in the case of using
derivatives to mange portfolio risk, even if the sub-adviser's judgment is
correct, there may be an imperfect correlation between the price of the
derivative instruments and the financial instrument(s) or asset(s) being hedged.
Any U.S. government or other guarantees on portfolio securities do not
apply to the market value or current yield of the portfolio's securities or to
the value of the Fund's shares. Finally, each Fund may trade securities
actively, which could increase its transaction costs (thus affecting
performance).
4
PERFORMANCE INFORMATION (UNAUDITED)
- ---------------------------
The bar charts and tables below compare the potential risks and rewards of
investing in the Target Fund and the Acquiring Fund. The bar charts provide an
indication of the risks of investing in each Fund by showing changes in the
Fund's performance from year to year for the last ten years or since the Fund's
inception. The tables show how each Fund's average annual total returns for one
year, five years and ten years (or since inception) compare to the returns of
one or more broad-based market indexes. The figures assume reinvestment of
dividends and distributions. Performance information does not reflect sales
loads or fees associated with a separate account that invests in the Funds or
any insurance contract for which a Fund is an investment option; if it did,
returns would be lower.
Keep in mind past performance does not indicate future results. Prior to
April 2, 2001, the Target Fund was managed by Fortis Advisers, Inc. The Target
Fund and the Acquiring Fund now have the same investment adviser, although the
Target Fund has a different sub-adviser than the Acquiring Fund.
RISK/RETURN BAR CHARTS
The bar charts shown below show the variability of annual total returns on
a calendar year-end basis for the Target Fund and the Acquiring Fund. For the
Acquiring Fund, the annual total returns shown in the bar charts are those of
Class IA shares.(5)
HARTFORD MULTISECTOR BOND HLS FUND
<Table>
<Caption>
1995 19.14
- ---- -----
1996 3.32
1997 0.14
1998 13.49
1999 -7.53
2000 4.27
2001 5.58
2002 3.94
2003 9.26
</Table>
CLASS IA TOTAL RETURNS BY CALENDAR YEAR
During the periods shown in the bar chart, the
highest quarterly return was 8.03% (3rd quarter
1998) and the lowest quarterly return was -4.87%
(1st quarter 1999).
- ---------------
(5) The shares of the Target Fund were redesignated as Class 1A shares as of
April 30, 2002.
5
HARTFORD BOND HLS FUND
[BAR CHART]
<Table>
<Caption>
1993 10.24
- ---- -----
1994 -3.95
1995 18.49
1996 3.52
1997 11.35
1998 8.15
1999 -2.02
2000 11.99
2001 8.68
2002 10.08
2003 7.85
</Table>
CLASS IA TOTAL RETURNS BY CALENDAR YEAR
During the periods shown in the bar chart, the
highest quarterly return was 6.40% (2nd quarter
1995) and the lowest quarterly return was -3.40
(1st quarter 1994).
AVERAGE ANNUAL TOTAL RETURN TABLES
The following tables show the Funds' average annual total returns over
different periods ended December 31, 2003 and compare those returns to one or
more broad-based market indexes. Total returns for the indexes shown do not
reflect expenses or other fees the Securities and Exchange Commission requires
to be reflected in the Funds' performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. Please note that the average annual
total return since inception is only given for the Target Fund, since it has
been in existence for less than ten calendar years.
HARTFORD MULTISECTOR BOND HLS FUND (UNAUDITED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/03
<Table>
<Caption>
SINCE INCEPTION
1 YEAR 5 YEARS (JANUARY 3, 1995)
------ ------- -----------------
Class IA(1)......................................... 9.26% 2.94% 5.49%
Lehman Brothers Aggregate Bond Index (reflects no
deduction for fees or expenses)................... 4.11% 6.62% 8.12%(2)
</Table>
- ---------------
(1) Hartford Multisector Bond HLS Fund's shares were re-designated as Class IA
shares on April 30, 2002.
(2) Return is from 12/31/94
6
INDEX: The Lehman Brothers Aggregate Bond Index is an unmanaged index of
government, corporate and mortgage-backed securities with an average maturity of
approximately nine years. You cannot invest directly in an index.
HARTFORD BOND HLS FUND (UNAUDITED)
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/03
<Table>
<Caption>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
Class IA................................................... 7.85% 7.20% 7.22%
Lehman Brothers U.S. Aggregate Bond Index (reflects no
deduction for fees or expenses).......................... 4.11% 6.62% 6.95%
</Table>
INDEX: The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index and
is composed of securities from the Lehman Brothers Government/Credit Bond Index,
Mortgage-Backed Securities Index, Asset-Backed Securities Index and Commercial
Mortgage-Backed Securities Index. You cannot invest directly in an index.
7
COMPARISON OF OPERATIONS
- ----------------------------
INVESTMENT ADVISORY AGREEMENTS
HL Investment Advisors, LLC ("HL Advisors") serves as the investment
manager of the Acquiring Fund. HL Advisors also has acted as the investment
manager of the Target Fund since the Target Fund's previous adviser, Fortis
Advisers, Inc., was acquired by The Hartford Life and Accident Insurance Company
("Hartford Life and Accident") on April 2, 2001. HL Advisors is a wholly-owned
indirect subsidiary of The Hartford Financial Services Group, Inc. ("The
Hartford"), a Connecticut financial services company with over $53 billion in
assets as of December 31, 2003. HL Advisors had over $[ ] billion in assets
under management as of December 31, 2003. HL Advisors is responsible for the
management of the Acquiring Fund and the Target Fund and supervises the
activities of the investment sub-advisers described below. HL Advisors is
principally located at 200 Hopmeadow Street, Simsbury, Connecticut 06089.
The Target Fund is sub-advised by A I M Capital Management, Inc. ("AIM"),
11 Greenway Plaza, Suite 100, Houston, Texas 77046. AIM has been an investment
adviser since its organization in 1986, and as of December 31, 2003, together
with its affiliates advised or managed approximately $[ ] billion in assets for
over 200 investment portfolios.
The Acquiring Fund is sub-advised by Hartford Investment Management Company
("Hartford Investment Management"), located at 55 Farmington Avenue, Hartford,
Connecticut 06105. Hartford Investment Management was organized in 1996 and is a
wholly owned subsidiary of The Hartford. Hartford Investment Management is a
professional money management firm that provides services to investment
companies, employee benefit plans, its affiliated insurance companies and other
institutional accounts. As of December 31, 2003, Hartford Investment Management
had approximately $[ ] billion in assets under management. In addition,
Hartford Investment Management's wholly-owned subsidiary, which utilizes the
same employee base, had approximately $[ ] billion in assets under
management.
OTHER SERVICE PROVIDERS
Both the Acquiring Fund and the Target Fund have the same transfer agent
(Hartford Investor Services Company), custodian (State Street Bank and Trust
Company), distributor (Hartford Securities Distribution Company, Inc.), and
independent auditors (Ernst & Young LLP, although for their respective fiscal
years ended December 31, 2001, the independent auditors for the Target Fund and
the Acquiring Fund were KPMG LLP and Arthur Andersen LLP, respectively). The
types of services provided to the Acquiring Fund and the Target Fund under these
service arrangements are substantially similar. In light of recent developments
affecting Arthur Andersen LLP, including the departure of certain key audit
personnel, management has been unable, despite reasonable efforts, to obtain
Arthur Andersen LLP's consent to the inclusion in this registration statement of
the Acquiring Fund's audited financial statements for the fiscal year ended
December 31, 2001. The failure of Arthur Andersen LLP to provide its consent may
adversely affect the ability of a contractholder to seek to recover damages
related to the contractholder's reliance on such financial statements.
PURCHASE, EXCHANGE AND REDEMPTION PROCEDURES
Target Fund shares are currently sold to separate accounts (the "Fortis
Accounts") of Fortis Benefits and First Fortis and Acquiring Fund shares are
currently sold to separate accounts (the "Hartford Accounts") of Hartford Life
Insurance Company and its affiliates, in each case as investment options for
certain variable life insurance and variable annuity contracts issued by those
companies. The Acquiring Fund also currently offers its shares to certain
qualified retirement plans (the "Retirement Plans") and to separate accounts of
other insurance companies. Shares of the Acquiring Fund are sold in a continuous
offering to the Hartford Accounts, the Retirement Plans and separate accounts of
other insurance companies, and shares of the Target Fund are sold in a
continuous offering to the Fortis Accounts. Hartford Accounts, the Retirement
Plans and separate accounts of other insurance companies purchase and redeem
Class IA shares of the Acquiring Fund at net asset value without sales or
redemption charges.
8
Similarly, Fortis Accounts purchase and redeem Class IA shares of the Target
Fund at net asset value without sales or redemption charges.
For each day on which a Fund's net asset value is calculated, the Fortis
Accounts, the Hartford Accounts or separate accounts of other insurance
companies, as the case may be (collectively, the "Accounts"), transmit to the
Target Fund or Acquiring Fund any orders to purchase or redeem shares of the
Fund based on the net purchase payments, redemption (surrender or withdrawal)
requests, and transfer requests from variable contract owners, annuitants and
beneficiaries that have been processed by the respective insurance company as of
that day. Similarly, the Retirement Plans transmit to the Acquiring Fund any
orders to purchase or redeem shares of the Fund based on the instructions of
Plan trustees or participants. The Accounts and Retirement Plans purchase and
redeem shares of the Funds at the next net asset value per share to be
calculated after the related orders are received, although such purchases and
redemptions may be executed the next morning.
Owners of the variable contracts issued by Fortis Benefits and First Fortis
and by Hartford Life Insurance Company and its affiliates may exchange shares
only among those funds which are indicated in the respective variable contract
prospectus.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Fortis Accounts receive any dividends or distributions of the Target
Fund and the Hartford Accounts, the Retirement Plans and separate accounts of
other insurance companies, as applicable, receive any dividends or distributions
of the Acquiring Fund. The current policy of the Acquiring Fund and the Target
Fund is to pay dividends from net investment income and to make distributions of
realized capital gains, if any, at least once each year. Such dividends and
distributions are 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.
TAX CONSEQUENCES
- --------------------
As a condition to the Reorganization, the Acquiring Fund and the Target
Fund will receive an opinion of counsel to the effect that, based upon certain
facts, assumptions and representations, the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Code so that
neither the Acquiring Fund nor the Target Fund nor the shareholders of the
Target Fund will recognize any gain or loss. Accordingly, the tax basis of the
Acquiring Fund's shares received by the Target Fund's shareholders will be the
same as the tax basis of their shares in the Target Fund.
INFORMATION ABOUT THE REORGANIZATION
CONSIDERATIONS BY THE BOARD OF DIRECTORS OF THE TARGET FUND
The Board of Directors of the Target Fund believes that the proposed
Reorganization is in the best interests of the Target Fund and its shareholders
and that the interests of the Target Fund shareholders will not be diluted as a
result of the Reorganization. The Board considered engaging in the transaction
with the Acquiring Fund at an in-person meeting of the Board of Directors held
on November 4, 2003. At this meeting, representatives of HL Advisors and its
affiliates discussed the proposed Reorganization with the Board. These
representatives also presented information to the Board, including comparative
performance, expense and asset size information for the Acquiring Fund and the
Target Fund. In considering the proposed Reorganization, the Board was advised
by its independent legal counsel.
At this meeting, the Board (including all of the directors who are not
"interested persons," as that term is defined in the Investment Company Act of
1940, as amended ("1940 Act")) reviewed and unanimously approved the
Reorganization and Plan, and recommended its approval by Target Fund
shareholders. In approving the Reorganization, the Board determined that
participation in the Reorganization is in the best interests of the Target Fund
and that the interests of Target Fund
9
shareholders would not be diluted as a result of the Reorganization. In
approving the Plan, the Board considered the following factors:
- The relative past and current growth in assets, historical investment
performance and perceived future prospects of each of the Funds,
including the inability of the Target Fund to attract significant assets.
- Given the Target Fund's relatively small size and The Hartford's
commitment to a streamlined family of funds, the Reorganization would
allow shareholders to continue their investment in another fund as
opposed to liquidation, which is less practical for funds serving as
funding vehicles for variable life insurance policies and variable
annuity contracts.
- The Acquiring Fund has investment objectives and policies that are
similar to those of the Target Fund.
- Because the combination will result in the reorganized Fund having a
larger asset base, the Board believes that the Reorganization may provide
shareholders and Contract Owners the benefit of economies of scale.
- The fact that the Acquiring Fund's expense ratio is lower than that of
the Target Fund.
- HL Advisors or its affiliates will bear the customary expenses associated
with the Reorganization.
- The Reorganization will be effected on the basis of the relative net
asset values of the Acquiring Fund and the Target Fund, so that Target
Fund shareholders will receive Acquiring Fund shares having a total net
asset value equal to the total net asset value of their Target Fund
shares as of the closing of the Reorganization.
- The Reorganization is expected to be tax-free; it is anticipated neither
shareholders nor Contract Owners will pay any federal income tax as a
result of the Reorganization.
The Board did not assign relative weights to the foregoing factors or deem
any one or group of them to be controlling in and of themselves.
Under the Target Fund's organizational documents, the directors of the
Target Fund are entitled to be indemnified by the Target Fund for certain
liabilities they may incur in connection with their service as directors. Under
the Plan, the Acquiring Fund is required to assume all of the liabilities of the
Target Fund.
The Board of Directors of the Acquiring Fund (including a majority of the
Directors who are not "interested persons," as that term is defined in the 1940
Act), also approved the Reorganization and Plan on November 4, 2003. The Board
of the Acquiring Fund has unanimously concluded that consummation of the
Reorganization is in the best interests of the Acquiring Fund and the
shareholders of the Acquiring Fund and that the interests of Acquiring Fund
shareholders would not be diluted as a result of effecting the Reorganization
and have unanimously voted to approve the Plan. In reaching this conclusion, the
Board considered that representatives of HL Advisors and its affiliates had
recommended the Reorganization and believed that the Target Fund's and Acquiring
Fund's shareholders should benefit from an investment in a larger fund that is
likely to have the ability to effect portfolio transactions on more favorable
terms and provide the Acquiring Fund's sub-adviser with greater investment
flexibility. These representatives also demonstrated that the larger aggregate
net asset base of the combined Fund could enable it to experience somewhat
greater economies of scale by spreading certain costs of operations over a
larger asset base.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that your Fund will transfer all of its assets and all of
its liabilities to the Acquiring Fund in exchange solely for the Acquiring
Fund's voting shares to be distributed pro rata by the Target Fund to its
shareholders in complete liquidation of the Target Fund on or about April 30,
2004 (the "Closing Date"). The value of the Target Fund's assets to be acquired
by the Acquiring Fund shall be the
10
value of such assets computed as of the close of regular trading on the NYSE
(normally 4:00 p.m., Eastern time) on the Closing Date (the "Closing"). Target
Fund shareholders will become shareholders of the Acquiring Fund as of the
Closing, and will be entitled to the Acquiring Fund's next dividend distribution
thereafter. Target Fund shareholders will receive Acquiring Fund Class IA shares
having a total net asset value equal to the total net asset value of their
Target Fund shares as of the Closing.
On or before the Closing, the Target Fund will declare and pay a dividend
or dividends which, together with all previous dividends, shall have the effect
of distributing to its shareholders all of its net investment income and
realized net capital gain, if any, for all taxable years ending on or before the
Closing Date.
Consummation of the Reorganization is subject to the conditions set forth
in the Plan, including receipt of an opinion in form and substance reasonably
satisfactory to the Target Fund and the Acquiring Fund, as described under the
caption "Federal Income Tax Consequences" below. The Plan may be terminated and
the Reorganization may be abandoned at any time before or after approval by the
Target Fund shareholders prior to the Closing Date (i) by the mutual agreement
of the parties or (ii) by either party if the Closing shall not have occurred on
or before April 30, 2004, unless such date is extended by mutual agreement of
the parties, or if the other party shall have materially breached its
obligations under the Plan or made a material and intentional misrepresentation
in the Plan or in connection with the Plan. Under the Plan, HL Advisors or its
affiliates is responsible for the payment of the expenses related to
consummating the Reorganization. Such expenses include, but are not limited to,
accountants' fees, legal fees, registration fees, transfer taxes (if any), the
fees of banks and transfer agents and the costs of preparing, printing, copying
and mailing proxy solicitation materials to the Target Fund shareholders and
Contract Owners and the costs of holding the Special Meeting (as hereinafter
defined).
The foregoing description of the Plan entered into between the Acquiring
Fund and the Target Fund is qualified in its entirety by the terms and
provisions of the Plan, the form of which is attached hereto as Appendix A and
incorporated herein by reference thereto.
DESCRIPTION OF ACQUIRING FUND SHARES
Full and fractional Class IA shares of the Acquiring Fund will be issued in
the Reorganization to the Target Fund shareholders in accordance with the
procedures described above. Shares of the Acquiring Fund to be issued to Target
Fund shareholders under the Plan will be fully paid and non-assessable when
issued and transferable without restriction and will have no preemptive or
conversion rights. Reference is hereby made to the Prospectus of the Acquiring
Fund, provided with this Prospectus/Proxy Statement, for additional information
about shares of the Acquiring Fund.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization, the Acquiring Fund and Target Fund
will receive an opinion from counsel substantially to the effect that, on the
basis of the existing provisions of the Code, current administrative rules and
court decisions and certain facts, assumptions and representations, for federal
income tax purposes: (1) the Reorganization will qualify as a "reorganization"
under section 368(a)(1) of the Code, and the Acquiring Fund and the Target Fund
each will be "a party to a reorganization" within the meaning of section 368(b)
of the Code; (2) the Target Fund will recognize no gain or loss on the transfer
of its assets to the Acquiring Fund in exchange solely for the Acquiring Fund's
voting shares and the assumption by the Acquiring Fund of all of the liabilities
of the Target Fund, followed by the distribution of those shares to the Target
Fund's shareholders in exchange for their Target Fund shares in complete
liquidation of the Target Fund; (3) the Acquiring Fund will recognize no gain or
loss on its receipt of those assets in exchange solely for its shares and the
assumption by the Acquiring Fund of all of the liabilities of the Target Fund;
(4) the Acquiring Fund's basis in those assets will be, in each instance, the
same as the Target Fund's basis therein immediately before the Reorganization,
and the Acquiring Fund's holding period for those assets will include the Target
Fund's holding period therefor; (5) a Target Fund shareholder will recognize no
gain or loss on the constructive exchange of the shareholder's Target
11
Fund shares solely for Acquiring Fund shares pursuant to the Reorganization; and
(6) a Target Fund shareholder's aggregate basis in the Acquiring Fund shares
received by the shareholder in the Reorganization will be the same as the
aggregate basis in the shareholder's Target Fund shares to be constructively
surrendered in exchange for those Target Fund shares, and the shareholder's
holding period for those Acquiring Fund shares will include the shareholder's
holding period for those Target Fund shares, provided the shareholder holds them
as capital assets at the time of the Reorganization.
No opinion will be expressed, however, as to whether (a) any accrued market
discount will be required to be recognized as ordinary income or (b) any gain or
loss will be recognized (i) by the Target Fund in connection with the transfer
from the Target Fund to the Acquiring Fund of any section 1256 contracts (as
defined in section 1256 of the Code) or (ii) by the Target Fund or the Acquiring
Fund in connection with any dispositions of assets by such Fund prior to or
following its respective Reorganization.
You should recognize that an opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or any court. Neither the Target Fund nor the
Acquiring Fund expects to obtain a ruling from the IRS regarding the tax
consequences of the Reorganizations. Accordingly, if the IRS sought to challenge
the tax treatment of the Reorganization and was successful, neither of which is
anticipated, the Reorganization would be treated as a taxable sale of assets of
the Target Fund, followed by the taxable liquidation thereof.
After the Closing, the Acquiring Fund likely will dispose of a significant
portion (but in no event more than two-thirds) of the securities received by the
Acquiring Fund from the Target Fund in connection with the Reorganization. Any
sales or dispositions made by the Target Fund in connection with the
Reorganization shall be taken into account in applying the two-thirds
limitation. Such dispositions by the Acquiring Fund, which likely will result in
transaction costs and may result in capital gains.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
The Target Fund is currently a series of Hartford HLS Series Fund II, Inc.
and the Acquiring Fund is a series of Hartford Series Fund, Inc., both of which
are Maryland corporations. As a result, the governing documents and laws
applicable to the Target Fund are substantially similar to those of the
Acquiring Fund. The Boards of Directors of both the Target Fund and the
Acquiring Fund are composed of the same directors, with the exception of David
M. Znamierowski, who serves on the Board of Hartford Series Fund, Inc. but does
not serve on the Board of Hartford HLS Series Fund II, Inc.
CAPITALIZATION (UNAUDITED)
The following tables set forth the unaudited capitalization as of December
31, 2003 of (i) the Target Fund and Acquiring Fund individually, and (ii) the
combined Acquiring Fund, on a pro forma basis, after giving effect to the
Reorganization.
<Table>
<Caption>
ACQUIRING TARGET
FUND FUND
------------- -----------
HARTFORD
MULTISECTOR
HARTFORD BOND BOND PRO FORMA
HLS FUND HLS FUND COMBINED
------------- ----------- ------------
Net Assets (in thousands)............................ $ 3,067,111 $ 30,038 $ 3,097,148
Net Asset Value Per Share
Class IA........................................... $ 12.32 $ 11.24 $ 12.32
Class IB........................................... $ 12.24 N/A $ 12.24
Shares Outstanding
Class IA........................................... 189,299,738 2,680,500 191,738,415
Class IB........................................... 59,997,589 N/A 59,997,589
</Table>
12
INFORMATION ABOUT THE ACQUIRING FUND AND THE TARGET FUND
ACQUIRING FUND
A discussion of the performance of the Acquiring Fund during the fiscal
year ended December 31, 2003 is included in this Prospectus/Proxy Statement as
Appendix B. Financial highlights for the Acquiring Fund are included as Appendix
C.
Information about the Class IA shares of the Acquiring Fund is contained in
the Acquiring Fund's current Class IA share Prospectus dated May 1, 2003, as
supplemented from time to time, which is incorporated herein by reference. A
copy of the current Prospectus of the Acquiring Fund is included with this
Prospectus/Proxy Statement. Additional information about the Acquiring Fund is
included in the Acquiring Fund's Statement of Additional Information dated May
1, 2003, as supplemented from time to time, and the Statement of Additional
Information dated [March 1], 2004 (relating to this Prospectus/Proxy Statement),
each of which is incorporated herein by reference. Copies of the Statements of
Additional Information, which have been filed with the SEC, may be obtained upon
request and without charge by calling or writing the Acquiring Fund at:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
1-800-862-6668 (if you are a variable annuity owner)
1-800-231-5453 (if you are a variable life insurance policy owner)
TARGET FUND
Information about the Target Fund is contained in the Target Fund's current
Prospectus dated May 1, 2003, as supplemented from time to time, Annual Report
to Shareholders dated December 31, 2003 (SEC File No. 811-4615), Statement of
Additional Information dated May 1, 2003, as supplemented from time to time, and
the Statement of Additional Information dated [March 1], 2004 (relating to this
Prospectus/ Proxy Statement), each of which is incorporated herein by reference.
Copies of such Prospectus, Annual Report, and Statements of Additional
Information, which have been filed with the SEC, may be obtained upon request
and without charge from the Target Fund by calling or writing the Target Fund
at:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
1-800-862-6668 (if you are a variable annuity owner)
1-800-800-2000 (if you are a variable life insurance policy owner)
Hartford Series Fund Inc. and Hartford HLS Series Fund II, Inc. are subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended, and the 1940 Act, and in accordance therewith, file reports, proxy
material and other information about the Acquiring Fund and the Target Fund,
respectively, with the SEC. Such reports, proxy material and other information
filed by Hartford Series Fund Inc. and Hartford HLS Series Fund II, Inc. can be
inspected and copied at the Public Reference Room maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following SEC Regional
Offices: Northeast Regional Office, 233 Broadway, New York, NY 10279; Southeast
Regional Office, 1401 Brickell Avenue, Suite 200, Miami, FL 33131; Midwest
Regional Office, 175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604; Central
Regional Office, 1801 California Street, Suite 4800, Denver, CO 80202-2648; and
Pacific Regional Office, 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA
90036-3648. Copies of such material can also be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The SEC maintains an Internet World Wide Web site (at
http://www.sec.gov) which contains the prospectuses and statements of
13
additional information for the Acquiring Fund and Target Fund, materials that
are incorporated by reference into the prospectuses and statements of additional
information, and other information about Hartford Series Fund, Inc. and Hartford
HLS Series Fund II, Inc. and the Acquiring Fund and Target Fund.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of the Target Fund of voting instruction
forms for use at the Special Meeting of Shareholders (the "Special Meeting") to
be held on April 20, 2004 at 10:00 a.m., Eastern Time at the offices of HL
Investment Advisors, LLC, 200 Hopmeadow Street, Simsbury, Connecticut 06089, and
at any adjournments or postponements thereof.
The Target Fund issues and sells its shares to Variable Account C and
Variable Account D, which are separate accounts of Fortis Benefits, and to
Separate Account A, which is a separate account of First Fortis. (Separate
Account A, Variable Account C, and Variable Account D are referred to together
as the "Separate Accounts.") The Separate Accounts hold shares of mutual funds,
including the Target Fund, which fund benefits under flexible premium deferred
variable annuity contracts or flexible premium variable life insurance contracts
which are issued by Fortis Benefits and First Fortis. As the owners of the
assets held in the Separate Accounts, Fortis Benefits and First Fortis are
shareholders of the Target Fund and are entitled to vote their shares of the
Fund. However, pursuant to applicable laws, Fortis Benefits and First Fortis
vote outstanding shares of the Target Fund in accordance with instructions
received from the owners of the annuity and life insurance contracts. This
Prospectus/Proxy Statement is being delivered to annuity and life insurance
contract owners who do not invest directly in or hold shares of the Target Fund,
but who, by virtue of their ownership of the contracts, have a beneficial
interest in the Target Fund as of the record date, so that they may instruct
Fortis Benefits and First Fortis how to vote the shares of the Fund underlying
their contracts.
You have the right to instruct Fortis Benefits or First Fortis on how to
vote the shares held under your contract. If you execute and return your voting
instruction form, but do not provide voting instructions, Fortis Benefits and
First Fortis will vote the shares underlying your contract in favor of the
proposal. Fortis Benefits and First Fortis will vote any shares for which they
do not receive a voting instruction form, and any shares which they hold for
their own account, in proportionately the same manner as shares for which they
have received voting instructions.
In order for the Special Meeting to go forward, there must be a quorum.
This means that at least a majority of the Target Fund's shares entitled to vote
on the proposal must be represented at the Special Meeting either in person or
by proxy. Because Fortis Benefits and First Fortis are the only shareholders of
the Target Fund, their presence at the Special Meeting in person or by proxy
will meet the quorum requirement. If a quorum is not obtained or if sufficient
votes to approve the Reorganization are not received, the entities named as
proxies may adjourn the Special Meeting from time to time without notice other
than by announcement at the Special Meeting, to permit further solicitation of
voting instructions. Accordingly, shareholders are urged to forward their voting
instructions promptly.
You may revoke your voting instructions up until voting results are
announced at the Special Meeting or any adjournment of the Special Meeting by
giving written notice to Fortis Benefits or First Fortis prior to the Special
Meeting, by executing and returning to Fortis Benefits or First Fortis a later
dated form, or by attending the Special Meeting and voting in person. If you
need a new voting instruction form, please call the Target Fund at
1-800-862-6668 if you are a variable annuity owner or at 1-800-800-2000 if you
are a variable life insurance policy owner, and a new voting instruction form
will be sent to you. If you return an executed form without voting instructions,
your shares will be voted "for" the proposal.
HL Advisors or its affiliates will pay all costs of solicitation, including
the cost of preparing and mailing the notice of joint Special Meeting of
shareholders and this Prospectus/Proxy statement to contract owners.
Representatives of The Hartford, who will receive no extra compensation for
their
14
services, may solicit voting instructions from Contract Owners by means of mail,
telephone, or personal calls.
OUTSTANDING SHARES AND VOTING REQUIREMENTS (UNAUDITED)
Those individuals owning contracts representing shares at the close of
business on February 27, 2004 may provide voting instructions for the Special
Meeting or any adjournment or postponement of the Special Meeting. The number of
shares outstanding for the Target Fund on December 31, 2003 is listed in the
table below. To the best knowledge of the Target Fund, no person other than
Fortis Benefits owned, of record or beneficially, 5% or more of the outstanding
shares of the Target Fund as of December 31, 2003. Fortis Benefits "controls,"
as that term is defined in the Instruction to Item 7(c)(4)(i) of Form N-14 under
the Securities Act of 1933, the Target Fund. As described above, because Fortis
Benefits and First Fortis are the sole shareholders of the Target Fund, they are
entitled to vote all of the shares of the Target Fund. However, pursuant to
applicable laws, Fortis Benefits and First Fortis vote outstanding shares of the
Target Fund in accordance with instructions received from the owners of the
annuity and life insurance contracts.
Unaudited information as of December 31, 2003 with regard to Fortis
Benefits' and First Fortis' beneficial and record ownership in the Target Fund
is provided below.
<Table>
<Caption>
PERCENT OF PERCENT OF
SHARES OUTSTANDING OUTSTANDING
OWNED BY SHARES OWNED SHARES SHARES OWNED
SHARES FORTIS BY FORTIS OWNED BY BY FIRST
OUTSTANDING BENEFITS(1) BENEFITS FIRST FORTIS FORTIS
----------- ----------- ------------ ------------ ------------
Hartford Multisector Bond HLS
Fund............................ 2,680,500 2,614,469 98% 66,031 2%
</Table>
- ---------------
(1) The address of Fortis Benefits is 500 Bielenberg Drive, Woodbury, MN 55125.
To the best knowledge of the Acquiring Fund, no person other than Hartford
Life Insurance Company and Hartford Life and Annuity Insurance Company, owned of
record or beneficially, 5% or more of the outstanding shares of any class of the
Acquiring Fund as of December 31, 2003. Both Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company "control" the Acquiring Fund, as
that term is defined in the Instruction to Item 7(c)(4)(i) of Form N-14 under
the Securities Act of 1933. Because both Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company "control" the Acquiring Fund, as
described above, they each have the ability to exert a greater influence over
the outcome of any proposals on which it is entitled to vote concerning the Fund
than do non-controlling shareholders. However, pursuant to applicable laws, both
Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company
vote outstanding shares of the Acquiring Fund in accordance with instructions
received from the owners of the annuity and life insurance contracts.
Unaudited information as of December 31, 2003 with regard to Hartford Life
and Annuity Insurance Company's, Hartford Life Insurance Company's and Fortis
Benefits' beneficial and record ownership in each class of the Acquiring Fund is
provided below. The percentage that appears in the parentheses reflects the
approximate percentage ownership of the Acquiring Fund's shares assuming the
Reorganization had been consummated as of that date.
15
<Table>
<Caption>
HARTFORD BOND HARTFORD BOND
HLS FUND HLS FUND
CLASS IA CLASS IB
----------------- -------------
Shares Outstanding.......................................... 189,299,738 59,997,589
Shares Owned by Hartford Life Insurance Company(1).......... 91,952,727 23,177,012
Percent of Outstanding Shares Owned by Hartford Life
Insurance Company......................................... 49%(48)% 39%(39)%
Shares Owned by Hartford Life and Annuity Insurance
Company(2)................................................ 86,904,803 36,820,565
Percent of Outstanding Shares Owned by Hartford Life and
Annuity Insurance Company................................. 46%(45)% 61%(61)%
Shares Owned by Fortis Benefits(3).......................... 7,106,624 0
Percent of Outstanding Shares Owned by Fortis Benefits...... 4%(5)% 0%(0)%
</Table>
- ---------------
(1) The address of Hartford Life Insurance Company is 200 Hopmeadow Street,
Simsbury, CT 06089.
(2) The address of Hartford Life and Annuity Insurance Company is 200 Hopmeadow
Street, Simsbury, CT 06089.
(3) The address of Fortis Benefits is 500 Bielenberg Drive, Woodbury, MN 55125.
As of December 31, 2003, the officers and directors as a group beneficially
owned less than 1% of the outstanding shares of the Acquiring Fund.
Approval of the Plan with respect to the Target Fund requires the
affirmative vote, in person or by proxy, of a "majority of the outstanding
voting securities," as defined in the 1940 Act, of the Fund on the record date,
February 27, 2004. The term "majority of the outstanding voting securities" as
defined in Section 2(a)(42) of the 1940 Act means the affirmative vote of the
lesser of (i) 67% of the voting securities of the Target Fund present at the
meeting if more than 50% of the outstanding voting securities of the Target Fund
are present in person or by proxy or (ii) more than 50% of the outstanding
voting securities of the Target Fund. Each shareholder is entitled to one vote
for each share owned on the record date. Shareholders will not be entitled to
cumulative voting or appraisal rights with respect to the proposal. Abstentions
will have the effect of a "no" vote. In the event that shareholders of the
Target Fund do not approve the Plan, the Reorganization will not proceed, and
the Board of Directors of the Target Fund will meet to determine what other
courses of action may be taken in the best interests of shareholders. The votes
of shareholders of the Acquiring Fund are not being solicited since their
approval is not required in order to effect the Reorganization.
OTHER MATTERS
Management of the Target Fund knows of no other matters that may properly
be, or which are likely to be, brought before the Special Meeting. However, if
any other business shall properly come before the Special Meeting, the persons
named on the voting instruction form intend to vote thereon in accordance with
their best judgment.
BOARD RECOMMENDATION
After carefully considering the issues involved, the Board of Directors of
the Target Fund has unanimously concluded that the proposed Reorganization is in
the best interests of shareholders. The Board of Directors of the Target Fund
recommends that you vote to approve the Plan. Whether or not you expect to
attend the Special Meeting, you are urged to promptly sign, complete and return
the enclosed voting instruction form.
SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a shareholder meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of the
16
Target Fund, c/o HL Investment Advisors, LLC, 200 Hopmeadow Street, Simsbury,
Connecticut 06089, within a reasonable time before the solicitation of proxies
for such meeting. The timely submission of a proposal does not guarantee its
inclusion.
17
INDEX OF APPENDICES
<Table>
APPENDIX A: Form of Agreement and Plan of Reorganization
APPENDIX B: Management's Discussion of the Acquiring Fund's Performance
APPENDIX C: Financial Highlights Table for the Acquiring Fund
</Table>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 200 , by and among Hartford Series Fund, Inc. (the
"Acquiring Corporation"), a Maryland corporation, on behalf of Hartford Bond HLS
Fund, (the "Acquiring Fund"), a separate series of the Acquiring Corporation,
and Hartford HLS Series Fund II, Inc. (the "Target Corporation" and, together
with the Acquiring Corporation, each a "Corporation" and collectively the
"Corporations"), a Maryland corporation, on behalf of Hartford Multisector Bond
HLS Fund (the "Target Fund" and, together with the Acquiring Fund, each a "Fund"
and collectively the "Funds"), a separate series of the Target Corporation, and
HL Investment Advisors, LLC ("HL Advisors"), investment adviser to the Funds
(for purposes of Paragraph 10.2 of the Agreement only). The principal place of
business of each Corporation is 200 Hopmeadow Street, Simsbury, Connecticut
06089.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all of the assets of the Target Fund to the
Acquiring Fund in exchange solely for Class IA voting shares of capital stock
($0.001 par value per share) of the Acquiring Fund (the "Acquiring Fund
Shares"), the assumption by the Acquiring Fund of all of the liabilities of the
Target Fund and the distribution of the Acquiring Fund Shares to the Class IA
shareholders of the Target Fund in complete liquidation of the Target Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE TARGET FUND TO THE ACQUIRING FUND IN EXCHANGE FOR
ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL TARGET FUND LIABILITIES AND THE
LIQUIDATION OF THE TARGET FUND
1.1. Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Target Fund agrees
to transfer to the Acquiring Fund all of the Target Fund's assets as set forth
in section 1.2, and the Acquiring Fund agrees in exchange therefor (i) to
deliver to the Target Fund that number of full and fractional Class IA Acquiring
Fund Shares determined by dividing the value of the Target Fund's assets net of
any liabilities of the Target Fund with respect to the Class IA shares of the
Target Fund, computed in the manner and as of the time and date set forth in
section 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 section 2.2; and (ii) to assume
all of the liabilities of the Target Fund. All Acquiring Fund Shares delivered
to the Target Fund shall be delivered at net asset value without a sales load,
commission or other similar fee being imposed. Such transactions shall take
place at the closing provided for in section 3.1 (the "Closing").
1.2. The assets of the Target Fund to be acquired by the Acquiring Fund
(the "Assets") shall consist of all assets, including, without limitation, all
cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Target Fund and
any deferred or prepaid expenses shown on the unaudited statement of assets and
liabilities of such Target Fund prepared as of the effective time of the Closing
in accordance with generally accepted accounting principles ("GAAP") applied
consistently with those of the Target Fund's most recent audited balance sheet.
The Assets shall constitute at least 90% of the fair market value of the net
assets, and at least 70% of the fair market value of the gross assets, held by
the Target Fund immediately before the Closing (excluding for these purposes
assets used to pay the dividends and other distributions paid pursuant to
section 1.4).
1.3. The Target Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
A-1
1.4. On or as soon as practicable prior to the Closing Date as defined in
section 3.1, the Target Fund will declare and pay to its shareholders of record
one or more dividends and/or other distributions so that it will have
distributed all of its investment company taxable income (computed without
regard to any deduction for dividends paid) and realized net capital gain, if
any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section 1.1,
the Target Fund will distribute to the Target Fund's shareholders of record (the
"Target Fund Shareholders"), determined as of the Valuation Time (as defined in
section 2.1), on a pro rata basis, the Acquiring Fund Shares received by the
Target Fund pursuant to section 1.1 and will completely liquidate. Such
distribution and liquidation will be accomplished with respect to the Target
Fund by the transfer of the Acquiring Fund Shares then credited to the account
of the Target Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the names of the Target Fund
Shareholders. The Acquiring Fund shall have no obligation to inquire as to the
validity, propriety or correctness of such records, but shall assume that such
transaction is valid, proper and correct. The aggregate net asset value of the
Class IA Acquiring Fund Shares to be so credited to the Class IA Target Fund
Shareholders shall be equal to the aggregate net asset value of the applicable
Target Fund shares owned by such shareholders as of the Valuation Time. All
issued and outstanding shares of the Target Fund will simultaneously be
cancelled on the books of the Target Fund, although share certificates
representing interests in Class IA shares of the Target Fund will represent a
number of Acquiring Fund Shares after the Closing Date as determined in
accordance with section 2.3. The Acquiring Fund will not issue certificates
representing Acquiring Fund Shares in connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of a Target Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the applicable Target Fund.
1.8. All books and records of the Target Fund, including all books and
records required to be maintained under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of business
on the Closing Date, as defined in section 3.1 (the "Valuation Time") after the
declaration and payment of any dividends and/or other distributions on that
date, using the valuation procedures set forth in the Acquiring Corporation's
Charter, as amended, and then-current prospectus or statement of additional
information, copies of which have been delivered to the Target Fund.
2.2. The net asset value of a Class IA Acquiring Fund Share shall be the
net asset value per share computed as of the Valuation Time using the valuation
procedures referred to in section 2.1.
2.3. The number of Class IA Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Assets shall be determined by
dividing the value of the Assets with respect to Class IA shares of the
applicable Target Fund determined in accordance with section 2.1 by the net
asset value of an Acquiring Fund Share determined in accordance with section
2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent auditors
upon the reasonable request of the other Fund.
A-2
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall
be April 30, 2004, or such other date as the parties may agree in writing (the
"Closing Date"). All acts taking place at the Closing shall be deemed to take
place simultaneously as of the close of business on the Closing Date, unless
otherwise agreed to by the parties. The Closing shall be held at the offices of
Dechert LLP, 200 Clarendon Street, 27th Floor, Boston, Massachusetts 02116, or
at such other place and time as the parties may agree.
3.2. The Target Fund shall deliver to the Acquiring Fund on the Closing
Date a schedule of Assets.
3.3. State Street Bank and Trust Company ("State Street"), custodian for
the Target Fund, shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets shall have been delivered in proper form to
State Street, custodian for the Acquiring Fund, prior to or on the Closing Date
and (b) all necessary taxes in connection with the delivery of the Assets,
including all applicable federal and state stock transfer stamps, if any, have
been paid or provision for payment has been made. The Target Fund's portfolio
securities represented by a certificate or other written instrument shall be
presented by the custodian for the Target Fund to the custodian for the
Acquiring Fund for examination no later than five business days preceding the
Closing Date and transferred and delivered by the Target Fund as of the Closing
Date by the Target Fund for the account of the Acquiring Fund duly endorsed in
proper form for transfer in such condition as to constitute good delivery
thereof. The Target Fund's portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the 1940 Act, shall be
delivered as of the Closing Date by book entry in accordance with the customary
practices of such depositories and the custodian for the Acquiring Fund. The
cash to be transferred by the Target Fund shall be delivered by wire transfer of
federal funds on the Closing Date.
3.4. Hartford Investor Services Company, as transfer agent for the Target
Fund, on behalf of the Target Fund, shall deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Target Fund Shareholders and the number and percentage
ownership (to three decimal places) of outstanding Class IA Target Fund 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 Target Fund or provide evidence
satisfactory to the Target Fund that such Acquiring Fund Shares have been
credited to that Target Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request to effect the transactions
contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of an Acquiring
Fund or a Target Fund shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class IA shares of an Acquiring Fund or a Target Fund
is impracticable, 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.
3.6. The liabilities of the Target Fund shall include all of such Target
Fund's liabilities, debts, obligations, and duties of whatever kind or nature,
whether absolute, accrued, contingent, or otherwise, whether or not arising in
the ordinary course of business, whether or not determinable at the Closing
Date, and whether or not specifically referred to in this Agreement including
but not limited to any deferred compensation to such Target Fund's board
members.
A-3
4. REPRESENTATIONS AND WARRANTIES
4.1. The Target Corporation, on behalf of the Target Fund, represents and
warrants to the respective Acquiring Fund as follows:
(a) The Target Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland with
power under the Target Corporation's Charter, as amended, to own all of its
properties and assets and to carry on its business as it is now being
conducted and, subject to approval of shareholders of the Target Fund, to
carry out the Agreement. The Target Fund is a separate series of the Target
Corporation duly designated in accordance with the applicable provisions of
the Target Corporation's Charter. The Target Corporation and Target Fund
are qualified to do business in all jurisdictions in which they are
required to be so qualified, except jurisdictions in which the failure to
so qualify would not have material adverse effect on the Target Corporation
or Target Fund. The Target Fund has all material federal, state and local
authorizations necessary to own all of the properties and assets and to
carry on its business as now being conducted, except authorizations that
the failure to so obtain would not have a material adverse effect on the
Target Fund;
(b) The Target Corporation is registered with the Commission as an
open-end management investment company under the 1940 Act, and such
registration is in full force and effect and the Target Fund is in
compliance in all material respects with the 1940 Act and the rules and
regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Target Fund
of the transactions contemplated herein, except such as have been obtained
under the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the 1940
Act and such as may be required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Target Fund which shall terminate on
or prior to the Closing Date, the Target Corporation is not, and the
execution, delivery and performance of this Agreement by the Target
Corporation will not result in (i) a violation of Maryland law or of the
Target Corporation's Charter, as amended, or By-Laws, (ii) a violation or
breach of, or constitute a default under, any material agreement,
indenture, instrument, contract, lease or other undertaking to which the
Target Fund is a party or by which it is bound, and the execution, delivery
and performance of this Agreement by the Target Fund will not result in the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to
which the Target Fund is a party or by which it is bound, or (iii) the
creation or imposition of any lien, charge or encumbrance on any property
or assets of the Target Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Target Fund or any
properties or assets held by it. The Target Fund knows of no facts that
might form the basis for the institution of such proceedings that would
materially and adversely affect its business and 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 its business or
its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of
the Target Fund at and for the fiscal year ended December 31, 2003, will be
audited by independent auditors, and will be in accordance with GAAP
consistently applied, and such statements (a copy of each of which has been
furnished to the Acquiring Fund) present fairly, in all material respects,
the financial position of the Target Fund as of such date in accordance
with GAAP, and there are no known contingent liabilities
A-4
of the Target Fund required to be reflected on a balance sheet (including
the notes thereto) in accordance with GAAP as of such date not disclosed
therein;
(g) Since December 31, 2003, there has not been any material adverse
change in the Target Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Target Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred except as otherwise
disclosed to and accepted in writing by the Acquiring Fund. For purposes of
this subsection (g), a decline in net asset value per share of the Target
Fund due to declines in market values of securities in the Target Fund's
portfolio, the discharge of Target Fund liabilities, or the redemption of
Target Fund shares by Target Fund Shareholders shall not constitute a
material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Target Fund required by law to have been
filed by such dates (including any extensions) shall have been filed and
are or will be correct in all material respects, 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 of the Target Fund's knowledge, 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 (including the taxable
year ending on the Closing Date), the Target Fund has met the requirements
of Subchapter M of the Code for qualification and treatment as a regulated
investment company and has elected to be treated as such, has been eligible
to and has computed its federal income tax under Section 852 of the Code,
and will have distributed all of its investment company taxable income and
net capital gain (as defined in the Code) that has accrued through the
Closing Date;
(j) All issued and outstanding shares of the Target Fund (i) have
been offered and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws, (ii) are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable and not subject to preemptive or dissenter's
rights, and (iii) will be held at the time of the Closing by the persons
and in the amounts set forth in the records of Hartford Investor Services
Company, as provided in section 3.4. The Target Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Target Fund shares, nor is there outstanding any
security convertible into any of the Target Fund shares;
(k) At the Closing Date, the Target Fund will have good and
marketable title to the Target Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power and authority
to sell, assign, transfer and deliver such assets hereunder free of any
liens or other encumbrances, except those liens or encumbrances as to which
the Acquiring Fund has received notice at or prior to the Closing, and upon
delivery and payment for such assets, the Acquiring Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the 1933
Act and the 1940 Act, except those restrictions as to which the Acquiring
Fund has received notice and necessary documentation at or prior to the
Closing;
(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 Board members of the Target Corporation, (including the
determinations required by Rule 17a-8(a) under the 1940 Act), and, subject
to the approval of the Target Fund Shareholders, this Agreement constitutes
a valid and binding obligation of the Target Corporation, on behalf of the
Target Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
A-5
(m) The information to be furnished by the Target Fund for use in
applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the National Association of
Securities Dealers, Inc. (the "NASD")), 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;
(n) The current prospectus and statement of additional information of
the Target 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; and
(o) The proxy statement of the Target Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Target Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all
material respects with the provisions and Regulations of the 1933 Act, 1934
Act and 1940 Act, as applicable, and (ii) 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 are made, not materially
misleading; provided, however, that the representations and warranties in
this section shall not apply to statements in or omissions from the Proxy
Statement and the Registration Statement made in reliance upon and in
conformity with information that was furnished or should have been
furnished by the Acquiring Fund for use therein.
4.2. The Acquiring Corporation, on behalf of the Acquiring Fund,
represents and warrants to the respective Target Fund as follows:
(a) The Acquiring Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland with
power under the Acquiring Corporation's Charter, as amended, to own all of
its properties and assets and to carry on its business as it is now being
conducted and, subject to the approval of shareholders of the Target Fund,
to carry out the Agreement. The Acquiring Fund is a separate series of the
Acquiring Corporation duly designated in accordance with the applicable
provisions of the Acquiring Corporation's Charter. The Acquiring
Corporation and Acquiring Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material
adverse effect on the Acquiring Corporation or Acquiring Fund. The
Acquiring Fund has all material federal, state and local authorizations
necessary to own all of the properties and assets and to carry on its
business as now being conducted, except authorizations that the failure to
so obtain would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Corporation is registered with the Commission as an
open-end management investment company under the 1940 Act, and such
registration is in full force and effect and the Acquiring Fund is in
compliance in all material respects with the 1940 Act and the rules and
regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring
Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required by state securities laws;
(d) The Acquiring Corporation is not, and the execution, delivery and
performance of this Agreement by the Acquiring Corporation will not result
in (i) a violation of Maryland law or of the Acquiring Corporation's
Charter, as amended, or By-Laws, (ii) a violation or breach of, or
constitute a default under, any material agreement, indenture, instrument,
contract, lease or other undertaking known to counsel to which the
Acquiring Fund is a party or by which it is bound, and the execution,
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delivery and performance of this Agreement by the Acquiring Fund will not
result in the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Acquiring Fund is a party or by which it is
bound, or (iii) the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or any
properties or assets held by it. The Acquiring Fund knows of no facts that
might form the basis for the institution of such proceedings that would
materially and adversely affect its business and 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 its business or
its ability to consummate the transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of
the Acquiring Fund at and for the fiscal year ended December 31, 2003, will
be audited by independent public accountants, and will be in accordance
with GAAP consistently applied, and such statements (a copy of each of
which has been furnished to the Target Fund) present fairly, in all
material respects, the financial position of the Acquiring Fund as of such
date in accordance with GAAP, and there are no known contingent liabilities
of the Acquiring Fund required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(g) Since December 31, 2003, 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 except as otherwise
disclosed to and accepted in writing by the Target Fund. For purposes of
this subsection (g), a decline in net asset value per share of the
Acquiring Fund due to declines in market values of securities in the
Acquiring Fund's portfolio, the discharge of Acquiring Fund liabilities, or
the redemption of Acquiring Fund shares by Acquiring Fund shareholders
shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been
filed by such dates (including any extensions) shall have been filed and
are or will be correct in all material respects, 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 of the Acquiring Fund's knowledge, 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 Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has elected to be treated
as such, has been eligible to and has computed its federal income tax under
Section 852 of the Code, and will do so for the taxable year including the
Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in
compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws and (ii) are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable, and not subject to preemptive or dissenter's
rights. The Acquiring Fund does not have outstanding any options, warrants
or other rights to subscribe for or purchase any of the Acquiring Fund
shares, nor is there outstanding any security convertible into any of the
Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the Target
Fund, for the account of the Target Fund Shareholders, pursuant to the
terms of this Agreement, will at the Closing Date
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have been duly authorized and, when so issued and delivered, will be duly
and validly issued and outstanding Acquiring Fund Shares, and will be fully
paid and non-assessable;
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Target
Fund has received notice at or prior to the Closing;
(m) 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 Board members of the Acquiring Corporation (including
the determinations required by Rule 17a-8(a) under the 1940 Act), and this
Agreement will constitute a valid and binding obligation of the Acquiring
Corporation, on behalf of the Acquiring Fund, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for
use in any other document filed or to be filed with any federal, state or
local regulatory authority (including the NASD), 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 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;
(p) 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, (i) comply in
all material respects with the provisions and Regulations of the 1933 Act,
1934 Act, and 1940 Act and (ii) 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; provided, however, that the representations and warranties in
this section shall not apply to statements in or omissions from the Proxy
Statement and the Registration Statement made in reliance upon and in
conformity with information that was furnished or should have been
furnished by the Target Fund for use therein; and
(q) 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 securities laws as may be necessary in order to continue
its operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE TARGET FUND
5.1. Each Fund covenants to operate its business in the ordinary course
between the date hereof and the Closing Date, it being understood that (a) such
ordinary course of business will include (i) the declaration and payment of
customary dividends and other distributions and (ii) such changes as are
contemplated by the Fund's normal operations; and (b) each Fund shall retain
exclusive control of the composition of its portfolio until the Closing Date. No
party shall take any action that would, or reasonably would be expected to,
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect. Each Fund covenants and agrees
to coordinate the respective portfolios of the Acquiring Fund and the Target
Fund from the date of the Agreement up to and including the Closing Date in
order that at Closing, when the Assets are added to the Acquiring Fund's
portfolio, the resulting portfolio will meet the applicable Acquiring Fund's
investment
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objective, policies and restrictions, as set forth in the Acquiring Fund's
Prospectus, a copy of which has been delivered to the Target Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Target Fund's books and records necessary to
maintain current knowledge of the Target Fund and to ensure that the
representations and warranties made by the Target Fund are accurate.
5.3. The Target Fund covenants to call a meeting of the Target Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than April 30, 2004.
5.4. The Target 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.
5.5. The Target Fund covenants that it will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Target Fund shares.
5.6. Subject to the provisions of this Agreement, each Fund will take, or
cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper and/or advisable to consummate and make effective
the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Target Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Target Fund will provide
the Acquiring Fund with information reasonably necessary for the preparation of
a prospectus, which will include the Proxy Statement referred to in section
4.1(o), all to be included in the Registration Statement, in compliance in all
material respects with the 1933 Act, the 1934 Act and the 1940 Act.
5.8. The Target Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by the Target Fund, execute and deliver or cause to be
executed and delivered all such assignments, assumption agreements, releases,
and other instruments, and will take or cause to be taken such further action,
as the Target Fund may reasonably deem necessary or desirable in order to (i)
vest and confirm to the Target Fund title to and possession of all Acquiring
Fund shares to be transferred to the Target Fund pursuant to this Agreement and
(ii) assume the liabilities from the Target Fund.
5.11. As soon as reasonably practicable after the Closing, the Target Fund
shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. Each Fund shall use its reasonable best efforts to fulfill or obtain
the fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
5.13. The intention of the parties is that the transaction will qualify as
a reorganization within the meaning of Section 368(a) of the Code. Neither the
Corporations nor the Funds shall take any action, or
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cause any action to be taken (including, without limitation, the filing of any
tax return) that is inconsistent with such treatment or results in the failure
of a transaction to qualify as a reorganization within the meaning of Section
368(a) of the Code. At or prior to the Closing Date, each Corporation and each
Fund will take such action, or cause such action to be taken, as is reasonably
necessary to enable Dechert to render the tax opinion contemplated herein in
section 8.5.
5.14. At or immediately prior to the Closing, the Target Fund will declare
and pay to its stockholders a dividend or other distribution in an amount large
enough so that it will have distributed all of its investment company taxable
income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET FUND
With respect to the Reorganization, the obligations of a Target 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 it hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:
6.1. All representations and warranties of the Acquiring Corporation, on
behalf 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 there shall be (i) no pending or threatened litigation brought by any
person (other than a Target Fund, its adviser or any of their affiliates)
against an Acquiring Fund or its investment adviser(s), Board members or
officers arising out of this Agreement and (ii) no facts known to any Acquiring
Fund which an Acquiring Fund reasonably believes might result in such
litigation.
6.2. The Acquiring Fund shall have delivered to the Target Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Target Corporation, on
behalf of the Target Fund, and dated as of the Closing Date, to the effect that
the representations and warranties of the Acquiring Corporation with respect to
the Acquiring Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Target Fund shall reasonably
request.
6.3. The Target Fund shall have received on the Closing Date an opinion of
counsel, in a form reasonably satisfactory to the Target Fund, and dated as of
the Closing Date, to the effect that:
(a) The Acquiring Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland; (b)
the Acquiring Fund has the power to carry on its business as presently
conducted in accordance with the description thereof in the Acquiring
Corporation's registration statement under the 1940 Act; (c) the Agreement
has been duly authorized, executed and delivered by the Acquiring
Corporation, on behalf of the Acquiring Fund, and constitutes a valid and
legally binding obligation of the Acquiring Corporation, on behalf of the
Acquiring Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; (d) the execution and delivery of the
Agreement did not, and the exchange of the Target Fund's assets for
Acquiring Fund Shares pursuant to the Agreement will not, violate the
Acquiring Corporation's Charter, as amended, or By-laws; and (e) to the
knowledge of such counsel, and without any independent investigation, (i)
the Acquiring Corporation is not subject to any litigation or other
proceedings that might have a materially adverse effect on the operations
of the Acquiring Corporation, (ii) the Acquiring Corporation is duly
registered as an investment company with the Commission and is not subject
to any stop order; and (iii) all regulatory consents, authorizations,
approvals or filings required to be obtained or made by the Acquiring Fund
under the federal laws of the United States or the laws of the State of
Maryland
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for the exchange of the Target Fund's assets for Acquiring Fund Shares,
pursuant to the Agreement have been obtained or made.
In rendering such opinion, such counsel may (1) rely, as to matters
governed by the laws of the State of Maryland, on an opinion of competent
Maryland counsel, (2) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, (3) limit such opinion to applicable federal and state
law, and (4) define the word "knowledge" and related terms to mean the knowledge
of attorneys then with such counsel who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization.
The delivery of such opinion is conditioned upon receipt by counsel of
customary representations it shall reasonably request of each of the Acquiring
Corporation and the Target Corporation, on behalf of the Acquiring Fund and the
Target Fund, respectively.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
With respect to the Reorganization, the obligations of an Acquiring Fund to
consummate the transactions provided for herein shall be subject, at its
election, to the performance by the Target Fund of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, the following further conditions:
7.1. All representations and warranties of the Target Corporation, on
behalf of the Target 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 there shall be (i) no pending or threatened litigation brought by any person
(other than an Acquiring Fund, its adviser or any of their affiliates) against a
Target Fund or its investment adviser(s), Board members or officers arising out
of this Agreement and (ii) no facts known to any Target Fund which a Target Fund
reasonably believes might result in such litigation.
7.2. The Target Fund shall have delivered to the Acquiring Fund a
statement of the Target Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Target Fund.
7.3. The Target Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Corporation, on
behalf of the Acquiring Fund, and dated as of the Closing Date, to the effect
that the representations and warranties of the Target Corporation with respect
to the Target Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
7.4. The Acquiring Fund shall have received on the Closing Date an opinion
of counsel, in a form reasonably satisfactory to the Acquiring Fund, and dated
as of the Closing Date, to the effect that:
(a) The Target Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland; (b)
the Target Fund has the power to carry on its business as presently
conducted in accordance with the description thereof in the Target
Corporation's registration statement under the 1940 Act; (c) the Agreement
has been duly authorized, executed and delivered by the Target Corporation,
on behalf of the Target Fund, and constitutes a valid and legally binding
obligation of the Target Corporation, on behalf of the Target Fund,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; (d) the execution and delivery of the Agreement
did not, and the exchange of the Target Fund's
A-11
assets for Acquiring Fund Shares pursuant to the Agreement will not,
violate the Target Corporation's Charter, as amended, or By-laws; and (e)
to the knowledge of such counsel, and without any independent
investigation, (i) the Target Corporation is not subject to any litigation
or other proceedings that might have a materially adverse effect on the
operations of the Target Corporation, (ii) the Target Corporation is duly
registered as an investment company with the Commission and is not subject
to any stop order, and (iii) all regulatory consents, authorizations,
approvals or filings required to be obtained or made by the Target Fund
under the federal laws of the United States or the laws of the State of
Maryland for the exchange of the Target Fund's assets for Acquiring Fund
Shares, pursuant to the Agreement have been obtained or made.
In rendering such opinion, such counsel may (1) rely, as to matters
governed by the laws of the State of Maryland, on an opinion of competent
Maryland counsel, (2) make assumptions regarding the authenticity, genuineness,
and/or conformity of documents and copies thereof without independent
verification thereof, (3) limit such opinion to applicable federal and state
law, and (4) define the word "knowledge" and related terms to mean the knowledge
of attorneys then with such counsel who have devoted substantive attention to
matters directly related to this Agreement and the Reorganization.
The delivery of such opinion is conditioned upon receipt by counsel of
customary representations it shall reasonably request of each of the Acquiring
Corporation and the Target Corporation, on behalf of the Acquiring Fund and the
Target Fund, respectively.
7.5. The Target Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Target Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
TARGET FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to the Target Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein, with respect
to the Target Fund, shall have been approved by the requisite vote of the
holders of the outstanding shares of the Target Fund in accordance with the
provisions of the Target Corporation's Charter, as amended, and By-Laws,
applicable Maryland law and the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to the Acquiring
Fund. Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Target Fund may waive the conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material 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
an Acquiring Fund or a Target 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 an
Acquiring Fund or a Target Fund, provided that either party hereto may for
itself 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.
8.5. The parties shall have received an opinion of Dechert LLP addressed
to each of the Acquiring Fund and the Target Fund, in a form reasonably
satisfactory to each such party to this Agreement,
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substantially to the effect that, based upon certain facts, assumptions and
representations of the parties, for federal income tax purposes: (i) the
transfer to the Acquiring Fund of all of the assets of the Target Fund in
exchange solely for Acquiring Fund Shares and the assumption by the Acquiring
Fund of all of the liabilities of the Target Fund, followed by the distribution
of such shares to the Target Fund Shareholders in exchange for their shares of
the Target Fund in complete liquidation of the Target Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Target Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Target Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the Target
Fund; (iii) the basis of the assets of the Target Fund in the hands of the
Acquiring Fund will be the same as the basis of such assets of the Target Fund
immediately prior to the transfer; (iv) the holding period of the assets of the
Target Fund in the hands of the Acquiring Fund will include the period during
which such assets were held by the Target Fund; (v) no gain or loss will be
recognized by the Acquiring Fund upon the receipt of the assets of the Target
Fund in exchange for Acquiring Fund Shares and the assumption by the Acquiring
Fund of all of the liabilities of the Target Fund; (vi) no gain or loss will be
recognized by Target Fund Shareholders upon the receipt of the Acquiring Fund
Shares solely in exchange for their shares of the Target Fund as part of the
transaction; (vii) the basis of the Acquiring Fund Shares received by Target
Fund Shareholders will be the same as the basis of the shares of the Target Fund
exchanged therefor; and (viii) the holding period of Acquiring Fund Shares
received by Target Fund Shareholders will include the holding period during
which the shares of the Target Fund exchanged therefor were held, provided that
at the time of the exchange the shares of the Target Fund were held as capital
assets in the hands of Target Fund Shareholders. The delivery of such opinion is
conditioned upon receipt by Dechert LLP of representations it shall request of
each of the Acquiring Corporation and the Target Corporation. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Target Fund
may waive the condition set forth in this section 8.5. No opinion will be
expressed by Dechert LLP, however, as to whether (a) any accrued market discount
will be required to be recognized as ordinary income or (b) any gain or loss
will be recognized (i) by a Target Fund in connection with the transfer from the
Target Fund to an Acquiring Fund of any section 1256 contracts (as defined in
Section 1256 of the Code) or (ii) by a Target Fund or an Acquiring Fund in
connection with any dispositions of assets by such Fund prior to or following
its respective Reorganization.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the Target
Fund and each of such Target Fund's Board members and officers from and against
any and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Target Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquiring Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
9.2. The Target Fund agrees to indemnify and hold harmless the Acquiring
Fund and each of such Acquiring Fund's Board members and officers from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquiring Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Target Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
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10. FEES AND EXPENSES
10.1. Each of the Acquiring Corporation, on behalf of the Acquiring Fund,
and the Target Corporation, on behalf of the Target Fund, represents and
warrants to the other that it has no obligations to pay any brokers or finders
fees in connection with the transactions provided for herein.
10.2. HL Advisors, or affiliates thereof, will bear all the expenses
associated with the Reorganization. Any such expenses so borne by HL Advisors,
or affiliates thereof, will be solely and directly related to the
Reorganization, within the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187.
Target Fund Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. Each Fund agrees that no party has made any representation, warranty
or covenant not set forth herein and that this Agreement constitutes the entire
agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and the Target Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by any party as it relates to the transaction applicable
to such party (i) by the mutual agreement of the parties, or (ii) by either
party if the Closing shall not have occurred on or before April 30, 2004, unless
such date is extended by mutual agreement of the parties, or (iii) by either
party if the other party shall have materially breached its obligations under
this Agreement or made a material and intentional misrepresentation herein or in
connection herewith. In the event of any such termination, this Agreement shall
become void and there shall be no liability hereunder on the part of any party
or their respective Board members or officers, except for any such material
breach or intentional misrepresentation, as to each of which all remedies at law
or in equity of the party adversely affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Target
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following each meeting of the Target Fund Shareholders called by the Target Fund
pursuant to section 5.3 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 Target 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 deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
applicable Target Fund, 200 Hopmeadow Street, Simsbury, Connecticut 06089, with
a copy to Dechert LLP, 200 Clarendon Street, 27th Floor, Boston, Massachusetts
02116, Attention: John V. O'Hanlon, Esq., or to the applicable Acquiring Fund,
200 Hopmeadow Street, Simsbury, Connecticut 06089, with a copy to Dechert LLP,
200 Clarendon Street, 27th Floor, Boston, Massachusetts 02116, Attention: John
V. O'Hanlon, Esq., or to any other address that the Target Fund or the Acquiring
Fund shall have last designated by notice to the other party.
A-14
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section 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 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 give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Target Fund and their respective successors and assigns,
any rights or remedies under or by reason of this Agreement.
15.4. Notwithstanding anything to the contrary contained in this
Agreement, the obligations, agreements, representations and warranties with
respect to each Fund shall constitute the obligations, agreements,
representations and warranties of that Fund only (the "Obligated Fund"), and in
no event shall any other series of the Corporations or the assets of any such
series be held liable with respect to the breach or other default by the
Obligated Fund of its obligations, agreements, representations and warranties as
set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Maryland, without regard to its
principles of conflicts of laws.
A-15
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
<Table>
Attest: HARTFORD SERIES FUND, INC.
on behalf of Hartford Bond HLS Fund
- ----------------------------------------------
Secretary
--------------------------------------------------------
By:
--------------------------------------------------------
Its:
--------------------------------------------------------
Attest: HARTFORD HLS SERIES FUND II, INC.
on behalf of Hartford Multisector Bond HLS Fund
- ----------------------------------------------
Secretary
--------------------------------------------------------
By:
--------------------------------------------------------
Its:
--------------------------------------------------------
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
HL INVESTMENT ADVISORS, LLC
--------------------------------------------------------
By:
--------------------------------------------------------
Its:
--------------------------------------------------------
</Table>
A-16
APPENDIX B
MANAGEMENT'S DISCUSSION OF THE ACQUIRING FUND'S PERFORMANCE
[To be added]
B-1
APPENDIX C
The financial highlights table is intended to help you understand the
financial performance of the Acquiring Fund's shares for the past five years (or
since inception, if shorter). Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate at which
an investor in the Fund's shares would have made or lost money on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
financial highlights for the year ended December 31, 2003 have not been audited.
The information for the year ended December 31, 2002 has been audited by Ernst &
Young LLP, whose report, along with the Fund's financial statements and
financial highlights are included in the annual report which is available upon
request.* These figures do not include the effect of sales charges or other fees
which may be applied at the variable life insurance, variable annuity or
qualified retirement plan product level. Any such additional sales charges or
other fees will lower the Fund's performance.
FINANCIAL HIGHLIGHTS TABLE FOR THE ACQUIRING FUND
[TO BE UPDATED]
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- SELECTED PER-SHARE DATA(1) --
-------------------------------------------------------------------------
NET REALIZED
AND
NET ASSET NET UNREALIZED TOTAL DIVIDENDS
VALUE AT INVESTMENT GAIN FROM FROM NET
BEGINNING INCOME (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME
--------- ---------- ------------ ---------- ----------
HARTFORD BOND HLS FUND
For the Year Ended December 31,
2003 (unaudited)
Class IA....................... $11.95 $0.37 $ 0.56 $ 0.93 $(0.50)
Class IB....................... 11.90 0.40 0.49 0.89 (0.49)
For the Year Ended December 31,
2002
Class IA....................... 11.46(2) 0.56(2) (0.01)(2) 0.55(2) (0.05)(2)
Class IB....................... 11.43(2) 0.46(2) 0.07(2) 0.53(2) (0.05)(2)
For the Year Ended December 31,
2001
Class IA....................... 11.08(2) 0.46(2) 0.48(2) 0.94(2) (0.56)(2)
Class IB....................... 11.07(2) 0.41(2) 0.50(2) 0.91(2) (0.55)(2)
For the Year Ended December 31,
2000
Class IA....................... 9.94(2) 0.69(2) 0.50(2) 1.19(2) (0.05)(2)
Class IB....................... 9.95(2) 0.61(2) 0.56(2) 1.17(2) (0.05)(2)
For the Year Ended December 31,
1999
Class IA....................... 10.81(2) 0.62(2) (0.84)(2) (0.22)(2) (0.58)(2)
Class IB....................... 10.83(2)(3) 0.61(2)(3) (0.84)(2)(3) (0.23)(2)(3) (0.57)(2)(3)
<Caption>
-- SELECTED PER-SHARE DATA(1) --
---------------------------------------------------
DISTRIBUTIONS
DIVIDENDS IN FROM
EXCESS OF NET REALIZED DISTRIBUTIONS
NET INVESTMENT GAINS ON FROM
INCOME INVESTMENTS CAPITAL
-------------- ------------- -------------
HARTFORD BOND HLS FUND
For the Year Ended December 31,
2003 (unaudited)
Class IA....................... $ -- $(0.06) $ --
Class IB....................... -- (0.06) --
For the Year Ended December 31,
2002
Class IA....................... --(2) (0.01)(2) --(2)
Class IB....................... --(2) (0.01)(2) --(2)
For the Year Ended December 31,
2001
Class IA....................... --(2) --(2) --(2)
Class IB....................... --(2) --(2) --(2)
For the Year Ended December 31,
2000
Class IA....................... --(2) --(2) --(2)
Class IB....................... --(2) --(2) --(2)
For the Year Ended December 31,
1999
Class IA....................... --(2) (0.07)(2) --(2)
Class IB....................... --(2)(3) (0.08)(2)(3) --(2)(3)
</Table>
- ---------------
(1) Information presented relates to a share of capital stock outstanding for
the indicated period.
(2) Per shares amounts have been restated to reflect a reverse stock split for
Class IB shares effective November 22, 2002.
(3) Per share amounts have been restated to reflect a reserve stock split for
Class B shares effective September 17, 1999.
(4) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Information for periods ended prior to December 31, 2002 has been audited by
Arthur Andersen LLP. In light of recent developments affecting Arthur
Andersen LLP, including the departure of certain key audit personnel,
management has been unable, despite reasonable efforts, to obtain Arthur
Andersen LLP's consent to the inclusion in this registration statement of the
Acquiring Fund's audited financial statements. The failure of Arthur Andersen
LLP to provide its consent may adversely affect the ability of a
contractholder to seek to recover damages related to the contractholder's
reliance on such financial statements.
C-1
- --------------------------------------------------------------------------------
<Table>
<Caption>
-- RATIOS AND SUPPLEMENTAL DATA --
- ------------------------------------------------------------------------------------------------------------------------------------
RATIO OF RATIO OF RATIO OF
EXPENSES EXPENSES NET
NET ASSET NET ASSETS TO AVERAGE TO AVERAGE INVESTMENT
NET INCREASE VALUE AT AT END OF NET ASSETS NET ASSETS INCOME PORTFOLIO
TOTAL (DECREASE) IN END TOTAL PERIOD AFTER BEFORE TO AVERAGE TURNOVER
DISTRIBUTIONS NET ASSETS VALUE OF PERIOD RETURN (000'S OMITTED) WAIVERS WAIVERS NET ASSETS RATE(4)
------------- ---------------- --------- ------- --------------- ---------- ---------- ---------- ---------
$(0.56) $ 0.37 $12.32 7.85% $2,332,342 0.50% 0.50% 3.77% 275%
(0.55) 0.34 12.24 7.58 734,768 0.75 0.75 3.52 275
(0.06)(2) 0.49(2) 11.95(2) 10.08 2,145,266 0.51 0.51 5.58 108
(0.06)(2) 0.47(2) 11.90(2) 9.83 382,864 0.75 0.76 5.34 108
(0.56)(2) 0.38(2) 11.46(2) 8.68 1,549,698 0.51 0.51 5.87 185
(0.55)(2) 0.36(2) 11.43(2) 8.49 152,254 0.69 0.76 5.69 185
(0.05)(2) 1.14(2) 11.08(2) 11.99 1,033,043 0.52 0.52 6.54 169
(0.05)(2) 1.12(2) 11.07(2) 11.79 31,551 0.70 0.77 6.36 169
(0.65)(2) (0.87)(2) 9.94(2) (2.02) 978,861 0.52 0.52 6.09 111
(0.65)(2)(3) (0.88)(2)(3) 9.95(2)(3) (2.19) 15,818 0.70 0.77 5.91 111
</Table>
C-2
PART B
STATEMENT OF ADDITIONAL INFORMATION
DATED [MARCH 1], 2004
ACQUISITION OF THE ASSETS OF
HARTFORD MULTISECTOR BOND HLS FUND
A SERIES OF
HARTFORD HLS SERIES FUND II, INC.
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
1-800-862-6668
BY AND IN EXCHANGE FOR SHARES OF
HARTFORD BOND HLS FUND
A SERIES OF
HARTFORD SERIES FUND, INC.
200 HOPMEADOW STREET
SIMSBURY, CONNECTICUT 06089
1-800-862-6668
This Statement of Additional Information relates specifically to the
reorganization of the series of Hartford HLS Series Fund II, Inc. referenced
above (the "Target Fund") into the series of Hartford Series Fund, Inc.
referenced above (the "Acquiring Fund"). Pursuant to this reorganization, the
Acquiring Fund would acquire all of the assets and all of the liabilities of the
Target Fund which has similar investment objectives, policies and risks, and
Acquiring Fund shares would be distributed pro rata by the Target Fund to the
holders of its shares, in complete liquidation of the Target Fund.
This Statement of Additional Information consists of this cover page
and the following documents, which are incorporated by reference herein:
1. The Statement of Additional Information dated May 1, 2003 of the Target
Fund, included in Post-Effective Amendment No. 34 to the Registration Statement
on Form N-1A of Hartford HLS Series Fund II, Inc., previously filed on EDGAR on
April 30, 2003, (SEC File Nos. 33-03920/811-4615).
1
2. The Statement of Additional Information dated May 1, 2003 of the
Acquiring Fund, included in Post-Effective Amendment Nos. 20 and 18 to the
Registration Statement on Form N-1A of Hartford Series Fund, Inc. previously
filed on EDGAR on April 30, 2003, (SEC File Nos. 333-45431/811-08629).
3. [The audited financial statements of the Target Fund included in the
Annual Report of The Hartford HLS Series Fund II, Inc. for the fiscal year ended
December 31, 2003, previously filed on EDGAR on February [__], 2004.]
4. [The audited financial statements of the Acquiring Fund included in the
Annual Report of Hartford Series Fund, Inc. for the fiscal year ended December
31, 2003, previously filed on EDGAR on February [__], 2004.]
Because the net asset value of the Target Fund did not individually
exceed 10 percent of the Acquiring Fund's net asset value, all measured as of
December 31, 2003, pro forma financial statements relating to the Funds have not
been included in this Statement of Additional Information.
This Statement of Additional Information dated [March 1], 2004 is not a
prospectus. A Prospectus/Proxy Statement dated [March 1], 2004 relating to the
above-referenced matters may be obtained from the Acquiring Fund or the Target
Fund at the addresses and telephone numbers shown above. This Statement of
Additional Information should be read in conjunction with such Prospectus/Proxy
Statement.
2
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION.
Article FIFTH of the Articles of Incorporation provides, in relevant part:
(f) The Corporation shall indemnify (i) its directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland and the federal securities laws now or hereafter
in force, including the advance of expenses under the procedures and to
the full extent permitted by law, and (ii) other employees and agents
to such extent as shall be authorized by the Board of Directors or the
Bylaws and as permitted by law. Nothing contained herein shall be
construed to protect any director or officer of the Corporation against
any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of his office. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those seeking
indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions
and is expressly empowered to adopt, approve and amend from time to
time such bylaws, resolutions or contracts implementing such provisions
or such further indemnification arrangements as may be permitted by
law. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the right of indemnification
provided hereunder with respect to acts or omissions occurring prior to
such amendment or repeal.
(g) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company
Act, no director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money damages;
provided, however, that nothing herein shall be construed to protect
any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his
office. No amendment of the charter of the Corporation or repeal of any
of its provisions shall limit or eliminate the limitation of liability
provided to directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal.
Insofar as indemnification for liability 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
1
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 in connection with
the securities being registered), the Registrant undertakes that it 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 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)(a) Articles of Incorporation (i)
(1)(b) Articles Supplementary dated August 20, 2002 (ii)
(1)(c) Articles Supplementary dated September 9, 2002 (iii)
(1)(d) Articles Supplementary dated January 7, 2003 (iii)
(1)(e) Articles Supplementary, dated June 10, 2003 (iv)
(1)(f) Articles of Amendment, dated October 1, 2003 (v)
(2) By-Laws (iv)
(3) Not applicable
(4) Agreement and Plan of Reorganization (filed herewith)
(5) See (1) above
(6)(a) Amended and Restated Investment Advisory Agreement (iii)
(6)(b) Amended and Restated Investment Services Agreement with
Hartford Investment Management Company (iii)
(7) Amended and Restated Principal Underwriting Agreement (iii)
(8) Not applicable
(9) Amended and Restated Custodian Agreement (iii)
(10)(a) Amended and Restated Rule 12b-1 Distribution Plan (iii)
(10)(b) Form of Multi-Class Plan Pursuant to Rule 18f-3(iii)
(11) Opinion and consent of Kevin J. Carr, in-house counsel to the
Registrant, with respect to the legality of the securities
being registered (filed herewith).
2
(12) Opinion and consent of Dechert with respect to tax matters (to
be filed by amendment)
(13)(a) Amended and Restated Share Purchase Agreement - Hartford Life
Insurance Company (vi)
(13)(b) Amended and Restated Share Purchase Agreement - Hartford Life
and Annuity Insurance Company (vi)
(13)(c) Share Purchase Agreement - First Fortis Life Insurance Company
(iv)
(13)(d) Share Purchase Agreement - Fortis Benefits Insurance Company
(iv)
(13)(e) Amended and Restated Administrative Services Agreement (iii)
(13)(f) Transfer Agency and Service Agreement between Hartford Series
Fund, Inc. and Hartford Investors Services Company LLC dated
March 1, 2003 (vi)
(14)(a) Consent of Arthur Anderson LLP*
(14)(b) Consent of KPMG LLP (filed herewith)
(14)(c) Consent of Ernst & Young LLP (filed herewith)
(15) Not applicable
(16) Power of attorney (v)
(17) Form of voting instructions (filed herewith).
- --------------------------
(i) Incorporated herein by reference to Registrant's Initial Registration
Statement on February 2, 1998.
(ii) Incorporated herein by reference to Registrant's Post-Effective
Amendment #16 filed on August 29, 2002.
(iii) Incorporated herein by reference to Registrant's Post-Effective
Amendment #s 18 and 16 filed on February 11, 2003.
- ------------------
* In light of recent developments affecting Arthur Andersen LLP,
including the departure of certain key audit personnel, management has
been unable, despite reasonable efforts, to obtain Arthur Andersen
LLP's consent to the inclusion in this registration statement of the
Acquiring Fund's audited financial statements for the fiscal year ended
December 31, 2001. The failure of Arthur Andersen LLP to provide its
consent may adversely affect the ability of a contractholder to seek to
recover damages related to the contractholder's reliance on such
financial statements.
3
(iv) Incorporated herein by reference to Registrant's Post-Effective
Amendment #s 25 and 23 filed on August 12, 2003.
(v) Incorporated herein by reference to Registrant's Post-Effective
Amendment #s 28 and 26 filed on October 24, 2003.
(vi) Incorporated herein by reference to Registrant's Post-Effective
Amendment #s 20 and 18 filed on April 30, 2003.
ITEM 17. UNDERTAKINGS.
(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, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
additional 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 1933 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.
(3) The undersigned Registrant agrees to file, by post-effective
amendment, an opinion of counsel or a copy of a ruling of the Internal Revenue
Service supporting the tax consequences of the proposed reorganization within a
reasonable time after receipt of such opinion or ruling.
4
Exhibit Index
Exhibit 4 Agreement and Plan of Reorganization
Exhibit 11 Opinion and Consent of Counsel Kevin J. Carr
Exhibit (14)(b) Consent of KPMG LLP
Exhibit (14)(c) Consent of Ernst & Young LLP
Exhibit 17 Form of Voting Instruction
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 the
state of Connecticut on the 14th day of January, 2004.
HARTFORD SERIES FUND, INC.
/s/ David M. Znamierowski*
-----------------------------------
By: David M. Znamierowski
Its: 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 date indicated.
Signature Title
/s/ David M. Znamierowski* President (Chief Executive Officer &
- --------------------------- Director) & Director
David M. Znamierowski
/s/ George R. Jay* Vice President, Controller & Treasurer
- --------------------------- (Chief Accounting Officer & Chief
George R. Jay Financial Officer)
/s/ Lynn S. Birdsong* Director
- ---------------------------
Lynn S. Birdsong
/s/ Winifred E. Coleman* Director
- ---------------------------
Winifred E. Coleman
/s/ Duane E. Hill* Director
- ---------------------------
Duane E. Hill
/s/ Thomas M. Marra* Director
- ---------------------------
Thomas M. Marra
/s/ Robert M. Gavin* Director
- ---------------------------
Robert M. Gavin
/s/ Phillip O. Peterson* Director
- ---------------------------
Phillip O. Peterson
/s/ Millard H. Pryor, Jr.* Director
- ---------------------------
Millard H. Pryor, Jr.
5
/s/ Lowndes A. Smith* Director
- ---------------------------
Lowndes A. Smith
/s/ Kevin J. Carr Dated: January 14, 2004
- ---------------------------
*By Kevin J. Carr
Attorney-in-fact
6