UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____________)
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The Hartford Mutual Funds, Inc.
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(Name of Registrant as Specified in Its Charter)
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THE HARTFORD MUTUAL FUNDS, INC.,
ON BEHALF OF
THE HARTFORD SELECT MIDCAP GROWTH FUND
September 1, 2006
THE HARTFORD SELECT MIDCAP GROWTH FUND
Dear Shareholders:
You are cordially invited to attend a Special Meeting of Shareholders (the
"Meeting") of The Hartford Select MidCap Growth Fund (the "Fund"), a series of
The Hartford Mutual Funds, Inc. (the "Company"). The Meeting will take place on
November 16, 2006 at 10 a.m. Eastern Time at the offices of Hartford Investment
Financial Services, LLC ("HIFSCO"), 200 Hopmeadow Street, Simsbury, Connecticut
06089.
At the Meeting, shareholders will be asked to vote on the matters listed in
the attached Notice of Special Meeting of Shareholders. As explained in the
enclosed Proxy Statement, the purpose of the Meeting is (i) to vote on the
approval of a sub-advisory agreement between HIFSCO, the Fund's investment
manager, and Hartford Investment Management Company ("Hartford Investment
Management"), an affiliate of HIFSCO, pursuant to which Hartford Investment
Management will serve as the sole sub-adviser to the Fund and manage the Fund's
assets; and (ii) to transact such other business as may properly come before the
Meeting, or any adjournment(s) or postponement(s) thereof.
The Company's Board of Directors has reviewed and approved this proposal
and recommends that you vote FOR the proposal. The Proxy Statement provides more
information on the proposed sub-advisory agreement. Please read it carefully,
complete the enclosed proxy card, 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. YOUR VOTE IS
IMPORTANT. If we do not hear from you after a reasonable period of time, you may
receive a telephone call from a representative of The Hartford Financial
Services Group, Inc. ("The Hartford") or from our proxy solicitor, Computershare
Fund Services, reminding you to vote your shares.
Very truly yours,
/s/ David M. Znamierowski
David M. Znamierowski
President and Chief Executive Officer
IMPORTANT INFORMATION
We encourage you to read the enclosed Proxy Statement. However, we thought it
would be helpful to provide brief answers to some questions.
Q. 1. WHAT PROPOSALS ARE SHAREHOLDERS BEING ASKED TO CONSIDER AT THE UPCOMING
SPECIAL MEETING?
A. 1. Shareholders of The Hartford Select MidCap Growth Fund (the "Fund"), a
series of The Hartford Mutual Funds, Inc. (the "Company"), are being asked to
consider one proposal (the "Proposal"): to approve a proposed sub-advisory
agreement (the "Agreement") between Hartford Investment Financial Services, LLC
("HIFSCO"), the Fund's investment manager, and Hartford Investment Management
Company ("Hartford Investment Management"), an affiliate of HIFSCO, pursuant to
which Hartford Investment Management will replace the Fund's current
sub-advisers, Chartwell Investment Partners, LP ("Chartwell"), Goldman Sachs
Asset Management, LP ("GSAM") and Northern Capital Management, LLC ("Northern
Capital"), and manage the Fund's assets as the sole sub-adviser.
Q. 2. HOW WILL REPLACING CHARTWELL, GSAM AND NORTHERN CAPITAL WITH HARTFORD
INVESTMENT MANAGEMENT BENEFIT THE FUND AND ITS SHAREHOLDERS?
A. 2. HIFSCO believes that replacing Chartwell, GSAM and Northern Capital with
Hartford Investment Management as sub-adviser to the Fund will benefit Fund
shareholders by: (1) reducing costs, due to the proposed lower management fee
schedule; (2) providing access to a talented and experienced portfolio manager;
and (3) increasing the potential for economies of scale by providing greater
opportunities for additional asset growth.
Q. 3. WHY ARE SHAREHOLDERS BEING ASKED TO APPROVE A NEW SUB-ADVISORY AGREEMENT
WITH HARTFORD INVESTMENT MANAGEMENT?
A. 3. The laws governing mutual funds require a fund to obtain shareholder
approval before entering into a new advisory or sub-advisory agreement. The Fund
operates pursuant to an order from the U.S. Securities and Exchange Commission
that permits its investment manager to implement new investment sub-advisory
agreements with sub-advisers for the Fund that are not affiliated with the
investment manager with the approval of the Fund's Board of Directors but
without shareholder approval (the "Order"). Under the Order, the investment
manager may not enter into a sub-advisory agreement with a sub-adviser that is
an "affiliated person," as defined in the Investment Company Act of 1940, as
amended, of the Fund or the investment manager without that sub-advisory
agreement being approved by Fund shareholders. Because Hartford Investment
Management is affiliated with HIFSCO, shareholder approval of the proposed
sub-advisory agreement is required.
Q. 4. WILL THE FUND'S INVESTMENT GOAL CHANGE IF THE PROPOSAL IS APPROVED?
A. 4. No. The Fund's investment goal of seeking long-term capital appreciation,
as well as its policy of investing primarily in mid cap growth style stocks,
will remain the same. However, it is expected that Hartford Investment
Management will use different strategies to achieve this goal than Chartwell,
GSAM and Northern Capital currently use. It is expected that Hartford Investment
Management will use a quantitative multifactor approach to bottom-up stock
selection, utilizing a set of varied market factors to model each stock's
relative attractiveness, with a focus on those factors driving the market.
Please refer to the enclosed Proxy Statement for additional information
regarding Hartford Investment Management's investment approach.
Q. 5. WILL THE PROPOSAL RESULT IN HIGHER FUND EXPENSES?
A. 5. No. The Proposal will not increase Fund expenses. The Fund pays an
advisory fee to HIFSCO and HIFSCO is responsible for paying the sub-advisory fee
to Hartford Investment Management. If the Proposal is approved, HIFSCO has
agreed to reduce the Fund's investment advisory fee schedule at all asset levels
while the Fund's other fees will remain the same. Please refer to the Proxy
Statement for further information on the reductions to the investment advisory
fee schedule.
Q. 6. HAS THE BOARD OF DIRECTORS APPROVED THE PROPOSAL?
A. 6. Yes. The Board of Directors has reviewed and approved the Proposal, and
recommends that you vote FOR the Proposal.
Q. 7. HOW CAN I VOTE?
A. 7. You can vote:
- By mail: complete and return your proxy card in the addressed
postage-paid envelope.
- By telephone: call the toll-free number listed on your proxy card and
follow the recorded instructions.
- By Internet: log on to the website listed on your proxy card and follow
the on-screen instructions.
Whichever method you choose, please take the time to read the Proxy
Statement before you vote.
Q. 8. WHEN SHOULD I VOTE?
A. 8. Please vote as soon as possible. Representatives of The Hartford or
Computershare Fund Services, a firm authorized by The Hartford to assist in the
solicitation of proxies, may be contacting you to urge you to vote on this
important matter.
Q. 9. WHERE CAN I OBTAIN ADDITIONAL INFORMATION ABOUT THIS PROXY STATEMENT?
A. 9. For information about voting, please call toll-free 1-866-390-6174:
To view The Hartford Mutual Funds' Annual Report for the year ended
December 31, 2005, Semi-Annual Report for the period ended June 30, 2006, a copy
of this Proxy Statement, or to obtain additional information about the Proxy
Statement:
Please go to www.hartfordinvestor.com (see "Your Vote Counts! Get Your 2006
Proxy Information" under "Points of Interest" on or after September 18, 2006);
Or call 1-888-843-7824 to request a copy.
THE ATTACHED PROXY STATEMENT
CONTAINS MORE DETAILED INFORMATION
ABOUT THE PROPOSAL. PLEASE READ IT CAREFULLY.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders (the "Meeting") of The Hartford Select
MidCap Growth Fund (the "Fund") a series of The Hartford Mutual Funds, Inc. (the
"Company"), will take place on November 16, 2006 at 10 a.m. Eastern Time at the
offices of Hartford Investment Financial Services, LLC ("HIFSCO"), 200 Hopmeadow
Street, Simsbury, Connecticut 06089 for the following purposes:
1. TO APPROVE A SUB-ADVISORY AGREEMENT BETWEEN HIFSCO, THE FUND'S
INVESTMENT MANAGER, AND HARTFORD INVESTMENT MANAGEMENT COMPANY
("HARTFORD INVESTMENT MANAGEMENT"), AN AFFILIATE OF HIFSCO, PURSUANT TO
WHICH HARTFORD INVESTMENT MANAGEMENT WILL SERVE AS SUB-ADVISER OF THE
FUND AND MANAGE THE FUND'S ASSETS; AND
2. TO TRANSACT SUCH OTHER ADDITIONAL MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
The Board of Directors of the Company recommends that you vote FOR the
proposal listed in this notice. Shareholders of record on August 21, 2006 are
entitled to notice of and to vote at the Meeting.
Please read the enclosed Proxy Statement carefully for information
concerning the proposal to be placed before the Meeting or any adjournments or
postponements thereof. Additional matters would include only matters that were
not anticipated as of the date of the enclosed Proxy Statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING, PLEASE FILL IN, SIGN, DATE, AND MAIL THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE, OR TAKE ADVANTAGE OF THE TELEPHONIC OR INTERNET VOTING
PROCEDURES DESCRIBED IN THE PROXY STATEMENT, IN ORDER TO SAVE ANY FURTHER
SOLICITATION EXPENSE. AN ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED.
By order of the Board of Directors,
/s/ Edward P. Macdonald
Edward P. Macdonald
Secretary
Dated: September 1, 2006
THE HARTFORD MUTUAL FUNDS, INC.
500 BIELENBERG DRIVE
WOODBURY, MINNESOTA 55125-4401
THE HARTFORD SELECT MIDCAP GROWTH FUND
(THE "FUND")
PROXY STATEMENT
SEPTEMBER 1, 2006
This proxy statement is furnished in connection with a solicitation of
proxies made by, and on behalf of the Board of Directors (the "Board") of The
Hartford Mutual Funds, Inc. (the "Company"), in connection with the Special
Meeting of Shareholders of The Hartford Select MidCap Growth Fund (the "Fund"),
to be held November 16, 2006, at 10 a.m., Eastern Time, at the offices of
Hartford Investment Financial Services, LLC ("HIFSCO"), 200 Hopmeadow Street,
Simsbury, Connecticut 06089, and at any adjournment(s) or postponement(s) of the
Meeting.
The purpose of the Meeting is set forth in the accompanying Notice. The
approximate mailing date of this Proxy Statement is September 15, 2006. The
costs of solicitation, including the cost of preparing and mailing the Notice of
the Special Meeting of Shareholders and this Proxy Statement, will be paid by
HIFSCO, the Fund's investment manager. Representatives of The Hartford Financial
Services Group, Inc. ("The Hartford") or Computershare Fund Services
("Computershare"), a firm authorized by The Hartford to assist in the
solicitation of proxies, may contact you to solicit your proxy by mail or by
telephone. As the meeting date approaches, shareholders of the Fund may receive
a telephone call from a representative of Computershare if their votes have not
yet been received. Proxies that are obtained telephonically will be recorded in
accordance with the procedures described below. These procedures are reasonably
designed to ensure that both the identity of the shareholder casting the vote
and the voting instructions of the shareholder are accurately determined.
HIFSCO serves as the Fund's investment manager and the Company's
administrator and principal underwriter. HIFSCO is 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" the proposal to approve a sub-advisory
agreement between HIFSCO and Hartford Investment Management Company ("Hartford
Investment Management") pursuant to which Hartford Investment Management will
serve as sub-adviser of the Fund and manage the Fund's assets
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(the "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. Votes can be cast to
approve or disapprove the Proposal. Abstentions and broker non-votes (proxy
cards received by the Company from brokers or nominees when the broker or
nominee has not received instructions from the beneficial owner or other persons
entitled to vote and has no 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" the
Proposal. So far as the Board 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, the persons
named as proxies intend to vote upon such matters according to their best
judgment.
Shareholders may vote by completing and returning the enclosed proxy card.
Shareholders may also vote by touchtone telephone or by Internet by following
the instructions 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 Proposal. Shareholders will have an opportunity to
review the voting instructions and make any necessary changes before submitting
the voting instructions and terminating the telephone call or Internet link.
In all cases where a telephonic proxy is solicited by Computershare, the
Computershare representative is required to ask for each shareholder's full name
and address, or the Zip code or employer identification number, and to confirm
that the shareholder has received the proxy materials in the mail. If the
shareholder is a corporation or other entity, the Computershare representative
is required to ask for the person's title and for confirmation that the person
is authorized to direct the voting of the shares. If the information solicited
agrees with the information previously provided to Computershare, then the
Computershare representative will explain the proxy voting process, read the
Proposal listed on the proxy card and ask for the shareholder's instructions on
the Proposal. Although the Computershare representative is permitted to answer
questions about the process, he or she is not permitted to recommend to the
shareholder how to vote, other than to read any recommendation set forth in this
Proxy Statement. The Computershare representative will record the shareholder's
instructions on the card. Within 72 hours, the shareholder will be sent a letter
or mailgram to confirm his or her vote and asking the shareholder to call the
Computershare representative immediately if his or her instructions are not
correctly reflected in the confirmation.
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Although a shareholder's vote may be solicited and taken by telephone, each
shareholder will also receive a copy of this Proxy Statement and may vote by
mail using the enclosed proxy card or by touchtone telephone or the Internet as
set forth on the proxy card. The last proxy vote received in time to be voted,
whether by proxy card, touchtone telephone or Internet, will be the vote that is
counted and will revoke all previous votes by the shareholder.
Only those shareholders owning shares as of the close of business on August
21, 2006 (the "Record Date") may vote at the Meeting or any adjournment(s) or
postponement(s) of the Meeting. Appendix A sets forth the issued and outstanding
shares of the Fund as of the Record Date. Each full share outstanding is
entitled to one vote, and each fractional share outstanding is entitled to a
proportionate share of one vote. As a shareholder, you will not have appraisal
rights in connection with the Proposal described in this Proxy Statement.
The presence, either in person or by proxy, of shareholders owning a
majority of shares of the Fund entitled to vote at the Meeting shall constitute
a quorum. If a quorum is not present at the Meeting, or if a quorum is present
but sufficient votes to approve any proposal 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. If the Proposal
receives a sufficient number of votes for approval prior to any adjournment, the
Proposal shall be deemed adopted and shall not require any further shareholder
approval at any adjournment or otherwise.
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PROPOSAL
APPROVAL OF A SUB-ADVISORY AGREEMENT
WITH HARTFORD INVESTMENT MANAGEMENT COMPANY
GENERAL OVERVIEW
The Board is asking shareholders to vote on a proposal to approve, with
respect to The Hartford Select MidCap Growth Fund (the "Fund"), a sub-advisory
agreement between Hartford Investment Financial Services, LLC ("HIFSCO") and
Hartford Investment Management Company ("Hartford Investment Management") (the
"Agreement"), pursuant to which Hartford Investment Management will serve as
sub-adviser to the Fund and will provide investment sub-advisory services to the
Fund with respect to the Fund's assets.(1)
HIFSCO serves as the Fund's investment manager pursuant to an investment
management agreement between HIFSCO and the Company on behalf of the Fund.
Pursuant to the investment management agreement, HIFSCO establishes the Fund's
investment program and selects, supervises and evaluates the sub-adviser or
sub-advisers who, in turn, make the Fund's investment decisions, subject to the
oversight of the Fund's Board. HIFSCO recommends sub-advisers it believes will
provide the Fund with high quality investment services consistent with the
Fund's strategy of investing primarily in mid cap growth style stocks with
potential for long-term capital appreciation. HIFSCO is also responsible for the
overall monitoring of the Fund's sub-adviser(s). HIFSCO does not make the
day-to-day investment management decisions for the Fund.
Chartwell Investment Partners, LP ("Chartwell"), Goldman Sachs Asset
Management, LP ("GSAM") and Northern Capital Management, LLC ("Northern
Capital") (collectively, the "Current Sub-Advisers") are investment sub-advisers
to the Fund. The Current Sub-Advisers are not affiliated with HIFSCO and
discharge their responsibilities subject to HIFSCO's oversight and supervision.
The Current Sub-Advisers are paid by HIFSCO, and not by the Fund, from the
investment management fees HIFSCO receives from the Fund.
- ---------------
(1) Hartford Investment Management currently serves as sub-adviser to several
other funds advised by HIFSCO pursuant to the same Agreement. Pursuant to
its terms, and subject to approval by the relevant fund shareholders, the
Agreement may be modified from time to time to apply to additional funds for
which Hartford Investment Management will serve as sub-adviser. If the
Agreement is approved on behalf of the Fund by the Fund's shareholders,
HIFSCO and Hartford Investment Management will amend the Agreement to extend
it to the Fund.
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HIFSCO recommended that the Board approve the engagement of Hartford
Investment Management to serve as the sole sub-adviser to the Fund contingent
upon shareholder approval of the Agreement. HIFSCO believes that replacing
Chartwell, GSAM and Northern Capital with Hartford Investment Management as
sub-adviser to the Fund will benefit Fund shareholders by: (1) reducing costs,
due to the proposed lower management fee schedule; (2) providing access to a
talented and experienced portfolio manager; and (3) increasing the potential for
economies of scale by providing greater opportunities for additional asset
growth. By replacing the Current Sub-Advisers with Hartford Investment
Management, which will operate at cost, HIFSCO will be in a position to manage
the Fund at a reduced management fee. HIFSCO made the recommendation to appoint
Hartford Investment Management as sub-adviser to the Fund based on its
confidence in Hartford Investment Management and in the investment expertise of
the portfolio management team that will manage the Fund. Finally, HIFSCO
believes that replacing the Current Sub-Advisers with Hartford Investment
Management will enable the Fund to gain greater acceptance among potential
investors, resulting in increased opportunities for growth.
There are certain potential conflicts of interest raised by HIFSCO's
recommendation to appoint its affiliate, Hartford Investment Management, to
replace the Current Sub-Advisers, each an unaffiliated manager for the Fund.
This action has the potential to provide substantial future benefits to HIFSCO.
Appointing Hartford Investment Management, which charges HIFSCO at cost rather
than at a market rate, is expected to increase profitability to HIFSCO over
time, as additional assets under management will lower Hartford Investment
Management's cost on a per share basis. However, HIFSCO believes that the
appointment of Hartford Investment Management to replace the Current
Sub-Advisers as the Fund's sub-adviser is in the best interests of shareholders,
for the reasons set forth above. In addition, the proposed reduction in the
management fee of the Fund at all asset levels serves to mitigate these
potential conflicts of interest and will provide a long term benefit to Fund
shareholders.
The Board, including a majority of those Directors who are not "interested
persons" of the Fund (as that term is defined in the Investment Company Act of
1940, as amended (the "1940 Act")), the Company or the investment manager
("Independent Directors"), approved HIFSCO's proposal to enter into the
Agreement. The Agreement is subject to approval by the Fund's shareholders. More
information about the Board's considerations is set forth under "Board of
Directors' Considerations."
The 1940 Act requires a fund to obtain shareholder approval of any
investment advisory or investment sub-advisory agreement. The Company has
received, and shareholders have approved reliance upon, an exemptive order from
the U.S. Securities and Exchange Commission that permits HIFSCO to
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implement new investment sub-advisory agreements with sub-advisers for the Fund
and to make changes to existing investment sub-advisory agreements with the
approval of the Board but without shareholder approval (the "Order"), as long as
the sub-adviser is not an affiliate of HIFSCO. The Order does not eliminate the
shareholder approval requirement where HIFSCO hires an affiliated person to
serve as sub-adviser to the Fund. Since Hartford Investment Management is a
subsidiary of The Hartford Financial Services Group, Inc. ("The Hartford"),
which also controls HIFSCO, Hartford Investment Management is affiliated with
HIFSCO. Therefore, shareholder approval of the proposed Agreement, which is
described more fully below, is required.
DESCRIPTION AND COMPARISON OF THE AGREEMENT
The following discussion of the terms of the Agreement is qualified in its
entirety by reference to the Agreement, a form of which is attached hereto as
Appendix B.
Under the Agreement, Hartford Investment Management will serve as
sub-adviser and provide investment sub-advisory services to the Fund with
respect to the Fund's portfolio. The following discussion summarizes key terms
of the Agreement and the obligations of Hartford Investment Management,
indicating any material differences between the Agreement as proposed and the
replaced sub-advisory agreements between HIFSCO and Chartwell, GSAM and Northern
Capital (the "Replaced Agreements"). Overall, the material terms of the Replaced
Agreements are substantially similar to each other, and the material terms of
the Agreement with Hartford Investment Management are substantially similar to
those of the Replaced Agreements.
Under the Replaced Agreements, each sub-adviser provides investment
sub-advisory services to the Fund with respect to a portion of the Fund's
assets, as determined by HIFSCO. Under the Agreement, HIFSCO's responsibilities
as the Fund's investment manager will generally remain unchanged, including its
responsibility to oversee and review the performance of the Fund's sub-adviser.
However, because Hartford Investment Management will be the sole sub-adviser
under the Agreement, Hartford Investment Management will provide investment
management services to all of the Fund's assets, rather than to just a portion.
If the Proposal is approved, as set forth in the Agreement, Hartford
Investment Management will perform investment management services with respect
to the Fund's assets in conformity with the Company's Articles of Incorporation
and By-Laws, each as amended from time to time, the 1940 Act and other
applicable laws. The Agreement will require Hartford Investment Management to
provide advisory services in accordance with the investment objectives, policies
and restrictions of the Fund as set forth in the Fund's
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prospectus and statement of additional information, and in accordance with any
investment guidelines or other instructions received in writing from HIFSCO, and
subject further to such policies and instructions as the Board or HIFSCO may
from time to time establish and deliver to Hartford Investment Management.
The Agreement will provide that Hartford Investment Management, in
consultation with HIFSCO as appropriate, will make all determinations with
respect to the investment of Fund assets and the purchase or sale of portfolio
securities. The Agreement requires Hartford Investment Management to report to
the Board at its regular periodic meetings. These reports would cover Hartford
Investment Management's economic outlook and investment strategy and a
discussion of the portfolio activity and the performance of the Fund's assets
sub-advised by Hartford Investment Management. Copies of all such reports would
be furnished to HIFSCO for examination and review within a reasonable time prior
to the presentation of such reports to the Company's Board.
Consistent with the terms of the Agreement, Hartford Investment Management
would be permitted, in its discretion, to select broker-dealers that would
execute the purchases and sales of portfolio securities for the Fund. In
selecting broker-dealers, Hartford Investment Management would be required to
use its best efforts to obtain the best net security price available for the
Fund. Additionally, subject to and in accordance with any directions that the
Board may issue from time to time, Hartford Investment Management may also be
authorized to effect individual securities transactions at commission rates in
excess of the minimum commission rates available, if Hartford Investment
Management determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or
Hartford Investment Management's overall responsibilities with respect to the
Fund and Hartford Investment Management's other advisory clients. Hartford
Investment Management will promptly communicate to the Board such information
relating to portfolio transactions as it may reasonably request.
The Agreement will not prevent Hartford Investment Management from acting
as investment manager or manager for any other investment companies or other
clients, whether or not the investment objectives or policies of any such other
clients are similar to those of the Fund, provided that the provision of such
services to those other clients does not impair Hartford Investment Management's
ability to provide services to the Fund under the Agreement.
The Agreement will provide that, as compensation for the performance of the
services by Hartford Investment Management, HIFSCO shall, as promptly as
possible after the last day of each calendar quarter, pay Hartford Investment
7
Management the equivalent of all direct and indirect expenses incurred in the
performance of its duties under this Agreement (indirect expenses may include an
allocation of expenses for various support services for Hartford Investment
Management's operations, such as legal, human resources, accounts payable,
employee benefits and other services). This will be Hartford Investment
Management's sole compensation for sub-advisory services provided to the Fund.
Hartford Investment Management will not be entitled to a fee calculated on the
basis of the Fund's average daily net assets.
Pursuant to the Agreement, Hartford Investment Management will not be
liable for any loss or losses suffered by the Fund by reason of any investment
made by Hartford Investment Management in the performance of its duties under
the Agreement, except for those losses resulting from (i) willful misfeasance,
bad faith or gross negligence on Hartford Investment Management's part in the
performance of its duties or (ii) reckless disregard by Hartford Investment
Management of its obligations under the Agreement. These liability provisions
are similar to those in the Replaced Agreements, which limited liability of the
sub-advisers, except for losses to the Fund from gross negligence, bad faith,
willful misfeasance, or reckless disregard of duties. The Replaced Agreements
also contained indemnity provisions, which stated that the sub-adviser would
indemnify HIFSCO for any liability and expenses as a result of gross negligence,
bad faith, willful misfeasance, or reckless disregard of duties, and that HIFSCO
would indemnify the sub-adviser for the same. The Agreement does not contain a
similar provision.
Additionally, the Replaced Agreements provide that neither HIFSCO nor any
of the Current Sub-Advisers will be held responsible for non-performance of any
obligation under the Replaced Agreements due to a reason or cause beyond
HIFSCO's or any of the Current Sub-Adviser's control, which includes any
breakdown or failure of transmission, communication or computer facilities,
postal or other strikes or similar industrial action and the failure of any
relevant exchange, clearing house and/or broker for any reason to perform its
obligations. In the case of the Agreement, no such force majeure provision is
provided.
Subject to shareholder approval, it is expected that the Agreement will
take effect on or about December 4, 2006. The Agreement will provide that it
will remain in effect for its initial two-year term and will continue thereafter
from year to year, if the Board or a majority of the outstanding voting
securities of the Fund, in either case with the support of a majority of the
Independent Directors, specifically approves its continuance at least annually.
The Agreement will provide that it can be terminated at any time, without the
payment of any penalty, by the Board, by a majority of the Fund's outstanding
voting securities, or by HIFSCO, on sixty days' written notice to Hartford
Investment Management. The Agreement will also be terminable by Hartford
Investment
8
Management on sixty days' written notice to HIFSCO, but such termination would
not be effective until (i) HIFSCO shall have contracted with one or more persons
to serve as a successor to Hartford Investment Management in its role as
sub-adviser to the Fund and (ii) those person(s) have assumed that position. The
Agreement will terminate automatically in the event of its assignment or in the
event of an assignment or termination, for any reason, of the investment
management agreement between HIFSCO and the Company.
With the exception of the fees to be paid under each agreement or as
otherwise discussed above, the terms of the Agreement between HIFSCO and
Hartford Investment Management are substantially similar to the terms of the
Replaced Agreements.
The form of the Agreement is attached as Appendix B to this Proxy
Statement. The above description of the terms of the Agreement is qualified in
its entirety by reference to Appendix B.
INFORMATION ABOUT HARTFORD INVESTMENT
MANAGEMENT COMPANY
Hartford Investment Management, a Delaware corporation with its main
offices located at 55 Farmington Avenue, Hartford, Connecticut 06105, is a
professional money management firm that provides services to investment
companies, employee benefit plans, its affiliated insurance companies and other
institutional accounts. Hartford Investment Management is a wholly owned
subsidiary of The Hartford, which is located at Hartford Plaza, 690 Asylum
Avenue, Hartford, Connecticut 06115. As of June 30, 2006, Hartford Investment
Management had investment management authority over approximately $118 billion
in assets. As of June 30, 2006, Hartford Investment Management provided
sub-advisory services for mutual funds advised by HIFSCO or its affiliate
representing 25 funds.
Currently, Hartford Investment Management is primarily a fixed income
manager, although it also engages in passive equity index management and asset
allocation for certain Hartford-sponsored mutual funds, and in June 2006
commenced active equity management of a portion of two Hartford-sponsored mutual
funds. In 2005, recognizing capacity constraints in various significant actively
managed equity classes, which could negatively affect HIFSCO's ability to find
qualified sub-advisers with sufficient capacity for the Hartford-sponsored
mutual funds, Hartford Investment Management undertook to develop an active
equity management capability. After an extensive search, Hartford Investment
Management hired Hugh Whelan, who will be the portfolio manager of the Fund for
Hartford Investment Management. Mr. Whelan has sixteen years of investment
management experience and currently serves as Hartford Investment Management's
Executive Vice Presi-
9
dent for Quantitative Strategies. Prior to joining Hartford Investment
Management in 2005, Mr. Whelan was head of Quantitative Equities at ING where he
was responsible for the team managing large cap, mid cap and small cap
quantitative equity strategies and for managing ING's quantitative equity
research group. Prior to 1999, Mr. Whelan was a quantitative portfolio manager
and analyst in ING's fixed income group. Mr. Whelan earned a B.S. degree in
Geology and an M.S. in Petroleum Geology from Stanford University and an M.B.A.
from the University of Pennsylvania's Wharton School of Finance.
Hartford Investment Management and Mr. Whelan have assembled a
Multi-Discipline Equity Team of portfolio managers, research analysts and other
investment personnel to support Hartford Investment Management's active equity
management function. The core of Hartford Investment Management's
Multi-Discipline Equity Team has been together since 2002 and uses a
quantitative multifactor investment approach to stock selection.
During the Fund's last fiscal year, Hartford Investment Management did not
receive any fees, commissions or other payments from the Fund. Appendix C to
this Proxy Statement sets forth information regarding the principal executive
officers and directors of Hartford Investment Management and the principal
executive officers of the Company.
David M. Znamierowski currently serves as President of Hartford Investment
Management. Mr. Znamierowski is also the President and Chief Executive Officer
of the Company and has been a director of the Company since 1999. No other
officer or director of the Fund is currently an officer, employee, director or
shareholder of Hartford Investment Management. Mr. Znamierowski, Thomas Marra
and Lowndes Smith, the interested directors of the Fund and each of the Fund's
officers have an equity ownership interest in The Hartford, the parent company
of Hartford Investment Management.
MORE INFORMATION ABOUT
ANTICIPATED BENEFITS TO THE FUND
If shareholders approve the Proposal, the Fund's investment goal of seeking
long-term capital appreciation, as well as its policy of investing primarily in
mid cap growth style stocks, will remain the same. However, the Fund will no
longer employ a "multi-manager" approach, whereby portions of the Fund's cash
flows are allocated among different money managers who employ distinct
investment styles intended to complement one another. In addition, Hartford
Investment Management will use different strategies to achieve the Fund's goal
than Chartwell, GSAM and Northern Capital currently use.
10
It is anticipated that Hartford Investment Management will use a
quantitative multifactor approach to "bottom-up" stock selection, utilizing a
set of varied market factors to model each stock's relative attractiveness, with
a focus on those factors driving the market. In addition, Hartford Investment
Management will manage the assets of the Fund, as determined by HIFSCO, with
oversight by the Fund's Board of Directors.
The replacement of Chartwell, GSAM and Northern Capital with Hartford
Investment Management as sub-adviser will significantly reduce shareholder
expenses. In connection with the Proposal, HIFSCO has agreed to a new management
fee schedule, which provides reductions in the management fees the Fund will pay
at all asset levels. The current and proposed fee schedules are set forth below
under "Fees and Expenses."
HIFSCO believes that replacing the Current Sub-Advisers with Hartford
Investment Management will enable the Fund to gain greater acceptance among
potential investors, resulting in increased opportunities for growth. To the
extent that the Fund's assets grow, there may be additional opportunities for
shareholders to benefit from economies of scale.
BOARD OF DIRECTORS' CONSIDERATIONS
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940
Act"), requires that each mutual fund's board of directors, including a majority
of those directors who are not "interested persons" of the mutual fund, as
defined in the 1940 Act ("Independent Directors"), review and approve each new
investment advisory and sub-advisory agreement.
At a board meeting held on August 1-2, 2006, the Board of Directors of the
Fund, including each of the Independent Directors, voted to approve the
investment sub-advisory agreement between Hartford Investment Financial
Services, LLC ("HIFSCO"), and Hartford Investment Management Company ("Hartford
Investment Management") (the "Agreement").
In advance of the August meeting, the Board requested, received, and
reviewed written responses from HIFSCO and Hartford Investment Management to
questions posed to them on behalf of the Independent Directors and supporting
materials relating to those questions and responses. The Board also received
in-person presentations from management regarding the capabilities of Hartford
Investment Management's multi-discipline equity management team and the
associated benefits to the Fund and its shareholders. The Board's Investment
Committee also received an in-person presentation from the proposed portfolio
manager about the team's capabilities and the associated benefits to
shareholders at its meeting on August 1, 2006. In addition, the Board received
information with respect to Hartford Investment Management in
11
connection with the Board's consideration of Hartford Investment Management's
re-approval as a sub-adviser to certain of the Company's fixed income and asset
allocation funds on August 1-2, 2006, and, with respect to the proposed
portfolio management team for the Fund, when Hartford Investment Management was
approved as an additional sub-adviser to one of the Company's equity funds on
June 20-21, 2006.
In determining to approve the Agreement, the Board determined that the
Agreement, including the appointment of Hartford Investment Management as
sub-adviser, was fair and reasonable and in the best interests of the Fund and
its shareholders.
In determining to approve the Agreement, the Board considered the following
categories of material factors, among others, relating to the Agreement.
NATURE, EXTENT AND QUALITY OF SERVICES
The Board requested and considered information and data concerning the
nature, extent, and quality of the services to be provided to the Fund by
Hartford Investment Management. The Board considered, among other things, the
terms of the Agreement, the range of services to be provided, and Hartford
Investment Management's organizational structure, systems and personnel. The
Board received information on the background and experience of senior management
and relevant investment and other personnel at Hartford Investment Management,
and the adequacy of the time and attention that they would devote to the Fund.
The Board considered Hartford Investment Management's reputation and overall
financial strength, noting that Hartford Investment Management's current
reputation and the Board's past experience with Hartford Investment Management
was predominantly based on Hartford Investment Management's performance as a
fixed income manager. The Board also noted that although Hartford Investment
Management is primarily a fixed income manager, it also engages in passive
equity index management and asset allocation for certain Hartford-sponsored
mutual funds, and in June 2006 commenced active equity management of a portion
of two Hartford-sponsored mutual funds. The Board also considered Hartford
Investment Management's efforts and progress in building its active management
capability.
The Board also considered the experience and reputation of equity personnel
hired by Hartford Investment Management to service the Fund, and the level of
support provided by the organization as a whole. The Investment Committee met
with Hugh Whelan, the proposed portfolio manager for the Fund. The Board
considered HIFSCO's representations and judgment that, although Mr. Whelan's
team has not previously managed a mid cap growth fund using the proposed
quantitative strategy, Mr. Whelan's prior experience
12
with various institutional products, success in managing mid cap assets in
another strategy, and success in implementing a quantitative investment approach
demonstrate his ability to manage assets in the mid cap growth mandate. The
Board also considered HIFSCO's and Hartford Investment Management's investments
in infrastructure in light of increased regulatory requirements and the needs of
Hartford Investment Management's proposed active equity management function.
The Board also requested and evaluated information concerning Hartford
Investment Management's regulatory and compliance environment. The Board focused
on regulatory and compliance matters particular to the management of equity
securities as opposed to fixed income securities. In this regard, the Board
requested and reviewed information on Hartford Investment Management's
compliance policies and procedures, compliance history, and reports from the
Fund's Chief Compliance Officer on Hartford Investment Management's compliance
with applicable laws and regulations, including its responses to regulatory
developments and compliance issues raised by regulators. The Board also noted
HIFSCO's and Hartford Investment Management's support of the Company's
compliance control structure, particularly the resources devoted by HIFSCO and
Hartford Investment Management in support of the Company's obligations pursuant
to Rule 38a-1 under the 1940 Act.
With respect to the day-to-day portfolio management services to be provided
by Hartford Investment Management, the Board considered the quality of Hartford
Investment Management's investment personnel (including its ability to attract
and retain qualified investment professionals); its investment philosophy and
process (and adherence to that philosophy and process); and its investment
research capabilities and resources, performance record, and trade execution
capabilities and experience. The Board noted the quality of the presentations to
and communications with the Board, and responsiveness to Board inquiries, of
Hartford Investment Management, including in particular Mr. Whelan and senior
management of Hartford Investment Management in their in-person discussions with
the Board and their discussions with the Investment Committee. The Board
recognized that HIFSCO is responsible for the overall management of the Fund,
provides investment advisory services in connection with selecting, monitoring
and supervising the Fund's sub-advisers, and had recommended to the Board that
Hartford Investment Management be appointed as a sub-adviser to the Fund.
In considering this information, the Board evaluated not only the
information presented to the Board and the Investment Committee in connection
with its consideration of the Agreement, but also the Board's experience through
past interactions with HIFSCO and Hartford Investment Management. Based on these
considerations, the Board concluded that it was satisfied with the
13
nature, extent and quality of the services to be provided to the Fund by HIFSCO
and Hartford Investment Management.
PERFORMANCE
The Board considered the investment performance of the Fund as managed by
Chartwell, GSAM and Northern Capital. In this regard, the Board considered
information and materials provided to the Board from HIFSCO comparing the Fund's
investment performance since its inception on January 1, 2005 with appropriate
benchmark indices, and with a performance universe of funds selected by Lipper,
Inc., an independent provider of investment company data ("Lipper"). The Board
noted that the comparative data demonstrated that the Fund had ranked in the
64th percentile, or in the bottom half, for its one-year performance as compared
to its peer funds. The Board also noted that its one-year and since-inception
date returns under Chartwell, GSAM and Northern Capital were below its
benchmarks.
As Hartford Investment Management does not have a performance track record
for active equity management, HIFSCO and Hartford Investment Management
presented information regarding the performance record of funds managed by Mr.
Whelan for his previous employer between 2000 and 2005. Mr. Whelan was a member
of the investment management team responsible for these funds since 1999, and
served in a leadership capacity on the team from 2001 to 2005. The Board
reviewed materials that compared the performance of funds previously managed by
Mr. Whelan and his team to the performance of appropriate benchmarks and other
matrices as well as to a universe of funds selected by Lipper. HIFSCO and
Hartford Investment Management provided additional information about the broad
range of Mr. Whelan's and his team's recent investment experience and about
their investment philosophy and process. The Board considered HIFSCO's
representations and judgment that although Mr. Whelan's team has not previously
managed a mid cap growth fund using the proposed quantitative strategy, the team
has demonstrated its ability to do so by successfully managing mid cap assets in
another strategy and successfully using a similar quantitative strategy in
different assets classes. The Board, at prior meetings, and the Investment
Committee also had extensive in person discussions with Mr. Whelan about his
investment philosophy, process and experience.
Based on these considerations, the Board concluded that, while there could
be no guarantee of future results, the Board was satisfied that Hartford
Investment Management has the capability of providing satisfactory investment
performance for the Fund.
14
COSTS OF THE SERVICES AND PROFITABILITY OF HIFSCO AND HARTFORD
INVESTMENT MANAGEMENT
The Board reviewed information regarding HIFSCO's and Hartford Investment
Management's costs to provide investment management and related services to the
Fund and the profitability to them from managing the Fund. The Board considered
information related to both HIFSCO and Hartford Investment Management because it
was proposed that Hartford Investment Management be reimbursed for its costs
rather than receive a set fee, with the result that any profitability from
managing the Fund would be realized only with respect to HIFSCO. The Board also
had information about the profitability to HIFSCO and its affiliates from all
services provided to the Fund and all aspects of its relationships with the
Fund. In evaluating HIFSCO's profitability, the Board considered that initially
HIFSCO did not anticipate making a profit, and that future profitability to
HIFSCO would depend on the growth of Hartford Investment Management's equity
assets under management. The Board considered statements by HIFSCO that HIFSCO's
profitability from the Fund is not expected to increase over the course of the
next year.
The Board reviewed with HIFSCO the assumptions and allocation methods used
in preparing the cost and profitability data provided to the Board. The Board
recognized that allocation methods are inherently subjective, and different
methods may be reasonable although they lead to different results. The Board
noted the difficulty in obtaining reliable comparative data about adviser
profitability, since such information is not generally publicly available and is
impacted by numerous factors, including the structure of an adviser's
organization, the types of funds it manages, and the adviser's capital structure
and costs of capital. The Board considered HIFSCO's profitability from managing
the Fund as compared to HIFSCO's profitability from managing other Funds. In
addition, the Board considered the profitability of HIFSCO's relationship with
the Fund on a pre-tax basis without regard to distribution expenses.
Based on these considerations, the Board concluded that the profits
anticipated to be realized by HIFSCO, Hartford Investment Management and their
affiliates from their relationships with the Fund would not be excessive.
COMPARISON OF FEES AND SERVICES PROVIDED BY HIFSCO AND HARTFORD INVESTMENT
MANAGEMENT
The Board considered comparative information with respect to the investment
management fees to be paid by the Fund to HIFSCO and its affiliates. In this
regard, the Board received information from HIFSCO and Hartford Investment
Management relating to the management fees, sub-advisory fees, and total
operating expenses for the Fund. HIFSCO also referenced information comparing
the Fund's management fees and total expense ratio relative to
15
those of a peer group of funds identified by Lipper as being in the mid
capitalization growth category. The Board considered that according to the
information provided by Lipper, the proposed management fee is below the average
and median fee for the Fund's peer group at all asset levels. While the Board
recognized that comparisons between the Fund and peer funds are imprecise, given
the differing service levels and characteristics of mutual funds, and the
different business models and cost structures of advisers, the comparative
information assisted the Board in evaluating the reasonableness of the Fund's
management advisory and sub-advisory fees.
In considering the reasonableness of the Fund's fees and total expense
ratios, the Board considered that the overall management fee for the Fund would
be lower under the Proposal as a result of HIFSCO's agreement to reduce the
Fund's management fees at all asset levels, as described in these proxy
materials under the caption "Fees and Expenses." The Board also considered
HIFSCO's representation that it would be able to reduce the Fund's management
fee at all asset levels because it would realize cost savings as a result of
having one affiliated sub-adviser, Hartford Investment Management, serve as
sub-adviser for all of the Fund's assets.
Based on these considerations, and after taking into account the fee
reductions noted above, the Board concluded that the comparative information
reviewed indicates that the Fund's management fee and sub-advisory fee and total
operating expenses are within a range that is competitive and, in conjunction
with the information about quality of services, profitability, economies of
scale, and other matters discussed, supports the conclusion that these fees and
expenses are reasonable.
ECONOMIES OF SCALE
The Board considered the extent to which economies of scale would be
realized as the Fund grows and whether the fee levels reflect these economies of
scale for the benefit of the Fund's investors.
The Board reviewed the breakpoints in the management fee schedule, which
reduce management fees, sub-advisory fees and operating expenses as Fund assets
grow over time. These breakpoints provide economies of scale to the Fund and its
shareholders in that, as the Fund grows, its effective management and
sub-advisory fee rates decline. The Board recognized that the Fund would
continue to benefit from economies of scale with assets beyond the last
breakpoint, because additional assets are charged the lowest breakpoint fee,
resulting in a lower overall effective management fee rate. The Board considered
that the Fund may achieve some economies as certain fixed expenses are spread
over a larger asset base, noting that there is no precise way to measure such
economies, and that certain expenses do not necessarily decrease as assets
16
increase. The Board considered management's representation that the replacement
of the Current Sub-Advisers with Hartford Investment Management would enable the
Fund to gain greater acceptance among potential investors, resulting in
increased opportunities for growth. The Board noted that increasing assets would
increase the likelihood that shareholders would benefit from the breakpoints in
the management fee schedule.
The Board received information regarding HIFSCO's and Hartford Investment
Management's realization of economies of scale with respect to the Fund. The
Board considered representations from HIFSCO that the initial start-up costs
Hartford Investment Management would incur in building its equity management
capability relating to the Fund would be high relative to the small amount of
assets under management. However, the Board considered that HIFSCO and Hartford
Investment Management were likely to realize some economies of scale over time
as Hartford Investment Management's equity assets under management increased,
which the Board would consider in determining whether to renew the agreement on
an annual basis.
After considering all of the information available to it, the Board
concluded that it was satisfied with the extent to which economies of scale
would be shared for the benefit of the Fund's investors, based on currently
available information and the effective advisory fees and expense ratios for the
Fund at its current and reasonably anticipated asset levels. The Board noted,
however, that it would continue to monitor future growth in Fund assets and the
appropriateness of additional breakpoints.
OTHER BENEFITS
The Board considered information regarding other benefits to HIFSCO,
Hartford Investment Management and their affiliates from their relationships
with the Fund. The Board considered Hartford Investment Management's statements
that Hartford Investment Management was undertaking a review of its soft dollar
practices in light of the recent addition of equity management capability, but
that it had determined that at present Hartford Investment Management will
utilize soft dollars to obtain only: (i) brokerage services; (ii) research
created and provided by a broker-dealer involved in effecting a trade (i.e.,
research provided by a full service broker-dealer, or provided by a
broker-dealer to which a portion of a trade is directed for the purpose of
obtaining access to the research, in either case on a bundled basis); and (iii)
access to management personnel. The Board considered Hartford Investment
Management's representations that Hartford Investment Management will not at
present utilize soft dollars to obtain research from parties who have no role in
effecting a trade, although Hartford Investment Management's practices could
change in the future. The Board considered that these soft dollar practices
would benefit Hartford Investment Management by providing it
17
with research that could be utilized with its other active equity clients. The
Board also considered that the following companies, which are affiliates of
Hartford Investment Management, provide services to the Fund and receive
compensation from the Fund:
- HIFSCO serves as the Fund's principal underwriter and receives 12b-1 fees
from the Fund.
- Hartford Life Insurance Company provides fund accounting services to the
Fund and receives fund accounting fees from the Fund.
- The Fund currently pays the cost of certain legal services in support of
the Fund provided by personnel of Hartford Life Insurance Company, but
such cost will be absorbed by Hartford Life Insurance Company as of
January 1, 2007.
- Hartford Administrative Services Company, the Fund's transfer agent,
receives transfer agency compensation from the Fund.
* * * * *
Based upon its review of these various factors, among others, the Board
concluded that it is in the best interests of the Fund and its shareholders to
approve the Agreement with Hartford Investment Management. In reaching this
decision, the Board did not assign relative weights to the factors discussed
above or deem any one or group of them to be controlling in and of themselves.
In connection with their deliberations, the Independent Directors met with
independent legal counsel to review the relevant materials and consider their
responsibilities under relevant laws and regulations.
REQUIRED VOTE
Approval of the Agreement by the Fund's shareholders requires an
affirmative vote of the lesser of (i) 67% or more of the Fund's shares present
at the Meeting, if more than 50% of the outstanding shares of the Fund are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Fund. Unless otherwise instructed, the proxies will vote properly
executed proxy cards FOR the approval of the Proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
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
18
named as proxies will vote on such matters in accordance with their judgment of
the best interests of the Company.
BENEFICIAL OWNERS
As of July 31, 2006, all directors and officers as a group owned less than
1% of the outstanding shares of each class of the Fund's shares. As of July 31,
2006, to the knowledge of the Company, no person owned beneficially more than 5%
of the outstanding shares of any class of shares of the Fund, except as listed
in Appendix D.
As of July 31, 2006, none of the Independent Directors (or their immediate
family members) had share ownership in securities of the Company's investment
manager or principal underwriter or in an entity controlling, controlled by or
under common control with the investment manager or principal underwriter (not
including registered investment companies).
FEES AND EXPENSES
Currently, the Fund pays HIFSCO an investment advisory fee at the following
annual rates (calculated as a percentage of the Fund's average daily net
assets):
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
First $500 million............................. 0.90%
Next $500 million.............................. 0.85%
Amount Over $1 billion......................... 0.80%
</Table>
If the sub-advisory agreement with Hartford Investment Management is
approved, HIFSCO has agreed to reduce its investment advisory fee in accordance
with the following schedule:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- ------------------------ -----------
First $500 million............................. 0.75%
Next $500 million.............................. 0.70%
Amount Over $1 billion......................... 0.65%
</Table>
As of July 31, 2006, net assets in the Fund were $55,499,786.
HIFSCO will pay all expenses relating to this Notice and Proxy Statement
and the Meeting, including the printing, mailing, solicitation and vote
tabulation expenses and out-of-pocket expenses.
The companies listed below, which are affiliates of Hartford Investment
Management, provide services to the Fund, and will continue to do so whether
19
or not Fund shareholders approve the Agreement with Hartford Investment
Management.
HIFSCO provides investment advisory services to the Fund. HIFSCO is located
at 200 Hopmeadow Street, Simsbury, Connecticut 06089. For the fiscal year ended
October 31, 2005, the Fund paid HIFSCO $103,727.
In addition, HIFSCO serves as the Fund's principal underwriter and receives
12b-1 fees from the Fund. As underwriter, HIFSCO is responsible for the sale and
distribution of fund shares. For the fiscal year ended October 31, 2005, the
Fund paid HIFSCO a total of $44,324 in 12b-1 fees.
Hartford Life Insurance Company ("Hartford Life") provides fund accounting
services to the Fund. For the fiscal year ended October 31, 2005, the Fund paid
Hartford Life a total of $2,305 for fund accounting services rendered and
expenses assumed.
In addition, Hartford Life provides certain legal services to the Fund. For
the fiscal year ended October 31, 2005, the Fund paid Hartford Life a total of
$67 for such services.
Hartford Administrative Services Company ("HASCO") performs transfer agency
services for the Fund. HASCO is located at 500 Bielenberg Drive, Woodbury,
Minnesota 55125. HASCO issues and redeems shares of the Fund and disburses any
dividends declared by the Fund. For the fiscal year ended October 31, 2005, the
Fund paid HASCO a total of $32,034 for transfer agency services.
SHAREHOLDER MAILINGS
To help lower the impact of operating costs, the Fund attempts to eliminate
mailing duplicate documents to the same address. When two or more Fund
shareholders have the same last name and address, the Fund may send only one
prospectus, annual report, semiannual report, general information statement or
proxy to that address, rather than mailing separate documents to each
shareholder. Shareholders may opt out of this single mailing at any time by
calling the Fund at 1-888-843-7824 or writing to the Fund at The Hartford Mutual
Funds, P.O. Box 64387 St. Paul, Minnesota 55164-0387, and requesting additional
copies of Fund documents. Shareholders sharing a single mailing address who are
currently receiving multiple copies of Fund documents can request delivery of a
single copy instead by calling the same telephone number or writing to the same
address.
A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT, MOST RECENT SUCCEEDING
SEMI-ANNUAL REPORT, PROSPECTUS, AND PROXY, ARE AVAILABLE UPON REQUEST AND
WITHOUT CHARGE.
20
If you would like to view a copy on the Internet, please go to
www.hartfordinvestor.com (see "Your Vote Counts! Get Your 2006 Proxy
Information" under "Points of Interest"). Alternatively, if you would like to
receive a copy, please contact the Fund at P.O.Box 64387, St. Paul, Minnesota
55164-0387 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.
SHAREHOLDER PROPOSALS
The Fund is not required to hold annual meetings of shareholders and
currently does not intend to hold such meetings, unless shareholder action is
required in accordance with the 1940 Act. To be considered for inclusion in the
proxy statement at any subsequent meeting of shareholders, a shareholder
proposal must be submitted to the Fund at the address above at a reasonable time
before the proxy statement for that meeting is mailed. Whether a proposal is
included in the proxy statement will be determined in accordance with applicable
federal and state laws. The timely submission of a proposal does not guarantee
its inclusion.
By order of the Board of Directors,
/s/ Edward P. Macdonald
Edward P. Macdonald
Secretary
September 1, 2006
21
[FORM OF PROXY CARD]
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR
PROXY TODAY
THE HARTFORD SELECT MIDCAP GROWTH FUND
C/O PROXY TABULATOR
P.O. BOX 9112
FARMINGDALE, NY 11735
VOTING BY TELEPHONE. Call toll-free 1-866-241-6192
and follow the recorded instructions.
VOTING BY INTERNET. Log on to https://vote.proxy-direct.com and follow
the on-screen instructions.
VOTING BY MAIL. Complete and return your proxy card in the addressed
envelope.
If you vote by telephone or Internet, you do not need to mail your proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE HARTFORD
MUTUAL FUNDS, INC. ON BEHALF OF
THE HARTFORD SELECT MIDCAP GROWTH FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 16, 2006
The undersigned appoints Tamara Fagely, Edward Macdonald and Michael Phillips or
each of them separately with power to act without the other and with the right
of substitution in each, the proxies of the undersigned (the "Proxies"), to
vote, as designated herein, all shares of The Hartford Select MidCap Growth Fund
(the "Fund") held by the undersigned on August 21, 2006, at a Special Meeting of
Shareholders (the "Meeting") to be held at the offices of Hartford Investment
Financial Services, LLC, 200 Hopmeadow Street, Simsbury, Connecticut, on
November 16, 2006 at 10 a.m., Eastern Time, and at any adjournments or
postponements thereof, upon the matters on the reverse as set forth in the
Notice of Special Meeting of Shareholders and Proxy Statement, with all powers
the undersigned would possess if present in person.
By executing this proxy, the undersigned revokes all previous proxies with
respect to the Meeting and acknowledges receipt of the Notice of Special Meeting
of Shareholders and Proxy Statement. This proxy may be revoked at any time
before it is exercised by giving written notice of revocation to the Secretary
of the Fund or by executing a superceding proxy.
Date
------------------------------------------
----------------------------------------------
Signature(s) (Please sign in 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 signing for a
partnership, please sign in partnership name
by authorized person.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTER SET FORTH BELOW. IT IS
UNDERSTOOD THAT IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" SUCH
MATTER.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS OF
THE MEETING. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATION OF THE
BOARD OF DIRECTORS, SIMPLY SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE
ENVELOPE PROVIDED.
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL.
PLEASE DO NOT USE FINE POINT PENS.
[ ] [ ] [ ] PROPOSAL TO APPROVE A SUB-ADVISORY
FOR AGAINST ABSTAIN AGREEMENT WITH HARTFORD INVESTMENT
MANAGEMENT COMPANY.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
THANK YOU!
APPENDIX A
FUND SHARES OUTSTANDING ON AUGUST 21, 2006
THE HARTFORD SELECT MIDCAP GROWTH FUND
<Table>
<Caption>
SHARES OUTSTANDING
CLASS ON RECORD DATE
- ----- ------------------
Class A 2,093,313.46
Class B 336,365.75
Class C 343,912.55
Class Y 2,541,465.34
Total 5,315,057.10
</Table>
22
APPENDIX B
FORM OF
INVESTMENT SERVICES AGREEMENT
This investment services agreement is made by and between Hartford
Investment Financial Services, LLC, a Delaware limited liability company
("HIFSCO") and Hartford Investment Management Company, a Delaware corporation
("Hartford Investment Management").
WHEREAS, HIFSCO has entered into an agreement for the provision of
investment management services (the "Principal Advisory Contract") to the ITT
Hartford Mutual Funds, Inc. (the "Company"), currently comprised of ,
and
WHEREAS, HIFSCO wishes to engage Hartford Investment Management to provide
investment management services to (each a "Portfolio" and together the
"Portfolios"), and
WHEREAS, Hartford Investment Management is willing to perform such services
on behalf of the Portfolio upon the terms and conditions and for the
compensation hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the parties hereto agree as follows:
1. HIFSCO hereby employs Hartford Investment Management to provide
investment management services with respect to the assets of the
Portfolio and to perform the services hereinafter set forth subject to
the terms and conditions of the investment objectives, policies and
restrictions of the Portfolio, and Hartford Investment Management
hereby accepts such employment and agrees during such period to assume
the obligations herein set forth for the compensation herein provided.
2. Hartford Investment Management shall evaluate and implement an
investment program appropriate for the Portfolio which shall be amended
and updated from time to time as financial and other economic conditions
change as determined by HIFSCO and Hartford Investment Management.
3. Hartford Investment Management, in consultation with HIFSCO when
appropriate, will make all determinations with respect to the investment
of the assets of the Portfolio and the purchase or sale of portfolio
securities, and shall take such steps as may be necessary to implement
the same. Such determinations and services shall include advising the
Company's Board of Directors of the manner in which voting rights,
rights to consent to corporate action, and any other non-
23
investment decisions pertaining to the Portfolio's securities should be
exercised.
4. Hartford Investment Management will regularly furnish reports with
respect to the Portfolio at periodic meetings of the Company's Board of
Directors and at such other times as may be reasonably requested by the
Company's Board of Directors, which reports shall include Hartford
Investment Management's economic outlook and investment strategy and a
discussion of the portfolio activity and the performance of the
Portfolio since the last report. Copies of all such reports shall be
furnished to HIFSCO for examination and review within a reasonable time
prior to the presentation of such reports to the Company's Board of
Directors.
5. Hartford Investment Management shall manage the Portfolio in conformity
with the Company's Articles of Incorporation and By-laws, each as
amended from time to time, and the Investment Company Act of 1940, as
amended, other applicable laws, and to the investment objectives,
policies and restrictions of the Portfolio as set forth in the
Portfolio's prospectus and statement of additional information, or any
investment guidelines or other instructions received in writing from
HIFSCO, and subject further to such policies and instructions as the
Company's Board of Directors may from time to time establish and deliver
to Hartford Investment Management.
6. Hartford Investment Management will select the brokers or dealers that
will execute the purchases and sales of portfolio securities for the
Portfolio and place, in the name of the Portfolio or its nominees, all
such orders. When placing such orders, Hartford Investment Management
shall use its best efforts to obtain the best net security price
available for the Portfolio. Subject to and in accordance with any
directions that the Board of Directors may issue from time to time,
Hartford Investment Management may also be authorized to effect
individual securities transactions at commission rates in excess of the
minimum commission rates available, if Hartford Investment Management
determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage or research services provided
by such broker or dealer, viewed in terms of either that particular
transaction or Hartford Investment Management's overall responsibilities
with respect to the Portfolio and Hartford Investment Management's other
advisory clients. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this
Agreement or otherwise. Hartford Investment Management will promptly
communicate to the Board of
24
Directors such information relating to portfolio transactions as they
may reasonably request.
7. As compensation for the performance of the services by Hartford
Investment Management hereunder, HIFSCO shall, as promptly as possible
after the last day of each calendar year quarter, pay Hartford
Investment Management the equivalent of all direct and indirect expenses
incurred in the performance of its duties under this Agreement.
8. Hartford Investment Management shall not be liable for any loss or
losses sustained by reason of any investment including the purchase,
holding or sale of any security as long as Hartford Investment
Management shall have acted in good faith and with due care; provided,
however, that no provision in this Agreement shall be deemed to protect
Hartford Investment Management against any liability to the Company or
its shareholders by reason of its willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
9. (a) This Agreement shall be effective on March 3, 1997, shall continue
in effect for the same term as the Principal Advisory Contract and shall
be submitted to the Company's Board of Directors for reapproval at the
same time as the Principal Advisory Contract. This Agreement, unless
sooner terminated in accordance with 9(b) below, shall continue in
effect from year to year thereafter provided that its continuance is
specifically approved at least annually (1) by a vote of the majority of
the members of the Board of Directors of the Company or by a vote of a
majority of the outstanding voting securities of the Portfolio, and (2)
in either event, by the vote of a majority of the members of the
Company's Board of Directors who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on this Agreement.
(b) This Agreement (1) may be terminated with respect to the Portfolio
at any time without the payment of any penalty either by vote of the
members of the Board of Directors of the Company or by a vote of a
majority of the Portfolio's outstanding voting securities, or by HIFSCO
on sixty days' prior written notice to Hartford Investment Management,
(2) shall immediately terminate in the event of its assignment, (3) may
be terminated by Hartford Investment Management on sixty days' prior
written notice to HIFSCO, but such termination will not be effective
until HIFSCO shall have contracted with one or more persons to serve as
a successor to Hartford Invest-
25
ment Management for the Portfolio (or Hartford Investment Management or
an affiliate of Hartford Investment Management agrees to manage the
Portfolio) and such person(s) shall have assumed such position, and (4)
will terminate automatically upon termination of the investment
management agreement between HIFSCO and the Company.
(c) As used in this Agreement, the terms "assignment," "interested
parties" and "vote of a majority of the Company's outstanding voting
securities" shall have the meanings set forth for such terms in the
Investment Company Act of 1940, as amended.
(d) Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party or parties at the
current office address provided by each party.
10. Nothing in this Agreement shall limit or restrict the right of any
partner, officer, or employee of Hartford Investment Management to
engage in any business or to devote his or her time and attention in
part to the management or other aspects of any other business, whether
of a similar nature or a dissimilar nature, nor to limit or restrict
the right of Hartford Investment Management to engage in any other
business or to render services of any kind to any other corporation,
firm, individual or association.
11. It is the intention of the parties hereto that by this Agreement
Hartford Investment Management shall provide HIFSCO with such
investment management and advisory services as may be required by
HIFSCO in managing and advising the Portfolio pursuant to the terms of
the Principal Advisory Contract. No provision of this Agreement shall
be construed or interpreted to grant Hartford Investment Management any
right or authority not granted to HIFSCO under the Principal Advisory
Contract, or to impose on Hartford Investment Management any duty or
obligation not otherwise imposed on HIFSCO under the Principal Advisory
Contract.
12. HIFSCO agrees that neither it nor any affiliate of HIFSCO will use
Hartford Investment Management's name or refer to Hartford Investment
Management or Hartford Investment Management's clients in marketing and
promotional materials without prior notification to and authorization
by Hartford Investment Management, such authorization not to be
unreasonably withheld.
13. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
26
14. The amendment of this Agreement for the sole purpose of adding one or
more Portfolios shall not be deemed an amendment affecting an already
existing Portfolio and requiring the approval of shareholders of that
Portfolio.
15. To the extent that federal securities laws do not apply, this Agreement
and all performance hereunder shall be governed by the laws of the
State of Connecticut which apply to contracts made and to be performed
in the State of Connecticut.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the 3rd day of March 1997.
HARTFORD INVESTMENT
FINANCIAL SERVICES COMPANY
By:
----------------------------------------
Title:
----------------------------------------
THE HARTFORD INVESTMENT
MANAGEMENT COMPANY
By:
----------------------------------------
Title:
----------------------------------------
27
AMENDMENT TO INVESTMENT SERVICES AGREEMENT
Pursuant to the Investment Services Agreement between Hartford Investment
Financial Services, LLC and Hartford Investment Management Company dated March
3, 1997 (the "Agreement"), the following fund is hereby included in the
Agreement as a Portfolio. All provisions in the Agreement shall apply to the
management of the new fund.
- The Hartford Select MidCap Growth Fund
This amended Agreement is effective for a period of two years from the date
hereof and shall continue in effect thereafter in accordance with the provisions
of Section 9 of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed on ________ day of ________, 2006.
HARTFORD INVESTMENT
FINANCIAL SERVICES, LLC
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
HARTFORD INVESTMENT
MANAGEMENT COMPANY
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
28
APPENDIX C
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF
HARTFORD INVESTMENT MANAGEMENT COMPANY
<Table>
<Caption>
NAME POSITION AND PRINCIPAL OCCUPATION ADDRESS
- ---- --------------------------------- -------
David M. Znamierowski President and Director 55 Farmington Avenue
Hartford, CT 06105
Kevin M. Scarrozzo Executive Vice President and 55 Farmington Avenue
Chief Financial Officer Hartford, CT 06105
Edmund V. Mahoney Senior Vice President and 55 Farmington Avenue
Chief Compliance Officer Hartford, CT 06105
Leonard J. Saltiel Chief Operating Officer, Managing 55 Farmington Avenue
Director and Director Hartford, CT 06105
M. Timothy Corbett Managing Director and Director 55 Farmington Avenue
Hartford, CT 06105
William H. Davison, Jr. Managing Director and Director 55 Farmington Avenue
Hartford, CT 06105
Andrew W. Kohnke Managing Director 55 Farmington Avenue
Hartford, CT 06105
Nasri A. Toutoungi Managing Director 55 Farmington Avenue
Hartford, CT 06105
Michael J. Bacevich Managing Director 55 Farmington Avenue
Hartford, CT 06105
William P. Meaney Managing Director 55 Farmington Avenue
Hartford, CT 06105
David N. Levenson Managing Director 55 Farmington Avenue
Hartford, CT 06105
Ronald A. Mendel Managing Director 55 Farmington Avenue
Hartford, CT 06105
Walter F. Garger Secretary and Chief Legal Officer 55 Farmington Avenue
Hartford, CT 06105
</Table>
29
PRINCIPAL EXECUTIVE OFFICERS OF
THE HARTFORD MUTUAL FUNDS, INC.
<Table>
<Caption>
POSITION AND PRINCIPAL
NAME OCCUPATION ADDRESS
- ---- ---------------------- -------
David M. Znamierowski President, Chief Executive c/o Hartford Mutual Funds
Officer P.O. Box 2999
Hartford, CT 06104-2999
Tamara L. Fagely Vice President, Controller c/o Hartford Mutual Funds
and Treasurer 500 Bielenberg Drive
Woodbury, MN 55125
Thomas D. Jones III Vice President and Chief c/o Hartford Mutual Funds
Compliance Officer P.O. Box 2999
Hartford, CT 06104-2999
Edward P. Macdonald Vice President, Secretary and c/o Hartford Mutual Funds
Chief Legal Officer P.O. Box 2999
Hartford, CT 06104-2999
</Table>
30
APPENDIX D
5% BENEFICIAL OWNERS OF FUND SHARES AS OF JULY 31, 2006
As of July 31, 2006, the following shareholders were beneficial owners of
the percentages of outstanding shares of the Fund indicated below.
THE HARTFORD SELECT MIDCAP GROWTH FUND
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER* BENEFICIAL OWNERSHIP CLASS OWNED
- --------------- ------------------- -------------------- -------------
Class A H L Investment Advisors 545,185.038 25.97%
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
Class A Edward D Jones & Co 404,376.811 19.26%
ATTN: Mutual Fund Shareholder
Accounting
201 Progress Pkwy
Maryland Hts, MO 63043-3009
Class B Edward D Jones & Co 28,141.815 8.39%
ATTN: Mutual Fund Shareholder
Accounting
201 Progress Pkwy
Maryland Hts, MO 63043-3009
Class B H L Investment Advisors 20,193.153 6.02%
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
Class C H L Investment Advisors 20,193.153 5.89%
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
Class Y State Street Bank & Trust Cust 1,050,288.494 41.33%
FBO The Hartford Balanced
Allocation
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
Class Y State Street Bank & Trust Cust 939,068.781 36.95%
FBO The Hartford Growth
Allocation
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
</Table>
31
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER* BENEFICIAL OWNERSHIP CLASS OWNED
- --------------- ------------------- -------------------- -------------
Class Y State Street Bank & Trust Cust 291,072.883 11.45%
FBO The Hartford Aggressive
Growth
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
Class Y State Street Bank & Trust Cust 236,004.367 9.29%
FBO The Hartford Conservative
Allocation
ATTN: Marilyn Orr
500 Bielenberg Dr
Woodbury, MN 55125-4401
</Table>
* Each entity set forth in this column is the shareholder of record and may be
deemed to be the beneficial owner of certain of the shares listed for certain
purposes under the securities laws, although certain of the entities generally
do not have an economic interest in these shares and would ordinarily disclaim
any beneficial ownership therein.
32