SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to " 240.14a-11(c) or " 240.14a-12
The Hartford Income Shares Fund, Inc.
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(Name of Registrant as Specified in its Charter)
(specify)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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or Item 22(a)(2) of Schedule 14A.
[_] Fee computed on table below per Exchange Act Rules 14a96(i)(4) and O-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously by written preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
November 17, 2004
THE HARTFORD INCOME SHARES FUND, INC.
Dear Shareholder:
You are cordially invited to attend the annual meeting of the shareholders
of The Hartford Income Shares Fund, Inc. The meeting will take place on December
15, 2004 at 8:30 a.m. Eastern Time at the offices of Hartford Life Insurance
Company, 200 Hopmeadow Street, Simsbury, Connecticut.
Additionally, we request that you complete the enclosed Proxy Card for the
upcoming meeting. As explained in the enclosed Proxy Statement, the purpose of
the meeting is to elect the Fund's Board of Directors and ratify the selection
of Ernst & Young LLP as independent public accountants for the Fund. The Fund's
Board of Directors has reviewed and approved these proposals and recommends that
you vote FOR each proposal.
The attached Proxy Statement provides more information on these proposals.
Please read it carefully and return your completed Proxy Card in the enclosed,
addressed, postage-paid envelope, or take advantage of the telephonic or
Internet voting procedures described in the Proxy Statement. If you have any
questions in connection with these materials please call us at 1-888-843-7824.
Very truly yours,
/s/ David M. Znamierowski
David M. Znamierowski
President
THE HARTFORD INCOME SHARES FUND, INC.
500 BIELENBERG DRIVE,
WOODBURY, MINNESOTA 55125
MAILING ADDRESS: P.O. BOX 64387,
ST. PAUL, MINNESOTA 55164
NOTICE OF ANNUAL SHAREHOLDERS' MEETING
TO BE HELD ON DECEMBER 15, 2004
The annual meeting of the shareholders of The Hartford Income Shares Fund,
Inc. (the "Company") will be held at the offices of Hartford Life Insurance
Company ("Hartford Life"), 200 Hopmeadow Street, Simsbury, Connecticut, on
Wednesday, December 15, 2004, at 8:30 a.m. Eastern Time for the following
purposes:
1. TO ELECT A BOARD OF DIRECTORS CONSISTING OF THE SEVEN NOMINEES DESCRIBED
IN THE ATTACHED PROXY STATEMENT.
2. TO RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF THE COMPANY OF
ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING JULY 31, 2005.
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Shareholders of record on October 29, 2004 are the only persons entitled to
notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN, DATE, AND MAIL
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, OR TAKE ADVANTAGE OF THE TELEPHONIC
OR INTERNET VOTING PROCEDURES DESCRIBED IN THE PROXY STATEMENT, IN ORDER TO SAVE
THE COMPANY ANY FURTHER SOLICITATION EXPENSE. An addressed envelope for which no
postage is required is enclosed.
/s/ Kevin J. Carr
Kevin J. Carr
Secretary
Dated: November 17, 2004
THE HARTFORD INCOME SHARES FUND, INC.
500 BIELENBERG DRIVE, WOODBURY, MINNESOTA 55125
MAILING ADDRESS: P.O. BOX 64387, ST. PAUL, MINNESOTA 55164
PROXY STATEMENT
ANNUAL MEETING OF THE SHAREHOLDERS --
DECEMBER 15, 2004
The enclosed proxy card is solicited by the Board of Directors of The
Hartford Income Shares Fund, Inc. (the "Company") in connection with the annual
meeting of shareholders of the Company to be held on Wednesday, December 15,
2004 beginning at 8:30 a.m. (Eastern Standard Time) and at any adjournment
(rescheduling) of the meeting. The costs of solicitation, including the cost of
preparing and mailing the Notice of Annual Shareholders' Meeting and this Proxy
Statement, will be paid by the Company, and such mailing will take place on
approximately November 17, 2004. Representatives of Hartford Administrative
Services Company ("HASCO"), the dividend disbursement agent for the Company, and
Hartford Life Insurance Company ("Hartford Life"), without cost to the Company,
may solicit proxies for the management of the Company by means of mail,
telephone, or personal calls. The address of HASCO is that of the Company as
provided above. Hartford Life, and Hartford Investment Financial Services, LLC
("HIFSCO"), which serves as the Company's investment adviser, principal
underwriter and administrator, are principally located at 200 Hopmeadow Street,
Simsbury, Connecticut 06089.
Shareholders may revoke authority to vote their shares by giving written
notice of revocation to the Secretary of the Company. Unless revoked, properly
executed proxy cards that have been returned by shareholders without
instructions will be voted "for" each proposal. In instances where choices are
specified by the shareholders in the proxy card, those shareholders' votes will
be voted or the votes will be withheld in accordance with the shareholders'
choices. With regard to the election of directors, votes may be cast for all
nominees or for all nominees except those indicated, or withheld for all
nominees. Abstentions may be specified for Proposal II (ratification of
independent public accountants). Abstentions and broker non-votes (proxy cards
received by the Company from brokers or nominees when the broker or nominee has
neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretion to vote on a particular matter) will be
counted as present for purposes of determining whether a quorum of shares is
present at the meeting, and will have the same effect as a vote "against"
Proposal II. Broker non-votes will not be counted in favor of, but will have no
other effect on Proposal I. So far as the Board of Directors is aware, no
matters other than those described in this Proxy Statement will be acted upon at
the meeting. Should any other matters properly come before the meeting calling
for a vote of shareholders, it is the intention of
1
the persons named as proxies to vote upon such matters according to their best
judgment.
In addition to completing and returning the enclosed proxy card,
shareholders are also able to vote their shares by touchtone telephone or by
Internet by following the instructions included with the proxy card accompanying
this Proxy Statement. To vote by Internet or by telephone, shareholders can
access the website or call the toll-free number listed on the proxy card. To
vote by Internet or by telephone, shareholders will need the "control number"
that appears on the proxy card. After inputting this number, shareholders will
be prompted to provide their voting instructions on the proposals. Shareholders
will have an opportunity to review their voting instructions and make any
necessary changes before submitting their voting instructions and terminating
their telephone call or Internet link.
Only those shareholders owning shares as of the close of business on
October 29, 2004 may vote at the meeting or any adjournments of the meeting. As
of that date, there were issued and outstanding 12,986,883 common shares, $0.001
par value. Common shares represent the only class of securities of the Company.
Each shareholder is entitled to one vote for each share held. As a shareholder,
you will not have appraisal rights in connection with the proposals described in
this Proxy Statement.
In order to have a quorum and hold the annual meeting, shareholders owning
a majority of the shares of the Company entitled to vote at the meeting must be
present in person or by proxy. If a quorum is not present at the meeting, or if
a quorum is present but sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of votes. In determining whether to
adjourn the meeting, the following factors may be considered: the nature of the
proposals that are the subject of the meeting, the percentage of votes actually
cast, the percentage of negative votes actually cast, the nature of any further
solicitation, and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of those shares represented at the meeting in person or by
proxy.
A copy of the Company's most recent annual report is available upon
request. If you would like to receive a copy, please contact the Company at P.O.
Box 64387, St. Paul, Minnesota 55164 or call 1-888-843-7824, and a copy will be
sent, without charge, by first class mail within three business days of your
request.
2
SHARE OWNERSHIP
The following table sets forth the dollar range of equity securities
beneficially owned by each director of the Company and on an aggregate basis in
any registered investment companies overseen by the director within the Hartford
Fund Family as a group, as of September 30, 2004.
<Table>
<Caption>
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
DOLLAR RANGE OF INVESTMENT COMPANIES OVERSEEN BY
EQUITY SECURITIES DIRECTOR IN THE HARTFORD FUND
BENEFICIAL OWNER IN THE COMPANY FAMILY*
- ---------------- -------------------- --------------------------------
NON-INTERESTED DIRECTORS
Lynn S. Birdsong......... None $10,001-$50,000
Dr. Robert M. Gavin...... None Over $100,000
Duane E. Hill............ None None
Phillip O. Peterson...... None $10,001-$50,000
Millard H. Pryor, Jr..... None $50,001-$100,000
INTERESTED DIRECTORS
Thomas M. Marra.......... None Over $100,000
Lowndes A. Smith......... None Over $100,000
</Table>
- ---------------
* The Hartford Fund Family currently consists of four open-end investment
companies and one closed-end investment company.
As of September 30, 2004, all directors and officers as a group owned less
than 1% of the outstanding shares of the Company. As of this date, no person, to
the knowledge of Company management, owned of record or beneficially, more than
5% of the voting shares of the Company.
As of the same date, none of the non-interested directors (or their
immediate family members) had share ownership in securities of the Company's
investment adviser, principal underwriter or in an entity controlling,
controlled by or under common control with the investment adviser or principal
underwriter of the Company (not including registered investment companies).
3
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, shareholders will be asked to elect seven members to the
Company's Board of Directors. It is intended that the enclosed proxy card will
be voted for the election of the seven persons named below as directors unless
such authority has been withheld in the proxy card. All of the nominees
currently serve as directors of the Company. The term of office of persons
elected will be until the next annual meeting of the shareholders or until their
successors are elected and shall qualify. Pertinent information regarding each
nominee's principal occupation and business experience during at least the past
five years, number of portfolios overseen and other directorships held is set
forth below. The mailing address of each nominee is: c/o Secretary, The Hartford
Income Shares Fund, Inc., 200 Hopmeadow Street, Simsbury, CT 06089.
NOMINEES FOR ELECTION AS NON-INTERESTED DIRECTORS
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND OTHER
POSITION HELD TERM OF OFFICE* COMPLEX DIRECTORSHIPS
WITH THE AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------ ------------- --------------- --------------------------- ------------- -------------
LYNN S.
BIRDSONG(1,2)....... Director Since 2003 From 1979 to 2002, Mr. 76 Independent
(age 58) Birdsong was a managing Director of
director of Zurich Scudder the Atlantic
Investments, an investment Whitehall
management firm. Since Funds and The
1981, Mr. Birdsong has been Japan Fund
a partner in Birdsong
Company, an advertising
specialty firm. He is also
a Director of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series Fund,
Inc. and Hartford HLS
Series Fund II, Inc.
DR. ROBERT M.
GAVIN(1,2).......... Director and Director since Dr. Gavin is an educational 76 N/A
(age 64) Chairman of 1986 and consultant. Prior to
the Board Chairman of September 1, 2001, he was
the Board President of Cranbrook
since 2004 Education Community; and
prior to July 1996, he was
President of Macalester
College, St. Paul,
Minnesota. He is also a
Director of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series Fund,
Inc. and Hartford HLS
Series Fund II, Inc.
</Table>
4
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND OTHER
POSITION HELD TERM OF OFFICE* COMPLEX DIRECTORSHIPS
WITH THE AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------ ------------- --------------- --------------------------- ------------- -------------
DUANE E. HILL(1,2)...
(age 59) Director Since 2002 Mr. Hill is Partner 76 N/A
Emeritus and a founding
partner of TSG Capital
Group, a private equity
investment firm that serves
as sponsor and lead
investor in leveraged
buyouts of middle market
companies. Mr. Hill is also
a Partner of TSG Ventures
L.P., a private equity
investment company that
invests primarily in
minority-owned small
businesses. He is also a
Director of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series Fund,
Inc. and Hartford HLS
Series Fund II, Inc.
PHILLIP O.
PETERSON(1,2)....... Director Since 2000 Mr. Peterson is a mutual 76 N/A
(age 59) fund industry consultant.
He was a partner of KPMG
LLP until July 1999. In
January 2004, Mr. Peterson
was appointed independent
president of the Strong
Mutual Funds. He is also a
Director of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series Fund,
Inc. and Hartford HLS
Series Fund II, Inc.
MILLARD H. PRYOR,
JR.(1,2)............ Director Since 2002 Mr. Pryor has served as 76 Mr. Pryor is
(age 71) Managing Director of Pryor a Director of
& Clark Company (real Infodata
estate investment), Systems, Inc.
Hartford, Connecticut, (software
since June 1992. He is also company) and
a Director of The Hartford CompuDyne
Mutual Funds, Inc., The Corporation
Hartford Mutual Funds II, (security
Inc., Hartford Series Fund, products and
Inc. and Hartford HLS services).
Series Fund II, Inc.
</Table>
5
NOMINEES FOR ELECTION AS INTERESTED DIRECTORS
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND OTHER
POSITION HELD TERM OF OFFICE* COMPLEX DIRECTORSHIPS
WITH THE AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------ ------------- --------------- --------------------------- ------------- -------------
THOMAS M. MARRA**....
(age 46) Director Since 2002 Mr. Marra is President and 76 Mr. Marra is
Chief Operating Officer of a member of
Hartford Life, Inc. the Board of
("Hartford Life"). He is Directors of
also a member of the Board The Hartford
of Directors and a member
of the Office of the
Chairman for The Hartford
Financial Services Group,
Inc. ("The Hartford"), the
parent company of Hartford
Life. Mr. Marra was named
President of Hartford Life
in 2001 and COO in 2000,
and served as Director of
Hartford Life's Investment
Products Division from 1998
to 2000. He was head of
Hartford Life's Individual
Life and Annuities Division
from 1994 to 1998 after
being promoted to Senior
Vice President in 1994 and
to Executive Vice President
in 1996. Mr. Marra is also
a Managing Member and
President of HIFSCO and HL
Investment Advisors, LLC
("HL Advisors"). He served
as Chairman of the Board of
the Company from 2002 to
2004. He currently serves
as a Director of The
Hartford Mutual Funds,
Inc., The Hartford Mutual
Funds II, Inc., Hartford
Series Fund, Inc. and
Hartford HLS Series Fund
II, Inc. and served as
Chairman of these companies
from 2002 to 2004.
</Table>
6
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
FUND OTHER
POSITION HELD TERM OF OFFICE* COMPLEX DIRECTORSHIPS
WITH THE AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME AND AGE COMPANY TIME SERVED DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------ ------------- --------------- --------------------------- ------------- -------------
LOWNDES A. SMITH**...
(age 65) Director Since 2002 Mr. Smith served as Vice 76 Mr. Smith is
Chairman of The Hartford a Director of
from February 1997 to White
January 2002, as President Mountains
and Chief Executive Officer Insurance
of Hartford Life, Inc. from Group, Ltd.
February 1997 to January
2002, and as President and
Chief Operating Officer of
The Hartford Life Insurance
Companies from January 1989
to January 2002. He is also
a Director of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series Fund,
Inc. and Hartford HLS
Series Fund II, Inc.
</Table>
- ---------------
* Each director serves until his or her death, resignation, or retirement or
until the next annual meeting of stockholders, if any, is held and his or her
successor is elected and qualifies.
** Denotes the director who is an interested person, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Company.
Mr. Marra is an interested director of the Company due to the positions he
holds with affiliates of the Company, including serving as Managing Member
and President of HIFSCO. Mr. Smith is an interested director of the Company
because he owns stock of the parent company of HIFSCO, the Company's
investment adviser.
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Nominating Committee of the Board of Directors
The Board of Directors recommends that shareholders vote in favor of the
seven individuals listed as Nominees for Election to serve as directors of the
Company. A plurality of the votes properly cast in person or by proxy at the
meeting is required for the election of directors. This means that the seven
nominees receiving the highest number of "FOR" votes will be elected. Unless
otherwise instructed, the proxies will vote for the seven nominees. All of the
nominees have consented to serve as directors if elected. In the event any of
the nominees are not candidates for election at the meeting, the proxies may
vote for such other persons according to their best judgment. Nothing currently
indicates that such a situation will arise.
7
PROPOSAL TWO
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or of its investment adviser. The 1940 Act
provides that the selection be submitted for ratification or rejection by the
shareholders at an annual meeting.
On July 27, 2004, the Board of Directors, upon the recommendation of the
Audit Committee, determined to select the firm of Ernst & Young LLP ("E&Y") as
independent auditors of the Company for the fiscal year ending July 31, 2005.
E&Y served as independent auditors of the Company for the fiscal year's ended
July 31, 2004 and July 31, 2003.
The Board of Directors recommends that shareholders vote in favor of the
ratification of E&Y as the independent public accountants for the Company. The
affirmative vote of a majority of the shares represented at the meeting,
provided at least a quorum (more than 50% of the outstanding shares) is
represented in person or by proxy, is sufficient for the ratification of the
selection of the independent public accountants. Unless otherwise instructed,
the proxies will vote for the ratification of the selection of E&Y as the
Company's independent public accountants.
MANAGEMENT COMPENSATION
The Company pays no compensation to any director or officer who is an
officer or employee of HIFSCO, HASCO, Hartford Life or any affiliated company.
During the fiscal year ended July 31, 2004, the Company paid a fee to each
director who is not an officer or employee of HIFSCO, HASCO or Hartford Life.
8
The following table sets forth the compensation that each director received
during the fiscal year ended July 31, 2004 from the entire Fund Complex (which
includes the Company and other Hartford-sponsored mutual funds) and the portion
from the Company.
<Table>
<Caption>
TOTAL
PENSION COMPENSATION
RETIREMENT ESTIMATED PAID TO DIRECTORS
AGGREGATE BENEFITS ACCRUED ANNUAL BENEFITS BY ALL FUNDS IN
NAME OF PERSON, COMPENSATION AS PART OF UPON THE HARTFORD FUND
POSITION FROM THE COMPANY FUND EXPENSES RETIREMENT COMPLEX*
- --------------- ---------------- ---------------- --------------- -----------------
NON-INTERESTED DIRECTORS
Lynn S. Birdsong................ $157.45 None None $116,000.00
Winifred E. Coleman............. $139.65 None None $101,500.00
Dr. Robert M. Gavin............. $160.56 None None $118,500.00
Duane E. Hill................... $160.56 None None $118,500.00
Phillip O. Peterson............. $150.65 None None $110,500.00
Millard H. Pryor, Jr............ $163.07 None None $120,500.00
INTERESTED DIRECTORS
Thomas M. Marra................. None None None None
Lowndes A. Smith................ $140.56 None None $103,000.00
</Table>
- ---------------
* There were five registered investment companies included in the Hartford Fund
Complex during the fiscal year ended July 31, 2004. For the fiscal year ending
July 31, 2005, the annual retainer fee paid to directors by all Funds in the
Hartford Fund Complex has been increased by $15,000 and the per meeting fee
has been increased by $1,500.
BOARD MEETINGS, COMMITTEES AND OTHER RELATED MATTERS
The Company has an Audit Committee and a Nominating Committee of the Board
of Directors. The Company does not have a standing compensation committee of the
Board of Directors. The Board has adopted written charters for the Audit
Committee and Nominating Committee, copies of which are not available on the
Company's website, but are attached to this Proxy Statement as Appendix A and
Appendix B, respectively.
During the Company's fiscal year ended July 31, 2004, there were ten
meetings of the Board of Directors, three meetings of the Nominating Committee
and five meetings of the Audit Committee. No members of the Board of Directors
attended last year's annual meeting. Mr. Znamierowski, President of the Company,
attended last year's annual meeting which was held on December 16, 2004. No
director attended or participated telephonically in fewer than 75% of the
aggregate of the number of meetings of the Board of Directors and the number of
meetings held by all committees of the Board on which such director served, with
the exception of Winifred E. Coleman.
9
On October 29, 2004, the New York Attorney General's Office informed The
Hartford Financial Services Group, Inc. ("Hartford"), the indirect parent to the
Company's investment adviser, that the Attorney General is conducting an
investigation with respect to the timing of the sale by Thomas Marra, a director
of the Company, of 217,074 shares of Hartford's common stock on September 21,
2004. The sale occurred shortly after the issuance of subpoenas dated September
17, 2004 by the New York Attorney General's Office. Hartford has engaged outside
counsel to review the circumstances related to the transaction and is fully
cooperating with the New York Attorney General's Office. On the basis of that
review, Hartford has determined that Mr. Marra complied with Hartford's
applicable internal trading policies and procedures.
Shareholders wishing to send communications to the Board may communicate
with members of the Board of Directors by submitting a written communication
directed to the Board of Directors in care of the Company's Secretary at c/o
Secretary, The Hartford Income Shares Fund, Inc., 200 Hopmeadow Street,
Simsbury, CT 06089.
THE NOMINATING COMMITTEE
The Nominating Committee's function is to screen and select nominees for
election. For the fiscal year ending July 31, 2004, the Nominating Committee was
comprised of the non-interested Directors: Mr. Birdsong, Ms. Coleman, Dr. Gavin,
Mr. Hill, Mr. Peterson and Mr. Pryor. There were three meetings of the
Nominating Committee held during the fiscal year ended July 31, 2004.
The Nominating Committee will consider nominees for non-interested
directors recommended by shareholders if a vacancy among the non-interested
directors occurs and if the nominee meets the Committee's criteria. Shareholders
wishing to submit recommendations for nominees must send a letter to the
chairperson of the Nominating Committee, in care of the Secretary of the Company
at 200 Hopmeadow Street, Simsbury, CT 06089, and must include, at a minimum: (i)
the shareholder's contact information; (ii) the nominee's contact information,
the nominee's resume or curriculum vitae, and the number of Company shares owned
by the proposed nominee; (iii) a statement as to whether the nominee is an
"interested person" of the Company as defined in Section 2(a)(19) of the 1940
Act, and appropriate documentation to support the statement; (iv) all
information regarding the nominee that would be required to be disclosed in
solicitations of proxies for elections of directors required by Regulation 14A
of the Securities Exchange Act of 1934; and (v) a notarized letter executed by
the nominee, stating his or her intention to serve as a nominee and be named in
the Company's proxy statement, if so designated by the Nominating Committee and
the Company's Board of Directors. A shareholder nominee recommendation must be
received by the Nominating Com-
10
mittee within a reasonable time period prior to the proxy submission. A
shareholder or shareholder group may not submit for consideration a nominee
which has previously been considered by the Nominating Committee. Candidates
submitted by shareholders are evaluated according to the same criteria as other
non-interested director candidates. The Nominating Committee has not received a
recommended nominee from an eligible shareholder or shareholder group who
individually, or in the aggregate, beneficially owned more than 5% of the
Company's voting shares for at least one year.
Care is given to ensure that the individual members of the Board bring to
their deliberations education, work and personal experiences that would improve
the value provided to the shareholders. In order to maintain the vitality of the
panel, the Board of Directors and the Nominating Committee have set a mandatory
retirement age of 72. The following criteria for nominees should be considered
as a minimum requirement for consideration as a non-interested director:
- Fifteen (15) years business or academic experience in a management,
administrative, or other oversight capacity;
- College degree or business experience equivalent to a college degree;
- At least one non-interested director should have an investment background
and at least one director should have a financial/accounting background;
- Personal accomplishments that would provide ready acceptance by
shareholders that the individual was capable of representing their
interests;
- An ability to invest in Hartford funds;
- A person able to think through and discuss complicated regulatory and
financial issues and arrive at reasonable decisions on these issues on
behalf of the shareholders;
- A person of high ethical standards;
- Must meet minimum standards set out in the Company's audit committee
charter; and
- Must be "financially literate" as that term is defined under New York
Stock Exchange rules. For these purposes, this means the ability to read
and understand fundamental financial statements, including a company's
balance sheet, income statement, and cash flow statement. Directors who
have limited familiarity with finance can achieve such "literacy" through
Company-sponsored training programs.
11
The Nominating Committee may, in its sole discretion, hire third parties at
the expense of the Company to assist it with identifying, screening and
evaluating nominees, although it has not done so in connection with the current
nominees.
THE AUDIT COMMITTEE
The Audit Committee currently consists of all non-interested directors of
the Company. Each member of the Audit Committee is considered to be
"independent" within the meaning of the rules of the New York Stock Exchange.
The Audit Committee met five times during the fiscal year ended July 31, 2004.
The charter for the Audit Committee, attached hereto as Appendix A, sets
forth the Audit Committee's responsibilities. The purposes and scope of
responsibilities of the Audit Committee are to assist board oversight of (a) the
Company's accounting and financial reporting policies and practices, their
internal controls and, as appropriate, the internal controls of the service
providers; (b) the quality, objectivity and integrity of the Company's financial
statements and the independent audit thereof; (c) the Company's compliance with
legal and regulatory requirements; (d) the qualifications and independence of
the Company's independent accountant; and (e) to act as liaison between the
Company's independent accountants and the full Board of Directors. The Company's
independent accountants shall report directly to the Audit Committee. The Audit
Committee shall report regularly to the Board of Directors.
Management is responsible for maintaining appropriate systems for
accounting. The Company's independent accountants are responsible for conducting
a proper audit of the Company's financial statements and are ultimately
accountable to the Audit Committee. The Audit Committee has the ultimate
authority and responsibility to select (subject to ratification by the non-
interested directors and, if applicable, to ratification by Company
shareholders) and evaluate the Company's independent accountants, to determine
the compensation of the Company's independent accountants and, where
appropriate, to replace the Company's independent accountants.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has met and held discussions with management and the
independent accountants. Management represented to the Audit Committee that the
Company's financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the financial statements with management and the independent
accountants. The Audit Committee discussed with the indepen-
12
dent accountants matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees).
The Company's independent accountants also provided to the Audit Committee
the written disclosure required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants the accounting firm's independence.
The Committee also considered whether non-audit services provided by the
independent accountants during the last fiscal year were compatible with
maintaining the independent accountants' independence.
Based upon the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommends to the Board of Directors that the
audited financial statements for the Company's most recent fiscal year ended
July 31, 2004 be included in the Company's Annual Report filed with the
Securities and Exchange Commission.
<Table>
The Audit Committee
Lynn S. Birdsong
Winifred E. Coleman
Dr. Robert M. Gavin
Duane E. Hill
Phillip O. Peterson
Millard H. Pryor, Jr.
</Table>
13
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board selected the firm
of Ernst & Young LLP ("E&Y") as independent auditors of the Company for the
fiscal year ending July 31, 2005. E&Y served as independent auditors of the
Company for the fiscal years ended July 31, 2003 and July 31, 2004.
AUDIT FEES. The aggregate fees billed by E&Y for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal years ended July 31, 2003 and 2004 were $25,000 and $25,000,
respectively.
AUDIT-RELATED FEES. No fees were billed by E&Y for professional services
rendered that are related to the audit of the Company's annual financial
statements but not reported under "Audit-Fees" above for the fiscal years ended
July 31, 2003 and 2004. Aggregate fees in the amount of $35,750 and $37,500 for
the fiscal years ended July 31, 2003 and 2004, respectively, were billed by E&Y
to HIFSCO, or an affiliate thereof that provides ongoing services to the
Company, relating to the operations and financial reporting of the Company.
These fees relate to an annual review of internal controls, as required by
regulation, for HASCO, an affiliate which provides transfer agency services to
the Company and over 30 other mutual funds in the Hartford Fund Family.
TAX FEES. The aggregate fees billed by E&Y for professional services
rendered for tax compliance, tax advice and tax planning for the fiscal years
ended July 31, 2003 and 2004 were $2,500 and $2,550, respectively. No fees were
billed by E&Y for such services rendered to HIFSCO, or an affiliate thereof that
provides ongoing services to the Company, relating to the operations and
financial reporting of the Company and subject to pre-approval by the Audit
Committee, for the fiscal years ended July 31, 2003 and 2004.
ALL OTHER FEES. No fees were billed by E&Y for professional services
rendered for products and services other than those described above for the
fiscal years ended July 31, 2003 and 2004, nor were any fees billed by E&Y for
such services rendered to HIFSCO, or an affiliate thereof that provides ongoing
services to the Company, relating to the operations and financial reporting of
the Company and subject to pre-approval by the Audit Committee, for those fiscal
years.
The Audit Committee has considered whether the services described above are
compatible with E&Y's independence. The Audit Committee has also considered
whether the provision of all other non-audit services rendered to HIFSCO, or an
affiliate thereof that provides ongoing services to the Company, is compatible
with maintaining E&Y's independence. The Audit Committee has adopted
pre-approval policies and procedures pursuant to which the
14
engagement of any accountant is approved. Such procedures govern the ways in
which the Audit Committee will pre-approve audit and various categories of
non-audit services that the auditor provides to the Company and to the Company's
investment adviser and to affiliates of the adviser that provide ongoing
services to the Company. In accordance with this policy, the Audit Committee has
given its approval for the provision of audit services by E&Y for the fiscal
year ending July 31, 2005 and has also given its general pre-approval for the
provision by E&Y of certain types of audit-related, tax and permitted non-audit
services. Services which have not received pre-approval must receive specific
approval of the Audit Committee. The Audit Committee is informed of each such
engagement in a timely manner, and such procedures do not include delegation of
the Audit Committee's responsibilities to management. Pre-approval has not been
waived in respect of services described under "Audit-Related Fees," "Tax Fees"
and "All Other Fees," since the pre-approval procedures were adopted by the
Audit Committee.
The aggregate non-audit fees billed by E&Y for services rendered to the
Company and to HIFSCO, or an affiliate thereof that provides ongoing services to
the Company, for the fiscal years ended July 31, 2003 and 2004, amounted to
$38,250 and $40,550, respectively.
Representatives of E&Y are not expected to be present at the meeting, but
will be given the opportunity to make a statement if they so desire and will be
available should any matter arise requiring their presence.
15
EXECUTIVE OFFICERS OF THE COMPANY
Information about each executive officer's position and term of office with
the Company and business experience during at least the past five years is set
forth below. Unless otherwise indicated, all positions have been held more than
five years. Compensation paid to the executive officers of the Company is paid
by Hartford Life or its affiliates. No executive officer receives any
compensation from the Company.
<Table>
<Caption>
BUSINESS EXPERIENCE DURING
NAME AND (AGE) POSITION/TERM OF OFFICE PAST FIVE YEARS
- -------------- ------------------------ --------------------------
David M. Znamierowski
(44).................. President since 2001 President, Hartford
Investment Management
Company ("Hartford
Investment"), Executive
Vice President and Chief
Investment Officer for
Hartford Life, Senior Vice
President, Hartford Life,
Inc., Managing Member and
Senior Vice President of
HIFSCO and HL Investment
Advisors, LLC ("HL
Advisors"), Group Senior
Vice President and Chief
Investment Officer of The
Hartford, and President of
The Hartford Mutual Funds,
Inc., The Hartford Mutual
Funds II, Inc., Hartford
HLS Series Fund, Inc. and
Hartford HLS Series Fund
II, Inc.
Robert W. Beltz, Jr.
(55).................. Vice President since Vice President, Securities
1993 Operations of HASCO,
Assistant Vice President
of Hartford Life Insurance
Company, Vice President of
The Hartford Mutual Funds,
Inc., The Hartford Mutual
Funds II, Inc., The
Hartford Income Shares
Fund, Inc., Hartford
Series Fund, Inc. and
Hartford HLS Series Fund
II, Inc since December
2001.
</Table>
16
<Table>
<Caption>
BUSINESS EXPERIENCE DURING
NAME AND (AGE) POSITION/TERM OF OFFICE PAST FIVE YEARS
- -------------- ------------------------ --------------------------
Kevin J. Carr (50)...... Vice President since Assistant General Counsel
2001, Secretary since since 1999, Counsel since
2002, Assistant November 1996 and
Secretary, 2001-2002 Associate Counsel since
November 1995 of The
Hartford, Vice President,
Assistant Secretary of HL
Advisors and HIFSCO,
Assistant Secretary,
Hartford Investment, and
Vice President and
Secretary of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc.
William H. Davison, Jr.
(47).................. Vice President since Managing Director and
2002 Director of the Funds
Management Group of
Hartford Investment
Management, Senior Vice
President of HIFSCO and HL
Advisors, and Vice
President of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc.
</Table>
17
<Table>
<Caption>
BUSINESS EXPERIENCE DURING
NAME AND (AGE) POSITION/TERM OF OFFICE PAST FIVE YEARS
- -------------- ------------------------ --------------------------
Tamara L. Fagely (46)... Treasurer since 1993, Vice President of HASCO
Vice President since since 1998; prior to 1998,
1996 and Controller Second Vice President of
since 2001 HASCO; Controller for
HIFSCO, Vice President,
Controller and Treasurer
of The Hartford Mutual
Funds, Inc. and The
Hartford Mutual Funds II,
Inc. since 2001, Vice
President, Controller and
Treasurer of Hartford
Series Fund, Inc. and
Hartford HLS Series Fund
II, Inc. since 2004, and
Assistant Vice President
of Hartford Life since
December 2001.
Bruce W. Ferris (49).... Vice President since Senior Vice President and
2002 Director of Sales and
Marketing in the
Investment Products
Division of Hartford Life,
Managing Member of HL
Advisors, and Vice
President of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc.
Mary Jane Fortin (40)... Vice President since Senior Vice President and
2003 Director of Mutual Funds
and 529 Programs for
Hartford Life, Vice
President of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc.
</Table>
18
<Table>
<Caption>
BUSINESS EXPERIENCE DURING
NAME AND (AGE) POSITION/TERM OF OFFICE PAST FIVE YEARS
- -------------- ------------------------ --------------------------
George R. Jay (52)...... Vice President since Assistant Vice President
2001 of Hartford Life and
Director of Broker-Dealer
Compliance. Vice President
and Chief Compliance
Officer of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., Hartford Series
Fund, Inc., and Hartford
HLS Series Fund II, Inc.
Stephen T. Joyce (45)... Vice President since Senior Vice President and
2001 Director of the
Institutional Solutions
Group for Hartford Life,
Senior Vice President of
HL Advisors, Vice
President of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc. Previously,
he served as Vice
President (1997-1999) and
of Hartford Life.
David N. Levenson (38).. Vice President since Senior Vice President
2001 since 2000 and Vice
President (1995-2000) of
Hartford Life; Senior Vice
President of HIFSCO and HL
Advisors, and Vice
President of The Hartford
Mutual Funds, Inc., The
Hartford Mutual Funds II,
Inc., The Hartford Income
Shares Fund, Inc.,
Hartford Series Fund, Inc.
and Hartford HLS Series
Fund II, Inc.
</Table>
19
<Table>
<Caption>
BUSINESS EXPERIENCE DURING
NAME AND (AGE) POSITION/TERM OF OFFICE PAST FIVE YEARS
- -------------- ------------------------ --------------------------
John C. Walters (42).... Vice President since Executive Vice President
2001 and Director of the
Investment Products
Division of Hartford Life,
Managing Member and
Executive Vice President
of HIFSCO and HL Advisors,
Vice President of The
Hartford Mutual Funds,
Inc., The Hartford Mutual
Funds II, Inc., The
Hartford Income Shares
Fund, Inc., Hartford
Series Fund, Inc. and
Hartford HLS Series Fund
II, Inc.
</Table>
OTHER MATTERS
Management does not intend to present any business to the meeting not
mentioned in this Proxy Statement and currently knows of no other business to be
presented. If any other matters are brought before the meeting, the persons
named as proxies will vote on such matters in accordance with their judgment of
the best interests of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company records and other information, the Company believes
that all SEC filing requirements applicable to its directors and officers
pursuant to Section 16(a) of the Securities Exchange Act of 1934, with respect
to the Company's fiscal year ending July 31, 2004, were satisfied, except that
due to an administrative oversight, a Form 3 for Lisa Audet, Assistant Portfolio
Manager, indicating that she is a reporting person, was not timely filed but has
since been filed.
SHAREHOLDER PROPOSALS
Proposals of Company shareholders intended to be presented at the fiscal
2005 annual shareholders' meeting must be received at the Company's offices by
July 20, 2005, in order to be considered for inclusion in the Company's proxy
statement and form of proxy for the 2005 annual meeting.
/s/ Kevin J. Carr
Kevin J. Carr, Secretary
Dated: November 17, 2004
20
APPENDIX A
THE HARTFORD MUTUAL FUNDS, INC.
THE HARTFORD MUTUAL FUNDS II, INC.
HARTFORD SERIES FUND, INC.
HARTFORD HLS SERIES FUND II, INC.
THE HARTFORD INCOME SHARES FUND, INC.
AUDIT COMMITTEE CHARTER
Revised September 2004
1. Membership
The Audit Committee shall be composed of at least three directors:
(a) each of whom shall not be an "interested person" of the Funds, as
defined in Section 2(a)(19) of the Investment Company Act of
1940, as amended;
(b) each of whom shall not accept any consulting, advisory, or other
compensatory fee from the Funds (other than fees for serving on
the Board of Directors or any committee thereof) or have any
other relationship to the Funds that may interfere with the
exercise of such person's independence from the Funds and Fund
management;
(c) each of whom shall otherwise satisfy the applicable independence
requirements for any stock exchange or market quotation system on
which Fund shares are listed or quoted;
(d) each of whom shall be financially literate, as such qualification
is interpreted by the Board of Directors in its business
judgment, or shall become financially literate within a
reasonable period of time after his or her appointment to the
Audit Committee; and
(e) at least one of whom shall have accounting or related financial
management expertise as the Board of Directors interprets such
qualification in its business judgment.
The Audit Committee shall determine whether at least one member of the
Audit Committee is an "audit committee financial expert" as defined in
rules promulgated by the U.S. Securities and Exchange Commission (the
A-1
"SEC") under the Sarbanes-Oxley Act of 2002.(1) The Audit Committee shall
appoint one member as chairperson.
2. Purposes and Scope
The purposes and scope of responsibilities of the Audit Committee are to
assist board oversight of:
(a) the Funds' accounting and financial reporting policies and practices,
their internal controls and, as appropriate, the internal controls of
the service providers;
(b) the quality, objectivity and integrity of the Funds' financial
statements and the independent audit thereof;
(c) the Funds' compliance with legal and regulatory requirements;
(d) the qualifications and independence of the Funds' independent
accountant; and
(e) to act as liaison between the Funds' independent accountants and the
full Board of Directors.
The Audit Committee shall report regularly to the Board of Directors with
respect to the matters described in Section 3 of this Audit Committee
Charter. The Funds' independent accountants shall report directly to the
Audit Committee.
3. Duties and Responsibilities
To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) To select, retain or replace the independent accountants (subject to
ratification by the Independent Directors and, if applicable, to
ratification by Fund shareholders as may be required by Section 32(a)
of the Investment Company Act of 1940) and, in connection therewith,
to evaluate the independence of the accountants as defined by the
Independence Standards Board and the SEC (including whether the
independent accountants provide any con-
- ---------------
(1) Audit committee financial experts shall not be subject to any duties,
obligations or liability that are greater than those imposed on other
members of the Audit Committee and the Board of Directors. Moreover, a
person determined to be an audit committee financial expert shall not be
deemed an "expert" for any purpose, including without limitation for
purposes of Section 11 of the Securities Act of 1933, as amended.
A-2
sulting services to the adviser or its affiliates), and to receive the
accountants' specific representations as to their independence. The Audit
Committee will continue its current practice of seeking the input of
management on issues pertaining to the selection, retention or termination
of independent accountants.
(b) To compensate and oversee the work of the independent accountants
(including resolution of disagreements between management and the
independent accountants regarding financial reporting).
(c) To review and discuss with management and independent accountants the
audited annual financial statements and, where applicable, quarterly
financial statements of the Funds, and prepare and deliver the Audit
Committee's report required to be included in any proxy statement.
(d) To meet with the Funds' independent accountants:
(i) to set and review clear hiring policies for employees or former
employees of the independent accountant;
(ii) to discuss any matters of concern relating to the Funds'
financial statements, including any material adjustments to
such statements recommended by the independent accountants, or
other results of such audit(s);
(iii) to review audit problems and difficulties and management's
response;
(iv) to consider the independent accountants' comments with respect
to the Funds' financial policies, procedures and internal
accounting and financial statement controls and management's
responses thereto;
(v) to review the opinion the independent accountants render to the
Board and shareholders; and
(vi) to review the results of internal audits of areas that impact
the Funds.
(e) To consider, in consultation with the independent accountants, (i) all
critical accounting policies and practices to be used; (ii) all
alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, the ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent accountants; and (iii) any other material written
communications between
A-3
the independent accountants and management, such as any management
letter or schedule of unadjusted differences.
(f) To approve in advance (i) all audit services to be provided by the
independent accountants to a Fund and (ii) all permissible non-audit
services(2) to be provided by the independent accountants to a Fund
and to the Fund's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the Fund, if the engagement related
directly to the operations and financial reporting of the Fund, except
for permissible non-audit services provided under a de minimis
exception(3) under applicable law or regulation. The Committee may
delegate the authority to grant such preapprovals to one or more
designated members of the Committee, if the Committee so chooses. Any
pre-approval determination of a delegate shall be presented to the
full Audit Committee at its next meeting. The Audit Committee shall
communicate any pre-approval made by it or a delegate to the
- ---------------
(2) "Permissible non-audit services" include any professional services,
including tax services, provided to the Funds by the independent
accountants, other than those provided to the Funds in connection with an
audit or a review of the financial statements of the Funds. Permissible
non-audit services may not include: (i) bookkeeping or other services
related to the accounting records or financial statements of the Funds; (ii)
financial information system design and implementation; (iii) appraisal or
valuation services, fairness opinions or contribution-in-kind reports; (iv)
actuarial services; (v) internal audit outsourcing services; (vi) management
functions or human resources; (vii) broker or dealer, investment adviser or
investment banking services; (viii) legal services and expert services
unrelated to the audit; and (ix) any other service the Public Company
Accounting Oversight Board determines, by regulation, is impermissible.
(3) Pre-approval by the Audit Committee of any permissible non-audit services is
not required so long as: (i) the aggregate amount of all such permissible
non- audit services provided to a Fund constitutes not more than 5% of the
total amount of revenues paid by the Fund, its investment adviser, and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the Fund, to the
independent accountants during the fiscal year in which the permissible
non-audit services are provided; (ii) the permissible non-audit services
were not recognized by the Fund at the time of the engagement to be
non-audit services; and (iii) such services are promptly brought to the
attention of the Committee and approved prior to the completion of the audit
by the Committee or its delegate(s).
A-4
Funds to ensure that the appropriate disclosure is made in the Fund's
periodic reports required by Section 13(a) of the Securities Exchange
Act of 1934 and other documents as required under the federal
securities laws.
(g) To meet with the Funds' independent accountants prior to the audit to
discuss the planning and staffing of the audit, including when
applicable a discussion of the periodic rotation of the lead audit
partner and lead review partner.
(h) To review the fees charged to the Funds by the independent accountants
for audit and permissible non-audit services.
(i) To investigate improprieties or suspected improprieties in Fund
operations.
(j) To review and discuss periodically the Funds' policies with respect to
risk assessment and risk management.
(k) To develop, establish and periodically review procedures for: (i) the
receipt, retention and treatment of complaints received by a Fund from
any source regarding accounting, internal accounting and financial
statement controls, or auditing matters; and (ii) the confidential,
anonymous submission by employees of a Fund and its service providers
of concerns regarding questionable accounting or auditing matters
related to the Fund.
(l) To assist the Funds, if necessary, in preparing any written
affirmation or written certification required to be filed with any
stock exchange on which a Fund's shares are listed.
(m) To cause to be prepared and to review and submit any report, including
any recommendation of the Audit Committee required by SEC Rules to be
included in a Fund's annual proxy statement.
(n) To receive reports from the principal executive officer and the
principal financial officer, or persons performing similar functions,
regarding: (i) all significant deficiencies in the design or operation
of Fund internal controls that could adversely affect the Funds'
ability to record, process, summarize, and report financial data and
have identified for Funds' independent accountants any material
weaknesses in internal controls; (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Funds' internal controls; and (iii) whether or
not there were significant changes in the Funds' internal controls or
in other factors that could significantly affect the Funds' internal
controls subsequent to the date of their evaluation, including any
corrective
A-5
actions with regard to significant deficiencies and material
weaknesses.
(o) To periodically discuss with management and the independent
accountants the quality and adequacy of the Funds' accounting and
financial reporting policies and practices, their internal controls
(including the control process for reviewing and approving the Funds'
internal transactions and accounting) and, as appropriate, the
internal controls of service providers.
(p) To request, obtain, review and discuss annually a report by the
independent accountants describing their internal quality control
procedures, material issues raised by their most recent internal
quality control or peer review, or by any governmental or professional
inquiry or investigation, within the preceding five years, respecting
one or more independent audits carried out by the accounting firm, and
any steps taken to deal with any such issues.
(q) With respect to any closed-end Fund, to review and discuss, as
applicable, press releases related to the Fund's financial reporting
and financial information and financial information and earnings
guidance provided to analysts and rating agencies.
(r) To report its activities to the full Board on a regular basis and to
make such recommendations with respect to the above and other matters
as the Audit Committee may deem necessary or appropriate.
(s) To evaluate the Audit Committee's performance annually.
(t) To perform such other functions consistent with this Audit Committee
Charter, the Funds' Articles of Incorporation, the Funds' By-laws, and
applicable law, as the Audit Committee or the Board of Directors deems
necessary or appropriate.
In fulfilling their responsibilities under this Audit Committee Charter, it
is recognized that members of the Audit Committee are not full-time
employees of the Funds. As such, it is not the duty or responsibility of
the Audit Committee or its members to conduct "field work" or other types
of auditing or accounting reviews or procedures. Each member of the Audit
Committee shall be entitled to rely on the accuracy of the financial and
other information provided to the Audit Committee by the Funds' officers
and employees and its internal and external service providers, absent
actual knowledge to the contrary (which actual knowledge shall be promptly
reported to the Board of Directors).
Management is responsible for maintaining appropriate systems for
accounting. The Funds' independent accountants are responsible for con-
A-6
ducting a proper audit of the Funds' financial statements and are
ultimately accountable to the Audit Committee. The Audit Committee has the
ultimate authority and responsibility to select (subject to ratification by
the Independent Directors and, if applicable, to ratification by Fund
shareholders) and evaluate the Funds' independent accountants, to determine
the compensation of the Funds' independent accountants and, where
appropriate, to replace the Funds' independent accountants.
4. Meetings
The Audit Committee shall meet on a regular basis at least twice a year.
The Funds' Chief Accounting Officer shall attend such regular meetings,
along with other invited personnel of the adviser and its affiliates,
including their internal accountants. The Audit Committee may also hold
special meetings as circumstances require. Participation in meetings may be
telephonic.
The Audit Committee shall meet separately at least semi-annually with
management, with personnel responsible for the Fund's internal audit
function, and with the Funds' independent accountants, to give
representatives of each the opportunity to privately discuss issues of
interest to the Audit Committee. The Audit Committee shall also hold
regular meetings with the Funds' Board of Directors.
5. Resources and Authority of the Audit Committee
The Audit Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the appropriate
Fund(s), and shall have full access to all books, records, facilities and
personnel of the Funds, as needed.
6. Annual Review and Approval
The Audit Committee shall review and assess the adequacy of this charter at
least annually and recommend any changes to the full Board of Directors.
The full Board of Directors shall approve this charter at least annually.
The Charter, including any amendments thereto, shall be maintained in the
records of the Funds.
A-7
APPENDIX B
THE HARTFORD MUTUAL FUNDS, INC.
THE HARTFORD MUTUAL FUNDS II, INC.
HARTFORD SERIES FUND, INC.
HARTFORD HLS SERIES FUND II, INC.
THE HARTFORD INCOME SHARES FUND, INC.
NOMINATING COMMITTEE CHARTER
Adopted May 2003
Revised March 2004
NOMINATING COMMITTEE MEMBERSHIP
The Nominating Committee of The Hartford Funds (the "Committee") shall be
composed entirely of Directors of the Funds that are not "interested persons" of
the Funds, their investment adviser or their principal underwriter, as that term
is defined in the Investment Company Act of 1940, as amended ("Independent
Directors"), and may be comprised of one or more such Independent Directors.
Officers of the Funds, although not members of the Committee, will nonetheless
be expected to have a role in evaluating candidates and recruiting them for the
Board.
BOARD NOMINATIONS AND FUNCTIONS
The Committee shall make nominations for Independent Director membership on
the Board of Directors. The Committee shall evaluate candidates' qualifications
for Board membership and their independence from the Funds' investment adviser
and other principal service providers. Persons selected must not be "interested
persons" of the Funds, their investment adviser or their principal underwriter,
as that term is defined in the 1940 Act. The Committee shall also consider the
effect of any relationships beyond those delineated in the 1940 Act that might
impair independence, e.g. business, financial or family relationships with the
investment adviser. In determining nominees' qualifications for Board
membership, the Committee may consider such other factors as it may determine to
be relevant to fulfilling the role of being a member of the Board of Directors.
The Committee shall consider nominees recommended by shareholders if a
vacancy among the Independent Directors of The Hartford Funds occurs pursuant to
the procedures attached hereto as Appendix A.
The Committee shall meet as necessary prior to a meeting of the full Board
and is empowered to hold special meetings as circumstances require.
B-1
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including authority to utilize Fund counsel
and/or independent counsel to the Independent Directors and to retain experts,
as deemed appropriate, at the expense of the Funds.
The Committee shall review these Procedures as necessary and recommend any
changes to the full Board of Directors.
B-2
APPENDIX A TO THE NOMINATING COMMITTEE CHARTER
PROCEDURES FOR CONSIDERATION OF SHAREHOLDER NOMINATIONS
FOR INDEPENDENT DIRECTOR MEMBERSHIP BY THE NOMINATING COMMITTEE
1. The Nominating Committee will consider nominees recommended by shareholders
if a vacancy among the Independent Directors of The Hartford Funds occurs.
Each eligible shareholder or shareholder group may submit not more than one
Independent Director nominee.
2. In order for the Nominating Committee to consider a nominee recommended by
shareholders, the nominee, as well as the shareholder or shareholder group
making the recommendation, must meet all requirements provided under
applicable federal and state law and in the applicable Fund's
organizational documents.
3. In order to recommend a nominee, a shareholder must send a letter to the
chairperson of the Nominating Committee, in care of the Secretary of the
applicable Hartford Fund at 200 Hopmeadow Street, Simsbury, CT 06089, and
must include, at a minimum:
(i) the shareholder's contact information;
(ii) the nominee's contact information, the nominee's resume or curriculum
vitae, and the number of applicable Fund shares owned by the proposed
nominee;
(iii) a statement as to whether the nominee is an "interested person" of
the applicable Fund as defined in Section 2(a)(19) of the Investment
Company Act of 1940, as amended, and appropriate documentation to
support the statement;
(iv) all information regarding the nominee that would be required to be
disclosed in solicitations of proxies for elections of directors
required by Regulation 14A of the Securities Exchange Act of 1934; and
(v) a notarized letter executed by the nominee, stating his or her
intention to serve as a nominee and be named in the applicable Fund's
proxy statement, if so designated by the Nominating Committee and the
Fund's Board of Director.
It shall be in the Nominating Committee's sole discretion whether to seek
corrections of a deficient submission or to exclude a nominee from
consideration due to the deficient submission.
4. A Shareholder nominee recommendation must be received by the Nominating
Committee within a reasonable time period prior to the proxy submission.
B-3
5. A shareholder or shareholder group may not submit for consideration a
nominee which has previously been considered by the Nominating Committee.
6. If the Nominating Committee receives a recommended nominee from an eligible
shareholder or shareholder group who individually, or in the aggregate,
beneficially owned more than 5% of the applicable Fund's voting shares for
at least one year as of the date of the recommendation and the shareholder
or shareholder group and their candidate provides his or her written
consent at the time the recommendation is made, the Fund shall disclose in
the applicable proxy statement: (1) the candidate's identity, (2) the
identity of the shareholder or shareholder group making the recommendation,
and (3) whether or not the Nominating Committee chose to nominate that
candidate.
7. The Nominating Committee shall evaluate the qualifications of a director
nominee in accordance with the guidelines attached hereto as Exhibit 1. The
Nominating Committee may, in its sole discretion, consider any factors that
it deems relevant in its consideration of a director nominee. Candidates
submitted by shareholders shall be evaluated according to the same criteria
as other director candidates.
8. The Nominating Committee may, in its sole discretion, hire third parties to
assist it with identifying, screening and evaluating nominees. If a third
party is used with respect to a particular election, appropriate disclosure
of that fact in the relevant proxy statement shall be made in accordance
with applicable law.
9. The final nomination of a prospective director rests solely with the
Nominating Committee.
10. The Nominating Committee shall review these Procedures as necessary and
recommend any changes to the full Board of Directors of the Hartford Funds.
B-4
EXHIBIT 1
TO THE NOMINATING
COMMITTEE CHARTER
CRITERIA FOR SELECTION OF NEW INDEPENDENT DIRECTORS
The ideal panel of independent directors should represent a cross section
of the shareholder base of the Hartford-sponsored funds and, since their duties
involve oversight of the management company's and service providers' activities
relative to shareholder interests, care should be given to insure that the panel
of individuals brings to their deliberation education, work and personal
experiences that would improve the value provided to the shareholders.
To maintain the vitality of the panel, some mandatory turnover of members
is desired and should be accomplished through a reasonable retirement policy
(e.g. age 72 mandatory retirement).
The following criteria giving no prejudice towards an individual's gender,
religion or race should be considered as a minimum requirement for consideration
as an independent director:
1. Fifteen (15) years business or academic experience in a management,
administrative, or other oversight capacity.
2. College degree or business experience equivalent to a college degree.
3. At least one independent director should have an investment background
and at least one director should have a financial/accounting
background.
4. Personal accomplishments that would provide ready acceptance by
shareholders that the individual was capable of representing their
interests.
5. An ability to invest in Hartford funds.
6. A person able to think through and discuss complicated regulatory and
financial issues and arrive at reasonable decisions on these issues on
behalf of the shareholders.
7. A person of high ethical standards.
8. Must meet minimum standards set out in the funds' audit committee
charter.
9. Must be "financially literate" as that term is defined under New York
Stock Exchange rules. For these purposes, this means the ability to
read and understand fundamental financial statements, including a
company's balance sheet, income statement, and cash flow statement.
Directors who have limited familiarity with finance can achieve such
"literacy" through fund-sponsored training programs.
B-5
[FORM OF PROXY CARD]
- --------------------------------------------------------------------------------
THREE EASY WAYS TO VOTE YOUR PROXY
READ THE PROXY STATEMENT AND HAVE THE PROXY CARD AT HAND.
TELEPHONE: Call 1-800-690-6903 and follow the recorded instructions.
INTERNET: Go to www.proxyweb.com and follow the on-line directions.
MAIL: Vote, sign, date and return your proxy by mail.
IF YOU VOTE BY TELEPHONE OR INTERNET, YOU DO NOT NEED TO MAIL YOUR PROXY.
- --------------------------------------------------------------------------------
*** CONTROL NUMBER: {999 999 999 99} ***
PROXY FOR ANNUAL SHAREHOLDERS' MEETING TO BE HELD DECEMBER 15, 2004
THE HARTFORD INCOME SHARES FUND, INC. THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned appoints Robert W. Beltz, Jr., Kevin J. Carr, Tamara L. Fagely,
and David M. Znamierowski and each of them with power to act without the other
and with the right of substitution in each, the proxies of the undersigned to
vote all shares of The Hartford Income Shares Fund, Inc. (the "Company") held by
the undersigned on October 29, 2004, at the annual Shareholders' Meeting of the
Company, to be held at the offices of Hartford Life Insurance Company, 200
Hopmeadow Street, Simsbury, Connecticut, on Wednesday, December 15, 2004 at 8:30
a.m. Eastern Time and at any adjournment thereof, with all powers the
undersigned would possess if present in person. All previous proxies given with
respect to the meeting are revoked.
RECEIPT OF NOTICE OF ANNUAL SHAREHOLDERS' MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. MARK, SIGN, DATE, AND RETURN THIS
PROXY IN THE ADDRESSED ENVELOPE--NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO
SAVE THE COMPANY FURTHER SOLICITATION EXPENSES.
DATE _____________________________________________
Please vote, date and sign and promptly return
this proxy card in the enclosed envelope.
-------------------------------------------------
-------------------------------------------------
Shareholder(s) signs here (SIGN IN THE BOX)
Please sign exactly as name appears to the left.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If signing for a corporation, please sign in
full corporate name by authorized person. If a
partnership, please sign in partnership name by
authorized person.
- ------------------------------------------------
PLEASE FILL IN ONE OF THE BOXES AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2
PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTERS SET FORTH BELOW. IT IS
UNDERSTOOD THAT IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE COMPANY.
1. TO ELECT THE FOLLOWING SEVEN NOMINEES: (01) L. S. BIRDSONG, (02) R.M. GAVIN, FOR ALL WITH-HOLD FOR
(03) D.E. HILL, (04) P.O. PETERSON, (05) M.H. PRYOR, JR., (06) T.M. MARRA, (07) ALL ALL
L.A. SMITH. EXCEPT*
[ ] [ ]
*TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL(S), MARK THE BOX "FOR ALL [ ] 1.
EXCEPT" AND WRITE THE NOMINEE'S(S') NUMBER(S) ON THE LINE BELOW.
- ---------------------------------------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE INDEPENDENT [ ] [ ] [ ] 2.
PUBLIC ACCOUNTANTS FOR THE COMPANY.
MARK BOX AT RIGHT IF AN ADDRESS CHANGE OR COMMENT HAS BEEN NOTED ABOVE. [ ]
PLEASE SIGN AND DATE ON THE REVERSE SIDE.