Table of Contents
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT COMPANIES
(Address of Principal Executive Offices)
Life Law Unit
The Hartford Financial Services Group, Inc.
200 Hopmeadow Street
Simsbury, Connecticut 06089
(Name and Address of Agent for Service)
Table of Contents
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Advisers A# | 7/22/96 | -26.89 | % | -1.61 | % | -0.62 | % | 4.04 | % | |||||||||||
Advisers A## | 7/22/96 | -30.91 | % | -2.71 | % | -1.18 | % | 3.58 | % | |||||||||||
Advisers B# | 7/22/96 | -27.52 | % | -2.38 | % | NA | * | NA | * | |||||||||||
Advisers B## | 7/22/96 | -31.07 | % | -2.71 | % | NA | * | NA | * | |||||||||||
Advisers C# | 7/22/96 | -27.48 | % | -2.30 | % | -1.30 | % | 3.33 | % | |||||||||||
Advisers C## | 7/22/96 | -28.19 | % | -2.30 | % | -1.30 | % | 3.33 | % | |||||||||||
Advisers R3# | 7/22/96 | -27.07 | % | -1.54 | % | -0.32 | % | 4.39 | % | |||||||||||
Advisers R4# | 7/22/96 | -26.93 | % | -1.41 | % | -0.25 | % | 4.44 | % | |||||||||||
Advisers R5# | 7/22/96 | -26.62 | % | -1.25 | % | -0.17 | % | 4.50 | % | |||||||||||
Advisers Y# | 7/22/96 | -26.57 | % | -1.21 | % | -0.15 | % | 4.52 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||||
Steven T. Irons, CFA | John C. Keogh | Peter I. Higgins, CFA | Christopher L. Gootkind, CFA | |||
Senior Vice President, Partner | Senior Vice President, Partner | Senior Vice President | Vice President |
2
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3
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as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 2.5 | % | ||
Capital Goods | 5.6 | |||
Commercial & Professional Services | 0.3 | |||
Consumer Cyclical | 0.4 | |||
Consumer Staples | 0.8 | |||
Diversified Financials | 7.2 | |||
Energy | 9.6 | |||
Finance | 9.3 | |||
Food & Staples Retailing | 3.7 | |||
Food, Beverage & Tobacco | 2.5 | |||
General Obligations | 0.3 | |||
Health Care | 0.5 | |||
Health Care Equipment & Services | 2.5 | |||
Household & Personal Products | 0.7 | |||
Insurance | 0.4 | |||
Materials | 1.1 | |||
Media | 3.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 5.5 | |||
Real Estate | 0.5 | |||
Retailing | 4.0 | |||
Semiconductors & Semiconductor Equipment | 3.1 | |||
Services | 0.3 | |||
Software & Services | 4.3 | |||
Technology | 0.8 | |||
Technology Hardware & Equipment | 6.7 | |||
Telecommunication Services | 1.1 | |||
Transportation | 3.0 | |||
U.S. Government Agencies | 3.0 | |||
U.S. Government Securities | 11.3 | |||
Utilities | 2.1 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | 2.0 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 1.8 | % | ||
Common Stocks | 67.4 | |||
Corporate Bonds: Investment Grade | 12.3 | |||
Municipal Bonds | 0.3 | |||
U.S. Government Agencies | 3.0 | |||
U.S. Government Securities | 11.3 | |||
Warrant | 0.0 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | 2.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 67.4% | ||||||||
Banks - 2.5% | ||||||||
65 | PNC Financial Services Group, Inc. | $ | 2,590 | |||||
114 | Standard Chartered plc | 1,763 | ||||||
823 | Washington Mutual, Inc. Private Placement ⌂ † | 81 | ||||||
660 | Wells Fargo & Co. | 13,211 | ||||||
17,645 | ||||||||
Capital Goods - 5.5% | ||||||||
98 | Cummins, Inc. | 3,332 | ||||||
41 | Danaher Corp. | 2,373 | ||||||
115 | Deere & Co. | 4,724 | ||||||
18 | First Solar, Inc. • | 3,409 | ||||||
671 | General Electric Co. | 8,488 | ||||||
129 | Honeywell International, Inc. | 4,017 | ||||||
147 | Illinois Tool Works, Inc. | 4,805 | ||||||
52 | Lockheed Martin Corp. | 4,075 | ||||||
61 | Siemens AG ADR | 4,056 | ||||||
39,279 | ||||||||
Commercial & Professional Services - 0.3% | ||||||||
179 | Monster Worldwide, Inc. • | 2,474 | ||||||
Diversified Financials - 7.2% | ||||||||
121 | Ameriprise Financial, Inc. | 3,178 | ||||||
687 | Bank of America Corp. | 6,139 | ||||||
519 | Discover Financial Services, Inc. | 4,222 | ||||||
95 | Goldman Sachs Group, Inc. | 12,156 | ||||||
259 | Invesco Ltd. | 3,816 | ||||||
436 | JP Morgan Chase & Co. | 14,375 | ||||||
563 | UBS AG ADR • | 7,675 | ||||||
51,561 | ||||||||
Energy - 9.3% | ||||||||
116 | Cameco Corp. | 2,639 | ||||||
32 | Canadian Natural Resources Ltd. ADR | 1,480 | ||||||
26 | Chevron Corp. | 1,705 | ||||||
101 | EOG Resources, Inc. | 6,424 | ||||||
247 | Exxon Mobil Corp. | 16,441 | ||||||
137 | Hess Corp. | 7,523 | ||||||
103 | Marathon Oil Corp. | 3,053 | ||||||
253 | OAO Gazprom Class S ADR | 4,531 | ||||||
72 | Occidental Petroleum Corp. | 4,042 | ||||||
62 | Petro-Canada | 1,964 | ||||||
140 | Petroleo Brasileiro S.A. ADR | 4,683 | ||||||
138 | Schlumberger Ltd. | 6,761 | ||||||
121 | Suncor Energy, Inc. ADR | 3,063 | ||||||
81 | XTO Energy, Inc. | 2,794 | ||||||
67,103 | ||||||||
Food & Staples Retailing - 3.7% | ||||||||
76 | Costco Wholesale Corp. | 3,669 | ||||||
104 | Kroger Co. | 2,248 | ||||||
205 | Safeway, Inc. | 4,039 | ||||||
250 | Supervalu, Inc. | 4,081 | ||||||
178 | Walgreen Co. | 5,595 | ||||||
134 | Wal-Mart Stores, Inc. | 6,729 | ||||||
26,361 | ||||||||
Food, Beverage & Tobacco - 2.5% | ||||||||
74 | General Mills, Inc. | 3,741 | ||||||
238 | PepsiCo, Inc. | 11,843 | ||||||
116 | Unilever N.V. NY Shares ADR | 2,304 | ||||||
17,888 | ||||||||
Health Care Equipment & Services - 2.5% | ||||||||
21 | Intuitive Surgical, Inc.• | 2,946 | ||||||
165 | Medtronic, Inc. | 5,280 | ||||||
199 | UnitedHealth Group, Inc. | 4,683 | ||||||
76 | Varian Medical Systems, Inc. • | 2,543 | ||||||
56 | Zimmer Holdings, Inc. • | 2,459 | ||||||
17,911 | ||||||||
Household & Personal Products - 0.7% | ||||||||
101 | Procter & Gamble Co. | 4,998 | ||||||
Insurance - 0.4% | ||||||||
64 | ACE Ltd. | 2,958 | ||||||
Materials - 1.1% | ||||||||
169 | Cliff’s Natural Resources, Inc. | 3,897 | ||||||
52 | Potash Corp. of Saskatchewan, Inc. | 4,463 | ||||||
8,360 | ||||||||
Media - 3.0% | ||||||||
794 | Comcast Corp. Class A | 12,269 | ||||||
200 | Time Warner, Inc. | 4,363 | ||||||
267 | Viacom, Inc. Class B • | 5,129 | ||||||
21,761 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 5.5% | ||||||||
191 | Daiichi Sankyo Co., Ltd. | 3,189 | ||||||
578 | Elan Corp. plc ADR • | 3,418 | ||||||
105 | Eli Lilly & Co. | 3,447 | ||||||
141 | Merck & Co., Inc. | 3,425 | ||||||
535 | Pfizer, Inc. | 7,148 | ||||||
136 | Schering-Plough Corp. | 3,128 | ||||||
285 | Shionogi & Co., Ltd. | 4,898 | ||||||
71 | UCB S.A. | 1,920 | ||||||
112 | Vertex Pharmaceuticals, Inc. • | 3,458 | ||||||
119 | Wyeth | 5,033 | ||||||
39,064 | ||||||||
Real Estate - 0.5% | ||||||||
64 | Kimco Realty Corp. | 767 | ||||||
53 | Simon Property Group, Inc. | 2,740 | ||||||
3,507 | ||||||||
Retailing - 4.0% | ||||||||
73 | Best Buy Co., Inc. | 2,798 | ||||||
2,225 | Buck Holdings L.P.⌂ • † | 3,958 | ||||||
92 | Kohl’s Corp. • | 4,163 | ||||||
387 | Lowe’s Co., Inc. | 8,314 | ||||||
129 | Nordstrom, Inc. | 2,915 | ||||||
333 | Staples, Inc. | 6,856 | ||||||
29,004 | ||||||||
Semiconductors & Semiconductor Equipment - 3.1% | ||||||||
306 | Applied Materials, Inc. | 3,741 | ||||||
108 | Intel Corp. | 1,708 | ||||||
117 | Lam Research Corp.• | 3,259 | ||||||
509 | Maxim Integrated Products, Inc. | 6,893 | ||||||
355 | Texas Instruments, Inc. | 6,413 | ||||||
22,014 | ||||||||
Software & Services - 4.3% | ||||||||
137 | Accenture Ltd. Class A | 4,041 | ||||||
15 | Google, Inc. • | 5,781 | ||||||
652 | Microsoft Corp. | 13,217 | ||||||
116 | Oracle Corp. • | 2,238 | ||||||
311 | Western Union Co. | 5,206 | ||||||
30,483 | ||||||||
Technology Hardware & Equipment - 6.7% |
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April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 67.4% — (continued) | ||||||||
Technology Hardware & Equipment - 6.7% — (continued) | ||||||||
70 | Apple, Inc.• | $ | 8,859 | |||||
839 | Cisco Systems, Inc.• | 16,213 | ||||||
170 | Corning, Inc. | 2,480 | ||||||
585 | Flextronics International Ltd. • | 2,271 | ||||||
135 | Hewlett-Packard Co. | 4,868 | ||||||
246 | NetApp, Inc.• | 4,507 | ||||||
217 | Qualcomm, Inc. | 9,192 | ||||||
48,390 | ||||||||
Telecommunication Services - 1.1% | ||||||||
89 | AT&T, Inc. | 2,290 | ||||||
314 | MetroPCS Communications, Inc.• | 5,366 | ||||||
7,656 | ||||||||
Transportation - 2.6% | ||||||||
851 | Delta Air Lines, Inc.• | 5,249 | ||||||
95 | FedEx Corp. | 5,294 | ||||||
161 | United Parcel Service, Inc. Class B | 8,421 | ||||||
18,964 | ||||||||
Utilities - 0.9% | ||||||||
136 | Exelon Corp. | 6,251 | ||||||
Total common stocks (cost $607,722) | $ | 483,632 | ||||||
WARRANTS - 0.0% | ||||||||
Banks 0.0% | ||||||||
103 | Washington Mutual, Inc. Private Placement ⌂ •† | $ | — | |||||
Total warrants (cost $—) | $ | — | ||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 1.8% | ||||||||
Finance - 1.8% | ||||||||
Advanta Business Card Master Trust | ||||||||
$ | 5,000 | 5.30%, 05/21/2012 | $ | 4,945 | ||||
Citibank Credit Card Issuance Trust | ||||||||
2,985 | 5.65%, 09/20/2019 | 2,808 | ||||||
Marriott Vacation Club Owner Trust | ||||||||
243 | 5.36%, 10/20/2028 § | 199 | ||||||
Nissan Automotive Lease Trust | ||||||||
5,000 | 5.10%, 07/16/2012 | 4,990 | ||||||
12,942 | ||||||||
Total asset & commercial mortgage backed securities (cost $13,219) | $ | 12,942 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 12.3% | ||||||||
Capital Goods - 0.1% | ||||||||
Xerox Corp. | ||||||||
$ | 1,000 | 5.50%, 05/15/2012 | $ | 950 | ||||
Consumer Cyclical - 0.4% | ||||||||
DaimlerChrysler NA Holdings Corp. | ||||||||
1,975 | 6.50%, 11/15/2013 | 1,919 | ||||||
Federated Retail Holdings, Inc. | ||||||||
714 | 5.90%, 12/01/2016 | 592 | ||||||
Staples, Inc. | ||||||||
460 | 9.75%, 01/15/2014 | 505 | ||||||
3,016 | ||||||||
Consumer Staples - 0.8% | ||||||||
PepsiAmericas, Inc. | ||||||||
2,435 | 6.38%, 05/01/2009 | 2,435 | ||||||
Procter & Gamble Co. | ||||||||
2,150 | 9.36%, 01/01/2021 | 2,593 | ||||||
Weyerhaeuser Co. | ||||||||
800 | 7.38%, 03/15/2032 | 609 | ||||||
5,637 | ||||||||
Energy - 0.3% | ||||||||
Atmos Energy Corp. | ||||||||
1,160 | 6.35%, 06/15/2017 | 1,072 | ||||||
Weatherford International Ltd. | ||||||||
1,000 | 5.95%, 06/15/2012 | 1,000 | ||||||
2,072 | ||||||||
Finance - 7.5% | ||||||||
Ace INA Holdings, Inc. | ||||||||
125 | 5.88%, 06/15/2014 | 124 | ||||||
American Express Centurion Bank | ||||||||
1,200 | 6.00%, 09/13/2017 | 1,021 | ||||||
AXA Financial, Inc. | ||||||||
2,200 | 7.00%, 04/01/2028 | 1,586 | ||||||
Bank of America Corp. | ||||||||
3,000 | 5.42%, 03/15/2017 | 2,113 | ||||||
Berkshire Hathaway Finance Corp. | ||||||||
1,050 | 4.85%, 01/15/2015 | 1,083 | ||||||
Brandywine Operating Partnership | ||||||||
750 | 5.70%, 05/01/2017 | 409 | ||||||
1,000 | 6.00%, 04/01/2016 | 586 | ||||||
Capital One Bank | ||||||||
750 | 6.50%, 06/13/2013 | 696 | ||||||
Capital One Capital IV | ||||||||
1,000 | 6.75%, 02/17/2037 | 425 | ||||||
Capital One Financial Corp. | ||||||||
870 | 5.70%, 09/15/2011 | 831 | ||||||
CIT Group, Inc. | ||||||||
1,150 | 7.63%, 11/30/2012 | 713 | ||||||
Citigroup, Inc. | ||||||||
1,600 | 6.00%, 10/31/2033 | 878 | ||||||
COX Communications, Inc. | ||||||||
2,000 | 5.45%, 12/15/2014 | 1,866 | ||||||
Developers Diversified Realty Corp. | ||||||||
1,500 | 5.38%, 10/15/2012 | 678 | ||||||
Discover Financial Services, Inc. | ||||||||
1,245 | 6.45%, 06/12/2017 | 879 | ||||||
Eaton Vance Corp. | ||||||||
530 | 6.50%, 10/02/2017 | 462 | ||||||
Everest Reinsurance Holdings, Inc. | ||||||||
885 | 5.40%, 10/15/2014 | 781 | ||||||
Genworth Financial, Inc. | ||||||||
1,500 | 6.15%, 11/15/2066 | 210 | ||||||
Goldman Sachs Group, Inc. | ||||||||
1,000 | 5.30%, 02/14/2012 | 1,014 | ||||||
1,200 | 5.63%, 01/15/2017 | 1,028 | ||||||
Health Care Properties | ||||||||
2,035 | 6.00%, 01/30/2017 | 1,660 |
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Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - 12.3% — (continued) | ||||||||
Finance - 7.5% — (continued) | ||||||||
HSBC Finance Corp. | ||||||||
$ | 2,000 | 5.50%, 01/19/2016 | $ | 1,680 | ||||
International Lease Finance Corp. | ||||||||
2,200 | 5.00%, 09/15/2012 | 1,344 | ||||||
1,200 | 5.63%, 09/15/2010 | 1,035 | ||||||
Jackson National Life Insurance Co. | ||||||||
2,000 | 8.15%, 03/15/2027 § | 1,564 | ||||||
John Deere Capital Corp. | ||||||||
1,655 | 4.88%, 10/15/2010 | 1,704 | ||||||
JP Morgan Chase & Co. | ||||||||
1,795 | 5.13%, 09/15/2014 | 1,663 | ||||||
KeyCorp Capital II | ||||||||
250 | 6.88%, 03/17/2029 | 167 | ||||||
Kimco Realty Corp. | ||||||||
1,550 | 5.78%, 03/15/2016 | 1,198 | ||||||
Liberty Mutual Group, Inc. | ||||||||
2,335 | 5.75%, 03/15/2014 § | 1,784 | ||||||
Liberty Property L.P. | ||||||||
260 | 6.63%, 10/01/2017 | 189 | ||||||
Merrill Lynch & Co., Inc. | ||||||||
2,000 | 5.00%, 02/03/2014 | 1,681 | ||||||
Morgan Stanley | ||||||||
2,650 | 5.38%, 10/15/2015 | 2,385 | ||||||
National City Corp. | ||||||||
125 | 6.88%, 05/15/2019 | 107 | ||||||
New England Mutual Life Insurance Co. | ||||||||
3,100 | 7.88%, 02/15/2024 § | 2,714 | ||||||
Prologis Trust | ||||||||
1,500 | 5.63%, 11/15/2016 | 1,004 | ||||||
Prudential Financial, Inc. | ||||||||
585 | 5.80%, 06/15/2012 | 535 | ||||||
Prudential Funding LLC | ||||||||
2,000 | 6.75%, 09/15/2023 § | 1,121 | ||||||
Realty Income Corp. | ||||||||
965 | 6.75%, 08/15/2019 | 710 | ||||||
Republic New York Capital I | ||||||||
250 | 7.75%, 11/15/2006 | 122 | ||||||
Santander Central Hispano Issuances Ltd. | ||||||||
500 | 7.63%, 11/03/2009 | 509 | ||||||
Simon Property Group L.P. | ||||||||
3,100 | 6.10%, 05/01/2016 | 2,680 | ||||||
Sovereign Bancorp, Inc. | ||||||||
1,000 | 8.75%, 05/30/2018 | 880 | ||||||
Sovereign Capital Trust IV | ||||||||
1,500 | 7.91%, 06/13/2036 | 980 | ||||||
Torchmark Corp. | ||||||||
3,000 | 8.25%, 08/15/2009 | 2,998 | ||||||
UnitedHealth Group, Inc. | ||||||||
500 | 5.50%, 11/15/2012 | 502 | ||||||
WEA Finance LLC | ||||||||
1,000 | 7.13%, 04/15/2018 § | 828 | ||||||
Wells Fargo Bank NA | ||||||||
2,500 | 6.45%, 02/01/2011 | 2,549 | ||||||
53,676 | ||||||||
Health Care - 0.5% | ||||||||
CVS Corp. | ||||||||
1,550 | 6.13%, 08/15/2016 | 1,581 | ||||||
Schering-Plough Corp. | ||||||||
2,000 | 5.55%, 12/01/2013 | 2,121 | ||||||
3,702 | ||||||||
Services - 0.3% | ||||||||
Comcast Corp. | ||||||||
1,600 | 5.90%, 03/15/2016 | 1,598 | ||||||
Wyndham Worldwide Corp. | ||||||||
615 | 6.00%, 12/01/2016 | 406 | ||||||
2,004 | ||||||||
Technology - 0.8% | ||||||||
BellSouth Telecommunications | ||||||||
250 | 7.00%, 12/01/2095 | 199 | ||||||
Fiserv, Inc. | ||||||||
1,250 | 6.13%, 11/20/2012 | 1,239 | ||||||
General Electric Co. | ||||||||
1,225 | 5.00%, 02/01/2013 | 1,257 | ||||||
Intuit, Inc. | ||||||||
1,500 | 5.40%, 03/15/2012 | 1,517 | ||||||
Time Warner Cable, Inc. | ||||||||
830 | 5.85%, 05/01/2017 | 798 | ||||||
Verizon Global Funding Corp. | ||||||||
250 | 7.25%, 12/01/2010 | 266 | ||||||
5,276 | ||||||||
Transportation - 0.4% | ||||||||
Continental Airlines, Inc. | ||||||||
755 | 5.98%, 04/19/2022 | 597 | ||||||
Southwest Airlines Co. | ||||||||
1,750 | 5.75%, 12/15/2016 | 1,547 | ||||||
666 | 6.15%, 08/01/2022 | 599 | ||||||
2,743 | ||||||||
Utilities - 1.2% | ||||||||
Consolidated Edison Co. of NY | ||||||||
955 | 5.30%, 12/01/2016 | 948 | ||||||
Enel Finance International | ||||||||
805 | 6.80%, 09/15/2037 § | 662 | ||||||
Indianapolis Power and Light | ||||||||
1,500 | 6.60%, 06/01/2037 § | 1,259 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
1,500 | 6.95%, 01/15/2038 | 1,304 | ||||||
MidAmerican Energy Co. | ||||||||
1,000 | 5.65%, 07/15/2012 | 1,028 | ||||||
MidAmerican Energy Holdings Co. | ||||||||
500 | 6.13%, 04/01/2036 | 434 | ||||||
Northern Border Pipeline Co. | ||||||||
1,150 | 7.75%, 09/01/2009 | 1,159 | ||||||
Southern California Edison Co. | ||||||||
1,750 | 5.55%, 01/15/2037 | 1,643 | ||||||
Taqa Abu Dhabi National Energy Co. | ||||||||
695 | 5.88%, 10/27/2016 § | 638 | ||||||
9,075 | ||||||||
Total corporate bonds: investment grade (cost $104,311) | $ | 88,151 | ||||||
MUNICIPAL BONDS - 0.3% | ||||||||
General Obligations - 0.3% | ||||||||
Oregon School Boards Association, Taxable Pension, | ||||||||
$ | 2,000 | 4.76%, 06/30/2028 | $ | 1,612 | ||||
State of Illinois, Taxable Pension, | ||||||||
650 | 5.10%, 06/01/2033 | 536 | ||||||
2,148 | ||||||||
Total municipal bonds (cost $2,643) | $ | 2,148 | ||||||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
U.S. GOVERNMENT AGENCIES - 3.0% | ||||||||||||
Federal Home Loan Mortgage Corporation - 1.8% | ||||||||||||
$ | 9,050 | 4.50%, 01/01/2038 - 02/01/2039 | $ | 9,209 | ||||||||
Federal National Mortgage Association - 0.5% | ||||||||||||
3,515 | 4.50%, 04/01/2038 - 03/01/2039 | 3,581 | ||||||||||
108 | 5.00%, 06/01/2036 | 112 | ||||||||||
3,693 | ||||||||||||
Government National Mortgage Association - 0.7% | ||||||||||||
2,229 | 5.50%, 02/15/2036 - 01/15/2037 | 2,318 | ||||||||||
2,447 | 6.00%, 11/20/2023 - 10/15/2034 | 2,568 | ||||||||||
1,734 | 6.50%, 04/15/2026 - 02/15/2035 | 1,849 | ||||||||||
1,713 | 7.00%, 11/15/2031 - 11/15/2033 | 1,827 | ||||||||||
262 | 8.00%, 12/15/2029 - 02/15/2031 | 293 | ||||||||||
8,855 | ||||||||||||
Total U.S. government agencies (cost $21,254) | $ | 21,757 | ||||||||||
U.S. GOVERNMENT SECURITIES - 11.3% | ||||||||||||
Other Direct Federal Obligations - 2.8% | ||||||||||||
Federal Financing Corporation: | ||||||||||||
$ | 1,456 | 5.24%, 12/06/2013 o | $ | 1,244 | ||||||||
2,220 | 5.25%, 12/27/2013 o | 1,892 | ||||||||||
10,000 | 9.80%, 04/06/2018 | 14,727 | ||||||||||
17,863 | ||||||||||||
Federal Home Loan Bank: | ||||||||||||
2,225 | 4.88%, 11/18/2011 | 2,401 | ||||||||||
20,264 | ||||||||||||
U.S. Treasury Bonds - 1.0% | ||||||||||||
5,775 | 6.25%, 08/15/2023 | 7,221 | ||||||||||
U.S. Treasury Notes - 7.5% | ||||||||||||
9,500 | 2.38%, 08/31/2010 | 9,719 | ||||||||||
14,000 | 2.75%, 02/15/2019 | 13,560 | ||||||||||
10,000 | 3.88%, 05/15/2018 | 10,657 | ||||||||||
6,335 | 4.13%, 08/15/2010 | 6,622 | ||||||||||
10,200 | 4.50%, 05/15/2017 | 11,386 | ||||||||||
1,277 | 4.75%, 05/31/2012 | 1,406 | ||||||||||
53,350 | ||||||||||||
Total U.S. government securities (cost $74,279) | $ | 80,835 | ||||||||||
Total long-term investments (cost $823,428) | $ | 689,465 | ||||||||||
SHORT-TERM INVESTMENTS - 1.9% | ||||||||||||
Repurchase Agreements - 1.9% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $3,162, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $3,225) | ||||||||||||
$ | 3,162 | 0.18%, 04/30/2009 | $ | 3,162 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $3,784, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $3,860) | ||||||||||||
3,784 | 0.17%, 04/30/2009 | 3,784 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $5,287, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $5,393) | ||||||||||||
5,287 | 0.17%, 04/30/2009 | 5,287 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $18, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $18) | ||||||||||||
18 | 0.14%, 04/30/2009 | 18 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,140, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - - 2039, value of $1,163) | ||||||||||||
1,140 | 0.16%, 04/30/2009 | 1,140 | ||||||||||
13,391 | ||||||||||||
Total short-term investments (cost $13,391) | $ | 13,391 | ||||||||||
Total investments (cost $836,819)▲ | 98.0 | % | $ | 702,856 | ||||||||
Other assets and liabilities | 2.0 | % | 14,442 | |||||||||
Total net assets | 100.0 | % | $ | 717,298 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 4.22% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $852,585 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 28,737 | ||
Unrealized Depreciation | (178,466 | ) | ||
Net Unrealized Depreciation | $ | (149,729 | ) | |
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† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $4,039, which represents 0.56% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
§ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $10,769, which represents 1.50% of total net assets. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||
Acquired | Par | Security | Cost Basis | |||||||
06/2007 | 2,225 | Buck Holdings L.P. | $ | 2,227 | ||||||
04/2008 | 823 | Washington Mutual, Inc. Private Placement | 7,200 | |||||||
04/2008 | 103 | Washington Mutual, Inc. Private Placement Warrants | — |
The aggregate value of these securities at April 30, 2009 was $4,039 which represents 0.56% of total net assets. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Sell) | $ | 74 | $ | 74 | 05/06/09 | $ | — | |||||||||
Euro (Sell) | 81 | 81 | 05/06/09 | — | ||||||||||||
$ | — | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 481,383 | ||
Investment in securities — Level 2 | 216,238 | |||
Investment in securities — Level 3 | 5,235 | |||
Total | $ | 702,856 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 4,478 | ||
Net realized loss | (713 | ) | ||
Change in unrealized appreciation ♦ | 2,511 | |||
Net sales | (1,041 | ) | ||
Balance as of April 30, 2009 | $ | 5,235 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 2,012 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $836,819) | $ | 702,856 | ||
Cash | 1 | |||
Unrealized appreciation on forward foreign currency contracts | ||||
Receivables: | — | |||
Investment securities sold | 21,257 | |||
Fund shares sold | 11 | |||
Dividends and interest | 3,259 | |||
Other assets | 185 | |||
Total assets | 727,569 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | ||||
Payables: | — | |||
Investment securities purchased | 8,455 | |||
Fund shares redeemed | 1,266 | |||
Investment management fees | 79 | |||
Distribution fees | 50 | |||
Accrued expenses | 421 | |||
Total liabilities | 10,271 | |||
Net assets | $ | 717,298 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,123,608 | |||
Accumulated distribution in excess of net investment income | (2,310 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (270,037 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (133,963 | ) | ||
Net assets | $ | 717,298 | ||
Shares authorized | 910,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.78/$11.40 | ||
Shares outstanding | 49,515 | |||
Net assets | $ | 533,700 | ||
Class B: Net asset value per share | $ | 10.67 | ||
Shares outstanding | 7,489 | |||
Net assets | $ | 79,884 | ||
Class C: Net asset value per share | $ | 10.78 | ||
Shares outstanding | 8,512 | |||
Net assets | $ | 91,753 | ||
Class R3: Net asset value per share | $ | 10.90 | ||
Shares outstanding | 1 | |||
Net assets | $ | 11 | ||
Class R4: Net asset value per share | $ | 10.89 | ||
Shares outstanding | 72 | |||
Net assets | $ | 779 | ||
Class R5: Net asset value per share | $ | 10.91 | ||
Shares outstanding | 1 | |||
Net assets | $ | 8 | ||
Class Y: Net asset value per share | $ | 10.91 | ||
Shares outstanding | 1,024 | |||
Net assets | $ | 11,163 | ||
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Investment Income: | ||||
Dividends | $ | 5,936 | ||
Interest | 6,362 | |||
Securities lending | 143 | |||
Less: Foreign tax withheld | (93 | ) | ||
Total investment income | 12,348 | |||
Expenses: | ||||
Investment management fees | 2,372 | |||
Transfer agent fees | 1,277 | |||
Distribution fees | ||||
Class A | 649 | |||
Class B | 428 | |||
Class C | 458 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 6 | |||
Accounting services | 64 | |||
Registration and filing fees | 58 | |||
Board of Directors’ fees | 10 | |||
Audit fees | 16 | |||
Other expenses | 199 | |||
Total expenses (before waivers and fees paid indirectly) | 5,537 | |||
Expense waivers | (500 | ) | ||
Transfer agent fee waivers | (243 | ) | ||
Commission recapture | (26 | ) | ||
Custodian fee offset | (5 | ) | ||
Total waivers and fees paid indirectly | (774 | ) | ||
Total expenses, net | 4,763 | |||
Net investment income | 7,585 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (165,309 | ) | ||
Net realized loss on futures | (100 | ) | ||
Net realized gain on foreign currency transactions | 3,258 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (162,151 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 161,048 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (3,239 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 157,809 | |||
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (4,342 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 3,243 | ||
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(000’s Omitted)
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 7,585 | $ | 19,469 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (162,151 | ) | (103,462 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 157,809 | (369,100 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 3,243 | (453,093 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (10,024 | ) | (15,267 | ) | ||||
Class B | (1,308 | ) | (1,361 | ) | ||||
Class C | (1,374 | ) | (1,601 | ) | ||||
Class R3 | — | — | ||||||
Class R4 | (3 | ) | (2 | ) | ||||
Class R5 | — | — | ||||||
Class Y | (222 | ) | (363 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (116,370 | ) | |||||
Class B | — | (26,714 | ) | |||||
Class C | — | (22,170 | ) | |||||
Class R3 | — | (1 | ) | |||||
Class R4 | — | (6 | ) | |||||
Class R5 | — | (1 | ) | |||||
Class Y | — | (2,134 | ) | |||||
Total distributions | (12,931 | ) | (185,990 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (54,023 | ) | (39,453 | ) | ||||
Class B | (21,605 | ) | (52,862 | ) | ||||
Class C | (13,622 | ) | (15,999 | ) | ||||
Class R3 | 2 | 4 | ||||||
Class R4 | 635 | 114 | ||||||
Class R5 | — | 1 | ||||||
Class Y | (144 | ) | (182 | ) | ||||
Net decrease from capital share transactions | (88,757 | ) | (108,377 | ) | ||||
Net decrease in net assets | (98,445 | ) | (747,460 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 815,743 | 1,563,203 | ||||||
End of period | $ | 717,298 | $ | 815,743 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (2,310 | ) | $ | 3,036 | |||
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Advisers Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading |
13
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restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. |
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Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | |||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the |
15
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close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had no outstanding when-issued or forward commitments. | ||
k) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
l) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is |
16
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limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | |||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
m) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. |
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Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
o) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
p) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. As of April 30, 2009, there were no outstanding futures contracts. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying |
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securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 120,978 | $ | 24,582 | ||||
Long-Term Capital Gains * | 65,012 | 9,545 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 6,246 | ||
Accumulated Capital Losses* | $ | (92,120 | ) | |
Unrealized Depreciation† | $ | (310,748 | ) | |
Total Accumulated Deficit | $ | (396,622 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward Note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the |
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type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $121 and decrease accumulated net realized loss by $121. | |||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 92,120 | ||
Total | $ | 92,120 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.6900 | % | ||
On next $500 million | 0.6250 | % | ||
On next $4 billion | 0.5750 | % | ||
On next $5 billion | 0.5725 | % | ||
Over $10 billion | 0.5700 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of |
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certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||||||||||||||
1.18% | NA | NA | 1.43 | % | 1.13 | % | 0.83 | % | NA |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.12 | % | 1.17 | % | 1.09 | % | 1.11 | % | 1.18 | % | 1.22 | % | ||||||||||||
Class B Shares | 2.07 | 2.00 | 1.90 | 1.90 | 1.96 | 1.94 | ||||||||||||||||||
Class C Shares | 2.03 | 1.86 | 1.78 | 1.81 | 1.88 | 1.86 | ||||||||||||||||||
Class R3 Shares | 1.43 | 1.43 | 1.40 | * | ||||||||||||||||||||
Class R4 Shares | 1.13 | 1.11 | 1.05 | † | ||||||||||||||||||||
Class R5 Shares | 0.83 | 0.79 | 0.80 | ‡ | ||||||||||||||||||||
Class Y Shares | 0.77 | 0.70 | 0.63 | 0.65 | 0.73 | 0.74 |
* | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $212 and contingent deferred sales charges of $46 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the |
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entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $25. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), a wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $1,103 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from Payment | ||||||||||||||||
from Affiliate for | ||||||||||||||||
Impact from | Total Return | Transfer Agent | ||||||||||||||
Payment from | Excluding | Allocation | Total Return | |||||||||||||
Affiliate for SEC | Payment from | Methodology | Excluding Payment | |||||||||||||
Settlement for the | Affiliate for the | Reimbursements for | from Affiliate for | |||||||||||||
Year Ended | Year Ended | the Year Ended | the Year Ended | |||||||||||||
October 31, 2007 | October 31, 2007 | October 31, 2004 | October 31, 2004 | |||||||||||||
Class A | 0.07 | % | 13.15 | % | 0.19 | % | 3.74 | % | ||||||||
Class B | 0.08 | 12.24 | 0.26 | 2.95 | ||||||||||||
Class C | 0.07 | 12.36 | 0.21 | 3.06 | ||||||||||||
Class Y | 0.07 | 13.65 | — | — |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 | |||
Class R5 | 1 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 223,883 | ||
Sales Proceeds Excluding U.S. Government Obligations | 341,435 | |||
Cost of Purchases for U.S. Government Obligations | 13,852 | |||
Sales Proceeds for U.S. Government Obligations | 8,208 |
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8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,455 | 959 | (8,892 | ) | — | (5,478 | ) | 4,723 | 8,149 | (16,658 | ) | — | (3,786 | ) | ||||||||||||||||||||||||||
Amount | $ | 24,456 | $ | 9,726 | $ | (88,205 | ) | $ | — | $ | (54,023 | ) | $ | 68,922 | $ | 128,191 | $ | (236,566 | ) | $ | — | $ | (39,453 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 146 | 126 | (2,476 | ) | — | (2,204 | ) | 360 | 1,720 | (5,914 | ) | — | (3,834 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,386 | $ | 1,295 | $ | (24,286 | ) | $ | — | $ | (21,605 | ) | $ | 5,188 | $ | 26,933 | $ | (84,983 | ) | $ | — | $ | (52,862 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 312 | 124 | (1,814 | ) | — | (1,378 | ) | 520 | 1,393 | (3,194 | ) | — | (1,281 | ) | ||||||||||||||||||||||||||
Amount | $ | 3,065 | $ | 1,310 | $ | (17,997 | ) | $ | — | $ | (13,622 | ) | $ | 7,233 | $ | 22,009 | $ | (45,241 | ) | $ | — | $ | (15,999 | ) | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 2 | $ | — | $ | — | $ | — | $ | 2 | $ | 3 | $ | 1 | $ | — | $ | — | $ | 4 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 70 | — | (8 | ) | — | 62 | 14 | — | (7 | ) | — | 7 | ||||||||||||||||||||||||||||
Amount | $ | 710 | $ | 4 | $ | (79 | ) | $ | — | $ | 635 | $ | 209 | $ | 8 | $ | (103 | ) | $ | — | $ | 114 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 43 | 22 | (79 | ) | — | (14 | ) | 120 | 157 | (305 | ) | — | (28 | ) | ||||||||||||||||||||||||||
Amount | $ | 435 | $ | 221 | $ | (800 | ) | $ | — | $ | (144 | ) | $ | 1,836 | $ | 2,498 | $ | (4,516 | ) | $ | — | $ | (182 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 848 | $ | 8,452 | |||||
For the Year Ended October 31, 2008 | 2,044 | $ | 30,041 |
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
realized | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | Gain | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | (Loss) | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000's) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rated(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.80 | $ | 0.12 | $ | — | $ | 0.05 | $ | 0.17 | $ | (0.19 | ) | $ | — | $ | — | $ | (0.19 | ) | $ | (0.02 | ) | $ | 10.78 | 1.72 | %(f) | $ | 533,700 | 1.37 | %(g) | 1.13 | %(g) | 1.13 | %(g) | 2.37 | %(g) | 32 | % | |||||||||||||||||||||||||||||||||
B | 10.69 | 0.07 | — | 0.06 | 0.13 | (0.15 | ) | — | — | (0.15 | ) | (0.02 | ) | 10.67 | 1.20 | (f) | 79,884 | 2.31 | (g) | 2.07 | (g) | 2.07 | (g) | 1.44 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 10.80 | 0.07 | — | 0.06 | 0.13 | (0.15 | ) | — | — | (0.15 | ) | (0.02 | ) | 10.78 | 1.19 | (f) | 91,753 | 2.03 | (g) | 2.03 | (g) | 2.03 | (g) | 1.47 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.92 | 0.10 | — | 0.06 | 0.16 | (0.18 | ) | — | — | (0.18 | ) | (0.02 | ) | 10.90 | 1.56 | (f) | 11 | 1.74 | (g) | 1.43 | (g) | 1.43 | (g) | 2.02 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.92 | 0.09 | — | 0.08 | 0.17 | (0.20 | ) | — | — | (0.20 | ) | (0.03 | ) | 10.89 | 1.64 | (f) | 779 | 1.19 | (g) | 1.13 | (g) | 1.13 | (g) | 2.02 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.93 | 0.13 | — | 0.06 | 0.19 | (0.21 | ) | — | — | (0.21 | ) | (0.02 | ) | 10.91 | 1.88 | (f) | 8 | 0.88 | (g) | 0.83 | (g) | 0.83 | (g) | 2.63 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.93 | 0.14 | — | 0.06 | 0.20 | (0.22 | ) | — | — | (0.22 | ) | (0.02 | ) | 10.91 | 1.91 | (f) | 11,163 | 0.77 | (g) | 0.77 | (g) | 0.77 | (g) | 2.71 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 18.52 | 0.26 | — | (5.74 | ) | (5.48 | ) | (0.25 | ) | (1.99 | ) | — | (2.24 | ) | (7.72 | ) | 10.80 | (33.24 | ) | 593,816 | 1.18 | 1.18 | 1.18 | 1.75 | 79 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 18.34 | 0.15 | — | (5.70 | ) | (5.55 | ) | (0.11 | ) | (1.99 | ) | — | (2.10 | ) | (7.65 | ) | 10.69 | (33.80 | ) | 103,632 | 2.03 | 2.00 | 2.00 | 0.93 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 18.51 | 0.16 | — | (5.73 | ) | (5.57 | ) | (0.15 | ) | (1.99 | ) | — | (2.14 | ) | (7.71 | ) | 10.80 | (33.68 | ) | 106,819 | 1.87 | 1.87 | 1.87 | 1.06 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 18.70 | 0.21 | — | (5.78 | ) | (5.57 | ) | (0.22 | ) | (1.99 | ) | — | (2.21 | ) | (7.78 | ) | 10.92 | (33.39 | ) | 9 | 1.57 | 1.43 | 1.43 | 1.49 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 18.70 | 0.26 | — | (5.78 | ) | (5.52 | ) | (0.27 | ) | (1.99 | ) | — | (2.26 | ) | (7.78 | ) | 10.92 | (3316 | ) | 113 | 1.11 | 1.11 | 1.11 | 1.80 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 18.71 | 0.31 | — | (5.79 | ) | (5.48 | ) | (0.31 | ) | (1.99 | ) | — | (2.30 | ) | (7.78 | ) | 10.93 | (32.96 | ) | 7 | 0.79 | 0.79 | 0.79 | 2.13 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 18.71 | 0.33 | — | (5.80 | ) | (5.47 | ) | (0.32 | ) | (1.99 | ) | — | (2.31 | ) | (7.78 | ) | 10.93 | (32.91 | ) | 11,347 | 0.70 | 0.70 | 0.70 | 2.22 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.74 | 0.30 | 0.01 | 1.87 | 2.18 | (0.31 | ) | (0.09 | ) | — | (0.40 | ) | 1.78 | 18.52 | 13.23 | (h) | 1,088,361 | 1.15 | 1.10 | 1.10 | 1.67 | 84 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 16.57 | 0.16 | 0.02 | 1.84 | 2.02 | (0.16 | ) | (0.09 | ) | — | (0.25 | ) | 1.77 | 18.34 | 12.32 | (h) | 248,020 | 1.96 | 1.91 | 1.91 | 0.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 16.73 | 0.18 | 0.01 | 1.87 | 2.06 | (0.19 | ) | (0.09 | ) | — | (0.28 | ) | 1.78 | 18.51 | 12.44 | (h) | 206,799 | 1.83 | 1.78 | 1.78 | 0.98 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 17.24 | 0.21 | — | 1.44 | 1.65 | (0.19 | ) | — | — | (0.19 | ) | 1.46 | 18.70 | 9.62 | (f) | 11 | 1.45 | (g) | 1.40 | (g) | 1.40 | (g) | 1.38 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 17.24 | 0.25 | — | 1.44 | 1.69 | (0.23 | ) | — | — | (0.23 | ) | 1.46 | 18.70 | 9.88 | (f) | 53 | 1.11 | (g) | 1.06 | (g) | 1.06 | (g) | 1.68 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 17.24 | 0.31 | — | 1.43 | 1.74 | (0.27 | ) | — | — | (0.27 | ) | 1.47 | 18.71 | 10.17 | (f) | 11 | 0.85 | (g) | 0.80 | (g) | 0.80 | (g) | 1.98 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 16.91 | 0.38 | 0.01 | 1.89 | 2.28 | (0.39 | ) | (0.09 | ) | — | (0.48 | ) | 1.80 | 18.71 | 13.73 | (h) | 19,948 | 0.69 | 0.64 | 0.64 | 2.13 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.34 | 0.31 | — | 1.38 | 1.69 | (0.29 | ) | — | — | (0.29 | ) | 1.40 | 16.74 | 11.16 | 1,110,324 | 1.17 | 1.12 | 1.12 | 1.86 | 99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.19 | 0.18 | — | 1.37 | 1.55 | (0.17 | ) | — | — | (0.17 | ) | 1.38 | 16.57 | 10.25 | 341,772 | 1.96 | 1.91 | 1.91 | 1.07 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.34 | 0.19 | — | 1.38 | 1.57 | (0.18 | ) | — | — | (0.18 | ) | 1.39 | 16.73 | 10.32 | 219,580 | 1.87 | 1.82 | 1.82 | 1.16 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.50 | 0.38 | — | 1.40 | 1.78 | (0.37 | ) | — | — | (0.37 | ) | 1.41 | 16.91 | 11.63 | 17,710 | 0.71 | 0.66 | 0.66 | 2.32 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.57 | 0.26 | — | 0.80 | 1.06 | (0.29 | ) | — | — | (0.29 | ) | 0.77 | 15.34 | 7.30 | 1,222,944 | 1.21 | 1.19 | 1.19 | 1.73 | 66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.43 | 0.14 | — | 0.79 | 0.93 | (0.17 | ) | — | — | (0.17 | ) | 0.76 | 15.19 | 6.48 | 437,462 | 1.99 | 1.98 | 1.98 | 0.95 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.56 | 0.16 | — | 0.80 | 0.96 | (0.18 | ) | — | — | (0.18 | ) | 0.78 | 15.34 | 6.63 | 253,605 | 1.91 | 1.89 | 1.89 | 1.06 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.72 | 0.33 | — | 0.81 | 1.14 | (0.36 | ) | — | — | (0.36 | ) | 0.78 | 15.50 | 7.78 | 15,342 | 0.75 | 0.74 | 0.74 | 2.13 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.19 | 0.15 | 0.03 | 0.38 | 0.56 | (0.18 | ) | — | — | (0.18 | ) | 0.38 | 14.57 | 3.93 | (h) | 1,539,264 | 1.22 | 1.22 | 1.22 | 1.23 | 42 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.05 | 0.03 | 0.04 | 0.38 | 0.45 | (007 | ) | — | — | (0.07 | ) | 0.38 | 14.43 | 3.21 | (h) | 550,499 | 1.95 | 1.95 | 1.95 | 0.50 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.18 | 0.06 | 0.03 | 0.37 | 0.46 | (0.08 | ) | — | — | (0.08 | ) | 0.38 | 14.56 | 3.27 | (h) | 355,711 | 1.86 | 1.86 | 1.86 | 0.58 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.37 | 0.25 | — | 0.36 | 0.61 | (0.26 | ) | — | — | (0.26 | ) | 0.35 | 14.72 | 4.22 | 13,587 | 0.74 | 0.74 | 0.74 | 1.71 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. |
24
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Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was President of Cranbrook Education Community and prior to July 1996, he was President of Macalester College, St. Paul, Minnesota.
25
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
26
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27
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.19 | $ | 5.65 | $ | 1,000.00 | $ | 1,019.19 | $ | 5.65 | 1.13 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,012.04 | $ | 10.32 | $ | 1,000.00 | $ | 1,014.52 | $ | 10.33 | 2.07 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,011.86 | $ | 10.12 | $ | 1,000.00 | $ | 1,014.72 | $ | 10.14 | 2.03 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,015.64 | $ | 7.14 | $ | 1,000.00 | $ | 1,017.70 | $ | 7.15 | 1.43 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,016.35 | $ | 5.64 | $ | 1,000.00 | $ | 1,019.19 | $ | 5.65 | 1.13 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,018.83 | $ | 4.15 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.15 | 0.83 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,019.11 | $ | 3.85 | $ | 1,000.00 | $ | 1,020.97 | $ | 3.85 | 0.77 | 181 | 365 |
28
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Balanced Allocation A# | 5/28/04 | -25.24 | % | 0.22 | % | |||||||
Balanced Allocation A## | 5/28/04 | -29.35 | % | -0.92 | % | |||||||
Balanced Allocation B# | 5/28/04 | -25.84 | % | -0.53 | % | |||||||
Balanced Allocation B## | 5/28/04 | -29.48 | % | -0.88 | % | |||||||
Balanced Allocation C# | 5/28/04 | -25.83 | % | -0.53 | % | |||||||
Balanced Allocation C## | 5/28/04 | -26.56 | % | -0.53 | % | |||||||
Balanced Allocation I# | 5/28/04 | -25.08 | % | 0.38 | % | |||||||
Balanced Allocation R3# | 5/28/04 | -25.65 | % | 0.02 | % | |||||||
Balanced Allocation R4# | 5/28/04 | -25.34 | % | 0.20 | % | |||||||
Balanced Allocation R5# | 5/28/04 | -25.08 | % | 0.34 | % |
# | Without sales charge | |
## | With sales charge | |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.1 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 0.6 | |||
SPDR DJ Wilshire REIT ETF | 0.9 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 15.8 | |||
The Hartford Capital Appreciation II Fund, Class Y | 5.1 | |||
The Hartford Disciplined Equity Fund, Class Y | 2.9 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.7 | |||
The Hartford Equity Income Fund, Class Y | 3.2 | |||
The Hartford Floating Rate Fund, Class Y | 3.8 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.1 | |||
The Hartford Global Growth Fund, Class Y | 5.1 | |||
The Hartford Growth Fund, Class Y | 1.5 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.1 | |||
The Hartford High Yield Fund, Class Y | 0.4 | |||
The Hartford Income Fund, Class Y | 9.5 | |||
The Hartford Inflation Plus Fund, Class Y | 8.0 | |||
The Hartford International Opportunities Fund, Class Y | 4.0 | |||
The Hartford International Small Company Fund, Class Y | 2.3 | |||
The Hartford MidCap Fund, Class Y | 1.5 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.0 | |||
The Hartford Select SmallCap Value Fund, Class Y | 1.7 | |||
The Hartford Short Duration Fund, Class Y | 6.4 | |||
The Hartford Small Company Fund, Class Y | 1.7 | |||
The Hartford Strategic Income Fund, Class Y | 1.0 | |||
The Hartford Total Return Bond Fund, Class Y | 8.2 | |||
The Hartford Value Fund, Class Y | 11.3 | |||
Other Assets and Liabilities | 0.1 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 98.3% | ||||||||||||
EQUITY FUNDS — 61.0% | ||||||||||||
4,305 | The Hartford Capital Appreciation Fund, Class Y | $ | 106,415 | |||||||||
3,846 | The Hartford Capital Appreciation II Fund, Class Y• | 34,422 | ||||||||||
2,131 | The Hartford Disciplined Equity Fund, Class Y | 19,330 | ||||||||||
831 | The Hartford Dividend and Growth Fund, Class Y | 11,366 | ||||||||||
2,359 | The Hartford Equity Income Fund, Class Y | 21,298 | ||||||||||
103 | The Hartford Fundamental Growth Fund, Class Y• | 786 | ||||||||||
3,115 | The Hartford Global Growth Fund, Class Y• | 34,111 | ||||||||||
812 | The Hartford Growth Fund, Class Y• | 9,812 | ||||||||||
774 | The Hartford Growth Opportunities Fund, Class Y• | 13,964 | ||||||||||
2,647 | The Hartford International Opportunities Fund, Class Y | 26,869 | ||||||||||
2,027 | The Hartford International Small Company Fund, Class Y | 15,829 | ||||||||||
647 | The Hartford MidCap Fund, Class Y• | 10,041 | ||||||||||
1,056 | The Hartford Select MidCap Value Fund, Class Y | 6,643 | ||||||||||
1,737 | The Hartford Select SmallCap Value Fund, Class Y | 11,515 | ||||||||||
849 | The Hartford Small Company Fund, Class Y | 11,126 | ||||||||||
9,467 | The Hartford Value Fund, Class Y | 76,304 | ||||||||||
Total equity funds (cost $569,730) | $ | 409,831 | ||||||||||
FIXED INCOME FUNDS — 37.3% | ||||||||||||
3,552 | The Hartford Floating Rate Fund, Class Y | $ | 25,861 | |||||||||
483 | The Hartford High Yield Fund, Class Y | 2,760 | ||||||||||
7,441 | The Hartford Income Fund, Class Y | 63,839 | ||||||||||
5,047 | The Hartford Inflation Plus Fund, Class Y | 54,054 | ||||||||||
4,725 | The Hartford Short Duration Fund, Class Y | 43,089 | ||||||||||
846 | The Hartford Strategic Income Fund, Class Y | 6,529 | ||||||||||
5,758 | The Hartford Total Return Bond Fund, Class Y | 55,337 | ||||||||||
Total fixed income funds (cost $278,363) | $ | 251,469 | ||||||||||
Total investments in affiliated investment companies (cost $848,093) | $ | 661,300 | ||||||||||
EXCHANGE TRADED FUNDS — 1.6% | ||||||||||||
20 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 459 | |||||||||
171 | SPDR DJ Wilshire International Real Estate ETF | 4,258 | ||||||||||
172 | SPDR DJ Wilshire REIT ETF | 5,963 | ||||||||||
Total exchange traded funds (cost $12,990) | $ | 10,680 | ||||||||||
Total long-term investments (cost $861,083) | $ | 671,980 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
3 | State Street Bank Money Market Fund | $ | 3 | |||||||||
Total short-term investments (cost $3) | $ | 3 | ||||||||||
Total investments (cost $861,086) ▲ | 99.9 | % | $ | 671,983 | ||||||||
Other assets and liabilities | 0.1 | % | 787 | |||||||||
Total net assets | 100.0 | % | $ | 672,770 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $862,095 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 3,611 | ||
Unrealized Depreciation | (193,723 | ) | ||
Net Unrealized Depreciation | $ | (190,112 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 671,983 | ||
Total | $ | 671,983 | ||
4
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $12,993) | $ | 10,683 | ||
Investments in underlying affiliated funds, at fair value (cost $848,093) | 661,300 | |||
Receivables: | ||||
Fund shares sold | 1,059 | |||
Dividends and interest | 780 | |||
Other assets | 90 | |||
Total assets | 673,912 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 116 | |||
Fund shares redeemed | 764 | |||
Investment management fees | 15 | |||
Distribution fees | 55 | |||
Accrued expenses | 192 | |||
Total liabilities | 1,142 | |||
Net assets | $ | 672,770 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 922,259 | |||
Accumulated undistributed net investment income | 382 | |||
Accumulated net realized loss on investments | (60,768 | ) | ||
Unrealized depreciation of investments | (189,103 | ) | ||
Net assets | $ | 672,770 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.36/$8.84 | ||
Shares outstanding | 50,363 | |||
Net assets | $ | 420,901 | ||
Class B: Net asset value per share | $ | 8.34 | ||
Shares outstanding | 10,148 | |||
Net assets | $ | 84,583 | ||
Class C: Net asset value per share | $ | 8.33 | ||
Shares outstanding | 17,438 | |||
Net assets | $ | 145,271 | ||
Class I: Net asset value per share | $ | 8.35 | ||
Shares outstanding | 145 | |||
Net assets | $ | 1,214 | ||
Class R3: Net asset value per share | $ | 8.33 | ||
Shares outstanding | 44 | |||
Net assets | $ | 366 | ||
Class R4: Net asset value per share | $ | 8.35 | ||
Shares outstanding | 1,302 | |||
Net assets | $ | 10,877 | ||
Class R5: Net asset value per share | $ | 8.36 | ||
Shares outstanding | 1,144 | |||
Net assets | $ | 9,558 | ||
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 197 | ||
Dividends from underlying affiliated funds | 12,213 | |||
Total investment income | 12,410 | |||
Expenses: | ||||
Investment management fees | 447 | |||
Transfer agent fees | 505 | |||
Distribution fees | ||||
Class A | 504 | |||
Class B | 412 | |||
Class C | 710 | |||
Class R3 | 1 | |||
Class R4 | 12 | |||
Custodian fees | — | |||
Accounting services | 39 | |||
Registration and filing fees | 65 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 11 | |||
Other expenses | 146 | |||
Total expenses (before waivers) | 2,859 | |||
Expense waivers | (34 | ) | ||
Total waivers | (34 | ) | ||
Total expenses, net | 2,825 | |||
Net investment income | 9,585 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (45,686 | ) | ||
Net Realized Loss on Investments | (45,686 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 33,384 | |||
Net Changes in Unrealized Appreciation of Investments | 33,384 | |||
Net Loss on Investments | (12,302 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (2,717 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 9,585 | $ | 18,094 | ||||
Net realized gain (loss) on investments | (45,686 | ) | 3,302 | |||||
Net unrealized appreciation (depreciation) of investments | 33,384 | (325,274 | ) | |||||
Net decrease in net assets resulting from operations | (2,717 | ) | (303,878 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (6,997 | ) | (24,256 | ) | ||||
Class B | (1,094 | ) | (4,239 | ) | ||||
Class C | (1,904 | ) | (7,330 | ) | ||||
Class I | (28 | ) | (81 | ) | ||||
Class R3 | (4 | ) | (12 | ) | ||||
Class R4 | (165 | ) | (198 | ) | ||||
Class R5 | (124 | ) | (87 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (26,813 | ) | |||||
Class B | — | (5,971 | ) | |||||
Class C | — | (9,928 | ) | |||||
Class I | — | (40 | ) | |||||
Class R3 | — | (5 | ) | |||||
Class R4 | — | (145 | ) | |||||
Class R5 | — | (32 | ) | |||||
Total distributions | (10,316 | ) | (79,137 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (11,116 | ) | 70,044 | |||||
Class B | (6,412 | ) | 8,431 | |||||
Class C | (11,555 | ) | 22,711 | |||||
Class I | (969 | ) | 2,197 | |||||
Class R3 | 5 | 511 | ||||||
Class R4 | 2,486 | 8,935 | ||||||
Class R5 | 5,147 | 4,818 | ||||||
Net increase (decrease) from capital share transactions | (22,414 | ) | 117,647 | |||||
Net decrease in net assets | (35,447 | ) | (265,368 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 708,217 | 973,585 | ||||||
End of period | $ | 672,770 | $ | 708,217 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 382 | $ | 1,113 | ||||
7
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Balanced Allocation Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4 and R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the applicable fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. |
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Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. |
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi- factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 38,476 | $ | 22,740 | ||||
Long-Term Capital Gains * | 40,661 | 16,040 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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Amount | ||||
Undistributed Ordinary Income | $ | 1,113 | ||
Accumulated Capital Losses* | $ | (14,074 | ) | |
Unrealized Depreciation† | $ | (223,495 | ) | |
Total Accumulated Deficit | $ | (236,456 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $18,029 and decrease accumulated net realized loss by $18,029. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 14,074 | ||
Total | $ | 14,074 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||
1.40% | 2.15% | 2.15% | 1.15% | 1.78% | 1.48% | 1.18% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six- month period ended April 30, 2009, HIFSCO received front-end load sales charges of $1,002 and contingent deferred sales charges of $200 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $36. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $507 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 77,495 | ||
Sales Proceeds Excluding U.S. Government Obligations | 100,055 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,338 | 854 | (9,735 | ) | — | (1,543 | ) | 14,186 | 4,158 | (12,888 | ) | — | 5,456 | |||||||||||||||||||||||||||
Amount | $ | 58,023 | $ | 6,743 | $ | (75,882 | ) | $ | — | $ | (11,116 | ) | $ | 158,195 | $ | 49,061 | $ | (137,212 | ) | $ | — | $ | 70,044 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 802 | 132 | (1,769 | ) | — | (835 | ) | 2,209 | 811 | (2,413 | ) | — | 607 | |||||||||||||||||||||||||||
Amount | $ | 6,288 | $ | 1,041 | $ | (13,741 | ) | $ | — | $ | (6,412 | ) | $ | 24,579 | $ | 9,630 | $ | (25,778 | ) | $ | — | $ | 8,431 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,991 | 211 | (3,724 | ) | — | (1,522 | ) | 5,758 | 1,236 | (5,278 | ) | — | 1,716 | |||||||||||||||||||||||||||
Amount | $ | 15,704 | $ | 1,659 | $ | (28,918 | ) | $ | — | $ | (11,555 | ) | $ | 64,145 | $ | 14,655 | $ | (56,089 | ) | $ | — | $ | 22,711 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 34 | 3 | (156 | ) | — | (119 | ) | 259 | 8 | (74 | ) | — | 193 | |||||||||||||||||||||||||||
Amount | $ | 268 | $ | 28 | $ | (1,265 | ) | $ | — | $ | (969 | ) | $ | 2,909 | $ | 96 | $ | (808 | ) | $ | — | $ | 2,197 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 24 | 1 | (23 | ) | — | 2 | 160 | 1 | (128 | ) | — | 33 | ||||||||||||||||||||||||||||
Amount | $ | 186 | $ | 4 | $ | (185 | ) | $ | — | $ | 5 | $ | 1,774 | $ | 12 | $ | (1,275 | ) | $ | — | $ | 511 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 567 | 21 | (293 | ) | — | 295 | 1,084 | 30 | (312 | ) | — | 802 | ||||||||||||||||||||||||||||
Amount | $ | 4,541 | $ | 165 | $ | (2,220 | ) | $ | — | $ | 2,486 | $ | 11,920 | $ | 343 | $ | (3,328 | ) | $ | — | $ | 8,935 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 832 | 16 | (192 | ) | — | 656 | 552 | 11 | (130 | ) | — | 433 | ||||||||||||||||||||||||||||
Amount | $ | 6,484 | $ | 124 | $ | (1,461 | ) | $ | — | $ | 5,147 | $ | 6,087 | $ | 119 | $ | (1,388 | ) | $ | — | $ | 4,818 |
15
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April 30, 2009 (Unaudited)
(000’s Omitted)
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 91 | $ | 715 | |||||
For the Year Ended October 31, 2008 | 182 | $ | 2,060 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
16
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8 .48 | $ | 0 .13 | $ | — | $ | (0.11 | ) | $ | 0.02 | $ | (0.14 | ) | $ | — | $ | — | $ | (0 .14 | ) | $ | (0 .12 | ) | $ | 8 .36 | 0 .28 | %(e) | $ | 420,901 | 0 .61 | %(f) | 0 .61 | %(f) | 0 .61 | %(f) | 3 .22 | %(f) | 12 | % | ||||||||||||||||||||||||||||||||
B | 8 .45 | 0 .10 | — | (0 .11 | ) | (0 .01 | ) | (0 .10 | ) | — | — | (0 .10 | ) | (0 .11 | ) | 8 .34 | (0 .01 | ) (e) | 84,583 | 1 .46 | (f) | 1 .38 | (f) | 1 .38 | (f) | 2 .46 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 8 .45 | 0 .10 | — | (0 .12 | ) | (0 .02 | ) | (0 .10 | ) | — | — | (0 .10 | ) | (0 .12 | ) | 8 .33 | (0 .12 | ) (e) | 145,271 | 1 .37 | (f) | 1 .37 | (f) | 1 .37 | (f) | 2 .48 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 8 .47 | 0 .18 | — | (0 .15 | ) | 0 .03 | (0 .15 | ) | — | — | (0 .15 | ) | (0 .12 | ) | 8 .35 | 0 .44 | (e) | 1,214 | 0 .29 | (f) | 0 .29 | (f) | 0 .29 | (f) | 4 .42 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3 | 8 .44 | 0 .11 | — | (0 .11 | ) | — | (0 .11 | ) | — | — | (0 .11 | ) | (0 .11 | ) | 8 .33 | 0 .12 | (e) | 366 | 1 .06 | (f) | 1 .01 | (f) | 1 .01 | (f) | 2 .69 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4 | 8 .47 | 0 .13 | — | (0 .11 | ) | 0 .02 | (0 .14 | ) | — | — | (0 .14 | ) | (0 .12 | ) | 8 .35 | 0 .29 | (e) | 10,877 | 0 .62 | (f) | 0 .62 | (f) | 0 .62 | (f) | 3 .11 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 8 .48 | 0 .13 | — | (0 .10 | ) | 0 .03 | (0 .15 | ) | — | — | (0 .15 | ) | (0 .12 | ) | 8 .36 | 0 .44 | (e) | 9,558 | 0 .32 | (f) | 0 .32 | (f) | 0 .32 | (f) | 3 .25 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13 .10 | 0 .26 | — | (3 .83 | ) | (3 .57 | ) | (0 .47 | ) | (0 .58 | ) | — | (1 .05 | ) | (4 .62 | ) | 8 .48 | (29 .35 | ) | 439,955 | 0 .53 | 0 .53 | 0 .53 | 2 .23 | 18 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 13 .06 | 0 .16 | — | (3 .81 | ) | (3 .65 | ) | (0 .38 | ) | (0 .58 | ) | — | (0 .96 | ) | (4 .61 | ) | 8 .45 | (29 .95 | ) | 92,829 | 1 .35 | 1 .35 | 1 .35 | 1 .47 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 13 .06 | 0 .17 | — | (3 .81 | ) | (3 .64 | ) | (0 .39 | ) | (0 .58 | ) | — | (0 .97 | ) | (4 .61 | ) | 8 .45 | (29 .91 | ) | 160,167 | 1 .29 | 1 .29 | 1 .29 | 1 .49 | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 13 .09 | 0 .33 | — | (3 .86 | ) | (3 .53 | ) | (0 .51 | ) | (0 .58 | ) | — | (1 .09 | ) | (4 .62 | ) | 8 .47 | (29 .15 | ) | 2,238 | 0 .22 | 0 .22 | 0 .22 | 1 .59 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 13 .08 | 0 .26 | — | (3 .88 | ) | (3 .62 | ) | (0 .44 | ) | (0 .58 | ) | — | (1 .02 | ) | (4 .64 | ) | 8 .44 | (29 .74 | ) | 358 | 0 .92 | 0 .92 | 0 .92 | 0 .86 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 13 .10 | 0 .38 | — | (3 .96 | ) | (3 .58 | ) | (0 .47 | ) | (0 .58 | ) | — | (1 .05 | ) | (4 .63 | ) | 8 .47 | (29 .44 | ) | 8,535 | 0 .59 | 0 .59 | 0 .59 | 1 .54 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 13 .10 | 0 .41 | — | (3 .95 | ) | (3 .54 | ) | (0 .50 | ) | (0 .58 | ) | — | (1 .08 | ) | (4 .62 | ) | 8 .48 | (29 .16 | ) | 4,135 | 0 .29 | 0 .29 | 0 .29 | 1 .54 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12 .01 | 0 .27 | — | 1 .45 | 1 .72 | (0 .36 | ) | (0 .27 | ) | — | (0 .63 | ) | 1 .09 | 13 .10 | 14 .95 | 608,443 | 0 .54 | 0 .54 | 0 .54 | 2 .09 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11 .98 | 0 .18 | — | 1 .44 | 1 .62 | (0 .27 | ) | (0 .27 | ) | — | (0 .54 | ) | 1 .08 | 13 .06 | 14 .03 | 135,541 | 1 .36 | 1 .33 | 1 .33 | 1 .34 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11 .98 | 0 .18 | — | 1 .44 | 1 .62 | (0 .27 | ) | (0 .27 | ) | — | (0 .54 | ) | 1 .08 | 13 .06 | 14 .07 | 225,155 | 1 .29 | 1 .29 | 1 .29 | 1 .35 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I | 12 .00 | 0 .26 | — | 1 .50 | 1 .76 | (0 .40 | ) | (0 .27 | ) | — | (0 .67 | ) | 1 .09 | 13 .09 | 15 .35 | 927 | 0 .22 | 0 .22 | 0 .22 | 1 .88 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 11 .89 | 0 .08 | — | 1 .25 | 1 .33 | (0 .14 | ) | — | — | (0 .14 | ) | 1 .19 | 13 .08 | 11 .29 | (e) | 115 | 0 .93 | (f) | 0 .93 | (f) | 0 .93 | (f) | 0 .94 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 11 .89 | 0 .14 | — | 1 .23 | 1 .37 | (0 .16 | ) | — | — | (0 .16 | ) | 1 .21 | 13 .10 | 11 .61 | (e) | 2,679 | 0 .66 | (f) | 0 .66 | (f) | 0 .66 | (f) | 1 .23 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 11 .89 | 0 .14 | — | 1 .25 | 1 .39 | (0 .18 | ) | — | — | (0 .18 | ) | 1 .21 | 13 .10 | 11 .79 | (e) | 725 | 0 .36 | (f) | 0 .36 | (f) | 0 .36 | (f) | 1 .54 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10 .95 | 0 .18 | — | 1 .12 | 1 .30 | (0 .22 | ) | (0 .02 | ) | — | (0 .24 | ) | 1 .06 | 12 .01 | 11 .98 | 453,492 | 0 .62 | 0 .62 | 0 .62 | 1 .52 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10 .92 | 0 .10 | — | 1 .11 | 1 .21 | (0 .13 | ) | (0 .02 | ) | — | (0 .15 | ) | 1 .06 | 11 .98 | 11 .22 | 109,117 | 1 .44 | 1 .36 | 1 .36 | 0 .82 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10 .92 | 0 .11 | — | 1 .11 | 1 .22 | (0 .14 | ) | (0 .02 | ) | — | (0 .16 | ) | 1 .06 | 11 .98 | 11 .24 | 171,073 | 1 .38 | 1 .36 | 1 .36 | 0 .78 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 11 .66 | 0 .05 | — | 0 .34 | 0 .39 | (0 .05 | ) | — | — | (0 .05 | ) | 0 .34 | 12 .00 | 3 .35 | (e) | 353 | 0 .39 | (f) | 0 .39 | (f) | 0 .39 | (f) | 1 .47 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10 .30 | 0 .13 | — | 0 .64 | 0 .77 | (0 .12 | ) | — | — | (0 .12 | ) | 0 .65 | 10 .95 | 7 .47 | 262,878 | 0 .66 | 0 .60 | 0 .60 | 1 .26 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10 .28 | 0 .06 | — | 0 .62 | 0 .68 | (0 .04 | ) | — | — | (0 .04 | ) | 0 .64 | 10 .92 | 6 .66 | 72,619 | 1 .47 | 1 .31 | 1 .31 | 0 .55 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10 .28 | 0 .06 | — | 0 .62 | 0 .68 | (0 .04 | ) | — | — | (0 .04 | ) | 0 .64 | 10 .92 | 6 .66 | 103,248 | 1 .41 | 1 .31 | 1 .31 | 0 .56 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 28, 2004, through October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10 .00 | 0 .02 | — | 0 .30 | 0 .32 | (0 .02 | ) | — | — | (0 .02 | ) | 0 .30 | 10 .30 | 3 .15 | (e) | 67,293 | 0 .62 | (f) | 0 .59 | (f) | 0 .59 | (f) | 0 .99 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10 .00 | 0 .01 | — | 0 .27 | 0 .28 | — | — | — | — | 0 .28 | 10 .28 | 2 .82 | (e) | 18,841 | 1 .45 | (f) | 1 .29 | (f) | 1 .29 | (f) | 0 .33 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10 .00 | — | — | 0 .28 | 0 .28 | — | — | — | — | 0 .28 | 10 .28 | 2 .82 | (e) | 30,414 | 1 .38 | (f) | 1 .29 | (f) | 1 .29 | (f) | 0 .30 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on August 31, 2006. | |
(k) | Commenced operations on May 28, 2004. | |
(l) | Commenced operations on May 28, 2004. | |
(m) | Commenced operations on May 28, 2004. |
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19
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20
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,002.78 | $ | 3.02 | $ | 1,000.00 | $ | 1,021.76 | $ | 3.05 | 0.61 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 999.93 | $ | 6.84 | $ | 1,000.00 | $ | 1,017.95 | $ | 6.90 | 1.38 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 998.82 | $ | 6.78 | $ | 1,000.00 | $ | 1,018.00 | $ | 6.85 | 1.37 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,004.35 | $ | 1.44 | $ | 1,000.00 | $ | 1,023.35 | $ | 1.45 | 0.29 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,001.15 | $ | 5.01 | $ | 1,000.00 | $ | 1,019.78 | $ | 5.05 | 1.01 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,002.87 | $ | 3.07 | $ | 1,000.00 | $ | 1,021.72 | $ | 3.10 | 0.62 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,004.38 | $ | 1.59 | $ | 1,000.00 | $ | 1,023.20 | $ | 1.60 | 0.32 | 181 | 365 |
21
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
15 | ||||
16 | ||||
17 | ||||
18 | ||||
29 | ||||
30 | ||||
32 | ||||
32 | ||||
33 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Balanced Income A# | 7/31/06 | -19.74 | % | -4.24 | % | |||||||
Balanced Income A## | 7/31/06 | -24.16 | % | -6.19 | % | |||||||
Balanced Income B# | 7/31/06 | -20.23 | % | -4.92 | % | |||||||
Balanced Income B## | 7/31/06 | -24.06 | % | -5.88 | % | |||||||
Balanced Income C# | 7/31/06 | -20.30 | % | -4.95 | % | |||||||
Balanced Income C## | 7/31/06 | -21.07 | % | -4.95 | % | |||||||
Balanced Income Y# | 7/31/06 | -19.50 | % | -3.93 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Lucius T. Hill, III | Scott I. St. John, CFA | Ian R. Link, CFA | ||
Senior Vice President | Vice President | Vice President | ||
W. Michael Reckmeyer, III, CFA | Karen H. Grimes, CFA | |||
Senior Vice President | Senior Vice President |
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as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 3.1 | % | ||
Basic Materials | 1.6 | |||
Capital Goods | 5.5 | |||
Commercial & Professional Services | 1.3 | |||
Consumer Cyclical | 1.0 | |||
Consumer Durables & Apparel | 1.1 | |||
Consumer Staples | 2.6 | |||
Energy | 10.6 | |||
Finance | 19.6 | |||
Food & Staples Retailing | 0.4 | |||
Food, Beverage & Tobacco | 4.0 | |||
Foreign Governments | 4.9 | |||
General Obligations | 0.3 | |||
Health Care | 2.4 | |||
Household & Personal Products | 1.3 | |||
Insurance | 0.7 | |||
Materials | 1.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 6.2 | |||
Real Estate | 0.2 | |||
Retailing | 2.7 | |||
Semiconductors & Semiconductor Equipment | 1.9 | |||
Services | 2.8 | |||
Technology | 6.8 | |||
Telecommunication Services | 2.9 | |||
Transportation | 0.7 | |||
Utilities | 9.4 | |||
Short-Term Investments | 2.7 | |||
Other Assets and Liabilities | 1.8 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 1.5 | % | ||
Common Stocks | 43.5 | |||
Corporate Bonds: Investment Grade | 42.6 | |||
Corporate Bonds: Non-Investment Grade | 7.5 | |||
Municipal Bonds | 0.4 | |||
Short-Term Investments | 2.7 | |||
Other Assets and Liabilities | 1.8 | |||
Total | 100.0 | % | ||
4
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS — 43.5% | ||||||||
Banks — 3.1% | ||||||||
10 | Bank of Nova Scotia | $ | 290 | |||||
46 | HSBC Holding plc | 330 | ||||||
18 | Standard Chartered plc | 278 | ||||||
11 | Toronto-Dominion Bank ADR | 449 | ||||||
1,347 | ||||||||
Capital Goods — 5.1% | ||||||||
7 | 3M Co. | 380 | ||||||
5 | Caterpillar, Inc. | 181 | ||||||
7 | Eaton Corp. | 316 | ||||||
5 | Emerson Electric Co. | 177 | ||||||
31 | General Electric Co. | 388 | ||||||
8 | Illinois Tool Works, Inc. | 249 | ||||||
8 | PACCAR, Inc. | 294 | ||||||
6 | Rockwell Automation, Inc. | 186 | ||||||
1 | Schneider Electric S.A. | 95 | ||||||
2,266 | ||||||||
Commercial & Professional Services — 1.3% | ||||||||
10 | Republic Services, Inc. | 210 | ||||||
13 | Waste Management, Inc. | 344 | ||||||
554 | ||||||||
Consumer Durables & Apparel — 1.1% | ||||||||
13 | Mattel, Inc. | 188 | ||||||
6 | Stanley Works | 221 | ||||||
2 | V.F. Corp. | 107 | ||||||
516 | ||||||||
Energy — 7.1% | ||||||||
8 | BP plc ADR | 352 | ||||||
13 | Chevron Corp. | 853 | ||||||
8 | ConocoPhillips Holding Co. | 336 | ||||||
7 | EnCana Corp. ADR | 302 | ||||||
11 | Marathon Oil Corp. | 333 | ||||||
8 | Royal Dutch Shell plc ADR | 343 | ||||||
13 | Total S.A. ADR | 631 | ||||||
3,150 | ||||||||
Food & Staples Retailing — 0.4% | ||||||||
8 | Sysco Corp. | 194 | ||||||
Food, Beverage & Tobacco — 4.0% | ||||||||
22 | Altria Group, Inc. | 351 | ||||||
4 | ConAgra Foods, Inc. | 71 | ||||||
3 | Diageo plc ADR | 163 | ||||||
7 | H.J. Heinz Co. | 237 | ||||||
9 | Kraft Foods, Inc. | 218 | ||||||
2 | Lorillard, Inc. | 151 | ||||||
2 | PepsiCo, Inc. | 114 | ||||||
10 | Philip Morris International, Inc. | 348 | ||||||
8 | Unilever N.V. NY Shares ADR | 154 | ||||||
1,807 | ||||||||
Household & Personal Products — 1.3% | ||||||||
12 | Kimberly-Clark Corp. | 580 | ||||||
Insurance — 0.7% | ||||||||
6 | Aflac, Inc. | 159 | ||||||
7 | Allstate Corp. | 152 | ||||||
311 | ||||||||
Materials — 1.5% | ||||||||
11 | E.I. DuPont de Nemours & Co. | 301 | ||||||
9 | Packaging Corp. of America | 140 | ||||||
5 | PPG Industries, Inc. | 216 | ||||||
657 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 6.2% | ||||||||
5 | Bristol-Myers Squibb Co. | 98 | ||||||
2 | Eli Lilly & Co. | 59 | ||||||
7 | GlaxoSmithKline plc ADR | 219 | ||||||
12 | Johnson & Johnson | 628 | ||||||
35 | Merck & Co., Inc. | 836 | ||||||
50 | Pfizer, Inc. | 665 | ||||||
5 | Wyeth | 208 | ||||||
2,713 | ||||||||
Real Estate — 0.2% | ||||||||
2 | Regency Centers Corp. | 86 | ||||||
Retailing — 2.7% | ||||||||
12 | Genuine Parts Co. | 411 | ||||||
29 | Home Depot, Inc. | 769 | ||||||
1,180 | ||||||||
Semiconductors & Semiconductor Equipment — 1.9% | ||||||||
22 | Analog Devices, Inc. | 462 | ||||||
24 | Intel Corp. | 371 | ||||||
833 | ||||||||
Telecommunication Services — 2.9% | ||||||||
32 | AT&T, Inc. | 824 | ||||||
15 | Verizon Communications, Inc. | 443 | ||||||
1,267 | ||||||||
Transportation — 0.4% | ||||||||
3 | United Parcel Service, Inc. Class B | 168 | ||||||
Utilities — 3.6% | ||||||||
8 | American Electric Power Co., Inc. | 214 | ||||||
17 | Dominion Resources, Inc. | 519 | ||||||
5 | Exelon Corp. | 230 | ||||||
10 | FPL Group, Inc. | 549 | ||||||
1 | SCANA Corp. | 36 | ||||||
1,548 | ||||||||
Total common stocks (cost $22,148) | $ | 19,177 | ||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 1.5% | ||||||||
Finance — 1.5% | ||||||||
Banc of America Commercial Mortgage, Inc. | ||||||||
$ | 85 | 5.45%, 01/15/2049 | $ | 66 | ||||
Carmax Automotive Owner Trust | ||||||||
45 | 4.34%, 09/15/2010 | 45 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
100 | 5.96%, 06/10/2046 Δ | 83 | ||||||
Long Beach Automotive Receivables Trust | ||||||||
100 | 5.03%, 01/15/2014 | 85 | ||||||
Merrill Lynch Mortgage Trust | ||||||||
100 | 5.05%, 07/12/2038 | 87 | ||||||
100 | 5.80%, 05/12/2039 Δ | 92 | ||||||
Morgan Stanley Capital I | ||||||||
100 | 5.23%, 09/15/2042 | 89 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 1.5% — (continued) | ||||||||
Finance — 1.5% — (continued) | ||||||||
Nissan Automotive Lease Trust | ||||||||
$ | 100 | 5.10%, 07/16/2012 | $ | 100 | ||||
647 | ||||||||
Transportation — 0.0% | ||||||||
Delta Air Lines | ||||||||
15 | 7.92%, 11/18/2010 | 12 | ||||||
Total asset & commercial mortgage backed securities (cost $738) | $ | 659 | ||||||
CORPORATE BONDS: INVESTMENT GRADE — 42.6% | ||||||||
Basic Materials — 1.2% | ||||||||
Alcan, Inc. | ||||||||
$ | 50 | 6.13%, 12/15/2033 | $ | 34 | ||||
ArcelorMittal | ||||||||
100 | 6.13%, 06/01/2018 | 81 | ||||||
Commercial Metals Co. | ||||||||
70 | 6.50%, 07/15/2017 | 51 | ||||||
Cytec Industries, Inc. | ||||||||
50 | 6.00%, 10/01/2015 | 39 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | ||||||||
35 | 8.38%, 04/01/2017 | 34 | ||||||
Inco Ltd. | ||||||||
30 | 7.20%, 09/15/2032 | 24 | ||||||
45 | 7.75%, 05/15/2012 | 46 | ||||||
International Paper Co. | ||||||||
40 | 7.40%, 06/15/2014 | 36 | ||||||
Methanex Corp. | ||||||||
20 | 8.75%, 08/15/2012 | 18 | ||||||
Potash Corp. of Saskatchewan, Inc. | ||||||||
30 | 5.25%, 05/15/2014 | 31 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
25 | 9.00%, 05/01/2019 | 26 | ||||||
Temple-Inland, Inc. | ||||||||
40 | 6.63%, 01/15/2016 | 32 | ||||||
Yara International ASA | ||||||||
45 | 5.25%, 12/15/2014 ■ | 38 | ||||||
490 | ||||||||
Capital Goods — 0.4% | ||||||||
Goodrich Corp. | ||||||||
35 | 6.29%, 07/01/2016 | 35 | ||||||
Tyco International Group S.A. | ||||||||
25 | 6.75%, 02/15/2011 | 26 | ||||||
Xerox Corp. | ||||||||
100 | 5.50%, 05/15/2012 | 95 | ||||||
60 | 6.40%, 03/15/2016 | 49 | ||||||
205 | ||||||||
Consumer Cyclical — 0.5% | ||||||||
Avnet, Inc. | ||||||||
50 | 6.63%, 09/15/2016 | 42 | ||||||
DaimlerChrysler NA Holdings Corp. | ||||||||
70 | 6.50%, 11/15/2013 | 68 | ||||||
Energy Transfer Partners | ||||||||
25 | 6.63%, 10/15/2036 | 20 | ||||||
Federated Retail Holdings, Inc. | ||||||||
15 | 5.90%, 12/01/2016 | 12 | ||||||
SABMiller plc | ||||||||
80 | 6.20%, 07/01/2011 ■ | 80 | ||||||
222 | ||||||||
Consumer Staples — 2.5% | ||||||||
Altria Group, Inc. | ||||||||
50 | 9.25%, 08/06/2019 | 57 | ||||||
105 | 9.70%, 11/10/2018 | 123 | ||||||
Anheuser-Busch InBev N.V. | ||||||||
20 | 7.20%, 01/15/2014 ■ | 21 | ||||||
75 | 7.75%, 01/15/2019 ■ | 79 | ||||||
BAT International Finance plc | ||||||||
20 | 8.13%, 11/15/2013 ■ | 21 | ||||||
35 | 9.50%, 11/15/2018 ■ | 40 | ||||||
Bottling Group LLC | ||||||||
60 | 5.13%, 01/15/2019 | 61 | ||||||
Cargill, Inc. | ||||||||
95 | 5.60%, 09/15/2012 ■ | 94 | ||||||
Cia Brasileira de Bebidas | ||||||||
50 | 8.75%, 09/15/2013 | 55 | ||||||
Coca-Cola Enterprises, Inc. | ||||||||
50 | 7.38%, 03/03/2014 | 57 | ||||||
Dr. Pepper Snapple Group | ||||||||
75 | 6.82%, 05/01/2018 | 73 | ||||||
Kraft Foods, Inc. | ||||||||
100 | 6.50%, 08/11/2017 | 104 | ||||||
130 | 6.75%, 02/19/2014 | 141 | ||||||
PepsiAmericas, Inc. | ||||||||
35 | 4.88%, 01/15/2015 | 34 | ||||||
Philip Morris International, Inc. | ||||||||
75 | 5.65%, 05/16/2018 | 76 | ||||||
55 | 6.38%, 05/16/2038 | 55 | ||||||
Weyerhaeuser Co. | ||||||||
10 | 7.38%, 03/15/2032 | 8 | ||||||
1,099 | ||||||||
Energy — 3.0% | ||||||||
AGL Capital Corp. | ||||||||
35 | 6.38%, 07/15/2016 | 32 | ||||||
Amerada Hess Corp. | ||||||||
45 | 7.88%, 10/01/2029 | 43 | ||||||
Atmos Energy Corp. | ||||||||
40 | 6.35%, 06/15/2017 | 37 | ||||||
Canadian National Resources Ltd. | ||||||||
30 | 5.70%, 05/15/2017 | 29 | ||||||
ConocoPhillips | ||||||||
150 | 4.75%, 02/01/2014 | 158 | ||||||
Devon Financing Corp. | ||||||||
75 | 7.88%, 09/30/2031 | 81 | ||||||
EnCana Corp. | ||||||||
40 | 6.50%, 05/15/2019 | 40 | ||||||
Enterprise Products Operating L.P. | ||||||||
90 | 5.65%, 04/01/2013 | 85 | ||||||
Hess Corp. | ||||||||
85 | 7.00%, 02/15/2014 | 92 | ||||||
Panhandle Eastern Pipeline | ||||||||
75 | 6.20%, 11/01/2017 | 68 | ||||||
Pemex Project Funding Master Trust | ||||||||
50 | 5.75%, 03/01/2018 | 45 | ||||||
Sempra Energy | ||||||||
70 | 8.90%, 11/15/2013 | 77 |
6
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 42.6% — (continued) | ||||||||
Energy — 3.0% — (continued) | ||||||||
Statoilhydro ASA | ||||||||
$ | 25 | 5.25%, 04/15/2019 | $ | 25 | ||||
Transocean, Inc. | ||||||||
110 | 6.00%, 03/15/2018 | 109 | ||||||
TXU Electric Delivery Co. | ||||||||
100 | 6.38%, 05/01/2012 | 102 | ||||||
Weatherford International Ltd. | ||||||||
100 | 6.00%, 03/15/2018 | 84 | ||||||
XTO Energy, Inc. | ||||||||
80 | 5.50%, 06/15/2018 | 76 | ||||||
50 | 5.75%, 12/15/2013 | 51 | ||||||
25 | 6.75%, 08/01/2037 | 24 | ||||||
45 | 7.50%, 04/15/2012 | 47 | ||||||
1,305 | ||||||||
Finance — 17.5% | ||||||||
Ace Capital Trust II | ||||||||
90 | 9.70%, 04/01/2030 | 70 | ||||||
Allied World Assurance | ||||||||
50 | 7.50%, 08/01/2016 | 35 | ||||||
AMB Property L.P. | ||||||||
100 | 5.45%, 12/01/2010 | 95 | ||||||
Ameriprise Financial, Inc. | ||||||||
60 | 5.35%, 11/15/2010 | 59 | ||||||
20 | 5.65%, 11/15/2015 | 17 | ||||||
Bank of America Corp. | ||||||||
50 | 4.90%, 05/01/2013 | 46 | ||||||
55 | 5.65%, 05/01/2018 | 45 | ||||||
230 | 6.00%, 09/01/2017 | 192 | ||||||
50 | 7.25%, 10/15/2025 | 33 | ||||||
Banque Cent De Tunisie | ||||||||
10 | 7.38%, 04/25/2012 | 10 | ||||||
Bear Stearns & Co., Inc. | ||||||||
90 | 5.35%, 02/01/2012 | 92 | ||||||
75 | 6.95%, 08/10/2012 | 79 | ||||||
120 | 7.25%, 02/01/2018 | 123 | ||||||
Berkshire Hathaway Finance Corp. | ||||||||
50 | 5.00%, 08/15/2013 | 52 | ||||||
Brandywine Operating Partnership | ||||||||
15 | 5.70%, 05/01/2017 | 8 | ||||||
75 | 5.75%, 04/01/2012 | 57 | ||||||
Capital One Financial Corp. | ||||||||
200 | 6.75%, 09/15/2017 | 169 | ||||||
CIT Group, Inc. | ||||||||
10 | 5.40%, 01/30/2016 | 5 | ||||||
23 | 5.65%, 02/13/2017 | 12 | ||||||
45 | 5.80%, 07/28/2011 | 30 | ||||||
31 | 5.85%, 09/15/2016 | 17 | ||||||
10 | 7.63%, 11/30/2012 | 6 | ||||||
60 | 12.00%, 12/18/2018 ■ | 25 | ||||||
Citigroup, Inc. | ||||||||
260 | 5.50%, 08/27/2012 — 04/11/2013 | 232 | ||||||
85 | 6.00%, 10/31/2033 | 47 | ||||||
55 | 6.13%, 11/21/2017 | 45 | ||||||
100 | 6.88%, 03/05/2038 | 85 | ||||||
Colonial Realty L.P. | ||||||||
95 | 6.05%, 09/01/2016 | 65 | ||||||
Countrywide Financial Corp. | ||||||||
40 | 5.80%, 06/07/2012 | 37 | ||||||
COX Communications, Inc. | ||||||||
70 | 6.45%, 12/01/2036 ■ | 57 | ||||||
90 | 7.13%, 10/01/2012 | 91 | ||||||
Credit Suisse New York | ||||||||
100 | 5.00%, 05/15/2013 | 99 | ||||||
265 | 6.00%, 02/15/2018 | 236 | ||||||
Developers Diversified Realty Corp. | ||||||||
50 | 5.00%, 05/03/2010 | 39 | ||||||
50 | 5.38%, 10/15/2012 | 23 | ||||||
Development Bank of Kazakhstan | ||||||||
35 | 7.38%, 11/12/2013 • | 26 | ||||||
Discover Financial Services, Inc. | ||||||||
10 | 6.45%, 06/12/2017 | 7 | ||||||
Duke-Weeks Realty | ||||||||
50 | 7.75%, 11/15/2009 | 50 | ||||||
Eaton Vance Corp. | ||||||||
65 | 6.50%, 10/02/2017 | 57 | ||||||
Equity One, Inc. | ||||||||
65 | 6.00%, 09/15/2017 | 45 | ||||||
ERAC USA Finance Co. | ||||||||
75 | 7.00%, 10/15/2037 ■ | 52 | ||||||
Everest Reinsurance Holdings, Inc. | ||||||||
70 | 5.40%, 10/15/2014 | 62 | ||||||
50 | 6.60%, 05/15/2037 Δ | 25 | ||||||
20 | 8.75%, 03/15/2010 | 20 | ||||||
Farmers Exchange Capital | ||||||||
100 | 7.05%, 07/15/2028 ■ | 59 | ||||||
General Electric Capital Corp. | ||||||||
75 | 5.40%, 09/20/2013 | 74 | ||||||
95 | 5.88%, 01/14/2038 | 66 | ||||||
90 | 6.15%, 08/07/2037 | 64 | ||||||
205 | 6.75%, 03/15/2032 | 160 | ||||||
Goldman Sachs Group, Inc. | ||||||||
140 | 5.45%, 11/01/2012 | 140 | ||||||
75 | 5.95%, 01/15/2027 | 54 | ||||||
180 | 6.25%, 09/01/2017 | 170 | ||||||
170 | 6.45%, 05/01/2036 | 124 | ||||||
30 | 6.60%, 01/15/2012 | 32 | ||||||
70 | 7.50%, 02/15/2019 | 72 | ||||||
HBOS plc | ||||||||
50 | 6.00%, 11/01/2033 ■ | 28 | ||||||
Health Care Properties | ||||||||
20 | 5.65%, 12/15/2013 | 17 | ||||||
80 | 6.00%, 01/30/2017 | 65 | ||||||
Host Hotels & Resorts, Inc. | ||||||||
7 | 3.25%, 04/15/2024 ۞ ■ | 7 | ||||||
Host Marriott L.P. | ||||||||
30 | 6.75%, 06/01/2016 | 26 | ||||||
HSBC Finance Corp. | ||||||||
100 | 6.38%, 10/15/2011 | 99 | ||||||
95 | 6.75%, 05/15/2011 | 93 | ||||||
HSBC Holdings plc | ||||||||
250 | 6.80%, 06/01/2038 | 220 | ||||||
International Lease Finance Corp. | ||||||||
100 | 5.63%, 09/15/2010 | 86 | ||||||
JP Morgan Chase & Co. | ||||||||
165 | 5.13%, 09/15/2014 | 153 | ||||||
170 | 5.38%, 10/01/2012 | 172 | ||||||
25 | 6.30%, 04/23/2019 | 25 | ||||||
Keycorp | ||||||||
25 | 6.50%, 05/14/2013 | 24 | ||||||
Kimco Realty Corp. | ||||||||
20 | 5.58%, 11/23/2015 | 15 | ||||||
30 | 5.78%, 03/15/2016 | 23 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 42.6% — (continued) | ||||||||
Finance — 17.5% — (continued) | ||||||||
Lazard Group | ||||||||
$ | 80 | 6.85%, 06/15/2017 | $ | 64 | ||||
Liberty Mutual Group, Inc. | ||||||||
60 | 5.75%, 03/15/2014 ■ | 46 | ||||||
80 | 7.50%, 08/15/2036 ■ | 50 | ||||||
Liberty Property L.P. | ||||||||
50 | 5.50%, 12/15/2016 | 35 | ||||||
50 | 8.50%, 08/01/2010 | 48 | ||||||
Lincoln National Corp. | ||||||||
80 | 5.65%, 08/27/2012 | 52 | ||||||
35 | 6.15%, 04/07/2036 | 19 | ||||||
Merrill Lynch & Co., Inc. | ||||||||
50 | 5.45%, 02/05/2013 | 44 | ||||||
210 | 6.05%, 08/15/2012 — 05/16/2016 | 174 | ||||||
100 | 6.22%, 09/15/2026 | 59 | ||||||
20 | 6.40%, 08/28/2017 | 16 | ||||||
Metlife, Inc. | ||||||||
25 | 6.13%, 12/01/2011 | 25 | ||||||
Mizuho Financial Group, Inc. | ||||||||
100 | 5.79%, 04/15/2014 ■ | 95 | ||||||
Morgan Stanley | ||||||||
90 | 4.75%, 04/01/2014 | 76 | ||||||
200 | 5.45%, 01/09/2017 | 179 | ||||||
200 | 6.00%, 04/28/2015 | 189 | ||||||
National City Corp. | ||||||||
40 | 4.90%, 01/15/2015 | 36 | ||||||
PNC Funding Corp. | ||||||||
60 | 5.50%, 09/28/2012 | 57 | ||||||
Prudential Financial, Inc. | ||||||||
70 | 6.10%, 06/15/2017 | 50 | ||||||
Realty Income Corp. | ||||||||
85 | 6.75%, 08/15/2019 | 63 | ||||||
Regency Centers L.P. | ||||||||
30 | 5.25%, 08/01/2015 | 21 | ||||||
15 | 5.88%, 06/15/2017 | 10 | ||||||
Reinsurance Group of America, Inc. | ||||||||
60 | 5.63%, 03/15/2017 | 39 | ||||||
Schwab Capital Trust I | ||||||||
35 | 7.50%, 11/15/2037 Δ | 24 | ||||||
Simon Property Group L.P. | ||||||||
50 | 4.88%, 08/15/2010 | 49 | ||||||
45 | 5.38%, 06/01/2011 | 43 | ||||||
80 | 5.63%, 08/15/2014 | 69 | ||||||
SLM Corp. | ||||||||
50 | 5.00%, 04/15/2015 * | 31 | ||||||
30 | 8.45%, 06/15/2018 | 18 | ||||||
Symetra Financial Corp. | ||||||||
10 | 6.13%, 04/01/2016 ■ | 8 | ||||||
Trustreet Properties, Inc. | ||||||||
80 | 7.50%, 04/01/2015 | 78 | ||||||
UFJ Finance Aruba AEC | ||||||||
100 | 6.75%, 07/15/2013 | 102 | ||||||
United Dominion Realty Trust, Inc. | ||||||||
55 | 6.05%, 06/01/2013 | 45 | ||||||
UnitedHealth Group, Inc. | ||||||||
100 | 5.50%, 11/15/2012 | 100 | ||||||
Unitrin, Inc. | ||||||||
100 | 4.88%, 11/01/2010 | 82 | ||||||
Ventas Realty L.P. | ||||||||
10 | 6.50%, 06/01/2016 | 9 | ||||||
W.R. Berkley Corp. | ||||||||
90 | 5.13%, 09/30/2010 | 85 | ||||||
Wachovia Corp. | ||||||||
55 | 4.88%, 02/15/2014 | 48 | ||||||
100 | 5.50%, 05/01/2013 | 98 | ||||||
70 | 5.63%, 10/15/2016 | 57 | ||||||
105 | 5.75%, 02/01/2018 | 96 | ||||||
WEA Finance LLC | ||||||||
100 | 7.13%, 04/15/2018 ■ | 83 | ||||||
Wellpoint, Inc. | ||||||||
50 | 6.00%, 02/15/2014 | 51 | ||||||
Wells Fargo & Co. | ||||||||
175 | 4.38%, 01/31/2013 | 168 | ||||||
120 | 5.63%, 12/11/2017 | 112 | ||||||
Westfield Group ADR | ||||||||
60 | 5.40%, 10/01/2012 ■ | 55 | ||||||
WR Berkley Corp. | ||||||||
25 | 5.88%, 02/15/2013 | 22 | ||||||
7,725 | ||||||||
Foreign Governments — 2.7% | ||||||||
Brazil (Republic of) | ||||||||
100 | 6.00%, 01/17/2017 | 101 | ||||||
BRL | 54 | 6.00%, 08/15/2010 | 25 | |||||
35 | 7.88%, 03/07/2015 | 39 | ||||||
46 | 8.00%, 01/15/2018 | 50 | ||||||
55 | 8.25%, 01/20/2034 | 62 | ||||||
70 | 8.75%, 02/04/2025 | 83 | ||||||
20 | 8.88%, 10/14/2019 | 24 | ||||||
Colombia (Republic of) | ||||||||
100 | 7.38%, 03/18/2019 | 105 | ||||||
30 | 10.38%, 01/28/2033 | 38 | ||||||
El Salvador (Republic of) | ||||||||
25 | 7.75%, 01/24/2023 § | 24 | ||||||
Peru (Republic of) | ||||||||
14 | 6.55%, 03/14/2037 | 13 | ||||||
20 | 7.13%, 03/30/2019 | 22 | ||||||
EUR | 10 | 7.50%, 10/14/2014 | 14 | |||||
10 | 8.75%, 11/21/2033 | 12 | ||||||
35 | 9.13%, 02/21/2012 | 40 | ||||||
Russian Federation Government | ||||||||
336 | 7.50%, 03/31/2030 § | 327 | ||||||
15 | 12.75%, 06/24/2028 § | 21 | ||||||
South Africa (Republic of) | ||||||||
15 | 7.38%, 04/25/2012 | 16 | ||||||
United Mexican States | ||||||||
60 | 5.88%, 02/17/2014 | 62 | ||||||
88 | 6.05%, 01/11/2040 | 77 | ||||||
MXP | 175 | 7.75%, 12/14/2017 | 13 | |||||
MXP | 175 | 8.00%, 12/19/2013 | 13 | |||||
ITL | 5,000 | 11.00%, 05/08/2017 | 4 | |||||
1,185 | ||||||||
Health Care — 1.9% | ||||||||
Amerisource Bergen Corp. | ||||||||
25 | 5.63%, 09/15/2012 | 25 | ||||||
101 | 5.88%, 09/15/2015 | 97 |
8
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 42.6% — (continued) | ||||||||
Health Care — 1.9% — (continued) | ||||||||
Amgen, Inc. | ||||||||
$ | 20 | 5.70%, 02/01/2019 | $ | 20 | ||||
25 | 6.40%, 02/01/2039 | 25 | ||||||
Amylin Pharmaceuticals, Inc. | ||||||||
5 | 3.00%, 06/15/2014 ۞ ■ | 3 | ||||||
AstraZeneca plc | ||||||||
45 | 6.45%, 09/15/2037 | 49 | ||||||
CVS Caremark Corp. | ||||||||
39 | 6.94%, 01/10/2030 ■ | 30 | ||||||
CVS Lease Pass-Through Trust | ||||||||
19 | 6.04%, 12/10/2028 ■ | 14 | ||||||
Glaxosmithkline Capital, Inc. | ||||||||
50 | 5.65%, 05/15/2018 | 52 | ||||||
85 | 6.38%, 05/15/2038 | 88 | ||||||
Laboratory Corp. | ||||||||
20 | 5.63%, 12/15/2015 | 17 | ||||||
McKesson Corp. | ||||||||
5 | 7.50%, 02/15/2019 | 5 | ||||||
Medco Health Solutions, Inc. | ||||||||
75 | 7.13%, 03/15/2018 | 74 | ||||||
Pfizer, Inc. | ||||||||
105 | 6.20%, 03/15/2019 | 113 | ||||||
50 | 7.20%, 03/15/2039 | 55 | ||||||
Quest Diagnostics, Inc. | ||||||||
115 | 6.95%, 07/01/2037 | 102 | ||||||
Roche Holdings, Inc. | ||||||||
75 | 6.00%, 03/01/2019 ■ | 78 | ||||||
847 | ||||||||
Services — 2.1% | ||||||||
AT&T Broadband Corp. | ||||||||
120 | 8.38%, 03/15/2013 | 133 | ||||||
CBS Corp. | ||||||||
145 | 7.70%, 07/30/2010 | 148 | ||||||
Comcast Corp. | ||||||||
80 | 6.45%, 03/15/2037 | 74 | ||||||
110 | 7.05%, 03/15/2033 | 108 | ||||||
Electronic Data Systems Corp. | ||||||||
40 | 7.45%, 10/15/2029 | 44 | ||||||
News America, Inc. | ||||||||
60 | 6.40%, 12/15/2035 | 44 | ||||||
Time Warner Entertainment Co., L.P. | ||||||||
30 | 8.38%, 03/15/2023 | 31 | ||||||
Time Warner, Inc. | ||||||||
50 | 5.50%, 11/15/2011 | 51 | ||||||
85 | 6.75%, 04/15/2011 | 89 | ||||||
105 | 7.63%, 04/15/2031 ‡ | 95 | ||||||
Viacom, Inc. | ||||||||
50 | 5.75%, 04/30/2011 | 50 | ||||||
40 | 6.13%, 10/05/2017 | 36 | ||||||
45 | 6.25%, 04/30/2016 | 42 | ||||||
Wyndham Worldwide Corp. | ||||||||
10 | 6.00%, 12/01/2016 | 7 | ||||||
952 | ||||||||
Technology — 5.6% | ||||||||
AT&T, Inc. | ||||||||
30 | 5.10%, 09/15/2014 | 31 | ||||||
90 | 6.15%, 09/15/2034 | 80 | ||||||
250 | 6.30%, 01/15/2038 | 231 | ||||||
110 | 6.50%, 09/01/2037 ‡ | 104 | ||||||
BellSouth Corp. | ||||||||
30 | 5.20%, 09/15/2014 | 31 | ||||||
British Telecommunications plc | ||||||||
35 | 8.62%, 12/15/2010 Δ | 37 | ||||||
60 | 9.12%, 12/15/2030 Δ | 58 | ||||||
Cingular Wireless Services, Inc. | ||||||||
120 | 8.75%, 03/01/2031 | 137 | ||||||
Comcast Cable Communications, Inc. | ||||||||
20 | 6.75%, 01/30/2011 | 21 | ||||||
Deutsche Telekom International Finance B.V. | ||||||||
120 | 8.75%, 06/15/2030 | 138 | ||||||
General Electric Co. | ||||||||
90 | 5.25%, 12/06/2017 | 85 | ||||||
IBM Corp. | ||||||||
125 | 8.00%, 10/15/2038 | 154 | ||||||
Qwest Corp. | ||||||||
10 | 7.63%, 06/15/2015 | 10 | ||||||
Rogers Communications, Inc. | ||||||||
100 | 6.80%, 08/15/2018 | 105 | ||||||
Siemens Finance | ||||||||
100 | 6.13%, 08/17/2026 ■ | 96 | ||||||
Sunpower Corp. | ||||||||
9 | 4.75%, 04/15/2014 ۞ | 11 | ||||||
Telecom Italia Capital | ||||||||
10 | 5.25%, 10/01/2015 | 9 | ||||||
180 | 6.20%, 07/18/2011 | 181 | ||||||
Telefonica Europe B.V. | ||||||||
65 | 8.25%, 09/15/2030 | 74 | ||||||
Time Warner Cable, Inc. | ||||||||
120 | 5.40%, 07/02/2012 | 122 | ||||||
85 | 6.55%, 05/01/2037 | 78 | ||||||
50 | 7.30%, 07/01/2038 | 50 | ||||||
Verizon Communications, Inc. | ||||||||
70 | 6.40%, 02/15/2038 | 65 | ||||||
30 | 8.75%, 11/01/2018 | 36 | ||||||
Verizon Global Funding Corp. | ||||||||
310 | 7.75%, 12/01/2030 | 327 | ||||||
Verizon Wireless | ||||||||
50 | 5.55%, 02/01/2014 ■ | 52 | ||||||
125 | 8.50%, 11/15/2018 ■ | 150 | ||||||
2,473 | ||||||||
Transportation — 0.2% | ||||||||
American Airlines, Inc. | ||||||||
27 | 3.86%, 07/09/2010 | 24 | ||||||
Continental Airlines, Inc. | ||||||||
20 | 5.98%, 04/19/2022 | 16 | ||||||
10 | 6.90%, 04/19/2022 | 6 | ||||||
Southwest Airlines Co. | ||||||||
57 | 6.15%, 08/01/2022 | 51 | ||||||
97 | ||||||||
Utilities — 5.0% | ||||||||
Aquila, Inc. | ||||||||
50 | 11.88%, 07/01/2012 | 52 | ||||||
Carolina Power & Light Co. | ||||||||
15 | 5.30%, 01/15/2019 | 15 | ||||||
CenterPoint Energy Houston Electric LLC | ||||||||
35 | 7.00%, 03/01/2014 | 37 | ||||||
CenterPoint Energy Resources Corp. | ||||||||
25 | 7.75%, 02/15/2011 | 26 |
9
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 42.6% — (continued) | ||||||||
Utilities — 5.0% — (continued) | ||||||||
CenterPoint Energy, Inc. | ||||||||
$ | 30 | 6.50%, 05/01/2018 | $ | 26 | ||||
Commonwealth Edison Co. | ||||||||
100 | 5.80%, 03/15/2018 | 95 | ||||||
DCP Midstream LLC | ||||||||
100 | 6.75%, 09/15/2037 ■ | 66 | ||||||
Dominion Resources, Inc. | ||||||||
181 | 6.25%, 06/30/2012 | 190 | ||||||
Duke Energy Corp. | ||||||||
100 | 5.65%, 06/15/2013 | 103 | ||||||
EDP Finance B.V. | ||||||||
100 | 6.00%, 02/02/2018 ■ | 97 | ||||||
El Paso Natural Gas Co. | ||||||||
70 | 5.95%, 04/15/2017 | 64 | ||||||
Electricite de France | ||||||||
100 | 5.50%, 01/26/2014 ■ | 107 | ||||||
Entergy Texas, Inc. | ||||||||
50 | 7.13%, 02/01/2019 | 50 | ||||||
Exelon Generation Co. LLC | ||||||||
45 | 6.95%, 06/15/2011 | 47 | ||||||
FPL Group Capital, Inc. | ||||||||
50 | 6.00%, 03/01/2019 | 51 | ||||||
ITC Midwest LLC | ||||||||
40 | 6.15%, 01/31/2038 ■ | 35 | ||||||
Kansas City Power & Light Co. | ||||||||
50 | 7.15%, 04/01/2019 | 51 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
90 | 6.95%, 01/15/2038 | 78 | ||||||
50 | 7.30%, 08/15/2033 | 44 | ||||||
MidAmerican Energy Holdings Co. | ||||||||
85 | 5.00%, 02/15/2014 | 85 | ||||||
100 | 5.75%, 04/01/2018 | 99 | ||||||
Nevada Power Co. | ||||||||
100 | 6.50%, 08/01/2018 | 98 | ||||||
NGPL Pipeco LLC | ||||||||
130 | 6.51%, 12/15/2012 ■ | 129 | ||||||
NiSource Finance Corp. | ||||||||
10 | 5.25%, 09/15/2017 | 8 | ||||||
140 | 6.40%, 03/15/2018 | 120 | ||||||
Northern States Power Co. | ||||||||
85 | 5.25%, 03/01/2018 | 86 | ||||||
Pacific Gas and Electric | ||||||||
35 | 6.25%, 03/01/2039 | 36 | ||||||
Pacificorp | ||||||||
50 | 6.35%, 07/15/2038 | 52 | ||||||
Peco Energy Co. | ||||||||
20 | 5.70%, 03/15/2037 | 17 | ||||||
Progress Energy, Inc. | ||||||||
50 | 6.85%, 04/15/2012 | 53 | ||||||
Taqa Abu Dhabi National | ||||||||
100 | 6.50%, 10/27/2036 ■ | 75 | ||||||
TransCanada Pipelines Ltd. | ||||||||
45 | 7.63%, 01/15/2039 | 49 | ||||||
Union Electric Co. | ||||||||
45 | 6.40%, 06/15/2017 | 44 | ||||||
2,185 | ||||||||
Total corporate bonds: investment grade (cost $20,334) | $ | 18,785 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 7.5% | ||||||||
Basic Materials — 0.4% | ||||||||
Blount, Inc. | ||||||||
35 | 8.88%, 08/01/2012 | $ | 34 | |||||
BWAY Corp. | ||||||||
5 | 10.00%, 04/15/2014 ■ | 5 | ||||||
Cascades, Inc. | ||||||||
15 | 7.25%, 02/15/2013 | 12 | ||||||
Hawk Corp. | ||||||||
15 | 8.75%, 11/01/2014 | 15 | ||||||
Koppers Holdings, Inc. | ||||||||
30 | 10.92%, 11/15/2014 | 25 | ||||||
Koppers, Inc. | ||||||||
10 | 9.88%, 10/15/2013 | 10 | ||||||
Neenah Paper, Inc. | ||||||||
25 | 7.38%, 11/15/2014 | 10 | ||||||
Peabody Energy Corp. | ||||||||
10 | 6.88%, 03/15/2013 | 10 | ||||||
Rock Tenn Co. | ||||||||
15 | 9.25%, 03/15/2016 | 15 | ||||||
Texas Industries, Inc. | ||||||||
25 | 7.25%, 07/15/2013 | 20 | ||||||
Tube City IMS Corp. | ||||||||
25 | 9.75%, 02/01/2015 | 6 | ||||||
162 | ||||||||
Capital Goods — 0.0% | ||||||||
Actuant Corp. | ||||||||
10 | 6.88%, 06/15/2017 | 9 | ||||||
L-3 Communications Corp. | ||||||||
15 | 5.88%, 01/15/2015 | 14 | ||||||
Vought Aircraft Industries, Inc. | ||||||||
15 | 8.00%, 01/15/2011 | 6 | ||||||
29 | ||||||||
Consumer Cyclical — 0.5% | ||||||||
Alliance One International, Inc. | ||||||||
10 | 8.50%, 05/15/2012 | 9 | ||||||
15 | 11.00%, 05/15/2012 | 15 | ||||||
Aramark Corp. | ||||||||
15 | 8.50%, 02/01/2015 | 14 | ||||||
Dollar General Corp. | ||||||||
10 | 11.88%, 07/15/2017 | 10 | ||||||
ESCO Corp. | ||||||||
30 | 8.63%, 12/15/2013 ■ | 24 | ||||||
Ford Motor Co. | ||||||||
15 | 7.45%, 07/16/2031 | 8 | ||||||
Group 1 Automotive, Inc. | ||||||||
20 | 8.25%, 08/15/2013 | 17 | ||||||
Pulte Homes, Inc. | ||||||||
40 | 7.88%, 08/01/2011 | 40 | ||||||
Supervalu, Inc. | ||||||||
15 | 8.00%, 05/01/2016 | 15 | ||||||
TRW Automotive, Inc. | ||||||||
20 | 7.00%, 03/15/2014 ■ | 11 | ||||||
United Components, Inc. | ||||||||
90 | 9.38%, 06/15/2013 | 49 | ||||||
212 | ||||||||
Consumer Staples — 0.1% | ||||||||
Land O’Lakes Capital Trust | ||||||||
15 | 7.45%, 03/15/2028 ■ | 10 | ||||||
Sally Holdings LLC | ||||||||
10 | 10.50%, 11/15/2016 | 10 |
10
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 7.5% — (continued) | ||||||||
Consumer Staples — 0.1% — (continued) | ||||||||
Tyson Foods, Inc. | ||||||||
$ | 25 | 10.50%, 03/01/2014 ■ | $ | 26 | ||||
46 | ||||||||
Energy — 0.5% | ||||||||
Chesapeake Energy Corp. | ||||||||
15 | 6.25%, 01/15/2018 | 13 | ||||||
20 | 6.50%, 08/15/2017 | 17 | ||||||
Encore Acquisition Co. | ||||||||
15 | 6.00%, 07/15/2015 | 12 | ||||||
15 | 9.50%, 05/01/2016 | 14 | ||||||
Newfield Exploration Co. | ||||||||
25 | 7.13%, 05/15/2018 | 23 | ||||||
Petrohawk Energy Corp. | ||||||||
30 | 9.13%, 07/15/2013 | 29 | ||||||
Petroleos de Venezuela S.A. | ||||||||
30 | 5.25%, 04/12/2017 | 14 | ||||||
40 | 5.38%, 04/12/2027 | 15 | ||||||
Pioneer Natural Resources Co. | ||||||||
25 | 5.88%, 07/15/2016 | 21 | ||||||
Range Resources Corp. | ||||||||
10 | 6.38%, 03/15/2015 | 9 | ||||||
Southwestern Energy Co. | ||||||||
10 | 7.50%, 02/01/2018 ■ | 10 | ||||||
Williams Companies, Inc. | ||||||||
45 | 8.75%, 03/15/2032 | 43 | ||||||
220 | ||||||||
Finance — 0.6% | ||||||||
Capmark Financial Group | ||||||||
40 | 7.88%, 05/10/2012 | 10 | ||||||
Ford Motor Credit Co. | ||||||||
30 | 7.00%, 10/01/2013 | 23 | ||||||
65 | 7.38%, 10/28/2009 | 62 | ||||||
15 | 8.63%, 11/01/2010 | 13 | ||||||
Fresenius U.S. Finance II | ||||||||
10 | 9.00%, 07/15/2015 ■ | 11 | ||||||
General Motors Acceptance Corp. | ||||||||
15 | 5.63%, 05/15/2009 | 15 | ||||||
30 | 7.75%, 01/19/2010 | 27 | ||||||
GMAC LLC | ||||||||
15 | 6.00%, 12/15/2011 ■ | 12 | ||||||
Hertz Corp. | ||||||||
20 | 8.88%, 01/01/2014 | 15 | ||||||
NB Capital Trust IV | ||||||||
20 | 8.25%, 04/15/2027 | 12 | ||||||
Nuveen Investments, Inc. | ||||||||
10 | 5.00%, 09/15/2010 | 8 | ||||||
Rouse Co. | ||||||||
15 | 5.38%, 11/26/2013 | 8 | ||||||
United Rentals North America, Inc. | ||||||||
15 | 1.88%, 10/15/2023 ۞ | 13 | ||||||
20 | 6.50%, 02/15/2012 | 18 | ||||||
Universal Hospital Services | ||||||||
15 | 8.50%, 06/01/2015 | 14 | ||||||
261 | ||||||||
Foreign Governments — 2.2% | ||||||||
Argentina (Republic of) | ||||||||
EUR | 5 | 2.26%, 12/31/2038 | 1 | |||||
5 | 2.50%, 12/31/2038 | 1 | ||||||
99 | 8.28%, 12/31/2033 | 29 | ||||||
Brazil (Republic of) | ||||||||
BRL | 72 | 6.00%, 05/15/2015 | 31 | |||||
Colombia (Republic of) | ||||||||
COP | 35,000 | 9.85%, 06/28/2027 | 17 | |||||
COP | 50,000 | 12.00%, 10/22/2015 | 26 | |||||
Ecuador (Republic of) | ||||||||
30 | 10.00%, 08/15/2030 • § | 10 | ||||||
Indonesia (Republic of) | ||||||||
70 | 6.75%, 03/10/2014 ■ | 67 | ||||||
50 | 6.75%, 03/10/2014 § | 47 | ||||||
Pakistan (Republic of) | ||||||||
100 | 6.88%, 06/01/2017 § | 53 | ||||||
Panama (Republic of) | ||||||||
35 | 7.25%, 03/15/2015 | 37 | ||||||
Philippines (Republic of) | ||||||||
115 | 8.38%, 06/17/2019 | 127 | ||||||
Turkey (Republic of) | ||||||||
105 | 6.88%, 03/17/2036 | 90 | ||||||
105 | 7.25%, 03/15/2015 | 107 | ||||||
60 | 7.50%, 11/07/2019 | 60 | ||||||
20 | 9.50%, 01/15/2014 | 23 | ||||||
TRY | 24 | 10.00%, 02/15/2012 | 15 | |||||
TRY | 31 | 12.00%, 08/14/2013 | 21 | |||||
Ukraine Government | ||||||||
EUR | 50 | 4.95%, 10/13/2015 | 34 | |||||
Uruguay (Republic of) | ||||||||
25 | 7.63%, 03/21/2036 | 21 | ||||||
Venezuela (Republic of) | ||||||||
95 | 7.00%, 03/31/2038 | 46 | ||||||
55 | 7.65%, 04/21/2025 | 29 | ||||||
40 | 9.00%, 05/07/2023 § | 23 | ||||||
65 | 9.25%, 09/15/2027 — 05/07/2028 * | 39 | ||||||
15 | 9.38%, 01/13/2034 | 9 | ||||||
963 | ||||||||
Health Care — 0.5% | ||||||||
Biomet, Inc. | ||||||||
15 | 10.00%, 10/15/2017 | 15 | ||||||
10 | 10.38%, 10/15/2017 | 10 | ||||||
Community Health Systems, Inc. | ||||||||
25 | 8.88%, 07/15/2015 | 25 | ||||||
Cubist Pharmaceuticals, Inc. | ||||||||
10 | 2.25%, 06/15/2013 ۞ | 8 | ||||||
Elan Financial plc | ||||||||
10 | 5.23%, 11/15/2011 Δ | 9 | ||||||
35 | 7.75%, 11/15/2011 | 31 | ||||||
HCA, Inc. | ||||||||
10 | 6.50%, 02/15/2016 | 8 | ||||||
5 | 8.50%, 04/15/2019 ■ | 5 | ||||||
70 | 9.63%, 11/15/2016 | 65 | ||||||
LifePoint Hospitals, Inc. | ||||||||
20 | 3.50%, 05/15/2014 ۞ | 16 | ||||||
Omnicare, Inc. | ||||||||
20 | 6.88%, 12/15/2015 | 19 | ||||||
Rite Aid Corp. | ||||||||
15 | 10.38%, 07/15/2016 | 13 | ||||||
Tenet Healthcare Corp. | ||||||||
15 | 9.00%, 05/01/2015 ■ | 15 | ||||||
239 | ||||||||
11
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 7.5% — (continued) | ||||||||
Services — 0.7% | ||||||||
AMC Entertainment, Inc. | ||||||||
$ | 35 | 8.00%, 03/01/2014 | $ | 32 | ||||
Anixter International, Inc. | ||||||||
15 | 10.00%, 03/15/2014 | 14 | ||||||
Bonten Media Acquisition | ||||||||
15 | 9.00%, 06/01/2015 ■ | 2 | ||||||
Canwest Media, Inc. | ||||||||
45 | 8.00%, 09/15/2012 | 12 | ||||||
Harrah’s Operating Co., Inc. | ||||||||
10 | 5.50%, 07/01/2010 | 6 | ||||||
3 | 10.00%, 12/15/2018 ■ | 1 | ||||||
HSN, Inc. | ||||||||
15 | 11.25%, 08/01/2016 ■ | 11 | ||||||
Marquee Holdings, Inc. | ||||||||
20 | 12.00%, 08/15/2014 | 16 | ||||||
Quebecor Media, Inc. | ||||||||
65 | 7.75%, 03/15/2016 | 54 | ||||||
River Rock Entertainment | ||||||||
10 | 9.75%, 11/01/2011 | 7 | ||||||
Seneca Gaming Corp. | ||||||||
50 | 7.25%, 05/01/2012 | 35 | ||||||
Sensata Technologies | ||||||||
10 | 8.00%, 05/01/2014 | 4 | ||||||
Service Corp. International | ||||||||
25 | 7.00%, 06/15/2017 | 22 | ||||||
SunGard Data Systems, Inc. | ||||||||
30 | 9.13%, 08/15/2013 | 29 | ||||||
20 | 10.25%, 08/15/2015 | 17 | ||||||
Unisys Corp. | ||||||||
15 | 8.00%, 10/15/2012 | 7 | ||||||
Virgin River Casino Corp. | ||||||||
10 | 9.00%, 01/15/2012 | 1 | ||||||
West Corp. | ||||||||
15 | 9.50%, 10/15/2014 | 13 | ||||||
283 | ||||||||
Technology — 1.2% | ||||||||
Bio-Rad Laboratories, Inc. | ||||||||
10 | 6.13%, 12/15/2014 | 9 | ||||||
CCH II Holdings LLC/ CCH II Capital | ||||||||
20 | 10.25%, 10/01/2013 | 18 | ||||||
Centennial Communications Corp. | ||||||||
20 | 10.00%, 01/01/2013 | 21 | ||||||
Charter Communications Holdings II LLC | ||||||||
20 | 10.25%, 09/15/2010 | 18 | ||||||
Charter Communications Operating LLC | ||||||||
15 | 8.00%, 04/30/2012 ■ Ψ | 14 | ||||||
35 | 10.88%, 09/15/2014 ■ Ψ | 35 | ||||||
Cricket Communications, Inc. | ||||||||
30 | 10.00%, 07/15/2015 ■ | 30 | ||||||
Crown Castle International Corp. | ||||||||
5 | 7.75%, 05/01/2017 ■ | 5 | ||||||
CSC Holdings, Inc. | ||||||||
55 | 7.63%, 07/15/2018 | 53 | ||||||
10 | 8.50%, 04/15/2014 ■ | 10 | ||||||
Deluxe Corp. | ||||||||
35 | 7.38%, 06/01/2015 | 26 | ||||||
Flextronics International | ||||||||
15 | 1.00%, 08/01/2010 ۞ | 14 | ||||||
Frontier Communications Corp. | ||||||||
10 | 8.25%, 05/01/2014 | 10 | ||||||
GCI, Inc. | ||||||||
25 | 7.25%, 02/15/2014 | 23 | ||||||
Hologic, Inc. | ||||||||
15 | 2.00%, 12/15/2037 ۞ | 11 | ||||||
Inmarsat Finance II plc | ||||||||
30 | 10.38%, 11/15/2012 | 31 | ||||||
Intelsat Bermuda Ltd. | ||||||||
15 | 11.25%, 06/15/2016 | 15 | ||||||
Intelsat Jackson Holdings Ltd. | ||||||||
65 | 9.50%, 06/15/2016 ■ | 64 | ||||||
Lender Process Services | ||||||||
25 | 8.13%, 07/01/2016 | 25 | ||||||
Maxtor Corp. | ||||||||
10 | 2.38%, 08/15/2012 ۞ | 7 | ||||||
Mediacom Broadband LLC | ||||||||
35 | 8.50%, 10/15/2015 | 33 | ||||||
MetroPCS Wireless, Inc. | ||||||||
30 | 9.25%, 11/01/2014 | 30 | ||||||
Seagate Technology International | ||||||||
15 | 10.00%, 05/01/2014 * ■ | 15 | ||||||
Sprint Capital Corp. | ||||||||
10 | 6.90%, 05/01/2019 | 9 | ||||||
Sprint Nextel Corp. | ||||||||
12 | 6.00%, 12/01/2016 | 10 | ||||||
536 | ||||||||
Transportation — 0.0% | ||||||||
American Rail Car Industries, Inc. | ||||||||
15 | 7.50%, 03/01/2014 | 12 | ||||||
Continental Airlines, Inc. | ||||||||
22 | 9.80%, 04/01/2021 | 13 | ||||||
Navios Maritime Holdings | ||||||||
20 | 9.50%, 12/15/2014 | 12 | ||||||
37 | ||||||||
Utilities — 0.8% | ||||||||
Dynegy Holdings, Inc. | ||||||||
40 | 8.38%, 05/01/2016 | 32 | ||||||
Edison Mission Energy | ||||||||
15 | 7.20%, 05/15/2019 | 11 | ||||||
15 | 7.50%, 06/15/2013 | 13 | ||||||
El Paso Corp. | ||||||||
25 | 12.00%, 12/12/2013 | 27 | ||||||
Energy Future Holdings | ||||||||
45 | 10.88%, 11/01/2017 | 31 | ||||||
Ipalco Enterprises, Inc. | ||||||||
30 | 7.25%, 04/01/2016 ■ | 28 | ||||||
Kinder Morgan Finance Co. | ||||||||
40 | 5.70%, 01/05/2016 | 35 | ||||||
National Power Corp. | ||||||||
55 | 9.63%, 05/15/2028 | 53 | ||||||
NRG Energy, Inc. | ||||||||
40 | 7.38%, 01/15/2017 | 38 | ||||||
Reliant Energy, Inc. | ||||||||
25 | 6.75%, 12/15/2014 | 24 | ||||||
Sierra Pacific Resources | ||||||||
5 | 6.75%, 08/15/2017 | 4 |
12
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 7.5% — (continued) | ||||||||||||
Utilities - 0.8% — (continued) | ||||||||||||
Tennessee Gas Pipeline Co. | ||||||||||||
$ | 15 | 8.00%, 02/01/2016 ■ | $ | 15 | ||||||||
TXU Corp. | ||||||||||||
10 | 5.55%, 11/15/2014 | 4 | ||||||||||
315 | ||||||||||||
Total corporate bonds: non-investment grade (cost $3,557) | $ | 3,303 | ||||||||||
MUNICIPAL BONDS — 0.4% | ||||||||||||
General Obligations — 0.3% | ||||||||||||
California State GO, Taxable, | ||||||||||||
$ | 125 | 7.55%, 04/01/2039 | $ | 131 | ||||||||
Transportation — 0.1% | ||||||||||||
New Jersey State Turnpike Auth, Taxable, | ||||||||||||
50 | 7.41%, 01/01/2040 | 54 | ||||||||||
Total municipal bonds (cost $179) | $ | 185 | ||||||||||
Total long-term investments (cost $46,956) | $ | 42,109 | ||||||||||
SHORT-TERM INVESTMENTS — 2.7% | ||||||||||||
Repurchase Agreements — 2.7% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $279, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $284) | ||||||||||||
$ | 279 | 0.18%, 04/30/2009 | $ | 279 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $333, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $340) | ||||||||||||
333 | 0.17%, 04/30/2009 | 333 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $466, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $475) | ||||||||||||
466 | 0.17%, 04/30/2009 | 466 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $2) | ||||||||||||
2 | 0.14%, 04/30/2009 | 2 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $100, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - - 2039, value of $102) | ||||||||||||
100 | 0.16%, 04/30/2009 | 100 | ||||||||||
1,180 | ||||||||||||
Total short-term investments (cost $1,180) | $ | 1,180 | ||||||||||
Total investments (cost $48,136) ▲ | 98.2 | % | $ | 43,289 | ||||||||
Other assets and liabilities | 1.8 | % | 812 | |||||||||
Total net assets | 100.0 | % | $ | 44,101 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 8.03% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $48,357 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,050 | ||
Unrealized Depreciation | (6,118 | ) | ||
Net Unrealized Depreciation | $ | (5,068 | ) | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
D | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $2,296, which represents 5.21% of total net assets. |
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Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
§ | Securities contain some restrictions as to public resale. These securities comply with Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933, and are determined to be liquid. At April 30, 2009, the market value of these securities amounted to $505 or 1.15% of total net assets. | |
۞ | Convertible security. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $88. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Brazilian Real (Sell) | $ | 2 | $ | 2 | 06/17/09 | $ | — | |||||||||
Brazilian Real (Sell) | 54 | 50 | 06/17/09 | (4 | ) | |||||||||||
British Pound (Buy) | 107 | 106 | 05/01/09 | 1 | ||||||||||||
British Pound (Buy) | 91 | 91 | 05/05/09 | — | ||||||||||||
British Pound (Buy) | 138 | 138 | 05/06/09 | — | ||||||||||||
Chinese Renminbi (Sell) | 33 | 31 | 09/21/09 | (2 | ) | |||||||||||
Chinese Renminbi (Buy) | 32 | 32 | 09/21/09 | — | ||||||||||||
Chinese Renminbi (Sell) | 11 | 11 | 02/22/10 | — | ||||||||||||
Colombian Peso (Sell) | 41 | 41 | 05/22/09 | — | ||||||||||||
Colombian Peso (Sell) | 4 | 4 | 06/17/09 | — | ||||||||||||
Euro (Sell) | 66 | 65 | 05/04/09 | (1 | ) | |||||||||||
Euro (Sell) | 11 | 11 | 05/04/09 | — | ||||||||||||
Euro (Sell) | 35 | 34 | 06/17/09 | (1 | ) | |||||||||||
Euro (Buy) | 80 | 78 | 06/17/09 | 2 | ||||||||||||
Euro (Sell) | 25 | 26 | 06/17/09 | 1 | ||||||||||||
Euro (Buy) | 11 | 11 | 06/17/09 | — | ||||||||||||
Euro (Sell) | 88 | 84 | 06/17/09 | (4 | ) | |||||||||||
Euro (Sell) | 24 | 24 | 06/17/09 | — | ||||||||||||
Hungarian Forint (Sell) | 17 | 17 | 05/07/09 | — | ||||||||||||
Hungarian Forint (Buy) | 16 | 16 | 06/17/09 | — | ||||||||||||
Hungarian Forint (Sell) | 16 | 14 | 06/17/09 | (2 | ) | |||||||||||
Indonesian Rupiah (Sell) | 14 | 15 | 07/16/09 | 1 | ||||||||||||
Indonesian Rupiah (Buy) | 15 | 16 | 07/16/09 | (1 | ) | |||||||||||
Kazakhstani Tenge (Sell) | 20 | 24 | 05/15/09 | 4 | ||||||||||||
Kazakhstani Tenge (Buy) | 8 | 8 | 05/15/09 | — | ||||||||||||
Mexican New Peso (Sell) | 25 | 22 | 06/17/09 | (3 | ) | |||||||||||
Mexican New Peso (Buy) | 25 | 24 | 06/17/09 | 1 | ||||||||||||
New Romanian Leu (Sell) | 13 | 12 | 06/17/09 | (1 | ) | |||||||||||
New Romanian Leu (Buy) | 13 | 13 | 06/17/09 | — | ||||||||||||
Nigerian Naira (Sell) | 13 | 11 | 05/06/09 | (2 | ) | |||||||||||
Peruvian New Sol (Sell) | 12 | 11 | 06/05/09 | (1 | ) | |||||||||||
Peruvian New Sol (Buy) | 11 | 11 | 06/05/09 | — | ||||||||||||
Polish Zloty (Buy) | 26 | 26 | 06/17/09 | — | ||||||||||||
Republic of Korea Won (Sell) | 12 | 16 | 07/01/09 | 4 | ||||||||||||
Republic of Korea Won (Buy) | 12 | 14 | 07/01/09 | (2 | ) | |||||||||||
Turkish New Lira (Sell) | 21 | 21 | 06/17/09 | — | ||||||||||||
Turkish New Lira (Sell) | 15 | 13 | 06/17/09 | (2 | ) | |||||||||||
Vietnamese Dong (Sell) | 22 | 21 | 05/29/09 | (1 | ) | |||||||||||
$ | (13 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 18,475 | ||
Investment in securities — Level 2 | 24,674 | |||
Investment in securities — Level 3 | 140 | |||
Total | $ | 43,289 | ||
Other financial instruments — Level 2 * | 14 | |||
Total | $ | 14 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 27 | |||
Total | $ | 27 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 224 | ||
Net realized loss | (72 | ) | ||
Change in unrealized appreciation ♦ | 82 | |||
Net sales | (125 | ) | ||
Transfers in and /or out of Level 3 | 31 | |||
Balance as of April 30, 2009 | $ | 140 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 19 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $48,136) | $ | 43,289 | ||
Cash | 24 | |||
Foreign currency on deposit with custodian (cost $—) | — | |||
Unrealized appreciation on forward foreign currency contracts | 14 | |||
Receivables: | ||||
Investment securities sold | 833 | |||
Fund shares sold | 618 | |||
Dividends and interest | 451 | |||
Other assets | 30 | |||
Total assets | 45,259 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 27 | |||
Payables: | ||||
Investment securities purchased | 978 | |||
Fund shares redeemed | 123 | |||
Investment management fees | 5 | |||
Distribution fees | 3 | |||
Accrued expenses | 16 | |||
Other liabilities | 6 | |||
Total liabilities | 1,158 | |||
Net assets | $ | 44,101 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 57,928 | |||
Accumulated undistributed net investment income | 140 | |||
Accumulated net realized loss on investments and foreign currency transactions | (9,107 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (4,860 | ) | ||
Net assets | $ | 44,101 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.97/$8.43 | ||
Shares outstanding | 4,647 | |||
Net assets | $ | 37,048 | ||
Class B: Net asset value per share | $ | 7.95 | ||
Shares outstanding | 319 | |||
Net assets | $ | 2,537 | ||
Class C: Net asset value per share | $ | 7.94 | ||
Shares outstanding | 558 | |||
Net assets | $ | 4,426 | ||
Class Y: Net asset value per share | $ | 7.98 | ||
Shares outstanding | 11 | |||
Net assets | $ | 90 | ||
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 445 | ||
Interest | 834 | |||
Less: Foreign tax withheld | (6 | ) | ||
Total investment income | 1,273 | |||
Expenses: | ||||
Investment management fees | 147 | |||
Transfer agent fees | 32 | |||
Distribution fees | ||||
Class A | 43 | |||
Class B | 10 | |||
Class C | 20 | |||
Custodian fees | 7 | |||
Accounting services | 4 | |||
Registration and filing fees | 20 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 11 | |||
Total expenses (before waivers and fees paid indirectly) | 298 | |||
Expense waivers | (20 | ) | ||
Transfer agent fee waivers | (1 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (22 | ) | ||
Total expenses, net | 276 | |||
Net investment income | 997 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (6,618 | ) | ||
Net realized gain on futures | 73 | |||
Net realized gain on foreign currency transactions | 14 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (6,531 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 5,429 | |||
Net unrealized depreciation of futures | (3 | ) | ||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (21 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 5,405 | |||
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (1,126 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (129 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 997 | $ | 2,057 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (6,531 | ) | (2,526 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 5,405 | (11,847 | ) | |||||
Net decrease in net assets resulting from operations | (129 | ) | (12,316 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (921 | ) | (1,785 | ) | ||||
Class B | (50 | ) | (79 | ) | ||||
Class C | (95 | ) | (159 | ) | ||||
Class Y | (3 | ) | (5 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (167 | ) | |||||
Class B | — | (9 | ) | |||||
Class C | — | (18 | ) | |||||
Class Y | — | (1 | ) | |||||
Total distributions | (1,069 | ) | (2,223 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 1,539 | 8,506 | ||||||
Class B | 626 | 359 | ||||||
Class C | 545 | 1,103 | ||||||
Class Y | 3 | 5 | ||||||
Net increase from capital share transactions | 2,713 | 9,973 | ||||||
Net increase (decrease) in net assets | 1,515 | (4,566 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 42,586 | 47,152 | ||||||
End of period | $ | 44,101 | $ | 42,586 | ||||
Accumulated undistributed net investment income | $ | 140 | $ | 212 | ||||
17
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Balanced Income Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
18
Table of Contents
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. |
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Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
20
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
i) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $88. | ||
j) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
k) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value |
21
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods |
22
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beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. As of April 30, 2009, there were no outstanding futures contracts. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
23
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 2,204 | $ | 870 | ||||
Long-Term Capital Gains * | 19 | — |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 302 | ||
Accumulated Capital Losses* | $ | (2,352 | ) | |
Unrealized Depreciation† | $ | (10,579 | ) | |
Total Accumulated Deficit | $ | (12,629 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $36 and decrease accumulated net realized loss by $36. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 2,352 | ||
Total | $ | 2,352 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
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Table of Contents
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $250 million | 0.7250 | % | ||
On next $250 million | 0.7000 | % | ||
On next $500 million | 0.6750 | % | ||
On next $4 billion | 0.6500 | % | ||
On next $5 billion | 0.6475 | % | ||
Over $10 billion | 0.6450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||
1.25% | 2.00% | 2.00% | 0.90% |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Annualized | ||||||||||||||
Six-Month | ||||||||||||||
Period | Year Ended | Year Ended | Year Ended | |||||||||||
Ended April | October 31, | October 31, | October 31, | |||||||||||
30, 2009 | 2008 | 2007 | 2006 | |||||||||||
Class A Shares | 1.25 | % | 1.25 | % | 1.19 | % | 1.25%* | |||||||
Class B Shares | 1.95 | 2.00 | 2.00 | 2.00† | ||||||||||
Class C Shares | 2.00 | 2.00 | 2.00 | 2.00‡ | ||||||||||
Class Y Shares | 0.90 | 0.90 | 0.90 | 0.90§ |
* | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
‡ | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
§ | From July 31, 2006 (commencement of operations), through October 31, 2006 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $207 and contingent deferred sales charges of $4 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $2. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $32 for providing such services. These fees are accrued daily and paid monthly. |
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6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 11 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 18,914 | ||
Sales Proceeds Excluding U.S. Government Obligations | 16,385 | |||
Cost of Purchases for U.S. Government Obligations | 483 | |||
Sales Proceeds for U.S. Government Obligations | 486 |
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,697 | 114 | (1,607 | ) | — | 204 | 1,538 | 193 | (964 | ) | — | 767 | ||||||||||||||||||||||||||||
Amount | $ | 13,266 | $ | 904 | $ | (12,631 | ) | $ | — | $ | 1,539 | $ | 15,554 | $ | 1,923 | $ | (8,971 | ) | $ | — | $ | 8,506 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 147 | 6 | (71 | ) | — | 82 | 111 | 8 | (90 | ) | — | 29 | ||||||||||||||||||||||||||||
Amount | $ | 1,130 | $ | 47 | $ | (551 | ) | $ | — | $ | 626 | $ | 1,118 | $ | 83 | $ | (842 | ) | $ | — | $ | 359 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 155 | 11 | (97 | ) | — | 69 | 233 | 15 | (147 | ) | — | 101 | ||||||||||||||||||||||||||||
Amount | $ | 1,211 | $ | 88 | $ | (754 | ) | $ | — | $ | 545 | $ | 2,396 | $ | 151 | $ | (1,444 | ) | $ | — | $ | 1,103 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | $ | — | $ | 5 | $ | — | $ | — | $ | 5 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 2 | $ | 13 | |||||
For the Year Ended October 31, 2008 | 3 | $ | 33 |
27
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.22 | $ | 0.20 | $ | — | $ | (0.24 | ) | $ | (0.04 | ) | $ | (0.21 | ) | $ | — | $ | — | $ | (0.21 | ) | $ | (0.25 | ) | $ | 7.97 | (0.41 | )%(e) | $ | 37,048 | 1.34 | %(f) | 1.25 | %(f) | 1.25 | %(f) | 5.01 | %(f) | 43 | % | |||||||||||||||||||||||||||||||
B | 8.20 | 0.16 | — | (0.22 | ) | (0.06 | ) | (0.19 | ) | — | — | (0.19 | ) | (0.25 | ) | 7.95 | (0.69 | ) (e) | 2,537 | 2.29 | (f) | 1.95 | (f) | 1.95 | (f) | 4.26 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 8.19 | 0.17 | — | (0.23 | ) | (0.06 | ) | (0.19 | ) | — | — | (0.19 | ) | (0.25 | ) | 7.94 | (0.73 | ) (e) | 4,426 | 2.13 | (f) | 2.00 | (f) | 2.00 | (f) | 4.26 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 8.24 | 0.21 | — | (0.24 | ) | (0.03 | ) | (0.23 | ) | — | — | (0.23 | ) | (0.26 | ) | 7.98 | (0.33 | ) (e) | 90 | 0.95 | (f) | 0.90 | (f) | 0.90 | (f) | 5.36 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.02 | 0.40 | — | (2.75 | ) | (2.35 | ) | (0.41 | ) | (0.04 | ) | — | (0.45 | ) | (2.80 | ) | 8.22 | (22.01 | ) | 36,544 | 1.25 | 1.25 | 1.25 | 4.10 | 44 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 10.98 | 0.33 | — | (2.74 | ) | (2.41 | ) | (0.33 | ) | (0.04 | ) | — | (0.37 | ) | (2.78 | ) | 8.20 | (22.53 | ) | 1,945 | 2.14 | 2.00 | 2.00 | 3.35 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 10.97 | 0.33 | — | (2.74 | ) | (2.41 | ) | (0.33 | ) | (0.04 | ) | — | (0.37 | ) | (2.78 | ) | 8.19 | (22.55 | ) | 4,007 | 2.04 | 2.00 | 2.00 | 3.34 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.03 | 0.44 | — | (2.75 | ) | (2.31 | ) | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (2.79 | ) | 8.24 | (21.67 | ) | 90 | 0.91 | 0.90 | 0.90 | 4.43 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.42 | 0.34 | — | 0.59 | 0.93 | (0.33 | ) | — | — | (0.33 | ) | 0.60 | 11.02 | 9.07 | 40,501 | 1.33 | 1.19 | 1.19 | 3.57 | 27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.41 | 0.26 | — | 0.59 | 0.85 | (0.28 | ) | — | — | (0.28 | ) | 0.57 | 10.98 | 8.22 | 2,280 | 2.21 | 2.00 | 2.00 | 2.76 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.41 | 0.26 | — | 0.58 | 0.84 | (0.28 | ) | — | — | (0.28 | ) | 0.56 | 10.97 | 8.17 | 4,256 | 2.14 | 2.00 | 2.00 | 2.76 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.42 | 0.41 | — | 0.56 | 0.97 | (0.36 | ) | — | — | (0.36 | ) | 0.61 | 11.03 | 9.43 | 115 | 1.04 | 0.90 | 0.90 | 3.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) July 31, 2006, through October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | 0.09 | — | 0.39 | 0.48 | (0.06 | ) | — | — | (0.06 | ) | 0.42 | 10.42 | 4.78 | (e) | 11,513 | 1.58 | (f) | 1.26 | (f) | 1.26 | (f) | 3.48 | (f) | 8 | |||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | 0.07 | — | 0.38 | 0.45 | (0.04 | ) | — | — | (0.04 | ) | 0.41 | 10.41 | 4.54 | (e) | 304 | 2.34 | (f) | 2.00 | (f) | 2.00 | (f) | 2.73 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | 0.06 | — | 0.40 | 0.46 | (0.05 | ) | — | — | (0.05 | ) | 0.41 | 10.41 | 4.56 | (e) | 400 | 2.39 | (f) | 2.00 | (f) | 2.00 | (f) | 2.67 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y(j) | 10.00 | 0.10 | — | 0.38 | 0.48 | (0.06 | ) | — | — | (0.06 | ) | 0.42 | 10.42 | 4.83 | (e) | 105 | 1.31 | (f) | 0.90 | (f) | 0.90 | (f) | 3.86 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on July 31, 2006. | |
(h) | Commenced operations on July 31, 2006. | |
(i) | Commenced operations on July 31, 2006. | |
(j) | Commenced operations on July 31, 2006. |
29
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30
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
31
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32
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 995.92 | $ | 6.18 | $ | 1,000.00 | $ | 1,018.59 | $ | 6.25 | 1.25 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 993.05 | $ | 9.63 | $ | 1,000.00 | $ | 1,015.12 | $ | 9.74 | 1.95 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 992.70 | $ | 9.88 | $ | 1,000.00 | $ | 1,014.87 | $ | 9.99 | 2.00 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 996.70 | $ | 4.45 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 |
33
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
21 | ||||
22 | ||||
24 | ||||
24 | ||||
25 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Average Annual Total Returns(2,3,4) (as of 4/30/09)
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Capital Appreciation A# | 7/22/96 | -40.10 | % | 0.74 | % | 5.17 | % | 11.95 | % | |||||||||||
Capital Appreciation A## | 7/22/96 | -43.39 | % | -0.40 | % | 4.57 | % | 11.45 | % | |||||||||||
Capital Appreciation B# | 7/22/96 | -40.59 | % | -0.05 | % | NA | * | NA | * | |||||||||||
Capital Appreciation B## | 7/22/96 | -43.55 | % | -0.35 | % | NA | * | NA | * | |||||||||||
Capital Appreciation C# | 7/22/96 | -40.54 | % | 0.03 | % | 4.44 | % | 11.19 | % | |||||||||||
Capital Appreciation C## | 7/22/96 | -41.13 | % | 0.03 | % | 4.44 | % | 11.19 | % | |||||||||||
Capital Appreciation I# | 7/22/96 | -39.90 | % | 0.90 | % | 5.25 | % | 12.02 | % | |||||||||||
Capital Appreciation R3# | 7/22/96 | -40.25 | % | 0.83 | % | 5.49 | % | 12.33 | % | |||||||||||
Capital Appreciation R4# | 7/22/96 | -40.08 | % | 0.99 | % | 5.57 | % | 12.40 | % | |||||||||||
Capital Appreciation R5# | 7/22/96 | -39.89 | % | 1.13 | % | 5.64 | % | 12.46 | % | |||||||||||
Capital Appreciation Y# | 7/22/96 | -39.82 | % | 1.19 | % | 5.68 | % | 12.49 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Saul J. Pannell, CFA | Frank D. Catrickes, CFA, CMT | |
Senior Vice President, Partner | Senior Vice President, Partner |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 4.1 | % | ||
Banks | 3.4 | |||
Capital Goods | 6.7 | |||
Consumer Durables & Apparel | 1.0 | |||
Consumer Services | 0.3 | |||
Diversified Financials | 7.8 | |||
Energy | 13.0 | |||
Finance | 0.4 | |||
Food, Beverage & Tobacco | 0.7 | |||
Health Care Equipment & Services | 7.4 | |||
Household & Personal Products | 0.3 | |||
Insurance | 5.5 | |||
Materials | 5.1 | |||
Media | 3.1 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 12.2 | |||
Retailing | 5.0 | |||
Semiconductors & Semiconductor Equipment | 1.0 | |||
Software & Services | 6.6 | |||
Technology Hardware & Equipment | 9.7 | |||
Telecommunication Services | 2.5 | |||
Utilities | 0.5 | |||
Short-Term Investments | 3.5 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.9% | ||||||||
Automobiles & Components — 4.1% | ||||||||
75,755 | Ford Motor Co. • | $ | 453,017 | |||||
2,116 | Michelin (C.G.D.E.) Class B | 108,336 | ||||||
561,353 | ||||||||
Banks — 3.4% | ||||||||
138,245 | Industrial and Commercial Bank of China | 78,645 | ||||||
6,668 | Standard Chartered plc | 103,152 | ||||||
14,093 | Wells Fargo & Co. | 282,007 | ||||||
463,804 | ||||||||
Capital Goods — 6.7% | ||||||||
4,795 | Boeing Co. | 192,040 | ||||||
20,285 | General Electric Co. | 256,602 | ||||||
8,366 | Hansen Transmissions • | 18,218 | ||||||
6,878 | Raytheon Co. | 311,083 | ||||||
2,083 | Siemens AG | 140,079 | ||||||
918,022 | ||||||||
Consumer Durables & Apparel — 1.0% | ||||||||
3,606 | Liz Claiborne, Inc. | 17,090 | ||||||
11,166 | Newell Rubbermaid, Inc. | 116,679 | ||||||
133,769 | ||||||||
Consumer Services — 0.3% | ||||||||
31,349 | Shangri-La Asia Ltd. | 46,094 | ||||||
Diversified Financials — 7.8% | ||||||||
1,199 | American Capital Ltd. ∞ | 3,704 | ||||||
15,158 | Bank of America Corp. | 135,360 | ||||||
1,402 | Deutsche Boerse AG | 103,603 | ||||||
5,177 | Excel Medical Fund L.P. ⌂ • † | 5,219 | ||||||
4,345 | Goldman Sachs Group, Inc. | 558,390 | ||||||
8,321 | ING Groep N.V. | 75,849 | ||||||
5,412 | Julius Baer Holding Ltd. | 177,547 | ||||||
1,059,672 | ||||||||
Energy — 13.0% | ||||||||
14,039 | Acergy S.A. | 108,434 | ||||||
4,487 | Cameco Corp. | 102,259 | ||||||
1,303 | Dresser-Rand Group, Inc. • | 32,102 | ||||||
14,251 | Halliburton Co. | 288,163 | ||||||
3,906 | National Oilwell Varco, Inc. • | 118,283 | ||||||
8,048 | OAO Gazprom Class S ADR | 143,895 | ||||||
1,984 | Occidental Petroleum Corp. | 111,668 | ||||||
4,855 | OMV AG | 150,404 | ||||||
1,662 | Petro-Canada | 52,394 | ||||||
3,327 | Schlumberger Ltd. | 162,975 | ||||||
5,250 | Suncor Energy, Inc. ADR | 133,140 | ||||||
11,947 | Weatherford International Ltd. • | 198,682 | ||||||
4,744 | XTO Energy, Inc. | 164,413 | ||||||
1,766,812 | ||||||||
Food, Beverage & Tobacco — 0.7% | ||||||||
2,808 | Cosan Ltd. • | 9,884 | ||||||
2,623 | Nestle S.A. | 85,510 | ||||||
95,394 | ||||||||
Health Care Equipment & Services — 7.4% | ||||||||
2,568 | Aetna, Inc. | 56,531 | ||||||
17,326 | Boston Scientific Corp. • | 145,708 | ||||||
2,312 | Covidien Ltd. | 76,251 | ||||||
4,252 | McKesson Corp. | 157,305 | ||||||
6,132 | Medtronic, Inc. | 196,237 | ||||||
13,670 | United Health Group, Inc. | 321,508 | ||||||
977 | Zimmer Holdings, Inc. • | 42,964 | ||||||
996,504 | ||||||||
Household & Personal Products — 0.3% | ||||||||
3,991 | Bare Escentuals, Inc. • | 36,953 | ||||||
Insurance — 5.5% | ||||||||
12,643 | ACE Ltd. | 585,612 | ||||||
5,490 | Metlife, Inc. | 163,322 | ||||||
748,934 | ||||||||
Materials — 5.1% | ||||||||
1,147 | Agnico Eagle Mines Ltd. | 50,581 | ||||||
3,646 | Aracruz Celulose S.A. ADR | 43,535 | ||||||
4,501 | Newmont Mining Corp. | 181,136 | ||||||
1,400 | Potash Corp. of Saskatchewan, Inc. | 121,086 | ||||||
1,286 | Praxair, Inc. | 95,922 | ||||||
12,447 | Vedanta Resources plc | 194,692 | ||||||
686,952 | ||||||||
Media — 3.1% | ||||||||
25 | Harvey Weinstein Co. Holdings Class A-1 ⌂ • † | — | ||||||
75 | McGraw-Hill Cos., Inc. | 2,261 | ||||||
16,000 | News Corp. Class A | 132,160 | ||||||
4,604 | Viacom, Inc. Class B • | 88,575 | ||||||
8,710 | Walt Disney Co. | 190,756 | ||||||
413,752 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 12.2% | ||||||||
1,446 | Amgen, Inc. • | 70,107 | ||||||
4,240 | Bristol-Myers Squibb Co. | 81,415 | ||||||
8,714 | Merck & Co., Inc. | 211,220 | ||||||
11,370 | Pfizer, Inc. | 151,900 | ||||||
2,663 | Roche Holding AG | 335,832 | ||||||
20,716 | Schering-Plough Corp. | 476,880 | ||||||
7,531 | Teva Pharmaceutical Industries Ltd. ADR | 330,527 | ||||||
1,657,881 | ||||||||
Retailing - 5.0% | ||||||||
36,752 | Buck Holdings L.P ⌂ • † | 65,392 | ||||||
963 | Priceline.com, Inc. • | 93,540 | ||||||
21,433 | Staples, Inc. | 441,939 | ||||||
2,724 | TJX Cos., Inc. | 76,185 | ||||||
677,056 | ||||||||
Semiconductors & Semiconductor Equipment — 1.0% | ||||||||
4,283 | Broadcom Corp. Class A • | 99,314 | ||||||
3,795 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 40,112 | ||||||
139,426 | ||||||||
Software & Services — 6.6% | ||||||||
5,449 | Activision Blizzard, Inc. • | 58,690 | ||||||
1,492 | Amdocs Ltd. • | 31,226 | ||||||
974 | Check Point Software Technologies Ltd. ADR • | 22,563 | ||||||
630 | Google, Inc. • | 249,540 | ||||||
783 | Mastercard, Inc. | 143,641 | ||||||
238 | Nintendo Co., Ltd. | 63,989 | ||||||
12,813 | Oracle Corp. • | 247,809 | ||||||
4,784 | Western Union Co. | 80,134 | ||||||
897,592 | ||||||||
Technology Hardware & Equipment — 9.7% | ||||||||
16,157 | Cisco Systems, Inc. • | 312,152 | ||||||
3,147 | Corning, Inc. | 46,005 | ||||||
7,346 | Hewlett-Packard Co. | 264,323 | ||||||
86,284 | Hon Hai Precision Industry Co., Ltd. | 249,105 | ||||||
2,104 | International Business Machines Corp. | 217,175 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | ||||||||||||
COMMON STOCKS — 95.9% — (continued) | |||||||||||||
Technology Hardware & Equipment - 9.7% — (continued) | |||||||||||||
3,556 | Qualcomm, Inc. | $ | 150,473 | ||||||||||
1,053 | Research In Motion Ltd. • | 73,197 | |||||||||||
1,312,430 | |||||||||||||
Telecommunication Services — 2.5% | |||||||||||||
10,264 | AT&T, Inc. | 262,959 | |||||||||||
2,246 | Mobile Telesystems OJSC ADR | 74,422 | |||||||||||
337,381 | |||||||||||||
Utilities — 0.5% | |||||||||||||
1,980 | E.On AG | 66,974 | |||||||||||
Total common stocks (cost $16,136,752) | $ | 13,016,755 | |||||||||||
CORPORATE BONDS: INVESTMENT GRADE — 0.4% | |||||||||||||
Finance - 0.4% | |||||||||||||
MBIA Insurance Co. | |||||||||||||
$ | 95,840 | 14.00%, 01/15/2033 ■ Δ | $ | 36,419 | |||||||||
UBS Luxembourg S.A. | |||||||||||||
14,420 | 6.23%, 02/11/2015 | 11,546 | |||||||||||
47,965 | |||||||||||||
Total corporate bonds: investment grade (cost $109,920) | $ | 47,965 | |||||||||||
Total long-term investments (cost $16,246,672) | $ | 13,064,720 | |||||||||||
SHORT-TERM INVESTMENTS — 3.5% | |||||||||||||
Repurchase Agreements — 3.5% | |||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $113,639, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $115,911) | |||||||||||||
$ | 113,639 | 0.18%, 04/30/2009 | $ | 113,639 | |||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $135,994, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $138,714) | |||||||||||||
135,994 | 0.17%, 04/30/2009 | 135,994 | |||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $190,019, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $193,819) | |||||||||||||
190,019 | 0.17%, 04/30/2009 | 190,019 | |||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $640, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $656) | |||||||||||||
640 | 0.14%, 04/30/2009 | 640 | |||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $40,984, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $41,805) | |||||||||||||
40,984 | 0.16%, 04/30/2009 | 40,984 | |||||||||||
481,276 | |||||||||||||
Total short-term investments (cost $481,276) | $ | 481,276 | |||||||||||
Total investments (cost $16,727,948) ▲ | 99.8 | % | $ | 13,545,996 | |||||||||
Other assets and liabilities | 0.2 | % | 27,439 | ||||||||||
Total net assets | 100.0 | % | $ | 13,573,435 | |||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 24.43% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $16,799,711 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 320,708 | ||
Unrealized Depreciation | (3,574,423 | ) | ||
Net Unrealized Depreciation | $ | (3,253,715 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $70,611, which represents 0.52% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $36,419, which represents 0.27% of total net assets. |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
∞ | Securities exempt from registration under Regulation D of the Securities Act of 1933. These securities are determined to be liquid. At April 30, 2009, the market value of these securities was $3,704, which represents 0.03% of total net assets. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
06/2007 | 36,752 | Buck Holdings L.P. | $ | 36,791 | ||||||||
03/2008 - 04/2009 | 5,177 | Excel Medical Fund L.P. | 5,177 | |||||||||
10/2005 | 25 | Harvey Weinstein Co. Holdings Class A-1 — Reg D | 23,636 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Sell) | $ | 23,905 | $ | 23,653 | 05/01/09 | $ | (252 | ) | ||||||||
British Pound (Sell) | 6,180 | 6,180 | 05/05/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 31,173 | 31,173 | 05/04/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 47,211 | 47,211 | 05/05/09 | — | ||||||||||||
$ | (252 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 10,839,683 | ||
Investment in securities — Level 2 | 2,635,702 | |||
Investment in securities — Level 3 | 70,611 | |||
Total | $ | 13,545,996 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 252 | |||
Total | $ | 252 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 60,635 | ||
Change in unrealized appreciation ♦ | 23,504 | |||
Net purchases | 2,452 | |||
Transfers in and /or out of Level 3 | (15,980 | ) | ||
Balance as of April 30, 2009 | $ | 70,611 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 23,504 | ||
6
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $16,727,948) | $ | 13,545,996 | ||
Cash | — | |||
Foreign currency on deposit with custodian (cost $—) | — | |||
Receivables: | ||||
Investment securities sold | 91,017 | |||
Fund shares sold | 57,846 | |||
Dividends and interest | 25,348 | |||
Other assets | 599 | |||
Total assets | 13,720,806 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 252 | |||
Payables: | ||||
Investment securities purchased | 117,722 | |||
Fund shares redeemed | 21,717 | |||
Investment management fees | 1,426 | |||
Distribution fees | 871 | |||
Accrued expenses | 5,383 | |||
Total liabilities | 147,371 | |||
Net assets | $ | 13,573,435 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 20,396,612 | |||
Accumulated distribution in excess of net investment income | (57,058 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (3,584,175 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (3,181,944 | ) | ||
Net assets | $ | 13,573,435 | ||
Shares authorized | 1,315,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 22.96/$24.29 | ||
Shares outstanding | 361,028 | |||
Net assets | $ | 8,287,491 | ||
Class B: Net asset value per share | $ | 20.52 | ||
Shares outstanding | 45,522 | |||
Net assets | $ | 934,266 | ||
Class C: Net asset value per share | $ | 20.61 | ||
Shares outstanding | 115,570 | |||
Net assets | $ | 2,382,057 | ||
Class I: Net asset value per share | $ | 22.85 | ||
Shares outstanding | 27,668 | |||
Net assets | $ | 632,222 | ||
Class R3: Net asset value per share | $ | 24.34 | ||
Shares outstanding | 609 | |||
Net assets | $ | 14,821 | ||
Class R4: Net asset value per share | $ | 24.53 | ||
Shares outstanding | 4,795 | |||
Net assets | $ | 117,636 | ||
Class R5: Net asset value per share | $ | 24.65 | ||
Shares outstanding | 2,176 | |||
Net assets | $ | 53,644 | ||
Class Y: Net asset value per share | $ | 24.72 | ||
Shares outstanding | 46,575 | |||
Net assets | $ | 1,151,298 | ||
7
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 122,049 | ||
Interest | 9,083 | |||
Securities lending | 375 | |||
Less: Foreign tax withheld | (5,212 | ) | ||
Total investment income | 126,295 | |||
Expenses: | ||||
Investment management and fees | 39,958 | |||
Transfer agent fees | 15,488 | |||
Distribution fees | ||||
Class A | 9,374 | |||
Class B | 4,411 | |||
Class C | 11,031 | |||
Class R3 | 26 | |||
Class R4 | 115 | |||
Custodian fees | 184 | |||
Accounting services | 1,001 | |||
Registration and filing fees | 486 | |||
Board of Directors’ fees | 145 | |||
Audit fees | 182 | |||
Other expenses | 2,982 | |||
Total expenses (before waivers and fees paid indirectly) | 85,383 | |||
Transfer agent fee waivers | (439 | ) | ||
Commission recapture | (275 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (714 | ) | ||
Total expenses, net | 84,669 | |||
Net investment income | 41,626 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (2,902,848 | ) | ||
Net realized gain on foreign currency transactions | 6,793 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (2,896,055 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 2,739,822 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (98,762 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 2,641,060 | |||
Net Loss on Investments and Foreign Currency Transactions | (254,995 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (213,369 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 41,626 | $ | 69,932 | ||||
Net realized loss on investments and foreign currency transactions | (2,896,055 | ) | (775,078 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 2,641,060 | (10,190,594 | ) | |||||
Net decrease in net assets resulting from operations | (213,369 | ) | (10,895,740 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (116,532 | ) | — | |||||
Class B | (2,415 | ) | — | |||||
Class C | (12,453 | ) | — | |||||
Class I | (8,419 | ) | — | |||||
Class R3 | (160 | ) | — | |||||
Class R4 | (1,508 | ) | — | |||||
Class R5 | (688 | ) | — | |||||
Class Y | (20,113 | ) | — | |||||
From net realized gain on investments | ||||||||
Class A | — | (1,110,143 | ) | |||||
Class B | — | (197,872 | ) | |||||
Class C | — | (395,139 | ) | |||||
Class I | — | (13,451 | ) | |||||
Class R3 | — | (3 | ) | |||||
Class R4 | — | (1,432 | ) | |||||
Class R5 | — | (353 | ) | |||||
Class Y | — | (79,569 | ) | |||||
Total distributions | (162,288 | ) | (1,797,962 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (127,944 | ) | 2,958,023 | |||||
Class B | (100,626 | ) | (25,704 | ) | ||||
Class C | (180,860 | ) | 775,400 | |||||
Class I | 186,977 | 501,432 | ||||||
Class R3 | 6,418 | 11,592 | ||||||
Class R4 | 41,197 | 99,010 | ||||||
Class R5 | 16,748 | 54,478 | ||||||
Class Y | 91,445 | 820,275 | ||||||
Net increase (decrease) from capital share transactions | (66,645 | ) | 5,194,506 | |||||
Net decrease in net assets | (442,302 | ) | (7,499,196 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 14,015,737 | 21,514,933 | ||||||
End of period | $ | 13,573,435 | $ | 14,015,737 | ||||
Accumulated undistributed (distribution in excess of) net investment income | $ | (57,058 | ) | $ | 63,604 | |||
9
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Capital Appreciation Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
10
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty |
11
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. |
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Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
k) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is |
13
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | |||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying |
14
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Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. As of April 30, 2009, there were no outstanding futures contracts. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 474,292 | $ | 455,689 | ||||
Long-Term Capital Gains * | 1,323,670 | 739,935 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 162,289 | ||
Accumulated Capital Losses* | $ | (616,357 | ) | |
Unrealized Depreciation† | $ | (5,993,452 | ) | |
Total Accumulated Deficit | $ | (6,447,520 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $87,735 and increase accumulated net realized gain by $87,735. |
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d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 616,357 | ||
Total | $ | 616,357 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8000 | % | ||
On next $500 million | 0.7000 | % | ||
On next $4 billion | 0.6500 | % | ||
On next $5 billion | 0.6475 | % | ||
Over $10 billion | 0.6450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.29% | NA | NA | 1.04% | 1.54% | 1.24% | 0.94% | NA |
17
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.27 | % | 1.11 | % | 1.11 | % | 1.17 | % | 1.22 | % | 1.32 | % | ||||||||||||
Class B Shares | 2.03 | 1.92 | 1.91 | 1.96 | 1.99 | 2.03 | ||||||||||||||||||
Class C Shares | 1.97 | 1.84 | 1.83 | 1.88 | 1.91 | 1.94 | ||||||||||||||||||
Class I Shares | 0.91 | 0.81 | 0.78 | 0.88 | * | |||||||||||||||||||
Class R3 Shares | 1.50 | 1.46 | 1.47 | † | ||||||||||||||||||||
Class R4 Shares | 1.14 | 1.12 | 1.13 | ‡ | ||||||||||||||||||||
Class R5 Shares | 0.84 | 0.82 | 0.84 | § | ||||||||||||||||||||
Class Y Shares | 0.74 | 0.72 | 0.71 | 0.73 | 0.75 | 0.76 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $9,431 and contingent deferred sales charges of $1,448 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $237. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $24. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $14,981 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.03 | % | 26.11 | % | ||||
Class B | 0.04 | 25.10 | ||||||
Class C | 0.04 | 25.23 | ||||||
Class I | 0.03 | 26.45 | ||||||
Class Y | 0.03 | 26.62 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 4,902,380 | ||
Sales Proceeds Excluding U.S. Government Obligations | 4,735,626 |
19
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Reinvested | Shares | from | (Decrease) of | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||||
Shares Sold | Dividends | Redeemed | Merger | Shares | Shares Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 76,766 | 4,767 | (91,125 | ) | — | (9,592 | ) | 146,914 | 23,779 | (97,067 | ) | — | 73,626 | |||||||||||||||||||||||||||
Amount | $ | 1,588,622 | $ | 97,965 | $ | (1,814,531 | ) | $ | — | $ | (127,944 | ) | $ | 5,204,130 | $ | 960,180 | $ | (3,206,287 | ) | $ | — | $ | 2,958,023 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,576 | 120 | (8,420 | ) | — | (5,724 | ) | 6,666 | 5,081 | (13,630 | ) | — | (1,883 | ) | ||||||||||||||||||||||||||
Amount | $ | 47,584 | $ | 2,171 | $ | (150,381 | ) | $ | — | $ | (100,626 | ) | $ | 214,918 | $ | 183,341 | $ | (423,963 | ) | $ | — | $ | (25,704 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 10,679 | 534 | (21,770 | ) | — | (10,557 | ) | 35,585 | 8,838 | (23,786 | ) | — | 20,637 | |||||||||||||||||||||||||||
Amount | $ | 199,115 | $ | 9,595 | $ | (389,570 | ) | $ | — | $ | (180,860 | ) | $ | 1,162,684 | $ | 320,715 | $ | (707,999 | ) | $ | — | $ | 775,400 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 14,576 | 381 | (6,022 | ) | — | 8,935 | 18,052 | 287 | (3,018 | ) | — | 15,321 | ||||||||||||||||||||||||||||
Amount | $ | 299,054 | $ | 7,775 | $ | (119,852 | ) | $ | — | $ | 186,977 | $ | 583,424 | $ | 11,558 | $ | (93,550 | ) | $ | — | $ | 501,432 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 381 | 5 | (90 | ) | — | 296 | 347 | — | (35 | ) | — | 312 | ||||||||||||||||||||||||||||
Amount | $ | 8,239 | $ | 112 | $ | (1,933 | ) | $ | — | $ | 6,418 | $ | 12,781 | $ | 3 | $ | (1,192 | ) | $ | — | $ | 11,592 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,085 | 63 | (349 | ) | — | 1,799 | 2,754 | 34 | (110 | ) | — | 2,678 | ||||||||||||||||||||||||||||
Amount | $ | 47,317 | $ | 1,380 | $ | (7,500 | ) | $ | — | $ | 41,197 | $ | 101,244 | $ | 1,432 | $ | (3,666 | ) | $ | — | $ | 99,010 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 815 | 31 | (88 | ) | — | 758 | 1,479 | 8 | (93 | ) | — | 1,394 | ||||||||||||||||||||||||||||
Amount | $ | 17,890 | $ | 686 | $ | (1,828 | ) | $ | — | $ | 16,748 | $ | 57,451 | $ | 352 | $ | (3,325 | ) | $ | — | $ | 54,478 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 6,811 | 857 | (3,602 | ) | — | 4,066 | 22,380 | 1,725 | (2,635 | ) | — | 21,470 | ||||||||||||||||||||||||||||
Amount | $ | 150,408 | $ | 18,800 | $ | (77,763 | ) | $ | — | $ | 91,445 | $ | 845,740 | $ | 74,889 | $ | (100,354 | ) | $ | — | $ | 820,275 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 1,562 | $ | 31,546 | |||||
For the Year Ended October 31, 2008 | 3,051 | $ | 111,717 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
20
Table of Contents
Financial Highlights — (Unaudited)
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s | ) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 23.43 | $ | 0.08 | $ | — | $ | (0.24 | ) | $ | (0.16 | ) | $ | (0.31 | ) | $ | — | $ | — | $ | (0.31 | ) | $ | (0.47 | ) | $ | 22.96 | (0.48 | )%(f) | $ | 8,287,491 | 1.27 | %(g) | 1.27 | %(g) | 1.27 | %(g) | 0.81 | %(g) | 40 | % | |||||||||||||||||||||||||||||||
B | 20.77 | — | — | (0.20 | ) | (0.20 | ) | (0.05 | ) | — | — | (0.05 | ) | (0.25 | ) | 20.52 | (0.90 | ) (f) | 934,266 | 2.13 | (g) | 2.03 | (g) | 2.03 | (g) | 0.04 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 20.91 | 0.01 | — | (0.21 | ) | (0.20 | ) | (0.10 | ) | — | — | (0.10 | ) | (0.30 | ) | 20.61 | (0.85 | ) (f) | 2,382,057 | 1.98 | (g) | 1.98 | (g) | 1.98 | (g) | 0.10 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 23.41 | 0.12 | — | (0.25 | ) | (0.13 | ) | (0.43 | ) | — | — | (0.43 | ) | (0.56 | ) | 22.85 | (0.32 | ) (f) | 632,222 | 0.91 | (g) | 0.91 | (g) | 0.91 | (g) | 1.18 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 24.92 | 0.07 | — | (0.28 | ) | (0.21 | ) | (0.37 | ) | — | — | (0.37 | ) | (0.58 | ) | 24.34 | (0.63 | ) (f) | 14,821 | 1.51 | (g) | 1.51 | (g) | 1.51 | (g) | 0.60 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 25.08 | 0.11 | — | (0.27 | ) | (0.16 | ) | (0.39 | ) | — | — | (0.39 | ) | (0.55 | ) | 24.53 | (0.45 | ) (f) | 117,636 | 1.14 | (g) | 1.14 | (g) | 1.14 | (g) | 0.95 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 25.21 | 0.14 | — | (0.27 | ) | (0.13 | ) | (0.43 | ) | — | — | (0.43 | ) | (0.56 | ) | 24.65 | (0.30 | ) (f) | 53,644 | 0.84 | (g) | 0.84 | (g) | 0.84 | (g) | 1.26 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 25.28 | 0.15 | — | (0.26 | ) | (0.11 | ) | (0.45 | ) | — | — | (0.45 | ) | (0.56 | ) | 24.72 | (0.22 | ) (f) | 1,151,298 | 0.74 | (g) | 0.74 | (g) | 0.74 | (g) | 1.35 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 46.08 | 0.20 | — | (19.12 | ) | (18.92 | ) | — | (3.73 | ) | — | (3.73 | ) | (22.65 | ) | 23.43 | (44.46 | ) | 8,682,603 | 1.12 | 1.12 | 1.12 | 0.54 | 82 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 41.59 | (0.09 | ) | — | (17.00 | ) | (17.09 | ) | — | (3.73 | ) | — | (3.73 | ) | (20.82 | ) | 20.77 | (44.90 | ) | 1,064,188 | 1.92 | 1.92 | 1.92 | (0.29 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 41.82 | (0.06 | ) | — | (17.12 | ) | (17.18 | ) | — | (3.73 | ) | — | (3.73 | ) | (20.91 | ) | 20.91 | (44.86 | ) | 2,637,037 | 1.84 | 1.84 | 1.84 | (0.19 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 45.90 | 0.28 | — | (19.04 | ) | (18.76 | ) | — | (3.73 | ) | — | (3.73 | ) | (22.49 | ) | 23.41 | (44.27 | ) | 438,528 | 0.81 | 0.81 | 0.81 | 0.87 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 48.91 | 0.09 | — | (20.35 | ) | (20.26 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.99 | ) | 24.92 | (44.64 | ) | 7,809 | 1.46 | 1.46 | 1.46 | 0.28 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 49.05 | 0.22 | — | (20.46 | ) | (20.24 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.97 | ) | 25.08 | (44.46 | ) | 75,127 | 1.12 | 1.12 | 1.12 | 0.60 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 49.15 | 0.34 | — | (20.55 | ) | (20.21 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.94 | ) | 25.21 | (44.30 | ) | 35,734 | 0.83 | 0.83 | 0.83 | 0.93 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 49.23 | 0.36 | — | (20.58 | ) | (20.22 | ) | — | (3.73 | ) | — | (3.73 | ) | (23.95 | ) | 25.28 | (44.24 | ) | 1,074,711 | 0.72 | 0.72 | 0.72 | 0.95 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A 39.67 0.16 — 9.42 | 9.58 | (0.13 | ) | (3.04 | ) | - | (3.17 | ) | 6.41 | 46.08 | 26.15 | (h) | 13,684,583 | 1.11 | 1.11 | 1.11 | 0.39 | 72 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 36.25 | (0.15 | ) | — | 8.53 | 8.38 | — | (3.04 | ) | — | (3.04 | ) | 5.34 | 41.59 | 25.15 | (h) | 2,209,870 | 1.92 | 1.92 | 1.92 | (0.40 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 36.40 | (0.12 | ) | — | 8.58 | 8.46 | — | (3.04 | ) | — | (3.04 | ) | 5.42 | 41.82 | 25.28 | (h) | 4,411,286 | 1.83 | 1.83 | 1.83 | (0.32 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 39.69 | 0.26 | — | 9.39 | 9.65 | (0.40 | ) | (3.04 | ) | — | (3.44 | ) | 6.21 | 45.90 | 26.49 | (h) | 156,616 | 0.79 | 0.79 | 0.79 | 0.65 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 40.22 | 0.01 | — | 8.68 | 8.69 | — | — | — | — | 8.69 | 48.91 | 21.61 | (f) | 41 | 1.47 | (g) | 1.47 | (g) | 1.47 | (g) | 0.04 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 40.22 | 0.02 | — | 8.81 | 8.83 | — | — | — | — | 8.83 | 49.05 | 21.95 | (f) | 15,618 | 1.14 | (g) | 1.14 | (g) | 1.14 | (g) | 0.06 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 40.22 | 0.08 | — | 8.85 | 8.93 | — | — | — | — | 8.93 | 49.15 | 22.20 | (f) | 1,165 | 0.85 | (g) | 0.85 | (g) | 0.85 | (g) | 0.25 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 42.19 | 0.34 | — | 10.06 | 10.40 | (0.32 | ) | (3.04 | ) | — | (3.36 | ) | 7.04 | 49.23 | 26.66 | (h) | 1,035,754 | 0.72 | 0.72 | 0.72 | 0.78 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 36.51 | 0.15 | — | 6.43 | 6.58 | — | (3.42 | ) | — | (3.42 | ) | 3.16 | 39.67 | 19.56 | 9,312,766 | 1.18 | 1.18 | 1.18 | 0.47 | 74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 33.90 | (0.10 | ) | — | 5.87 | 5.77 | — | (3.42 | ) | — | (3.42 | ) | 2.35 | 36.25 | 18.59 | 1,868,359 | 1.97 | 1.97 | 1.97 | (0.31 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 34.00 | (0.07 | ) | — | 5.89 | 5.82 | — | (3.42 | ) | — | (3.42 | ) | 2.40 | 36.40 | 18.69 | 2,968,472 | 1.90 | 1.90 | 1.90 | (0.25 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I(l) | 37.53 | — | — | 2.16 | 2.16 | — | — | — | — | 2.16 | 39.69 | 5.76 | (f) | 5,193 | 0.88 | (g) | 0.88 | (g) | 0.88 | (g) | 0.17 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 38.47 | 0.30 | — | 6.84 | 7.14 | — | (3.42 | ) | — | (3.42 | ) | 3.72 | 42.19 | 20.07 | 414,259 | 0.75 | 0.75 | 0.75 | 0.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 30.80 | 0.09 | — | 5.62 | 5.71 | — | — | — | — | 5.71 | 36.51 | 18.54 | 6,071,891 | 1.26 | 1.26 | 1.26 | 0.31 | 93 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 28.82 | (0.15 | ) | — | 5.23 | 5.08 | — | — | — | — | 5.08 | 33.90 | 17.63 | 1,631,199 | 2.03 | 2.03 | 2.03 | (0.45 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 28.88 | (0.11 | ) | — | 5.23 | 5.12 | — | — | — | — | 5.12 | 34.00 | 17.73 | 1,834,562 | 1.94 | 1.94 | 1.94 | (0.37 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 32.29 | 0.21 | — | 5.97 | 6.18 | — | — | — | — | 6.18 | 38.47 | 19.14 | 245,163 | 0.78 | 0.78 | 0.78 | 0.76 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 26.50 | (0.01 | ) | — | 4.31 | 4.30 | — | — | — | — | 4.30 | 30.80 | 16.23 | 4,203,178 | 1.35 | 1.35 | 1.35 | (0.05 | ) | 78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 24.97 | (0.21 | ) | — | 4.06 | 3.85 | — | — | — | — | 3.85 | 28.82 | 15.42 | 1,432,121 | 2.06 | 2.06 | 2.06 | (0.78 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 25.00 | (0.18 | ) | — | 4.06 | 3.88 | — | — | — | — | 3.88 | 28.88 | 15.52 | 1,348,972 | 1.97 | 1.97 | 1.97 | (0.68 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 27.64 | 0.11 | — | 4.54 | 4.65 | — | — | — | — | 4.65 | 32.29 | 16.82 | 116,527 | 0.79 | 0.79 | 0.79 | 0.50 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on August 31, 2006. |
21
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22
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• | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
23
Table of Contents
Directors and Officers (Unaudited) — (continued)
24
Table of Contents
Expense Example (Unaudited)
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 995.18 | $ | 6.28 | $ | 1,000.00 | $ | 1,018.49 | $ | 6.35 | 1.27 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 991.03 | $ | 10.02 | $ | 1,000.00 | $ | 1,014.72 | $ | 10.14 | 2.03 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 991.48 | $ | 9.77 | $ | 1,000.00 | $ | 1,014.97 | $ | 9.89 | 1.98 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 996.82 | $ | 4.50 | $ | 1,000.00 | $ | 1,020.28 | $ | 4.55 | 0.91 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 993.70 | $ | 7.46 | $ | 1,000.00 | $ | 1,017.30 | $ | 7.55 | 1.51 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 995.48 | $ | 5.64 | $ | 1,000.00 | $ | 1,019.14 | $ | 5.70 | 1.14 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 996.98 | $ | 4.15 | $ | 1,000.00 | $ | 1,020.62 | $ | 4.20 | 0.84 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 997.79 | $ | 3.66 | $ | 1,000.00 | $ | 1,021.12 | $ | 3.70 | 0.74 | 181 | 365 |
25
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Capital Appreciation II A# | 4/29/05 | -35.42 | % | -0.40 | % | |||||||
Capital Appreciation II A## | 4/29/05 | -38.97 | % | -1.80 | % | |||||||
Capital Appreciation II B# | 4/29/05 | -35.82 | % | -1.16 | % | |||||||
Capital Appreciation II B## | 4/29/05 | -39.03 | % | -1.60 | % | |||||||
Capital Appreciation II C# | 4/29/05 | -35.86 | % | -1.10 | % | |||||||
Capital Appreciation II C## | 4/29/05 | -36.51 | % | -1.10 | % | |||||||
Capital Appreciation II I# | 4/29/05 | -35.14 | % | -0.16 | % | |||||||
Capital Appreciation II R3# | 4/29/05 | -35.54 | % | -0.44 | % | |||||||
Capital Appreciation II R4# | 4/29/05 | -35.33 | % | -0.22 | % | |||||||
Capital Appreciation II R5# | 4/29/05 | -35.20 | % | -0.08 | % | |||||||
Capital Appreciation II Y# | 4/29/05 | -35.05 | % | 0.02 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Michael T. Carmen, CFA, CPA | Nicholas M Choumenkovitch | Saul J. Pannell, CFA | ||
Senior Vice President, Partner | Senior Vice President | Senior Vice President, Partner | ||
Frank D. Catrickes, CFA, CMT | David W. Palmer, CFA | |||
Senior Vice President, Partner | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 1.7 | % | ||
Banks | 1.2 | |||
Capital Goods | 7.1 | |||
Consumer Durables & Apparel | 2.5 | |||
Consumer Services | 2.9 | |||
Diversified Financials | 7.4 | |||
Energy | 9.5 | |||
Food & Staples Retailing | 0.6 | |||
Food, Beverage & Tobacco | 3.4 | |||
Health Care Equipment & Services | 5.7 | |||
Household & Personal Products | 1.0 | |||
Insurance | 6.2 | |||
Materials | 4.6 | |||
Media | 2.7 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.1 | |||
Real Estate | 1.2 | |||
Retailing | 5.1 | |||
Semiconductors & Semiconductor Equipment | 1.2 | |||
Software & Services | 9.4 | |||
Technology Hardware & Equipment | 7.9 | |||
Telecommunication Services | 2.1 | |||
Transportation | 3.1 | |||
Utilities | 1.5 | |||
Short-Term Investments | 2.3 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS — 97.0% | ||||||||
Automobiles & Components — 1.7% | ||||||||
74 | Daimler AG | $ | 2,640 | |||||
631 | Dongfeng Motor Group Co., Ltd. | 469 | ||||||
1,446 | Ford Motor Co. • | 8,650 | ||||||
429 | TRW Automotive Holdings Corp. • | 3,696 | ||||||
15,455 | ||||||||
Banks — 1.2% | ||||||||
430 | HSBC Holding plc | 3,057 | ||||||
17 | Standard Chartered plc | 268 | ||||||
76 | Sumitomo Mitsui Financial Group, Inc. • | 2,636 | ||||||
417 | Turkiye Garanti Bankasi A.S. | 874 | ||||||
185 | Wells Fargo & Co. | 3,698 | ||||||
10,533 | ||||||||
Capital Goods — 7.1% | ||||||||
244 | Aecom Technology Corp. • | 6,278 | ||||||
13 | Alliant Techsystems, Inc. • | 1,019 | ||||||
35 | AMETEK, Inc. | 1,118 | ||||||
5 | Axsys Technologies, Inc. • | 213 | ||||||
94 | Beijing Enterprises Holdings, Ltd. | 411 | ||||||
44 | Boeing Co. | 1,765 | ||||||
14 | Briggs & Stratton Corp. | 205 | ||||||
48 | Caterpillar, Inc. | 1,718 | ||||||
51 | Chiyoda Corp. | 306 | ||||||
11 | Cummins, Inc. | 367 | ||||||
33 | Danaher Corp. | 1,905 | ||||||
126 | Deere & Co. | 5,215 | ||||||
75 | Dover Corp. | 2,315 | ||||||
10 | Eaton Corp. | 458 | ||||||
10 | First Solar, Inc. • | 1,807 | ||||||
283 | General Electric Co. | 3,575 | ||||||
86 | Hansen Transmissions • | 188 | ||||||
77 | Honeywell International, Inc. | 2,410 | ||||||
196 | Illinois Tool Works, Inc. | 6,439 | ||||||
16 | Ingersoll-Rand Co. Class A | 346 | ||||||
36 | Lindsay Corp. | 1,409 | ||||||
53 | Lockheed Martin Corp. | 4,183 | ||||||
17 | Pall Corp. | 455 | ||||||
5 | Parker-Hannifin Corp. | 245 | ||||||
122 | Pentair, Inc. | 3,254 | ||||||
118 | Raytheon Co. | 5,315 | ||||||
6 | Siemens AG | 432 | ||||||
40 | Siemens AG ADR | 2,664 | ||||||
162 | Sunpower Corp. • | 4,444 | ||||||
40 | Sunpower Corp. Class B • | 1,025 | ||||||
22 | Terex Corp. • | 301 | ||||||
6 | Vestas Wind Systems A/S • | 382 | ||||||
62,167 | ||||||||
Commercial & Professional Services — 0.0% | ||||||||
27 | Monster Worldwide, Inc. • | 372 | ||||||
Consumer Durables & Apparel — 2.5% | ||||||||
947 | China Dongxiang Group Co. | 460 | ||||||
27 | D.R. Horton, Inc. | 346 | ||||||
58 | Hanesbrands, Inc. • | 947 | ||||||
620 | Jarden Corp. • | 12,467 | ||||||
29 | Liz Claiborne, Inc. | 137 | ||||||
22 | NIKE, Inc. Class B | 1,145 | ||||||
73 | Pool Corp. | 1,301 | ||||||
334 | Pulte Homes, Inc. | 3,850 | ||||||
35 | Smith & Wesson Holding Corp. • | 253 | ||||||
13 | Whirlpool Corp. | 571 | ||||||
21,477 | ||||||||
Consumer Services — 2.9% | ||||||||
3 | Apollo Group, Inc. Class A • | 189 | ||||||
36 | Burger King Holdings, Inc. | 583 | ||||||
104 | Coinstar, Inc. • | 3,708 | ||||||
372 | Corinthian Colleges, Inc. • | 5,723 | ||||||
63 | ITT Educational Services, Inc. • | 6,324 | ||||||
87,066 | Rexlot Holdings Ltd. • | 5,064 | ||||||
2,613 | Shangri-La Asia Ltd. | 3,841 | ||||||
25,432 | ||||||||
Diversified Financials — 7.4% | ||||||||
40 | American Express Co. | 1,012 | ||||||
160 | Ameriprise Financial, Inc. | 4,217 | ||||||
494 | Bank of America Corp. | 4,412 | ||||||
910 | BM & F Bovespa S.A. | 3,742 | ||||||
60 | Capital One Financial Corp. | 1,001 | ||||||
225 | China Everbright Ltd. | 435 | ||||||
391 | CIT Group, Inc. | 867 | ||||||
61 | Deutsche Boerse AG | 4,489 | ||||||
95 | Discover Financial Services, Inc. | 774 | ||||||
139 | Goldman Sachs Group, Inc. | 17,810 | ||||||
459 | ING Groep N.V. | 4,186 | ||||||
91 | Invesco Ltd. | 1,342 | ||||||
146 | JP Morgan Chase & Co. | 4,823 | ||||||
158 | Julius Baer Holding Ltd. | 5,179 | ||||||
170 | Oaktree Capital ■ • | 2,295 | ||||||
290 | PennantPark Investment Corp. | 1,594 | ||||||
208 | TD Ameritrade Holding Corp. • | 3,311 | ||||||
250 | UBS AG • | 3,436 | ||||||
29 | UBS AG ADR • | 391 | ||||||
65,316 | ||||||||
Energy — 9.5% | ||||||||
49 | Anadarko Petroleum Corp. | 2,092 | ||||||
21 | Apache Corp. | 1,508 | ||||||
14 | Atwood Oceanics, Inc. • | 310 | ||||||
54 | Baker Hughes, Inc. | 1,932 | ||||||
95 | BG Group plc | 1,516 | ||||||
66 | Cameco Corp. | 1,508 | ||||||
51 | Canadian Natural Resources Ltd. | 2,351 | ||||||
85 | Canadian Natural Resources Ltd. ADR | 3,906 | ||||||
90 | Consol Energy, Inc. | 2,801 | ||||||
12 | Dril-Quip, Inc. • | 406 | ||||||
41 | EOG Resources, Inc. | 2,622 | ||||||
31 | Exxon Mobil Corp. | 2,047 | ||||||
201 | Halliburton Co. | 4,064 | ||||||
22 | Helmerich & Payne, Inc. | 677 | ||||||
42 | Hess Corp. | 2,320 | ||||||
382 | Karoon Gas Australia Ltd. • | 1,519 | ||||||
107 | Lundin Petroleum Ab • | 693 | ||||||
18 | Nabors Industries Ltd. • | 268 | ||||||
30 | National Oilwell Varco, Inc. • | 897 | ||||||
171 | Newfield Exploration Co. • | 5,338 | ||||||
77 | Noble Energy, Inc. | 4,381 | ||||||
269 | OAO Gazprom Class S ADR | 4,814 | ||||||
18 | Occidental Petroleum Corp. | 1,035 | ||||||
48 | Petro-Canada | 1,514 | ||||||
23 | Petroleo Brasileiro S.A. ADR | 759 | ||||||
93 | SBM Offshore N.V. | 1,503 | ||||||
110 | Schlumberger Ltd. | 5,383 |
4
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS — 97.0% — (continued) | ||||||||
Energy — 9.5% — (continued) | ||||||||
53 | Suncor Energy, Inc. ADR | $ | 1,336 | |||||
123 | Talisman Energy, Inc. | 1,543 | ||||||
29 | Total S.A. | 1,467 | ||||||
127 | Total S.A. ADR | 6,311 | ||||||
897 | Uranium One, Inc. • | 2,480 | ||||||
236 | USEC, Inc. • | 1,458 | ||||||
332 | Weatherford International Ltd. • | 5,526 | ||||||
158 | XTO Energy, Inc. | 5,462 | ||||||
83,747 | ||||||||
Food & Staples Retailing — 0.6% | ||||||||
13 | BJ’s Wholesale Club, Inc. • | 431 | ||||||
140 | Kroger Co. | 3,024 | ||||||
87 | Sysco Corp. | 2,023 | ||||||
5,478 | ||||||||
Food, Beverage & Tobacco — 3.4% | ||||||||
122 | Altria Group, Inc. | 1,989 | ||||||
23 | Bunge Ltd. Finance Corp. | 1,124 | ||||||
2,923 | Chaoda Modern Agriculture | 1,662 | ||||||
22 | Dr Pepper Snapple Group • | 462 | ||||||
7 | Green Mountain Coffee Roasters • | 502 | ||||||
42 | Groupe Danone ⌂ | 2,013 | ||||||
131 | Imperial Tobacco Group plc | 2,978 | ||||||
1 | Japan Tobacco, Inc. | 2,671 | ||||||
5,089 | Marine Harvest • | 2,293 | ||||||
75 | Molson Coors Brewing Co. | 2,861 | ||||||
95 | Nestle S.A. | 3,094 | ||||||
18 | Pepsi Bottling Group, Inc. | 560 | ||||||
43 | Perdigao S.A. | 1,273 | ||||||
9 | Philip Morris International, Inc. | 333 | ||||||
52 | SABMiller plc | 864 | ||||||
99 | Tsingtao Brewery Co., Ltd. | 257 | ||||||
158 | Tyson Foods, Inc. Class A | 1,669 | ||||||
131 | Unilever N.V. NY Shares ADR | 2,596 | ||||||
1,037 | Want Want China Holdings Ltd. | 517 | ||||||
29,718 | ||||||||
Health Care Equipment & Services — 5.7% | ||||||||
148 | Aetna, Inc. ‡ | 3,257 | ||||||
136 | Cardinal Health, Inc. | 4,592 | ||||||
24 | China Medical Technologies, Inc. ADR | 465 | ||||||
97 | CIGNA Corp. | 1,914 | ||||||
328 | Covidien Ltd. | 10,808 | ||||||
14 | Hologic, Inc. • | 211 | ||||||
9 | Intuitive Surgical, Inc. • | 1,262 | ||||||
94 | McKesson Corp. | 3,489 | ||||||
228 | Medtronic, Inc. | 7,302 | ||||||
169 | St. Jude Medical, Inc. • | 5,661 | ||||||
439 | UnitedHealth Group, Inc. | 10,314 | ||||||
19 | Varian Medical Systems, Inc. • | 625 | ||||||
49,900 | ||||||||
Household & Personal Products — 1.0% | ||||||||
279 | Bare Escentuals, Inc. • | 2,581 | ||||||
12 | Clorox Co. | 682 | ||||||
60 | Energizer Holdings, Inc. • | 3,409 | ||||||
103 | Hengan International Group Co., Ltd. | 428 | ||||||
16 | L’Oreal S.A. | 1,169 | ||||||
8,269 | ||||||||
Insurance — 6.2% | ||||||||
428 | ACE Ltd. | 19,809 | ||||||
23 | Aflac, Inc. | 662 | ||||||
57 | Everest Re Group Ltd. | 4,274 | ||||||
44 | Fidelity National Financial, Inc. | 798 | ||||||
42 | First American Financial Corp. | 1,168 | ||||||
532 | Marsh & McLennan Cos., Inc. | 11,213 | ||||||
5 | Metlife, Inc. | 137 | ||||||
14 | Muenchener Rueckversicherungs NPV | 1,931 | ||||||
26 | PartnerRe Ltd. | 1,800 | ||||||
85 | Platinum Underwriters Holdings Ltd. | 2,457 | ||||||
43 | Prudential Financial, Inc. | 1,227 | ||||||
103 | Reinsurance Group of America, Inc. | 3,265 | ||||||
146 | Scor SE | 3,064 | ||||||
187 | Unum Group | 3,055 | ||||||
54,860 | ||||||||
Materials — 4.6% | ||||||||
28 | Agnico Eagle Mines Ltd. | 1,241 | ||||||
15 | Alcoa, Inc. | 135 | ||||||
5 | AngloGold Ltd. ADR | 159 | ||||||
54 | Anhui Conch Cement Co., Ltd. | 355 | ||||||
13 | Aracruz Celulose S.A. ADR | 150 | ||||||
94 | ArcelorMittal ADR | 2,212 | ||||||
22 | Celanese Corp. | 466 | ||||||
60 | Cemex S.A. de C.V. ADR • | 448 | ||||||
105 | Century Aluminum Co. • | 425 | ||||||
198 | China National Building Material Co., Ltd. | 413 | ||||||
43 | Cliff’s Natural Resources, Inc. | 995 | ||||||
101 | Companhia Vale do Rio Doce ADR | 1,671 | ||||||
7 | Compania De Minas Buenaventur ADR | 158 | ||||||
162 | CRH plc | 4,183 | ||||||
11 | Eagle Materials, Inc. | 318 | ||||||
19 | FMC Corp. | 907 | ||||||
7 | Franco-Nevada Corp. | 159 | ||||||
301 | Huabao International Holdings Ltd. | 213 | ||||||
89 | Impala Platinum Holdings Ltd. | 1,693 | ||||||
25 | International Paper Co. | 322 | ||||||
111 | Mining and Metallurgical Co. Norilsk Nickel ADR | 914 | ||||||
12 | Mosaic Co. | 467 | ||||||
77 | Newmont Mining Corp. | 3,085 | ||||||
36 | Osisko Mining Corp. • | 169 | ||||||
211 | Owens-Illinois, Inc. • | 5,158 | ||||||
13 | Potash Corp. of Saskatchewan, Inc. | 1,156 | ||||||
7 | Randgold Resources Ltd. ADR | 326 | ||||||
180 | Rexam plc | 833 | ||||||
45 | Rio Tinto plc | 1,847 | ||||||
5 | Royal Gold, Inc. | 167 | ||||||
12 | Scotts Miracle-Gro Co. Class A | 405 | ||||||
47 | Steel Dynamics, Inc. | 584 | ||||||
474 | Sterlite Industries Ltd. | 4,023 | ||||||
22 | Syngenta AG ADR | 917 | ||||||
11 | United States Steel Corp. | 303 | ||||||
159 | Vedanta Resources plc | 2,490 | ||||||
20 | Yamana Gold, Inc. | 161 | ||||||
39,628 | ||||||||
Media — 2.7% | ||||||||
137 | CBS Corp. Class B | 965 | ||||||
743 | Comcast Corp. Class A | 11,487 | ||||||
250 | Comcast Corp. Special Class A | 3,663 | ||||||
23 | DreamWorks Animation SKG, Inc. • | 552 | ||||||
12 | Marvel Entertainment, Inc. • | 369 | ||||||
16 | Viacom, Inc. Class B • | 302 | ||||||
331 | Virgin Media, Inc. | 2,556 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS — 97.0% — (continued) | ||||||||
Media — 2.7% — (continued) | ||||||||
195 | Walt Disney Co. | $ | 4,264 | |||||
24,158 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 9.1% | ||||||||
41 | Abbott Laboratories | 1,724 | ||||||
168 | Alkermes, Inc. • | 1,285 | ||||||
215 | Amgen, Inc. • | 10,401 | ||||||
35 | Amylin Pharmaceuticals, Inc. • | 385 | ||||||
26 | Auxilium Pharmaceuticals, Inc. • | 594 | ||||||
55 | Bristol-Myers Squibb Co. | 1,063 | ||||||
94 | Cephalon, Inc. • | 6,156 | ||||||
16 | Daiichi Sankyo Co., Ltd. | 270 | ||||||
155 | Elan Corp. plc ADR • | 915 | ||||||
48 | Eli Lilly & Co. | 1,571 | ||||||
50 | Genzyme Corp. • | 2,688 | ||||||
232 | Impax Laboratories, Inc. • | 1,227 | ||||||
51 | Johnson & Johnson | 2,655 | ||||||
10 | Life Technologies Corp. • | 372 | ||||||
170 | Merck & Co., Inc. | 4,111 | ||||||
53 | Myriad Genetics, Inc. • | 2,074 | ||||||
142 | Novavax, Inc. • | 347 | ||||||
9 | PerkinElmer, Inc. | 134 | ||||||
649 | Pfizer, Inc. | 8,676 | ||||||
36 | Roche Holding AG | 4,575 | ||||||
280 | Schering-Plough Corp. | 6,441 | ||||||
27 | Sequenom, Inc. • | 99 | ||||||
27 | Shionogi & Co., Ltd. | 463 | ||||||
261 | Teva Pharmaceutical Industries Ltd. ADR | 11,439 | ||||||
225 | Wyeth | 9,538 | ||||||
79,203 | ||||||||
Real Estate — 1.2% | ||||||||
61 | Annaly Capital Management, Inc. | 854 | ||||||
148 | Brookfield Asset Management, Inc. | 2,292 | ||||||
753 | Chimera Investment Corp. | 2,657 | ||||||
192 | China Overseas Land & Investment Ltd. | 334 | ||||||
249 | China Resources Land Ltd. | 445 | ||||||
27 | E-House China Holdings, Ltd. • | 335 | ||||||
— | Eurocastle Investment Ltd. | — | ||||||
132 | Kimco Realty Corp. | 1,587 | ||||||
18 | Mack-Cali Realty Corp. | 494 | ||||||
9 | Simon Property Group, Inc. | 438 | ||||||
46 | Ventas, Inc. | 1,329 | ||||||
— | Vornado Realty Trust | 20 | ||||||
10,785 | ||||||||
Retailing — 5.1% | ||||||||
179 | Advance Automotive Parts, Inc. | 7,814 | ||||||
171 | Aeropostale, Inc. • | 5,824 | ||||||
37 | Best Buy Co., Inc. | 1,407 | ||||||
1,405 | Buck Holdings L.P. ⌂•† | 2,500 | ||||||
40 | Chico’s FAS, Inc. • | 305 | ||||||
15 | Dollar Tree, Inc. • | 633 | ||||||
28 | Family Dollar Stores, Inc. | 915 | ||||||
367 | Gap, Inc. | 5,702 | ||||||
62 | Home Depot, Inc. | 1,637 | ||||||
35 | Hot Topic, Inc. • | 425 | ||||||
41 | Industria de Diseno Textil S.A. | 1,737 | ||||||
16 | JOS A. Bank Clothiers, Inc. • | 649 | ||||||
23 | PetSmart, Inc. | 520 | ||||||
13 | Ross Stores, Inc. | 493 | ||||||
649 | Staples, Inc. | 13,372 | ||||||
13 | The Buckle, Inc. | 476 | ||||||
20 | Urban Outfitters, Inc. • | 395 | ||||||
44,804 | ||||||||
Semiconductors & Semiconductor Equipment — 1.2% | ||||||||
63 | Atheros Communications, Inc. • | 1,078 | ||||||
20 | Broadcom Corp. Class A • | 457 | ||||||
14 | Cavium Networks, Inc. • | 171 | ||||||
61 | Lam Research Corp. • | 1,695 | ||||||
25 | Maxim Integrated Products, Inc. | 341 | ||||||
79 | ON Semiconductor Corp. • | 428 | ||||||
109 | Texas Instruments, Inc. | 1,967 | ||||||
178 | Varian Semiconductor Equipment Associates, Inc. • | 4,548 | ||||||
10,685 | ||||||||
Software & Services — 9.4% | ||||||||
260 | Accenture Ltd. Class A | 7,655 | ||||||
389 | Activision Blizzard, Inc. • | 4,189 | ||||||
14 | Adobe Systems, Inc. • | 369 | ||||||
37 | AsiaInfo Holdings, Inc. • | 611 | ||||||
49 | Automatic Data Processing, Inc. | 1,728 | ||||||
289 | BMC Software, Inc. • | 10,032 | ||||||
28 | CACI International, Inc. Class A • | 1,119 | ||||||
44 | Check Point Software Technologies Ltd. ADR • | 1,028 | ||||||
16 | Concur Technologies, Inc. • | 428 | ||||||
99 | Equinix, Inc. • | 6,945 | ||||||
6 | Google, Inc. • | 2,455 | ||||||
9 | Mastercard, Inc. | 1,719 | ||||||
159 | McAfee, Inc. • | 5,974 | ||||||
584 | Microsoft Corp. | 11,824 | ||||||
30 | Netease.com, Inc. • | 894 | ||||||
1 | Nintendo Co., Ltd. | 381 | ||||||
18 | Omniture, Inc. • | 223 | ||||||
333 | Red Hat, Inc. • | 5,758 | ||||||
14 | Shanda Interactive Entertainment Ltd. ADR • | 660 | ||||||
203 | Solera Holdings, Inc. • | 4,637 | ||||||
120 | Visa, Inc. | 7,789 | ||||||
402 | Western Union Co. | 6,739 | ||||||
83,157 | ||||||||
Technology Hardware & Equipment — 7.8% | ||||||||
140 | 3Com Corp. • | 569 | ||||||
3 | Agilent Technologies, Inc. • | 59 | ||||||
56 | Apple, Inc. • | 7,028 | ||||||
161 | Arrow Electronics, Inc. • | 3,670 | ||||||
61 | Avnet, Inc. • | 1,331 | ||||||
1,010 | Cisco Systems, Inc. • | 19,517 | ||||||
330 | Corning, Inc. | 4,827 | ||||||
554 | Flextronics International Ltd. • | 2,148 | ||||||
14 | FLIR Systems, Inc. • | 310 | ||||||
165 | Hewlett-Packard Co. | 5,922 | ||||||
169 | Hughes Telematics Inc. • | 705 | ||||||
20 | International Business Machines Corp. | 2,033 | ||||||
6 | Itron, Inc. • | 289 | ||||||
286 | JDS Uniphase Corp. • | 1,320 | ||||||
41 | Logitech International S.A. • | 549 | ||||||
16 | NCR Corp. • | 157 | ||||||
40 | NetApp, Inc. • | 734 | ||||||
23 | Nice Systems Ltd. • | 602 | ||||||
195 | Nokia Oyj | 2,768 |
6
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS — 97.0% — (continued) | ||||||||
Technology Hardware & Equipment — 7.8% — (continued) | ||||||||
31 | Palm, Inc. • | $ | 326 | |||||
56 | Qualcomm, Inc. | 2,354 | ||||||
119 | Research In Motion Ltd. • | 8,271 | ||||||
145 | Seagate Technology | 1,187 | ||||||
59 | Solar Cayman Ltd. ⌂•† | 478 | ||||||
300 | Xerox Corp. | 1,831 | ||||||
68,985 | ||||||||
Telecommunication Services — 2.1% | ||||||||
248 | AT&T, Inc. ‡ | 6,346 | ||||||
575 | MetroPCS Communications, Inc. • | 9,820 | ||||||
1,381 | Vodafone Group plc | 2,538 | ||||||
18,704 | ||||||||
Transportation — 3.1% | ||||||||
37 | C.H. Robinson Worldwide, Inc. | 1,956 | ||||||
1,322 | Delta Air Lines, Inc. • | 8,159 | ||||||
53 | FedEx Corp. | 2,972 | ||||||
607 | JetBlue Airways Corp. • | 2,990 | ||||||
57 | Ryanair Holdings plc ADR • | 1,554 | ||||||
376 | Singapore Airlines Ltd. | 2,704 | ||||||
103 | United Parcel Service, Inc. Class B | 5,373 | ||||||
372 | US Airways Group, Inc. • | 1,408 | ||||||
27,116 | ||||||||
Utilities — 1.5% | ||||||||
59 | Entergy Corp. | 3,828 | ||||||
51 | Exelon Corp. | 2,339 | ||||||
20 | FirstEnergy Corp. | 830 | ||||||
190 | Northeast Utilities | 3,992 | ||||||
19 | Southern Co. | 560 | ||||||
40 | Wisconsin Energy Corp. | 1,594 | ||||||
13,143 | ||||||||
Total common stocks (cost $901,640) | $ | 853,092 | ||||||
PREFERRED STOCKS — 0.1% | ||||||||
Technology Hardware & Equipment — 0.1% | ||||||||
200 | Hughes Telematics ⌂† | $ | 751 | |||||
Total preferred stocks (cost $2,000) | $ | 751 | ||||||
WARRANTS — 0.0% | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences 0.0% | ||||||||
13 | Novavax, Inc. ⌂• | $ | — | |||||
Total warrants (cost $-) | $ | — | ||||||
Total long-term investments (cost $903,640) | $ | 853,843 | ||||||
SHORT-TERM INVESTMENTS — 2.3% | ||||||||
Repurchase Agreements — 2.3% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $4,819, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $4,916) | ||||||||
$ | 4,819 | 0.18%, 04/30/2009 | $ | 4,819 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $5,768, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 - 2047, value of $5,883) | ||||||||
5,768 | 0.17%, 04/30/2009 | 5,768 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $8,059, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 - 2038, GNMA 4.50% — 7.00%, 2024 — 2039, value of $8,220) | ||||||||
8,059 | 0.17%, 04/30/2009 | 8,059 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $27, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $28) | ||||||||
27 | 0.14%, 04/30/2009 | 27 | ||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,738, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 — 2039, value of $1,773) | ||||||||
1,738 | 0.16%, 04/30/2009 | 1,738 | ||||||
20,411 | ||||||||
Total short-term investments (cost $20,411) | $ | 20,411 | ||||||
Total investments (cost $924,051)▲ | 99.4 | % | $ | 874,254 | ||||||||
Other assets and liabilities | 0.6 | % | 5,243 | |||||||||
Total net assets | 100.0 | % | $ | 879,497 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 5.70% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $983,212 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 62,897 | ||
Unrealized Depreciation | (171,855 | ) | ||
Net Unrealized Depreciation | $ | (108,958 | ) | |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $3,729, which represents 0.42% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $2,295, which represents 0.26% of total net assets. | |
• | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $359. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
06/2007 | 1,405 | Buck Holdings L.P. | $ | 1,406 | ||||||||
09/2008 — 04/2009 | 42 | Groupe Danone | 2,760 | |||||||||
03/2009 | 200 | Hughes Telematics — Reg D | 2,000 | |||||||||
07/2008 | 13 | Novavax, Inc. Warrants | — | |||||||||
03/2007 | 59 | Solar Cayman Ltd. — 144A | 816 |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Buy) | $ | 50 | $ | 50 | 05/05/09 | $ | — | |||||||||
British Pound (Sell) | 33 | 33 | 05/06/09 | — | ||||||||||||
Canadian Dollar (Sell) | 285 | 283 | 05/04/09 | (2 | ) | |||||||||||
Canadian Dollar (Sell) | 506 | 506 | 05/05/09 | — | ||||||||||||
Euro (Sell) | 64 | 64 | 05/04/09 | — | ||||||||||||
Japanese Yen (Sell) | 3,078 | 3,139 | 05/01/09 | 61 | ||||||||||||
Japanese Yen (Buy) | 353 | 361 | 05/01/09 | (8 | ) | |||||||||||
Japanese Yen (Buy) | 359 | 361 | 05/08/09 | (2 | ) | |||||||||||
Norwegian Krone (Sell) | 100 | 98 | 05/04/09 | (2 | ) | |||||||||||
Norwegian Krone (Sell) | 271 | 272 | 05/05/09 | 1 | ||||||||||||
Swiss Franc (Sell) | 25 | 25 | 05/05/09 | — | ||||||||||||
Swiss Franc (Sell) | 41 | 41 | 05/06/09 | — | ||||||||||||
Turkish New Lira (Sell) | 414 | 415 | 05/05/09 | 1 | ||||||||||||
$ | 49 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 751,186 | ||
Investment in securities — Level 2 | 117,044 | |||
Investment in securities — Level 3 | 6,024 | |||
Total | $ | 874,254 | ||
Other financial instruments — Level 2 * | 63 | |||
Total | $ | 63 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 14 | |||
Total | $ | 14 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 8,596 | ||
Change in unrealized depreciation ♦ | (1,537 | ) | ||
Net purchases | 1,939 | |||
Transfers in and /or out of Level 3 | (2,974 | ) | ||
Balance as of April 30, 2009 | $ | 6,024 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (1,537 | ) | |
8
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $924,051) | $ | 874,254 | ||
Cash | 87 | |||
Foreign currency on deposit with custodian (cost $156) | 156 | |||
Unrealized appreciation on forward foreign currency contracts | 63 | |||
Receivables: | ||||
Investment securities sold | 24,855 | |||
Fund shares sold | 1,424 | |||
Dividends and interest | 1,308 | |||
Other assets | 158 | |||
Total assets | 902,305 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 14 | |||
Payables: | ||||
Investment securities purchased | 19,599 | |||
Fund shares redeemed | 2,568 | |||
Investment management fees | 134 | |||
Distribution fees | 70 | |||
Accrued expenses | 423 | |||
Total liabilities | 22,808 | |||
Net assets | $ | 879,497 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,459,474 | |||
Accumulated undistributed net investment income | 707 | |||
Accumulated net realized loss on investments and foreign currency transactions | (530,875 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (49,809 | ) | ||
Net assets | $ | 879,497 | ||
Shares authorized | 1,000,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.79/$9.30 | ||
Shares outstanding | 50,214 | |||
Net assets | $ | 441,602 | ||
Class B: Net asset value per share | $ | 8.51 | ||
Shares outstanding | 7,305 | |||
Net assets | $ | 62,161 | ||
Class C: Net asset value per share | $ | 8.53 | ||
Shares outstanding | 30,262 | |||
Net assets | $ | 258,286 | ||
Class I: Net asset value per share | $ | 8.88 | ||
Shares outstanding | 6,757 | |||
Net assets | $ | 59,992 | ||
Class R3: Net asset value per share | $ | 8.78 | ||
Shares outstanding | 668 | |||
Net assets | $ | 5,868 | ||
Class R4: Net asset value per share | $ | 8.86 | ||
Shares outstanding | 399 | |||
Net assets | $ | 3,535 | ||
Class R5: Net asset value per share | $ | 8.91 | ||
Shares outstanding | 51 | |||
Net assets | $ | 452 | ||
Class Y: Net asset value per share | $ | 8.95 | ||
Shares outstanding | 5,319 | |||
Net assets | $ | 47,601 | ||
9
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 7,898 | ||
Interest | 37 | |||
Securities lending | 26 | |||
Less: Foreign tax withheld | (271 | ) | ||
Total investment income | 7,690 | |||
Expenses: | ||||
Investment management fees | 3,883 | |||
Transfer agent fees | 1,161 | |||
Distribution fees | ||||
Class A | 526 | |||
Class B | 291 | |||
Class C | 1,211 | |||
Class R3 | 12 | |||
Class R4 | 3 | |||
Custodian fees | 34 | |||
Accounting services | 57 | |||
Registration and filing fees | 92 | |||
Board of Directors’ fees | 12 | |||
Audit fees | 17 | |||
Other expenses | 217 | |||
Total expenses (before waivers and fees paid indirectly) | 7,516 | |||
Expense waivers | (62 | ) | ||
Transfer agent fee waivers | (62 | ) | ||
Commission recapture | (48 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (172 | ) | ||
Total expenses, net | 7,344 | |||
Net investment income | 346 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (302,487 | ) | ||
Net realized loss on foreign currency transactions | (320 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (302,807 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 299,095 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 344 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 299,439 | |||
Net Loss on Investments and Foreign Currency Transactions | (3,368 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (3,022 | ) | |
10
Table of Contents
(000’s Omitted)
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 346 | $ | (1,777 | ) | |||
Net realized loss on investments and foreign currency transactions | (302,807 | ) | (222,258 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 299,439 | (513,984 | ) | |||||
Net decrease in net assets resulting from operations | (3,022 | ) | (738,019 | ) | ||||
Distributions to Shareholders: | ||||||||
From net realized gain on investments | ||||||||
Class A | — | (57,297 | ) | |||||
Class B | — | (7,516 | ) | |||||
Class C | — | (29,944 | ) | |||||
Class I | — | (6,005 | ) | |||||
Class R3 | — | (33 | ) | |||||
Class R4 | — | (1 | ) | |||||
Class R5 | — | (12 | ) | |||||
Class Y | — | (11 | ) | |||||
Total distributions | — | (100,819 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (35,518 | ) | 118,490 | |||||
Class B | (3,500 | ) | 21,834 | |||||
Class C | (9,576 | ) | 101,804 | |||||
Class I | (17,022 | ) | 56,898 | |||||
Class R3 | 1,596 | 5,886 | ||||||
Class R4 | 2,276 | 1,828 | ||||||
Class R5 | 221 | 129 | ||||||
Class Y | 21,734 | 27,587 | ||||||
Net increase (decrease) from capital share transactions | (39,789 | ) | 334,456 | |||||
Net decrease in net assets | (42,811 | ) | (504,382 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 922,308 | 1,426,690 | ||||||
End of period | $ | 879,497 | $ | 922,308 | ||||
Accumulated undistributed net investment income (loss) | $ | 707 | $ | 361 | ||||
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Capital Appreciation II Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50% Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the |
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close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
k) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $359. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 75,863 | $ | 7,427 | ||||
Long-Term Capital Gains * | 24,956 | 1,610 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses* | $ | (168,861 | ) | |
Unrealized Depreciation † | $ | (408,094 | ) | |
Total Accumulated Deficit | $ | (576,955 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $2,826, decrease accumulated net realized loss by $1,937, and decrease paid in capital by $889. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 168,861 | ||
Total | $ | 168,861 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment advisory services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $250 million | 1.0000 | % | ||
On next $250 million | 0.9500 | % | ||
On next $500 million | 0.9000 | % | ||
On next $4 billion | 0.8500 | % | ||
On next $5 billion | 0.8475 | % | ||
Over $10 billion | 0.8450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
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c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.60% | 2.35% | 2.35% | 1.35% | 1.85% | 1.55% | 1.25% | 1.25% |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||
Six-Month | ||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.59 | % | 1.40 | % | 1.43 | % | 1.59 | % | 1.60 | %* | ||||||||||
Class B Shares | 2.16 | 2.27 | 2.29 | 2.34 | 2.35 | † | ||||||||||||||
Class C Shares | 2.31 | 2.14 | 2.16 | 2.32 | 2.35 | ‡ | ||||||||||||||
Class I Shares | 1.19 | 1.08 | 1.10 | 0.80 | § | |||||||||||||||
Class R3 Shares | 1.84 | 1.76 | 1.86 | ** | ||||||||||||||||
Class R4 Shares | 1.47 | 1.42 | 1.47 | †† | ||||||||||||||||
Class R5 Shares | 1.21 | 1.15 | 1.22 | ‡‡ | ||||||||||||||||
Class Y Shares | 1.05 | 1.00 | 1.01 | 1.13 | 1.15 | §§ |
* | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
† | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
‡ | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
§ | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
** | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
†† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§§ | From April 29, 2005 (commencement of operations), through October 31, 2005 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $732 and contingent deferred sales charges of $214 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $56. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $2. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $1,131 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 712,223 | ||
Sales Proceeds Excluding U.S. Government Obligations | 742,343 |
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6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 9,520 | — | (14,251 | ) | — | (4,731 | ) | 26,758 | 3,361 | (23,631 | ) | — | 6,488 | |||||||||||||||||||||||||||
Amount | $ | 76,101 | $ | — | $ | (111,619 | ) | $ | — | $ | (35,518 | ) | $ | 358,379 | $ | 49,988 | $ | (289,877 | ) | $ | — | $ | 118,490 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 737 | — | (1,228 | ) | — | (491 | ) | 2,420 | 475 | (1,411 | ) | — | 1,484 | |||||||||||||||||||||||||||
Amount | $ | 5,726 | $ | — | $ | (9,226 | ) | $ | — | $ | (3,500 | ) | $ | 31,700 | $ | 6,911 | $ | (16,777 | ) | $ | — | $ | 21,834 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,556 | — | (7,001 | ) | — | (1,445 | ) | 12,925 | 1,739 | (7,915 | ) | — | 6,749 | |||||||||||||||||||||||||||
Amount | $ | 43,538 | $ | 10 | $ | (53,124 | ) | $ | — | $ | (9,576 | ) | $ | 169,290 | $ | 25,354 | $ | (92,840 | ) | $ | — | $ | 101,804 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,992 | — | (5,263 | ) | — | (2,271 | ) | 8,574 | 326 | (4,802 | ) | — | 4,098 | |||||||||||||||||||||||||||
Amount | $ | 24,370 | $ | — | $ | (41,392 | ) | $ | — | $ | (17,022 | ) | $ | 110,685 | $ | 4,865 | $ | (58,652 | ) | $ | — | $ | 56,898 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 307 | — | (114 | ) | — | 193 | 517 | 2 | (71 | ) | — | 448 | ||||||||||||||||||||||||||||
Amount | $ | 2,476 | $ | — | $ | (880 | ) | $ | — | $ | 1,596 | $ | 6,719 | $ | 33 | $ | (866 | ) | $ | — | $ | 5,886 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 367 | — | (108 | ) | — | 259 | 157 | — | (18 | ) | — | 139 | ||||||||||||||||||||||||||||
Amount | $ | 3,092 | $ | — | $ | (816 | ) | $ | — | $ | 2,276 | $ | 2,027 | $ | 1 | $ | (200 | ) | $ | — | $ | 1,828 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 45 | — | (11 | ) | — | 34 | 12 | 1 | (4 | ) | — | 9 | ||||||||||||||||||||||||||||
Amount | $ | 311 | $ | — | $ | (90 | ) | $ | — | $ | 221 | $ | 169 | $ | 12 | $ | (52 | ) | $ | — | $ | 129 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,870 | — | (14 | ) | — | 2,856 | 3,157 | 1 | (704 | ) | — | 2,454 | ||||||||||||||||||||||||||||
Amount | $ | 21,856 | $ | — | $ | (122 | ) | $ | — | $ | 21,734 | $ | 34,322 | $ | 11 | $ | (6,746 | ) | $ | — | $ | 27,587 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 41 | $ | 323 | |||||
For the Year Ended October 31, 2008 | 83 | $ | 1,097 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
21
Table of Contents
- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
realized | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | Gain | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | (Loss) | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s | ) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.73 | $ | 0.01 | $ | — | $ | 0.05 | $ | 0.06 | $ | — | $ | — | $ | — | $ | — | $ | 0.06 | $ | 8.79 | 0.69 | %(e) | $ | 441,602 | 1.60 | %(f) | 1.59 | %(f) | 1.59 | %(f) | 0.29 | %(f) | 88 | % | ||||||||||||||||||||||||||||||||||||
B | 8.47 | (0.01 | ) | — | 0.05 | 0.04 | — | — | — | — | 0.04 | 8.51 | 0.47 | (e) | 62,161 | 2.53 | (f) | 2.17 | (f) | 2.17 | (f) | (0.29 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 8.50 | (0.02 | ) | — | 0.05 | 0.03 | — | — | — | — | 0.03 | 8.53 | 0.24 | (e) | 258,286 | 2.31 | (f) | 2.31 | (f) | 2.31 | (f) | (0.43 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 8.80 | 0.03 | — | 0.05 | 0.08 | — | — | — | — | 0.08 | 8.88 | 0.91 | (e) | 59,992 | 1.20 | (f) | 1.20 | (f) | 1.20 | (f) | 0.67 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 8.73 | — | — | 0.05 | 0.05 | — | — | — | — | 0.05 | 8.78 | 0.57 | (e) | 5,868 | 1.87 | (f) | 1.85 | (f) | 1.85 | (f) | 0.04 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 8.79 | 0.01 | — | 0.06 | 0.07 | — | — | — | — | 0.07 | 8.86 | 0.80 | (e) | 3,535 | 1.48 | (f) | 1.48 | (f) | 1.48 | (f) | 0.41 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 8.84 | 0.02 | — | 0.05 | 0.07 | — | — | — | — | 0.07 | 8.91 | 0.79 | (e) | 452 | 1.21 | (f) | 1.21 | (f) | 1.21 | (f) | 0.71 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 8.86 | 0.03 | — | 0.06 | 0.09 | — | — | — | — | 0.09 | 8.95 | 1.02 | (e) | 47,601 | 1.06 | (f) | 1.06 | (f) | 1.06 | (f) | 0.87 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.95 | 0.02 | — | (7.07 | ) | (7.05 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.22 | ) | 8.73 | (44.43 | ) | 479,795 | 1.40 | 1.40 | 1.40 | 0.12 | 159 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 16.62 | (0.09 | ) | — | (6.89 | ) | (6.98 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.15 | ) | 8.47 | (44.92 | ) | 66,057 | 2.27 | 2.27 | 2.27 | (0.75 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 16.66 | (0.07 | ) | — | (6.92 | ) | (6.99 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.16 | ) | 8.50 | (44.87 | ) | 269,662 | 2.14 | 2.14 | 2.14 | (0.62 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 17.02 | 0.04 | — | (7.09 | ) | (7.05 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.22 | ) | 8.80 | (44.23 | ) | 79,436 | 1.08 | 1.08 | 1.08 | 0.43 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 17.00 | (0.01 | ) | — | (7.09 | ) | (7.10 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.27 | ) | 8.73 | (44.60 | ) | 4,148 | 1.77 | 1.77 | 1.77 | (0.28 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 17.05 | 0.01 | — | (7.10 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.79 | (44.40 | ) | 1,232 | 1.43 | 1.43 | 1.43 | 0.08 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 17.10 | 0.04 | — | (7.13 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.84 | (44.26 | ) | 151 | 1.16 | 1.16 | 1.16 | 0.37 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.12 | — | — | (7.09 | ) | (7.09 | ) | — | (1.17 | ) | — | (1.17 | ) | (8.26 | ) | 8.86 | (44.20 | ) | 21,827 | 1.01 | 1.01 | 1.01 | 0.51 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.13 | — | — | 4.13 | 4.13 | — | (0.31 | ) | — | (0.31 | ) | 3.82 | 16.95 | 32.15 | 821,428 | 1.44 | 1.44 | 1.44 | — | 102 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.99 | (0.07 | ) | — | 4.01 | 3.94 | — | (0.31 | ) | — | (0.31 | ) | 3.63 | 16.62 | 31.01 | 104,908 | 2.29 | 2.29 | 2.29 | (0.86 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.00 | (0.06 | ) | — | 4.03 | 3.97 | — | (0.31 | ) | — | (0.31 | ) | 3.66 | 16.66 | 31.22 | 415,688 | 2.16 | 2.16 | 2.16 | (0.73 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I | 13.14 | 0.02 | — | 4.17 | 4.19 | — | (0.31 | ) | — | (0.31 | ) | 3.88 | 17.02 | 32.60 | 83,905 | 1.11 | 1.11 | 1.11 | 0.31 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 13.52 | (0.03 | ) | — | 3.51 | 3.48 | — | — | — | — | 3.48 | 17.00 | 25.74 | (e) | 452 | 1.85 | (f) | 1.85 | (f) | 1.85 | (f) | (0.43 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 13.52 | (0.01 | ) | — | 3.54 | 3.53 | — | — | — | — | 3.53 | 17.05 | 26.11 | (e) | 14 | 1.47 | (f) | 1.47 | (f) | 1.47 | (f) | (0.06 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 13.52 | — | — | 3.58 | 3.58 | — | — | — | — | 3.58 | 17.10 | 26.48 | (e) | 136 | 1.22 | (f) | 1.22 | (f) | 1.22 | (f) | 0.03 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.20 | 0.06 | — | 4.17 | 4.23 | — | (0.31 | ) | — | (0.31 | ) | 3.92 | 17.12 | 32.75 | 158 | 1.02 | 1.02 | 1.02 | 0.44 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.07 | (0.01 | ) | — | 2.22 | 2.21 | — | (0.15 | ) | — | (0.15 | ) | 2.06 | 13.13 | 20.21 | 241,238 | 1.66 | 1.60 | 1.60 | (0.13 | ) | 113 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.02 | (0.07 | ) | — | 2.19 | 2.12 | — | (0.15 | ) | — | (0.15 | ) | 1.97 | 12.99 | 19.48 | 29,169 | 2.54 | 2.35 | 2.35 | (0.88 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.04 | (0.06 | ) | — | 2.17 | 2.11 | — | (0.15 | ) | — | (0.15 | ) | 1.96 | 13.00 | 19.35 | 97,678 | 2.37 | 2.33 | 2.33 | (0.86 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 12.51 | — | — | 0.63 | 0.63 | — | — | — | — | 0.63 | 13.14 | 5.04 | (e) | 3,316 | 1.46 | (f) | 0.80 | (f) | 0.80 | (f) | 0.45 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.08 | 0.12 | — | 2.15 | 2.27 | — | (0.15 | ) | — | (0.15 | ) | 2.12 | 13.20 | 20.74 | 119 | 1.20 | 1.15 | 1.15 | 0.39 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10.00 | (0.01 | ) | — | 1.08 | 1.07 | — | — | — | — | 1.07 | 11.07 | 10.70 | (e) | 56,981 | 1.99 | (f) | 1.60 | (f) | 1.60 | (f) | (0.30 | ) (f) | 46 | ||||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10.00 | (0.03 | ) | — | 1.05 | 1.02 | — | — | — | — | 1.02 | 11.02 | 10.20 | (e) | 6,343 | 2.97 | (f) | 2.35 | (f) | 2.35 | (f) | (1.10 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10.00 | (0.03 | ) | — | 1.07 | 1.04 | — | — | — | — | 1.04 | 11.04 | 10.40 | (e) | 19,494 | 2.82 | (f) | 2.35 | (f) | 2.35 | (f) | (1.12 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.02 | — | 1.06 | 1.08 | — | — | — | — | 1.08 | 11.08 | 10.80 | (e) | 332 | 1.41 | (f) | 1.15 | (f) | 1.15 | (f) | 0.29 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on August 31, 2006. | |
(k) | Commenced operations on April 29, 2005. | |
(l) | Commenced operations on April 29, 2005. | |
(m) | Commenced operations on April 29, 2005. | |
(n) | Commenced operations on April 29, 2005. |
22
Table of Contents
23
Table of Contents
Directors and Officers (Unaudited) — (continued)
24
Table of Contents
25
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,006.87 | $ | 7.91 | $ | 1,000.00 | $ | 1,016.90 | $ | 7.95 | 1.59 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,004.72 | $ | 10.78 | $ | 1,000.00 | $ | 1,014.03 | $ | 10.83 | 2.17 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,002.35 | $ | 11.46 | $ | 1,000.00 | $ | 1,013.33 | $ | 11.53 | 2.31 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,009.09 | $ | 5.97 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.00 | 1.20 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,005.72 | $ | 9.20 | $ | 1,000.00 | $ | 1,015.62 | $ | 9.24 | 1.85 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,007.96 | $ | 7.36 | $ | 1,000.00 | $ | 1,017.45 | $ | 7.40 | 1.48 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,007.91 | $ | 6.02 | $ | 1,000.00 | $ | 1,018.79 | $ | 6.05 | 1.21 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,010.15 | $ | 5.28 | $ | 1,000.00 | $ | 1,019.53 | $ | 5.30 | 1.06 | 181 | 365 |
26
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
16 | ||||
17 | ||||
19 | ||||
19 | ||||
20 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Checks and Balances A# | 5/31/07 | -25.68 | % | -13.67 | % | |||||||
Checks and Balances A## | 5/31/07 | -29.76 | % | -16.18 | % | |||||||
Checks and Balances B# | 5/31/07 | -26.37 | % | -14.37 | % | |||||||
Checks and Balances B## | 5/31/07 | -29.94 | % | -16.09 | % | |||||||
Checks and Balances C# | 5/31/07 | -26.26 | % | -14.29 | % | |||||||
Checks and Balances C## | 5/31/07 | -26.98 | % | -14.29 | % | |||||||
Checks and Balances I# | 5/31/07 | -25.46 | % | -13.51 | % | |||||||
Checks and Balances R3# | 5/31/07 | -25.76 | % | -13.72 | % | |||||||
Checks and Balances R4# | 5/31/07 | -25.65 | % | -13.65 | % | |||||||
Checks and Balances R5# | 5/31/07 | -25.53 | % | -13.58 | % |
# | Without sales charge | |
## | With sales charge | |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. | |
(4) | Class I shares commenced operations on 2/29/08. Performance prior to 2/29/08 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 8/29/08. Performance prior to 8/29/08 reflects Class A performance. |
Vernon J. Meyer, CFA
Senior Vice President
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Percentage of Net | ||||
Fund Name | Assets | |||
The Hartford Capital Appreciation Fund, Class Y | 34.0 | % | ||
The Hartford Dividend and Growth Fund, Class Y | 32.8 | |||
The Hartford Total Return Bond Fund, Class Y | 32.8 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 99.6% | ||||||||||||
EQUITY FUNDS — 66.8% | ||||||||||||
14,892 | The Hartford Capital Appreciation Fund, Class Y | $ | 368,126 | |||||||||
26,007 | The Hartford Dividend and Growth Fund, Class Y | 355,521 | ||||||||||
Total equity funds (cost $1,027,810) | $ | 723,647 | ||||||||||
FIXED INCOME FUNDS — 32.8% | ||||||||||||
36,911 | The Hartford Total Return Bond Fund, Class Y | $ | 354,718 | |||||||||
Total fixed income funds (cost $378,297) | $ | 354,718 | ||||||||||
Total investments in affiliated investment companies (cost $1,406,107) | $ | 1,078,365 | ||||||||||
Total long-term investments (cost $1,406,107) | $ | 1,078,365 | ||||||||||
Total investments (cost $1,406,107) ▲ | 99 .6 | % | $ | 1,078,365 | ||||||||
Other assets and liabilities | 0 .4 | % | 4,773 | |||||||||
Total net assets | 100.0 | % | $ | 1,083,138 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $1,408,819 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | — | ||
Unrealized Depreciation | (330,454 | ) | ||
Net Unrealized Depreciation | $ | (330,454 | ) | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 1,078,365 | ||
Total | $ | 1,078,365 | ||
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Assets: | ||||
Investments in underlying affiliated funds, at fair value (cost $1,406,107) | $ | 1,078,365 | ||
Receivables: | ||||
Fund shares sold | 6,672 | |||
Dividends and interest | 1,061 | |||
Other assets | 208 | |||
Total assets | 1,086,306 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,606 | |||
Fund shares redeemed | 1,330 | |||
Distribution fees | 83 | |||
Accrued expenses | 149 | |||
Total liabilities | 3,168 | |||
Net assets | $ | 1,083,138 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,418,396 | |||
Accumulated undistributed net investment income | 616 | |||
Accumulated net realized loss on investments | (8,132 | ) | ||
Unrealized depreciation of investments | (327,742 | ) | ||
Net assets | $ | 1,083,138 | ||
Shares authorized | 1,000,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.13/$7.54 | ||
Shares outstanding | 104,632 | |||
Net assets | $ | 745,814 | ||
Class B: Net asset value per share | $ | 7.10 | ||
Shares outstanding | 14,643 | |||
Net assets | $ | 103,990 | ||
Class C: Net asset value per share | $ | 7.11 | ||
Shares outstanding | 31,465 | |||
Net assets | $ | 223,587 | ||
Class I: Net asset value per share | $ | 7.13 | ||
Shares outstanding | 1,300 | |||
Net assets | $ | 9,273 | ||
Class R3: Net asset value per share | $ | 7.13 | ||
Shares outstanding | 44 | |||
Net assets | $ | 312 | ||
Class R4: Net asset value per share | $ | 7.13 | ||
Shares outstanding | 12 | |||
Net assets | $ | 83 | ||
Class R5: Net asset value per share | $ | 7.13 | ||
Shares outstanding | 11 | |||
Net assets | $ | 79 | ||
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Investment Income: | ||||
Dividends from underlying affiliated funds | $ | 20,841 | ||
Total investment income | 20,841 | |||
Expenses: | ||||
Transfer agent fees | 771 | |||
Distribution fees | ||||
Class A | 810 | |||
Class B | 446 | |||
Class C | 1,017 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | — | |||
Accounting services | 57 | |||
Registration and filing fees | 115 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 18 | |||
Other expenses | 67 | |||
Total expenses (before waivers) | 3,304 | |||
Expense waivers | (43 | ) | ||
Total waivers | (43 | ) | ||
Total expenses, net | 3,261 | |||
Net investment income | 17,580 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (5,421 | ) | ||
Net Realized Loss on Investments | (5,421 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (6,664 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (6,664 | ) | ||
Net Loss on Investments | (12,085 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 5,495 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 17,580 | $ | 12,797 | ||||
Net realized gain (loss) on investments | (5,421 | ) | 6,765 | |||||
Net unrealized depreciation of investments | (6,664 | ) | (329,223 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 5,495 | (309,661 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (13,292 | ) | (10,497 | ) | ||||
Class B | (1,500 | ) | (874 | ) | ||||
Class C | (3,439 | ) | (2,405 | ) | ||||
Class I | (192 | ) | (47 | ) | ||||
Class R3 | (2 | ) | — | |||||
Class R4 | (1 | ) | (1 | ) | ||||
Class R5 | (2 | ) | (1 | ) | ||||
From net realized gain on investments | ||||||||
Class A | (4,882 | ) | — | |||||
Class B | (671 | ) | — | |||||
Class C | (1,587 | ) | — | |||||
Class I | (62 | ) | — | |||||
Class R3 | (1 | ) | — | |||||
Class R4 | — | — | ||||||
Class R5 | (1 | ) | — | |||||
Total distributions | (25,632 | ) | (13,825 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 109,430 | 696,123 | ||||||
Class B | 17,207 | 97,717 | ||||||
Class C | 17,428 | 229,519 | ||||||
Class I | 1,288 | 10,092 | ||||||
Class R3 | 220 | 101 | ||||||
Class R4 | 6 | 100 | ||||||
Class R5 | 2 | 101 | ||||||
Net increase from capital share transactions | 145,581 | 1,033,753 | ||||||
Net increase in net assets | 125,444 | 710,267 | ||||||
Net Assets: | ||||||||
Beginning of period | 957,694 | 247,427 | ||||||
End of period | $ | 1,083,138 | $ | 957,694 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 616 | $ | 1,464 | ||||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Checks and Balances Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund seeks its investment goal through investment in Class Y shares of a combination of Hartford mutual funds: The Hartford Capital Appreciation Fund, The Hartford Dividend and Growth Fund and The Hartford Total Return Bond Fund. The Fund is managed by Hartford Investment Financial Services, LLC (“HIFSCO”). | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. |
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b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. |
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If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
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d) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
e) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. |
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f) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
g) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 * | |||||||
Ordinary Income | $ | 13,825 | $ | 483 |
* | For the period May 31, 2007 (commencement of operations) through October 31, 2007. |
Amount | ||||
Undistributed Ordinary Income | $ | 1,464 | ||
Undistributed Long-Term Capital Gain | $ | 7,205 | ||
Unrealized Depreciation* | $ | (323,790 | ) | |
Total Accumulated Deficit | $ | (315,121 | ) | |
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital account. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $2,272 and decrease accumulated net realized loss by $2,272. | ||
d) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2007 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — HIFSCO serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. The Fund is managed by HIFSCO in accordance with the Fund’s investment objective and policies. The Fund does not currently pay any fees to HIFSCO for managing the Fund. | ||
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||||||||||||||
1.15% | 1.90 | % | 1.90 | % | 0.90 | % | 1.45 | % | 1.15 | % | 0.95 | % |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $6,642 and contingent deferred sales charges of $396 from the Fund. |
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For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $153. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $2. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $747 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 11 | |||
Class R4 | 11 | |||
Class R5 | 11 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 170,046 | ||
Sales Proceeds Excluding U.S. Government Obligations | 31,686 |
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7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 29,041 | 2,588 | (15,757 | ) | — | 15,872 | 82,896 | 1,054 | (11,616 | ) | — | 72,334 | ||||||||||||||||||||||||||||
Amount | $ | 196,482 | $ | 17,419 | $ | (104,471 | ) | $ | — | $ | 109,430 | $ | 788,469 | $ | 9,911 | $ | (102,257 | ) | $ | — | $ | 696,123 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,808 | 306 | (1,591 | ) | — | 2,523 | 11,434 | 86 | (1,283 | ) | — | 10,237 | ||||||||||||||||||||||||||||
Amount | $ | 25,603 | $ | 2,051 | $ | (10,447 | ) | $ | — | $ | 17,207 | $ | 108,095 | $ | 808 | $ | (11,186 | ) | $ | — | $ | 97,717 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,069 | 661 | (5,265 | ) | — | 2,465 | 27,792 | 217 | (4,262 | ) | — | 23,747 | ||||||||||||||||||||||||||||
Amount | $ | 47,740 | $ | 4,441 | $ | (34,753 | ) | $ | — | $ | 17,428 | $ | 264,512 | $ | 2,054 | $ | (37,047 | ) | $ | — | $ | 229,519 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 645 | 34 | (512 | ) | — | 167 | 1,291 | 4 | (162 | ) | — | 1,133 | ||||||||||||||||||||||||||||
Amount | $ | 4,383 | $ | 230 | $ | (3,325 | ) | $ | — | $ | 1,288 | $ | 11,382 | $ | 39 | $ | (1,329 | ) | $ | — | $ | 10,092 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 33 | — | — | — | 33 | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||
Amount | $ | 218 | $ | 2 | $ | — | $ | — | $ | 220 | $ | 101 | $ | — | $ | — | $ | — | $ | 101 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||
Amount | $ | 5 | $ | 2 | $ | (1 | ) | $ | — | $ | 6 | $ | 100 | $ | — | $ | — | $ | — | $ | 100 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 11 | — | — | — | 11 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | 100 | $ | 1 | $ | — | $ | — | $ | 101 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 44 | $ | 294 | |||||
For the Year Ended October 31, 2008 | 51 | $ | 465 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.32 | $ | 0.13 | $ | — | $ | (0.13 | ) | $ | — | $ | (0.14 | ) | $ | (0.05 | ) | $ | — | $ | (0.19 | ) | $ | (0.19 | ) | $ | 7.13 | 0.22 | %(e) | $ | 745,814 | 0.45 | %(f) | 0.45 | %(f) | 0.45 | %(f) | 3.93 | %(f) | 3 | % | |||||||||||||||||||||||||||||||
B | 7.29 | 0.11 | — | (0.13 | ) | (0.02 | ) | (0.12 | ) | (0.05 | ) | — | (0.17 | ) | (0.19 | ) | 7.10 | (0.14 | ) (e) | 103,990 | 1.32 | (f) | 1.24 | (f) | 1.24 | (f) | 3.13 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||
C | 7.29 | 0.11 | — | (0.12 | ) | (0.01 | ) | (0.12 | ) | (0.05 | ) | — | (0.17 | ) | (0.18 | ) | 7.11 | (0.01 | ) (e) | 223,587 | 1.22 | (f) | 1.21 | (f) | 1.21 | (f) | 3.20 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||
I | 7.32 | 0.14 | — | (0.13 | ) | 0.01 | (0.15 | ) | (0.05 | ) | — | (0.20 | ) | (0.19 | ) | 7.13 | 0.37 | (e) | 9,273 | 0.16 | (f) | 0.16 | (f) | 0.16 | (f) | 4.31 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.31 | 0.13 | — | (0.13 | ) | — | (0.13 | ) | (0.05 | ) | — | (0.18 | ) | (0.18 | ) | 7.13 | 0.23 | (e) | 312 | 0.82 | (f) | 0.77 | (f) | 0.77 | (f) | 2.67 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.32 | 0.13 | — | (0.13 | ) | — | (0.14 | ) | (0.05 | ) | — | (0.19 | ) | (0.19 | ) | 7.13 | 0.21 | (e) | 83 | 0.46 | (f) | 0.46 | (f) | 0.46 | (f) | 3.94 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.32 | 0.14 | — | (0.13 | ) | 0.01 | (0.15 | ) | (0.05 | ) | — | (0.20 | ) | (0.19 | ) | 7.13 | 0.36 | (e) | 79 | 0.15 | (f) | 0.15 | (f) | 0.15 | (f) | 4.27 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.51 | 0.21 | — | (3.17 | ) | (2.96 | ) | (0.23 | ) | — | — | (0.23 | ) | (3.19 | ) | 7.32 | (28.70 | ) | 649,297 | 0.42 | 0.41 | 0.41 | 2.08 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.49 | 0.15 | — | (3.19 | ) | (3.04 | ) | (0.16 | ) | — | — | (0.16 | ) | (3.20 | ) | 7.29 | (29.32 | ) | 88,364 | 1.26 | 1.23 | 1.23 | 1.22 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.49 | 0.15 | — | (3.18 | ) | (3.03 | ) | (0.17 | ) | — | — | (0.17 | ) | (3.20 | ) | 7.29 | (29.29 | ) | 211,502 | 1.17 | 1.17 | 1.17 | 1.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I(g) | 9.89 | 0.14 | — | (2.57 | ) | (2.43 | ) | (0.14 | ) | — | — | (0.14 | ) | (2.57 | ) | 7.32 | (23.71 | ) (e) | 8,293 | 0.16 | (f) | 0.16 | (f) | 0.16 | (f) | 2.09 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 9.38 | 0.03 | — | (2.06 | ) | (2.03 | ) | (0.04 | ) | — | — | (0.04 | ) | (2.07 | ) | 7.31 | (21.19 | ) (e) | 80 | 0.81 | (f) | 0.80 | (f) | 0.80 | (f) | 1.93 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 9.38 | 0.03 | — | (2.05 | ) | (2.02 | ) | (0.04 | ) | — | — | (0.04 | ) | (2.06 | ) | 7.32 | (21.06 | ) (e) | 79 | 0.51 | (f) | 0.50 | (f) | 0.50 | (f) | 2.23 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 9.38 | 0.03 | — | (2.04 | ) | (2.01 | ) | (0.05 | ) | — | — | (0.05 | ) | (2.06 | ) | 7.32 | (21.04 | ) (e) | 79 | 0.21 | (f) | 0.21 | (f) | 0.21 | (f) | 2.52 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 31, 2007, through October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10.00 | 0.05 | — | 0.51 | 0.56 | (0.05 | ) | — | — | (0.05 | ) | 0.51 | 10.51 | 5.56 | (e) | 172,572 | 0.43 | (f) | 0.43 | (f) | 0.43 | (f) | 1.77 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10.00 | 0.03 | — | 0.49 | 0.52 | (0.03 | ) | — | — | (0.03 | ) | 0.49 | 10.49 | 5.24 | (e) | 19,750 | 1.26 | (f) | 1.25 | (f) | 1.25 | (f) | 0.96 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10.00 | 0.03 | — | 0.49 | 0.52 | (0.03 | ) | — | — | (0.03 | ) | 0.49 | 10.49 | 5.23 | (e) | 55,105 | 1.18 | (f) | 1.18 | (f) | 1.18 | (f) | 1.02 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the Underlying Funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on February 29, 2008. | |
(h) | Commenced operations on August 29, 2008. | |
(i) | Commenced operations on August 29, 2008. | |
(j) | Commenced operations on August 29, 2008. | |
(k) | Commenced operations on May 31, 2007. | |
(l) | Commenced operations on May 31, 2007. | |
(m) | Commenced operations on May 31, 2007. |
16
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17
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Directors and Officers (Unaudited) — (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 - 2009). |
18
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19
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,002.23 | $ | 2.23 | $ | 1,000.00 | $ | 1,022.56 | $ | 2.25 | 0.45 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 998.57 | $ | 6.14 | $ | 1,000.00 | $ | 1,018.64 | $ | 6.20 | 1.24 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 999.87 | $ | 5.99 | $ | 1,000.00 | $ | 1,018.79 | $ | 6.05 | 1.21 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,003.71 | $ | 0.79 | $ | 1,000.00 | $ | 1,024.00 | $ | 0.80 | 0.16 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,002.26 | $ | 3.82 | $ | 1,000.00 | $ | 1,020.97 | $ | 3.85 | 0.77 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,002.11 | $ | 2.28 | $ | 1,000.00 | $ | 1,022.51 | $ | 2.30 | 0.46 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,003.59 | $ | 0.74 | $ | 1,000.00 | $ | 1,024.05 | $ | 0.75 | 0.15 | 181 | 365 |
20
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Conservative Allocation A# | 5/28/04 | -18.67 | % | 0.69 | % | |||||||
Conservative Allocation A## | 5/28/04 | -23.15 | % | -0.46 | % | |||||||
Conservative Allocation B# | 5/28/04 | -19.29 | % | 0.00 | % | |||||||
Conservative Allocation B## | 5/28/04 | -23.22 | % | -0.34 | % | |||||||
Conservative Allocation C# | 5/28/04 | -19.24 | % | 0.00 | % | |||||||
Conservative Allocation C## | 5/28/04 | -20.03 | % | 0.00 | % | |||||||
Conservative Allocation I# | 5/28/04 | -18.44 | % | 0.84 | % | |||||||
Conservative Allocation R3# | 5/28/04 | -18.92 | % | 0.49 | % | |||||||
Conservative Allocation R4# | 5/28/04 | -18.73 | % | 0.66 | % | |||||||
Conservative Allocation R5# | 5/28/04 | -18.46 | % | 0.80 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.3 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 0.4 | |||
SPDR DJ Wilshire REIT ETF | 0.6 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 10.7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.9 | |||
The Hartford Disciplined Equity Fund, Class Y | 5.8 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.7 | |||
The Hartford Equity Income Fund, Class Y | 2.8 | |||
The Hartford Floating Rate Fund, Class Y | 7.9 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.6 | |||
The Hartford Global Growth Fund, Class Y | 2.9 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.0 | |||
The Hartford High Yield Fund, Class Y | 5.1 | |||
The Hartford Income Fund, Class Y | 10.0 | |||
The Hartford Inflation Plus Fund, Class Y | 9.4 | |||
The Hartford International Opportunities Fund, Class Y | 3.5 | |||
The Hartford International Small Company Fund, Class Y | 1.9 | |||
The Hartford Select MidCap Value Fund, Class Y | 0.7 | |||
The Hartford Select SmallCap Value Fund, Class Y | 1.0 | |||
The Hartford Short Duration Fund, Class Y | 10.2 | |||
The Hartford Strategic Income Fund, Class Y | 3.6 | |||
The Hartford Total Return Bond Fund, Class Y | 11.5 | |||
The Hartford Value Fund, Class Y | 4.2 | |||
Other Assets and Liabilities | 0.3 | |||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 98.4% | ||||||||||||
EQUITY FUNDS — 40.7% | ||||||||||||
786 | The Hartford Capital Appreciation Fund, Class Y | $ | 19,424 | |||||||||
586 | The Hartford Capital Appreciation II Fund, Class Y • | 5,240 | ||||||||||
1,162 | The Hartford Disciplined Equity Fund, Class Y | 10,541 | ||||||||||
218 | The Hartford Dividend and Growth Fund, Class Y | 2,984 | ||||||||||
556 | The Hartford Equity Income Fund, Class Y | 5,024 | ||||||||||
146 | The Hartford Fundamental Growth Fund, Class Y • | 1,122 | ||||||||||
477 | The Hartford Global Growth Fund, Class Y • | 5,223 | ||||||||||
198 | The Hartford Growth Opportunities Fund, Class Y • | 3,562 | ||||||||||
627 | The Hartford International Opportunities Fund, Class Y | 6,361 | ||||||||||
448 | The Hartford International Small Company Fund, Class Y | 3,503 | ||||||||||
193 | The Hartford Select MidCap Value Fund, Class Y | 1,213 | ||||||||||
267 | The Hartford Select SmallCap Value Fund, Class Y | 1,773 | ||||||||||
933 | The Hartford Value Fund, Class Y | 7,519 | ||||||||||
Total equity funds (cost $94,937) | $ | 73,489 | ||||||||||
FIXED INCOME FUNDS — 57.7% | ||||||||||||
1,964 | The Hartford Floating Rate Fund, Class Y | $ | 14,297 | |||||||||
1,620 | The Hartford High Yield Fund, Class Y | 9,252 | ||||||||||
2,101 | The Hartford Income Fund, Class Y | 18,023 | ||||||||||
1,591 | The Hartford Inflation Plus Fund, Class Y | 17,036 | ||||||||||
2,019 | The Hartford Short Duration Fund, Class Y | 18,410 | ||||||||||
855 | The Hartford Strategic Income Fund, Class Y | 6,599 | ||||||||||
2,162 | The Hartford Total Return Bond Fund, Class Y | 20,779 | ||||||||||
Total fixed income funds (cost $115,232) | $ | 104,396 | ||||||||||
Total investments in affiliated investment companies (cost $210,169) | $ | 177,885 | ||||||||||
EXCHANGE TRADED FUNDS — 1.3% | ||||||||||||
22 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 498 | |||||||||
26 | SPDR DJ Wilshire International Real Estate ETF | 656 | ||||||||||
33 | SPDR DJ Wilshire REIT ETF | 1,150 | ||||||||||
Total exchange traded funds (cost $2,577) | $ | 2,304 | ||||||||||
Total long-term investments (cost $212,746) | $ | 180,189 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
3 | State Street Bank Money Market Fund | $ | 3 | |||||||||
Total short-term investments (cost $3) | �� | $ | 3 | |||||||||
Total investments (cost $212,749) 5 | 99.7 | % | $ | 180,192 | ||||||||
Other assets and liabilities | 0.3 | % | 560 | |||||||||
Total net assets | 100.0 | % | $ | 180,752 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
5 | At April 30, 2009, the cost of securities for federal income tax purposes was $213,671 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,304 | ||
Unrealized Depreciation | (34,783 | ) | ||
Net Unrealized Depreciation | $ | (33,479 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 180,192 | ||
Total | $ | 180,192 | ||
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Assets: | ||||
Investments in securities, at fair value (cost $2,580) | $ | 2,307 | ||
Investments in underlying affiliated funds, at fair value (cost $210,169) | 177,885 | |||
Receivables: | ||||
Fund shares sold | 553 | |||
Dividends and interest | 370 | |||
Other assets | 96 | |||
Total assets | 181,211 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 166 | |||
Fund shares redeemed | 234 | |||
Investment management fees | 5 | |||
Distribution fees | 14 | |||
Accrued expenses | 40 | |||
Total liabilities | 459 | |||
Net assets | $ | 180,752 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 231,924 | |||
Accumulated undistributed net investment income | 285 | |||
Accumulated net realized loss on investments | (18,900 | ) | ||
Unrealized depreciation of investments | (32,557 | ) | ||
Net assets | $ | 180,752 | ||
Shares authorized | 400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.32/$8.80 | ||
Shares outstanding | 13,372 | |||
Net assets | $ | 111,289 | ||
Class B: Net asset value per share | $ | 8.32 | ||
Shares outstanding | 2,496 | |||
Net assets | $ | 20,771 | ||
Class C: Net asset value per share | $ | 8.31 | ||
Shares outstanding | 4,578 | |||
Net assets | $ | 38,063 | ||
Class I: Net asset value per share | $ | 8.31 | ||
Shares outstanding | 43 | |||
Net assets | $ | 355 | ||
Class R3: Net asset value per share | $ | 8.37 | ||
Shares outstanding | 23 | |||
Net assets | $ | 189 | ||
Class R4: Net asset value per share | $ | 8.31 | ||
Shares outstanding | 798 | |||
Net assets | $ | 6,630 | ||
Class R5: Net asset value per share | $ | 8.32 | ||
Shares outstanding | 415 | |||
Net assets | $ | 3,455 | ||
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Investment Income: | ||||
Dividends | $ | 42 | ||
Dividends from underlying affiliated funds | 3,713 | |||
Total investment income | 3,755 | |||
Expenses: | ||||
Investment management fees | 126 | |||
Transfer agent fees | 107 | |||
Distribution fees | ||||
Class A | 129 | |||
Class B | 97 | |||
Class C | 182 | |||
Class R3 | — | |||
Class R4 | 7 | |||
Custodian fees | 1 | |||
Accounting services | 10 | |||
Registration and filing fees | 47 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 4 | |||
Other expenses | 37 | |||
Total expenses (before waivers) | 749 | |||
Expense waivers | (14 | ) | ||
Total waivers | (14 | ) | ||
Total expenses, net | 735 | |||
Net investment income | 3,020 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (9,662 | ) | ||
Net Realized Loss on Investments | (9,662 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 10,269 | |||
Net Changes in Unrealized Appreciation of Investments | 10,269 | |||
Net Gain on Investments | 607 | |||
Net Increase in Net Assets Resulting from Operations | $ | 3,627 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,020 | $ | 5,728 | ||||
Net realized loss on investments | (9,662 | ) | (5,242 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 10,269 | (53,423 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 3,627 | (52,937 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (2,081 | ) | (4,987 | ) | ||||
Class B | (315 | ) | (812 | ) | ||||
Class C | (603 | ) | (1,672 | ) | ||||
Class I | (8 | ) | (45 | ) | ||||
Class R3 | (1 | ) | (5 | ) | ||||
Class R4 | (116 | ) | (153 | ) | ||||
Class R5 | (53 | ) | (58 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (4,169 | ) | |||||
Class B | — | (882 | ) | |||||
Class C | — | (1,608 | ) | |||||
Class I | — | (57 | ) | |||||
Class R3 | — | (1 | ) | |||||
Class R4 | — | (21 | ) | |||||
Class R5 | — | (21 | ) | |||||
Total distributions | (3,177 | ) | (14,491 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 3,025 | * | 26,954 | |||||
Class B | 17 | † | 2,936 | |||||
Class C | (1,963 | ) ‡ | 9,856 | |||||
Class I | (61 | ) | (817 | ) | ||||
Class R3 | (77 | ) § | 324 | |||||
Class R4 | 1,713 | ** | 6,057 | |||||
Class R5 | 1,285 | †† | 2,011 | |||||
Net increase from capital share transactions | 3,939 | 47,321 | ||||||
Net increase (decrease) in net assets | 4,389 | (20,107 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 176,363 | 196,470 | ||||||
End of period | $ | 180,752 | $ | 176,363 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 285 | $ | 442 | ||||
* | Includes merger activity in the amount of $2,213. | |
† | Includes merger activity in the amount of $290. | |
‡ | Includes merger activity in the amount of $788. | |
§ | Includes merger activity in the amount of $38. | |
** | Includes merger activity in the amount of $418. | |
†† | Includes merger activity in the amount of $91. |
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Conservative Allocation Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. |
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Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 8,611 | $ | 5,741 | ||||
Long-Term Capital Gains * | 5,880 | 3,535 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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Amount | ||||
Undistributed Ordinary Income | $ | 442 | ||
Accumulated Capital Losses* | $ | (6,794 | ) | |
Unrealized Depreciation† | $ | (43,142 | ) | |
Total Accumulated Deficit | $ | (49,494 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $2,023 and decrease accumulated net realized loss by $2,023. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 6,794 | ||
Total | $ | 6,794 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||
1.35% | 2.10% | 2.10% | 1.10% | 1.78% | 1.48% | 1.18% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $444 and contingent deferred sales charges of $54 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may |
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be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $14. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $106 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 33,262 | ||
Sales Proceeds Excluding U.S. Government Obligations | 26,850 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
7. | Capital Share Transactions: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,617 | 252 | (2,783 | ) | 287 | 373 | 6,078 | 809 | (4,337 | ) | — | 2,550 | ||||||||||||||||||||||||||||
Amount | $ | 20,626 | $ | 1,985 | $ | (21,799 | ) | $ | 2,213 | $ | 3,025 | $ | 62,170 | $ | 8,613 | $ | (43,829 | ) | $ | — | $ | 26,954 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 372 | 37 | (445 | ) | 37 | 1 | 875 | 145 | (754 | ) | — | 266 | ||||||||||||||||||||||||||||
Amount | $ | 2,916 | $ | 290 | $ | (3,479 | ) | $ | 290 | $ | 17 | $ | 8,914 | $ | 1,556 | $ | (7,534 | ) | $ | — | $ | 2,936 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 828 | 64 | (1,247 | ) | 102 | (253 | ) | 3,122 | 258 | (2,546 | ) | — | 834 | |||||||||||||||||||||||||||
Amount | $ | 6,509 | $ | 506 | $ | (9,766 | ) | $ | 788 | $ | (1,963 | ) | $ | 32,319 | $ | 2,758 | $ | (25,221 | ) | $ | — | $ | 9,856 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 6 | 1 | (14 | ) | — | (7 | ) | 91 | 7 | (177 | ) | — | (79 | ) | ||||||||||||||||||||||||||
Amount | $ | 44 | $ | 3 | $ | (108 | ) | $ | — | $ | (61 | ) | $ | 937 | $ | 83 | $ | (1,837 | ) | $ | — | $ | (817 | ) | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 16 | — | (30 | ) | 5 | (9 | ) | 129 | — | (99 | ) | — | 30 | |||||||||||||||||||||||||||
Amount | $ | 129 | $ | 1 | $ | (245 | ) | $ | 38 | $ | (77 | ) | $ | 1,324 | $ | 4 | $ | (1,004 | ) | $ | — | $ | 324 | |||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 292 | 15 | (154 | ) | 54 | 207 | 777 | 17 | (240 | ) | — | 554 | ||||||||||||||||||||||||||||
Amount | $ | 2,346 | $ | 116 | $ | (1,167 | ) | $ | 418 | $ | 1,713 | $ | 8,088 | $ | 174 | $ | (2,205 | ) | $ | — | $ | 6,057 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 182 | 6 | (38 | ) | 12 | 162 | 242 | 8 | (57 | ) | — | 193 | ||||||||||||||||||||||||||||
Amount | $ | 1,440 | $ | 53 | $ | (299 | ) | $ | 91 | $ | 1,285 | $ | 2,483 | $ | 79 | $ | (551 | ) | $ | — | $ | 2,011 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 7 | $ | 56 | |||||
For the Year Ended October 31, 2008 | 32 | $ | 328 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Fund Merger: | |
Reorganization of The Hartford Retirement Income Fund with and into The Hartford Conservative Allocation Fund: On August 6, 2008, the Board of Directors of The Hartford Mutual Funds, Inc. (“Company”) approved a Form of Agreement and Plan of Reorganization (“Reorganization Agreement”) that provides for the reorganization of a series of the Company, The Hartford Retirement Income Fund, into another series of the Company, The Hartford Conservative Allocation Fund (“Reorganization”). The reorganization did not require shareholder approval by shareholders of The Hartford Conservative Allocation Fund or The Hartford Retirement Income Fund. |
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Pursuant to the Reorganization Agreement, on February 20, 2009, each holder of Class A, Class B, Class C, Class R3, Class R4 and Class R5 shares of The Hartford Retirement Income Fund became the owner of full of factional shares of the corresponding class in The Hartford Conservative Allocation Fund having an equal aggregate value. | ||
This merger was accomplished by tax free exchange as detailed below: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Total | |||||||||||||||||||||||||
Net assets of The Hartford Retirement Income Fund on February 20, 2009 | $ | 2,213 | $ | 290 | $ | 788 | N/A | $ | 38 | $ | 418 | $ | 91 | $ | 3,838 | |||||||||||||||||
The Hartford Retirement Income Fund shares exchanged | 305 | 40 | 108 | N/A | 5 | 58 | 13 | 529 | ||||||||||||||||||||||||
The Hartford Conservative Allocation Fund shares issued | 287 | 37 | 102 | N/A | 5 | 54 | 12 | 497 | ||||||||||||||||||||||||
Net assets of The Hartford Conservative Allocation Fund immediately before the merger | $ | 101,250 | $ | 18,900 | $ | 35,423 | $ | 340 | $ | 41 | $ | 6,085 | $ | 2,870 | $ | 164,909 | ||||||||||||||||
Net assets of The Hartford Conservative Allocation Fund immediately after the merger | $ | 103,463 | $ | 19,190 | $ | 36,211 | $ | 340 | $ | 79 | $ | 6,503 | $ | 2,961 | $ | 168,747 |
The Hartford Retirement Income Fund had the following unrealized depreciation, accumulated net realized losses and capital stock as of February 20, 2009. |
Unrealized | Accumulated Net | |||||||||||
Fund | Depreciation | Realized Losses | Capital Stock | |||||||||
The Hartford Retirement Income Fund | $ | (586 | ) | $ | (1,542 | ) | $ | 5,966 |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.30 | $ | 0 .15 | $ | — | $ | 0 .03 | $ | 0.18 | $ | (0.16 | ) | $ | — | $ | — | $ | (0.16 | ) | $ | 0.02 | $ | 8.32 | 2 .30 | %(e) | $ | 111,289 | 0 .63 | %(f) | 0 .63 | %(f) | 0 .63 | %(f) | 3 .85 | %(f) | 16 | % | ||||||||||||||||||||||||||||||||||
B | 8.30 | 0 .12 | — | 0 .03 | 0.15 | (0.13 | ) | — | — | (0.13 | ) | 0.02 | 8.32 | 1 .89 | (e) | 20,771 | 1 .48 | (f) | 1 .38 | (f) | 1 .38 | (f) | 3 .11 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 8.29 | 0 .12 | — | 0 .03 | 0.15 | (0.13 | ) | — | — | (0.13 | ) | 0.02 | 8.31 | 1 .90 | (e) | 38,063 | 1 .40 | (f) | 1 .38 | (f) | 1 .38 | (f) | 3 .12 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 8.29 | 0 .18 | — | 0 .01 | 0.19 | (0.17 | ) | — | — | (0.17 | ) | 0.02 | 8.31 | 2 .39 | (e) | 355 | 0 .41 | (f) | 0 .38 | (f) | 0 .38 | (f) | 4 .12 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 8.28 | 0 .12 | — | 0 .05 | 0.17 | (0.08 | ) | — | — | (0.08 | ) | 0.09 | 8.37 | 2 .09 | (e) | 189 | 1 .15 | (f) | 1 .06 | (f) | 1 .06 | (f) | 2 .90 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 8.29 | 0 .15 | — | 0 .03 | 0.18 | (0.16 | ) | — | — | (0.16 | ) | 0.02 | 8.31 | 2 .29 | (e) | 6,630 | 0 .66 | (f) | 0 .66 | (f) | 0 .66 | (f) | 3 .76 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 8.30 | 0 .16 | — | 0 .03 | 0.19 | (0.17 | ) | — | — | (0.17 | ) | 0.02 | 8.32 | 2 .44 | (e) | 3,455 | 0 .37 | (f) | 0 .37 | (f) | 0 .37 | (f) | 3 .90 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.63 | 0 .33 | — | (2 .84 | ) | (2.51 | ) | (0.42 | ) | (0.40 | ) | — | (0.82 | ) | (3.33 | ) | 8.30 | (22.99 | ) | 107,922 | 0.57 | 0.57 | 0.57 | 3.09 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 11.62 | 0 .24 | — | (2 .82 | ) | (2.58 | ) | (0.34 | ) | (0.40 | ) | — | (0.74 | ) | (3.32 | ) | 8.30 | (23.55 | ) | 20,703 | 1.40 | 1.40 | 1.40 | 2.29 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 11.62 | 0 .23 | — | (2 .81 | ) | (2.58 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (3.33 | ) | 8.29 | (23.57 | ) | 40,054 | 1.33 | 1.33 | 1.33 | 2.23 | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 11.61 | 0 .39 | — | (2 .86 | ) | (2.47 | ) | (0.45 | ) | (0.40 | ) | — | (0.85 | ) | (3.32 | ) | 8.29 | (22.73 | ) | 418 | 0.31 | 0.31 | 0.31 | 4.43 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 11.61 | 0 .32 | — | (2 .86 | ) | (2.54 | ) | (0.39 | ) | (0.40 | ) | — | (0.79 | ) | (3.33 | ) | 8.28 | (23.28 | ) | 269 | 0.97 | 0.97 | 0.97 | 2.01 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 11.62 | 0 .34 | — | (2 .85 | ) | (2.51 | ) | (0.42 | ) | (0.40 | ) | — | (0.82 | ) | (3.33 | ) | 8.29 | (23.01 | ) | 4,900 | 0.63 | 0.63 | 0.63 | 2.21 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 11.63 | 0 .39 | — | (2 .87 | ) | (2.48 | ) | (0.45 | ) | (0.40 | ) | — | (0.85 | ) | (3.33 | ) | 8.30 | (22.81 | ) | 2,097 | 0.34 | 0.34 | 0.34 | 2.84 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.16 | 0 .33 | — | 0 .81 | 1.14 | (0.38 | ) | (0.29 | ) | — | (0.67 | ) | 0.47 | 11.63 | 10.64 | 121,488 | 0.59 | 0.59 | 0.59 | 2.91 | 40 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.16 | 0 .25 | — | 0 .80 | 1.05 | (0.30 | ) | (0.29 | ) | — | (0.59 | ) | 0.46 | 11.62 | 9.81 | 25,903 | 1.42 | 1.28 | 1.28 | 2.25 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.15 | 0 .25 | — | 0 .81 | 1.06 | (0.30 | ) | (0.29 | ) | — | (0.59 | ) | 0.47 | 11.62 | 9.91 | 46,433 | 1.35 | 1.28 | 1.28 | 2.17 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I | 11.16 | 0 .38 | — | 0 .78 | 1.16 | (0.42 | ) | (0.29 | ) | — | (0.71 | ) | 0.45 | 11.61 | 10.86 | 1,502 | 0.27 | 0.27 | 0.27 | 2.64 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 10.95 | 0 .16 | — | 0 .70 | 0.86 | (0.20 | ) | — | — | (0.20 | ) | 0.66 | 11.61 | 7 .93 | (e) | 20 | 1 .05 | (f) | 1 .03 | (f) | 1 .03 | (f) | 1 .87 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 10.95 | 0 .20 | — | 0 .70 | 0.90 | (0.23 | ) | — | — | (0.23 | ) | 0.67 | 11.62 | 8 .25 | (e) | 429 | 0 .75 | (f) | 0 .75 | (f) | 0 .75 | (f) | 2 .26 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 10.95 | 0 .24 | — | 0 .68 | 0.92 | (0.24 | ) | — | — | (0.24 | ) | 0.68 | 11.63 | 8 .53 | (e) | 695 | 0 .48 | (f) | 0 .46 | (f) | 0 .46 | (f) | 2 .41 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.57 | 0 .26 | — | 0 .76 | 1.02 | (0.31 | ) | (0.12 | ) | — | (0.43 | ) | 0.59 | 11.16 | 9.85 | 93,504 | 0.64 | 0.63 | 0.63 | 2.41 | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.56 | 0 .19 | — | 0 .76 | 0.95 | (0.23 | ) | (0.12 | ) | — | (0.35 | ) | 0.60 | 11.16 | 9.19 | 20,782 | 1.48 | 1.31 | 1.31 | 1.73 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.56 | 0 .19 | — | 0 .76 | 0.95 | (0.24 | ) | (0.12 | ) | — | (0.36 | ) | 0.59 | 11.15 | 9.10 | 36,123 | 1.41 | 1.31 | 1.31 | 1.67 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 10.94 | 0 .07 | — | 0 .22 | 0.29 | (0.07 | ) | — | — | (0.07 | ) | 0.22 | 11.16 | 2 .69 | (e) | 10 | 0 .72 | (f) | 0 .41 | (f) | 0 .41 | (f) | 2 .07 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.27 | 0 .23 | — | 0 .28 | 0.51 | (0.21 | ) | — | — | (0.21 | ) | 0.30 | 10.57 | 4.96 | 70,533 | 0.63 | 0.60 | 0.60 | 2.25 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.26 | 0 .16 | — | 0 .28 | 0.44 | (0.14 | ) | — | — | (0.14 | ) | 0.30 | 10.56 | 4.26 | 14,525 | 1.48 | 1.26 | 1.26 | 1.60 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.26 | 0 .16 | — | 0 .28 | 0.44 | (0.14 | ) | — | — | (0.14 | ) | 0.30 | 10.56 | 4.26 | 27,453 | 1.42 | 1.26 | 1.26 | 1.56 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 28, 2004, through October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10.00 | 0 .03 | — | 0 .27 | 0.30 | (0.03 | ) | — | — | (0.03 | ) | 0.27 | 10.27 | 2 .96 | (e) | 33,921 | 0 .63 | (f) | 0 .60 | (f) | 0 .60 | (f) | 1 .70 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10.00 | 0 .02 | — | 0 .25 | 0.27 | (0.01 | ) | — | — | (0.01 | ) | 0.26 | 10.26 | 2 .70 | (e) | 4,993 | 1 .44 | (f) | 1 .25 | (f) | 1 .25 | (f) | 1 .05 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10.00 | 0 .02 | — | 0 .25 | 0.27 | (0.01 | ) | — | — | (0.01 | ) | 0.26 | 10.26 | 2 .70 | (e) | 10,807 | 1 .38 | (f) | 1 .25 | (f) | 1 .25 | (f) | 1 .17 | (f) | — |
(a) | Expense ratios do not include expenses of the underlying funds. | |
(b) | Information presented relates to a share outstanding throughout the indicated period. | |
(c) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(d) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(e) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. | |
(l) | Commenced operations on May 28, 2004. | |
(m) | Commenced operations on May 28, 2004. | |
(n) | Commenced operations on May 28, 2004. |
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Directors and Officers (Unaudited) — (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
20
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21
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,022.95 | $ | 3.16 | $ | 1,000.00 | $ | 1,021.67 | $ | 3.15 | 0.63 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,018.92 | $ | 6.90 | $ | 1,000.00 | $ | 1,017.95 | $ | 6.90 | 1.38 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,018.98 | $ | 6.90 | $ | 1,000.00 | $ | 1,017.95 | $ | 6.90 | 1.38 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,023.90 | $ | 1.90 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,020.92 | $ | 5.31 | $ | 1,000.00 | $ | 1,019.53 | $ | 5.30 | 1.06 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,022.88 | $ | 3.31 | $ | 1,000.00 | $ | 1,021.52 | $ | 3.30 | 0.66 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,024.38 | $ | 1.85 | $ | 1,000.00 | $ | 1,022.95 | $ | 1.85 | 0.37 | 181 | 365 |
22
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
21 | ||||
22 | ||||
24 | ||||
24 | ||||
25 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Disciplined Equity A# | 4/30/98 | -33.33 | % | -3.35 | % | -2.49 | % | -0.39 | % | |||||||||||
Disciplined Equity A## | 4/30/98 | -37.00 | % | -4.44 | % | -3.04 | % | -0.90 | % | |||||||||||
Disciplined Equity B# | 4/30/98 | -33.68 | % | -3.98 | % | NA | * | NA | * | |||||||||||
Disciplined Equity B## | 4/30/98 | -36.99 | % | -4.36 | % | NA | * | NA | * | |||||||||||
Disciplined Equity C# | 4/30/98 | -33.89 | % | -4.04 | % | -3.18 | % | -1.09 | % | |||||||||||
Disciplined Equity C## | 4/30/98 | -34.55 | % | -4.04 | % | -3.18 | % | -1.09 | % | |||||||||||
Disciplined Equity R3# | 4/30/98 | -33.60 | % | -3.23 | % | -2.18 | % | -0.06 | % | |||||||||||
Disciplined Equity R4# | 4/30/98 | -33.35 | % | -3.06 | % | -2.10 | % | 0.02 | % | |||||||||||
Disciplined Equity R5# | 4/30/98 | -33.13 | % | -2.93 | % | -2.03 | % | 0.08 | % | |||||||||||
Disciplined Equity Y# | 4/30/98 | -33.10 | % | -2.88 | % | -2.01 | % | 0.10 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. | |
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
James A. Rullo, CFA | Mammen Chally, CFA | |
Senior Vice President, Partner | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.4 | % | ||
Banks | 4.6 | |||
Capital Goods | 7.0 | |||
Commercial & Professional Services | 0.6 | |||
Consumer Services | 1.1 | |||
Diversified Financials | 1.6 | |||
Energy | 8.4 | |||
Food & Staples Retailing | 4.0 | |||
Food, Beverage & Tobacco | 6.1 | |||
Health Care Equipment & Services | 3.9 | |||
Insurance | 4.9 | |||
Materials | 1.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 15.6 | |||
Real Estate | 0.8 | |||
Retailing | 4.4 | |||
Semiconductors & Semiconductor Equipment | 1.8 | |||
Software & Services | 11.9 | |||
Technology Hardware & Equipment | 7.6 | |||
Telecommunication Services | 2.9 | |||
Transportation | 1.7 | |||
Utilities | 6.9 | |||
Short-Term Investments | 1.5 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
3
Table of Contents
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS—98.1% | ||||||||||||
Automobiles & Components—0.4% | ||||||||||||
112 | Ford Motor Co. • | $ | 669 | |||||||||
Banks—4.6% | ||||||||||||
68 | PNC Financial Services Group, Inc. | 2,708 | ||||||||||
236 | Wells Fargo & Co. | 4,728 | ||||||||||
7,436 | ||||||||||||
Capital Goods—7.0% | ||||||||||||
55 | Dover Corp. | 1,678 | ||||||||||
7 | First Solar, Inc. • | 1,236 | ||||||||||
20 | Fluor Corp. | 773 | ||||||||||
53 | Lockheed Martin Corp. | 4,138 | ||||||||||
26 | Precision Castparts Corp. | 1,976 | ||||||||||
14 | Raytheon Co. | 611 | ||||||||||
19 | United Technologies Corp. | 904 | ||||||||||
11,316 | ||||||||||||
Commercial & Professional Services—0.6% | ||||||||||||
22 | Manpower, Inc. Ø | 957 | ||||||||||
Consumer Services—1.1% | ||||||||||||
16 | Apollo Group, Inc. Class A • | 988 | ||||||||||
9 | ITT Educational Services, Inc. • | 867 | ||||||||||
1,855 | ||||||||||||
Diversified Financials—1.6% | ||||||||||||
20 | Goldman Sachs Group, Inc. | 2,621 | ||||||||||
Energy—8.4% | ||||||||||||
19 | ConocoPhillips Holding Co. | 795 | ||||||||||
9 | Diamond Offshore Drilling, Inc. | 673 | ||||||||||
23 | Hess Corp. | 1,266 | ||||||||||
91 | Marathon Oil Corp. | 2,703 | ||||||||||
51 | Nabors Industries Ltd. • | 782 | ||||||||||
24 | National Oilwell Varco, Inc. • | 724 | ||||||||||
68 | Occidental Petroleum Corp. | 3,833 | ||||||||||
34 | Range Resources Corp. | 1,347 | ||||||||||
36 | Ultra Petroleum Corp. • | 1,554 | ||||||||||
13,677 | ||||||||||||
Food & Staples Retailing—4.0% | ||||||||||||
37 | BJ’s Wholesale Club, Inc. • | 1,227 | ||||||||||
77 | Supervalu, Inc. | 1,265 | ||||||||||
79 | Wal-Mart Stores, Inc. | 4,002 | ||||||||||
6,494 | ||||||||||||
Food, Beverage & Tobacco—6.1% | ||||||||||||
156 | Altria Group, Inc. | 2,546 | ||||||||||
17 | Archer Daniels Midland Co. | 406 | ||||||||||
24 | Lorillard, Inc. | 1,509 | ||||||||||
36 | PepsiCo, Inc. | 1,801 | ||||||||||
101 | Philip Morris International, Inc. | 3,638 | ||||||||||
9,900 | ||||||||||||
Health Care Equipment & Services—3.9% | ||||||||||||
10 | Humana, Inc. • | 273 | ||||||||||
11 | McKesson Corp. Θ | 403 | ||||||||||
33 | Medtronic, Inc. | 1,066 | ||||||||||
67 | St. Jude Medical, Inc. • | 2,259 | ||||||||||
62 | UnitedHealth Group, Inc. | 1,461 | ||||||||||
22 | Wellpoint, Inc. • | 945 | ||||||||||
6,407 | ||||||||||||
Insurance—4.9% | ||||||||||||
6 | Aflac, Inc. | 170 | ||||||||||
72 | Allied World Assurance Holdings Ltd. | 2,685 | ||||||||||
78 | Axis Capital Holdings Ltd. | 1,917 | ||||||||||
28 | Everest Re Group Ltd. | 2,105 | ||||||||||
64 | Unum Group | 1,046 | ||||||||||
7,923 | ||||||||||||
Materials—1.9% | ||||||||||||
58 | Cliffs Natural Resources, Inc. | 1,331 | ||||||||||
19 | Mosaic Co. | 769 | ||||||||||
25 | Nucor Corp. Θ | 1,017 | ||||||||||
3,117 | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences—15.6% | ||||||||||||
43 | Abbott Laboratories | 1,816 | ||||||||||
77 | Amgen, Inc. • | 3,708 | ||||||||||
128 | Bristol-Myers Squibb Co. | 2,458 | ||||||||||
104 | Eli Lilly & Co. | 3,407 | ||||||||||
124 | Forest Laboratories, Inc. • | 2,694 | ||||||||||
34 | Gilead Sciences, Inc. • | 1,553 | ||||||||||
57 | Johnson & Johnson | 2,990 | ||||||||||
69 | Merck & Co., Inc. | 1,670 | ||||||||||
61 | Pfizer, Inc. | 808 | ||||||||||
101 | Schering-Plough Corp. | 2,313 | ||||||||||
47 | Wyeth | 2,010 | ||||||||||
25,427 | ||||||||||||
Real Estate—0.8% | ||||||||||||
97 | Annaly Capital Management, Inc. | 1,363 | ||||||||||
Retailing—4.4% | ||||||||||||
4 | Amazon.com, Inc. • | 330 | ||||||||||
204 | Gap, Inc. | 3,169 | ||||||||||
24 | Kohl’s Corp. • | 1,079 | ||||||||||
56 | Macy’s, Inc. | 766 | ||||||||||
40 | Staples, Inc. | 821 | ||||||||||
40 | TJX Cos., Inc. | 1,121 | ||||||||||
7,286 | ||||||||||||
Semiconductors & Semiconductor Equipment—1.8% | ||||||||||||
42 | Intel Corp. | 658 | ||||||||||
43 | Maxim Integrated Products, Inc. | 583 | ||||||||||
91 | Texas Instruments, Inc. | 1,634 | ||||||||||
2,875 | ||||||||||||
Software & Services—11.9% | ||||||||||||
78 | Accenture Ltd. Class A | 2,293 | ||||||||||
78 | BMC Software, Inc. • | 2,690 | ||||||||||
6 | Google, Inc. • | 2,495 | ||||||||||
2 | Mastercard, Inc. | 330 | ||||||||||
200 | Microsoft Corp. Θ | 4,048 | ||||||||||
163 | Oracle Corp. • | 3,143 | ||||||||||
37 | Symantec Corp. • | 642 | ||||||||||
30 | VeriSign, Inc. • | 611 | ||||||||||
179 | Western Union Co. | 3,000 | ||||||||||
19,252 | ||||||||||||
Technology Hardware & Equipment—7.6% | ||||||||||||
23 | Apple, Inc. • | 2,894 | ||||||||||
94 | Cisco Systems, Inc. • | 1,812 | ||||||||||
65 | Dell, Inc. •Θ | 755 | ||||||||||
84 | Hewlett-Packard Co. Θ | 3,012 | ||||||||||
23 | International Business Machines Corp. | 2,363 | ||||||||||
231 | Xerox Corp. | 1,413 | ||||||||||
12,249 | ||||||||||||
Telecommunication Services—2.9% | ||||||||||||
153 | AT&T, Inc. | 3,908 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 98.1%—(continued) | ||||||||||||
Telecommunication Services—2.9%—(continued) | ||||||||||||
27 | Century Tel, Inc. | $ | 741 | |||||||||
4,649 | ||||||||||||
Transportation—1.7% | ||||||||||||
8 | C.H. Robinson Worldwide, Inc. | 415 | ||||||||||
30 | FedEx Corp. Θ | 1,684 | ||||||||||
24 | J.B. Hunt Transport Services, Inc. | 669 | ||||||||||
2,768 | ||||||||||||
Utilities—6.9% | ||||||||||||
20 | Edison International | 562 | ||||||||||
43 | Entergy Corp. | 2,778 | ||||||||||
61 | Exelon Corp. Θ | 2,814 | ||||||||||
58 | FirstEnergy Corp. | 2,372 | ||||||||||
11 | PG&E Corp. | 390 | ||||||||||
101 | UGI Corp. | 2,306 | ||||||||||
11,222 | ||||||||||||
Total common stocks (cost $188,960) | $ | 159,463 | ||||||||||
Total long-term investments (cost $188,960) | $ | 159,463 | ||||||||||
SHORT-TERM INVESTMENTS—1.5% | ||||||||||||
Repurchase Agreements—1.5% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $558, collateralized by GNMA 4.50%—6.50%, 2038—2039, value of $569) | ||||||||||||
$ | 558 | 0.18%, 04/30/2009 | $ | 558 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $668, collateralized by FHLMC 4.50%—6.50%, 2035—2039, FNMA 4.50%—6.50%, 2034—2047, value of $681) | ||||||||||||
668 | 0.17%, 04/30/2009 | 668 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $933, collateralized by FHLMC 4.00%—7.00%, 2021—2039, FNMA 6.00%—7.00%, 2034—2038, GNMA 4.50%—7.00%, 2024—2039, value of $952) | ||||||||||||
933 | 0.17%, 04/30/2009 | 933 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $3, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $3) | ||||||||||||
3 | 0.14%, 04/30/2009 | 3 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $201, collateralized by FHLMC 8.00%—15.00%, 2009—2021, FNMA 3.50%—15.50%, 2012— 2039, value of $205) | ||||||||||||
$ | 201 | 0.16%, 04/30/2009 | 201 | |||||||||
2,363 | ||||||||||||
Total short-term investments (cost $2,363) | $ | 2,363 | ||||||||||
Total investments (cost $191,323) ▲ | 99.6 | % | $ | 161,826 | ||||||||
Other assets and liabilities | 0.4 | % | 701 | |||||||||
Total net assets | 100.0 | % | $ | 162,527 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $191,649 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 5,691 | ||
Unrealized Depreciation | (35,514 | ) | ||
Net Unrealized Depreciation | $ | (29,823 | ) | |
• | Currently non-income producing. | |
Θ | At April 30, 2009, these securities were designated to cover open call options written as follows: |
Number of | Exercise | Exercise | Market | Premiums | |||||||||||||||||
Issuer | Contracts* | Price | Date | Value ╪ | Received | ||||||||||||||||
Dell, Inc. | 163 | $ | 11.00 | May 2009 | $ | 14 | 3 | ||||||||||||||
Exelon Corp. | 67 | 50.00 | May 2009 | — | 7 | ||||||||||||||||
FedEx Corp. | 29 | 60.00 | May 2009 | 2 | 2 | ||||||||||||||||
Hewlett Packard Co. | 45 | 37.50 | May 2009 | 2 | 2 | ||||||||||||||||
McKesson Corp. | 27 | 37.50 | May 2009 | 3 | 3 | ||||||||||||||||
Microsoft Corp. | 131 | 19.00 | May 2009 | 19 | 13 | ||||||||||||||||
Nucor Corp. | 38 | 47.50 | May 2009 | 1 | 5 | ||||||||||||||||
$ | 41 | $ | 35 | ||||||||||||||||||
* | The number of contracts does not omit 000’s. |
5
Table of Contents
Schedule of Investments—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Ø | At April 30, 2009, securities valued at $264 and cash of $438 were designated to cover open put options written as follows: |
Market | ||||||||||||||||||||
Number of | Exercise | Exercise | Value | Premiums | ||||||||||||||||
Issuer | Contracts* | Price | Date | ╪ | Received | |||||||||||||||
Apollo Investment Corp. | 28 | $ | 55.00 | May 2009 | $ | 2 | $ | 5 | ||||||||||||
Cliff’s Natural Resources, Inc. | 75 | $ | 17.50 | May 2009 | $ | 1 | $ | 4 | ||||||||||||
Dell, Inc. | 163 | $ | 8.00 | May 2009 | $ | — | $ | 4 | ||||||||||||
Gilead Sciences, Inc. | 34 | $ | 44.00 | May 2009 | $ | 3 | $ | 4 | ||||||||||||
Symantec Corp. | 91 | $ | 15.00 | May 2009 | $ | 2 | $ | 4 | ||||||||||||
$ | 8 | $ | 21 | |||||||||||||||||
* | The number of contracts does not omit 000’s. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
S&P 500 Mini | 56 | Long | Jun 2009 | $ | 278 | |||||||||||
* | The number of contracts does not omit 000’s. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 159,463 | ||
Investment in securities — Level 2 | 2,363 | |||
Total | $ | 161,826 | ||
Other financial instruments — Level 1 * | $ | 302 | ||
Total | $ | 302 | ||
Liabilities: | ||||
Other financial instruments — Level 1 * | $ | 17 | ||
Total | $ | 17 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
6
Table of Contents
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $191,323) | $ | 161,826 | ||
Cash | 690 | *† | ||
Receivables: | ||||
Investment securities sold | 1,350 | |||
Fund shares sold | 11 | |||
Dividends and interest | 203 | |||
Variation margin | 3 | |||
Other assets | 78 | |||
Total assets | 164,161 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,185 | |||
Fund shares redeemed | 279 | |||
Investment management fees | 20 | |||
Distribution fees | 7 | |||
Accrued expenses | 94 | |||
Written options | 49 | |||
Total liabilities | 1,634 | |||
Net assets | $ | 162,527 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 255,659 | |||
Accumulated undistributed net investment income | 813 | |||
Accumulated net realized loss on investments | (64,733 | ) | ||
Unrealized depreciation of investments | (29,212 | ) | ||
Net assets | $ | 162,527 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.82/$9.33 | ||
Shares outstanding | 8,882 | |||
Net assets | $ | 78,320 | ||
Class B: Net asset value per share | $ | 8.37 | ||
Shares outstanding | 1,074 | |||
Net assets | $ | 8,992 | ||
Class C: Net asset value per share | $ | 8.35 | ||
Shares outstanding | 1,340 | |||
Net assets | $ | 11,187 | ||
Class R3: Net asset value per share | $ | 9.04 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class R4: Net asset value per share | $ | 9.03 | ||
Shares outstanding | 5 | |||
Net assets | $ | 46 | ||
Class R5: Net asset value per share | $ | 9.07 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class Y: Net asset value per share | $ | 9.07 | ||
Shares outstanding | 7,051 | |||
Net assets | $ | 63,968 | ||
* | Cash of $438 was designated to cover open put options written. | |
† | Cash of $252 was designated to cover open futures contracts. |
7
Table of Contents
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 2,134 | ||
Interest | 2 | |||
Securities lending | — | |||
Total investment income | 2,136 | |||
Expenses: | ||||
Investment management fees | 602 | |||
Transfer agent fees | 269 | |||
Distribution fees | ||||
Class A | 100 | |||
Class B | 49 | |||
Class C | 58 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 4 | |||
Accounting services | 13 | |||
Registration and filing fees | 37 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 5 | |||
Other expenses | 45 | |||
Total expenses (before waivers and fees paid indirectly) | 1,185 | |||
Expense waivers | (158 | ) | ||
Transfer agent fee waivers | (114 | ) | ||
Commission recapture | (2 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (274 | ) | ||
Total expenses, net | 911 | |||
Net investment income | 1,225 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (30,748 | ) | ||
Net realized gain on futures and written options | 105 | * | ||
Net Realized Loss on Investments and Other Financial Instruments | (30,643 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 19,993 | |||
Net unrealized appreciation of futures and written options | 170 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 20,163 | |||
Net Loss on Investments and Other Financial Instruments | (10,480 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (9,255 | ) | |
* | Realized gains on written options were $153. |
8
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,225 | $ | 1,270 | ||||
Net realized loss on investments and other financial instruments | (30,643 | ) | (23,436 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 20,163 | (97,417 | ) | |||||
Net decrease in net assets resulting from operations | (9,255 | ) | (119,583 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (511 | ) | (266 | ) | ||||
Class R3 | — | — | ||||||
Class R4 | (1 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (828 | ) | (754 | ) | ||||
Total distributions | (1,340 | ) | (1,020 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (8,612 | ) | (24,705 | ) | ||||
Class B | (2,245 | ) | (9,365 | ) | ||||
Class C | (1,701 | ) | (3,758 | ) | ||||
Class R3 | (3 | ) | 6 | |||||
Class R4 | 37 | 1 | ||||||
Class R5 | — | — | ||||||
Class Y | (444 | ) | (234 | ) | ||||
Net decrease from capital share transactions | (12,968 | ) | (38,055 | ) | ||||
Net decrease in net assets | (23,563 | ) | (158,658 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 186,090 | 344,748 | ||||||
End of period | $ | 162,527 | $ | 186,090 | ||||
Accumulated undistributed net investment income | $ | 813 | $ | 928 | ||||
9
Table of Contents
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Disciplined Equity Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income—Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation—The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading |
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restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Securities Lending—The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that |
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April 30, 2009 (Unaudited)
(000’s Omitted)
the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
d) | Joint Trading Account—Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Fund Share Valuation and Dividend Distributions to Shareholders—Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
g) | Illiquid and Restricted Securities—The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund had no illiquid or restricted securities as of April 30, 2009. |
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h) | Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157—Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4—In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, |
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April 30, 2009 (Unaudited)
(000’s Omitted)
management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161—In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions—The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. Transactions involving written option contracts for the Fund during the six-month period ended April 30, 2009, are summarized below: |
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Call Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 2,344 | 153 | ||||||
Expired | (1,559 | ) | (101 | ) | ||||
Closed | (285 | ) | (17 | ) | ||||
Exercised | — | — | ||||||
End of Period | 500 | $ | 35 | |||||
Put Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 1,924 | 101 | ||||||
Expired | (1,113 | ) | (61 | ) | ||||
Closed | (192 | ) | (12 | ) | ||||
Exercised | (228 | ) | (7 | ) | ||||
End of Period | 391 | $ | 21 | |||||
* | The number of contracts does not omit 000’s. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes—For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 1,020 | $ | 2,100 |
Amount | ||||
Undistributed Ordinary Income | $ | 928 | ||
Accumulated Capital Losses* | $ | (33,649 | ) | |
Unrealized Depreciation† | $ | (49,816 | ) | |
Total Accumulated Deficit | $ | (82,537 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Reclassification of Capital Accounts—In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $8, increase accumulated net realized gain by $7, and increase paid in capital by $1. | ||
d) | Capital Loss Carryforward—At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2011 | $ | 10,424 | ||
2016 | 23,225 | |||
Total | $ | 33,649 | ||
e) | Financial Accounting Standards Board Interpretation No. 48—On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements—Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.7500 | % | ||
On next $500 million | 0.6750 | % | ||
On next $4 billion | 0.6250 | % | ||
On next $5 billion | 0.6225 | % | ||
Over $10 billion | 0.6200 | % |
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b) | Accounting Services Agreement—Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
c) | Operating Expenses —Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||||||||||||||
1.35% | 2.10 | % | 2.10 | % | 1.60 | % | 1.30 | % | 1.00 | % | 0.95 | % |
d) | Fees Paid Indirectly—The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.14 | % | 1.40 | % | 1.40 | % | 1.39 | % | 1.38 | % | 1.44 | % | ||||||||||||
Class B Shares | 1.54 | 1.94 | 2.08 | 2.07 | 2.13 | 2.14 | ||||||||||||||||||
Class C Shares | 2.01 | 2.12 | 2.09 | 2.09 | 2.10 | 2.09 | ||||||||||||||||||
Class R3 Shares | 1.53 | 1.65 | 1.65 | * | ||||||||||||||||||||
Class R4 Shares | 1.30 | 1.28 | 1.34 | † | ||||||||||||||||||||
Class R5 Shares | 0.99 | 0.99 | 1.05 | ‡ | ||||||||||||||||||||
Class Y Shares | 0.89 | 0.88 | 0.88 | 0.88 | 0.89 | 0.87 |
* | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares—HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $50 and contingent deferred sales charges of $7 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of |
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $6. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions—Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $172 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from Payment | ||||||||||||||||
from Affiliate for | ||||||||||||||||
Impact from | Total Return | Transfer Agent | ||||||||||||||
Payment from | Excluding | Allocation | Total Return | |||||||||||||
Affiliate for SEC | Payment from | Methodology | Excluding Payment | |||||||||||||
Settlement for the | Affiliate for the | Reimbursements for | from Affiliate for | |||||||||||||
Year Ended | Year Ended | the Year Ended | the Year Ended | |||||||||||||
October 31, 2007 | October 31, 2007 | October 31, 2004 | October 31, 2004 | |||||||||||||
Class A | 0.08 | % | 13.78 | % | — | % | — | % | ||||||||
Class B | 0.08 | 13.05 | — | — | ||||||||||||
Class C | 0.08 | 12.98 | 0.01 | 5.24 | ||||||||||||
Class Y | 0.07 | 14.37 | — | — |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 | |||
Class R4 | 1 | |||
Class R5 | 1 |
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Table of Contents
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 58,832 | ||
Sales Proceeds Excluding U.S. Government Obligations | 71,168 |
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 704 | 57 | (1,813 | ) | — | (1,052 | ) | 825 | 18 | (2,793 | ) | — | (1,950 | ) | ||||||||||||||||||||||||||
Amount | $ | 6,022 | $ | 494 | $ | (15,128 | ) | $ | — | $ | (8,612 | ) | $ | 10,605 | $ | 259 | $ | (35,569 | ) | $ | — | $ | (24,705 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 35 | — | (316 | ) | — | (281 | ) | 68 | — | (830 | ) | — | (762 | ) | ||||||||||||||||||||||||||
Amount | $ | 285 | $ | — | $ | (2,530 | ) | $ | — | $ | (2,245 | ) | $ | 825 | $ | — | $ | (10,190 | ) | $ | — | $ | (9,365 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 113 | — | (329 | ) | — | (216 | ) | 102 | — | (414 | ) | — | (312 | ) | ||||||||||||||||||||||||||
Amount | $ | 920 | $ | — | $ | (2,621 | ) | $ | — | $ | (1,701 | ) | $ | 1,215 | $ | — | $ | (4,973 | ) | $ | — | $ | (3,758 | ) | ||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 2 | $ | — | $ | (5 | ) | $ | — | $ | (3 | ) | $ | 6 | $ | — | $ | — | $ | — | $ | 6 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 4 | — | — | — | 4 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 36 | $ | 1 | $ | — | $ | — | $ | 37 | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 710 | 93 | (806 | ) | — | (3 | ) | 665 | 51 | (860 | ) | — | (144 | ) | ||||||||||||||||||||||||||
Amount | $ | 5,854 | $ | 829 | $ | (7,127 | ) | $ | — | $ | (444 | ) | $ | 8,318 | $ | 754 | $ | (9,306 | ) | $ | — | $ | (234 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 106 | $ | 895 | |||||
For the Year Ended October 31, 2008 | 229 | $ | 3,024 |
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
19
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
20
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.31 | $ | 0 .06 | $ | — | $ | (0 .50 | ) | $ | (0 .44 | ) | $ | (0 .05 | ) | $ | — | $ | — | $ | (0 .05 | ) | $ | (0 .49 | ) | $ | 8.82 | (4 .68 | )%(f) | $ | 78,320 | 1 .64 | %(g) | 1 .14 | %(g) | 1 .14 | %(g) | 1 .52 | %(g) | 36 | % | |||||||||||||||||||||||||||||||
B | 8.80 | 0 .05 | — | (0 .48 | ) | (0 .43 | ) | — | — | — | — | (0 .43 | ) | 8.37 | (4 .89 | ) (f) | 8,992 | 2 .74 | (g) | 1 .54 | (g) | 1 .54 | (g) | 1 .13 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 8.80 | 0 .03 | — | (0 .48 | ) | (0 .45 | ) | — | — | — | — | (0 .45 | ) | 8.35 | (5 .11 | ) (f) | 11,187 | 2 .27 | (g) | 2 .01 | (g) | 2 .01 | (g) | 0 .65 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 9.56 | 0 .05 | — | (0 .52 | ) | (0 .47 | ) | (0 .05 | ) | — | — | (0 .05 | ) | (0 .52 | ) | 9.04 | (4 .91 | ) (f) | 7 | 2 .03 | (g) | 1 .53 | (g) | 1 .53 | (g) | 1 .17 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 9.60 | 0 .06 | — | (0 .52 | ) | (0 .46 | ) | (0 .11 | ) | — | — | (0 .11 | ) | (0 .57 | ) | 9.03 | (4 .75 | ) (f) | 46 | 1 .34 | (g) | 1 .30 | (g) | 1 .30 | (g) | 1 .29 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 9.62 | 0 .07 | — | (0 .51 | ) | (0 .44 | ) | (0 .11 | ) | — | — | (0 .11 | ) | (0 .55 | ) | 9.07 | (4 .56 | ) (f) | 7 | 1 .00 | (g) | 1 .00 | (g) | 1 .00 | (g) | 1 .66 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 9.64 | 0 .08 | — | (0 .53 | ) | (0 .45 | ) | (0 .12 | ) | — | — | (0 .12 | ) | (0 .57 | ) | 9.07 | (4 .54 | ) (f) | 63,968 | 0 .89 | (g) | 0 .89 | (g) | 0 .89 | (g) | 1 .76 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.91 | 0 .05 | — | (5 .63 | ) | (5 .58 | ) | (0 .02 | ) | — | — | (0 .02 | ) | (5 .60 | ) | 9.31 | (37 .46 | ) | 92,476 | 1 .44 | 1 .40 | 1 .40 | 0 .36 | 69 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.16 | (0 .05 | ) | — | (5 .31 | ) | (5 .36 | ) | — | — | — | — | (5 .36 | ) | 8.80 | (37 .85 | ) | 11,931 | 2 .39 | 1 .95 | 1 .95 | (0 .18 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.17 | (0 .06 | ) | — | (5 .31 | ) | (5 .37 | ) | — | — | — | — | (5 .37 | ) | 8.80 | (37 .90 | ) | 13,691 | 2 .13 | 2 .13 | 2 .13 | (0 .36 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 15.33 | 0 .01 | — | (5 .78 | ) | (5 .77 | ) | — | — | — | — | (5 .77 | ) | 9.56 | (37 .64 | ) | 11 | 1 .87 | 1 .65 | 1 .65 | 0 .12 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 15.37 | 0 .06 | — | (5 .79 | ) | (5 .73 | ) | (0 .04 | ) | — | — | (0 .04 | ) | (5 .77 | ) | 9.60 | (37 .37 | ) | 8 | 1 .28 | 1 .28 | 1 .28 | 0 .48 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 15.41 | 0 .10 | — | (5 .81 | ) | (5 .71 | ) | (0 .08 | ) | — | — | (0 .08 | ) | (5 .79 | ) | 9.62 | (37 .23 | ) | 7 | 0 .99 | 0 .99 | 0 .99 | 0 .77 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.43 | 0 .12 | — | (5 .81 | ) | (5 .69 | ) | (0 .10 | ) | — | — | (0 .10 | ) | (5 .79 | ) | 9.64 | (37 .09 | ) | 67,966 | 0 .89 | 0 .89 | 0 .89 | 0 .88 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.19 | 0 .04 | 0 .01 | 1 .77 | 1 .82 | (0 .10 | ) | — | — | (0 .10 | ) | 1 .72 | 14.91 | 13 .87 | (h) | 177,170 | 1 .40 | 1 .40 | 1 .40 | 0 .32 | 72 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.53 | (0 .07 | ) | 0 .01 | 1 .70 | 1 .64 | (0 .01 | ) | — | — | (0 .01 | ) | 1 .63 | 14.16 | 13 .14 | (h) | 29,968 | 2 .31 | 2 .08 | 2 .08 | (0 .35 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.54 | (0 .07 | ) | 0 .01 | 1 .70 | 1 .64 | (0 .01 | ) | — | — | (0 .01 | ) | 1 .63 | 14.17 | 13 .07 | (h) | 26,479 | 2 .09 | 2 .09 | 2 .09 | (0 .37 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 13.89 | — | — | 1 .44 | 1 .44 | — | — | — | — | 1 .44 | 15.33 | 10 .37 | (f) | 11 | 1 .65 | (g) | 1 .65 | (g) | 1 .65 | (g) | (0 .03 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 13.89 | 0 .03 | — | 1 .45 | 1 .48 | — | — | — | — | 1 .48 | 15.37 | 10 .66 | (f) | 11 | 1 .34 | (g) | 1 .34 | (g) | 1 .34 | (g) | 0 .28 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 13.89 | 0 .07 | — | 1 .45 | 1 .52 | — | — | — | — | 1 .52 | 15.41 | 10 .94 | (f) | 11 | 1 .05 | (g) | 1 .05 | (g) | 1 .05 | (g) | 0 .57 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.58 | 0 .19 | 0 .01 | 1 .75 | 1 .95 | (0 .10 | ) | — | — | (0 .10 | ) | 1 .85 | 15.43 | 14 .45 | (h) | 111,098 | 0 .88 | 0 .88 | 0 .88 | 0 .86 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.78 | 0 .04 | — | 1 .39 | 1 .43 | (0 .02 | ) | — | — | (0 .02 | ) | 1 .41 | 13.19 | 12 .13 | 189,375 | 1 .40 | 1 .40 | 1 .40 | 0 .39 | 67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.25 | (0 .03 | ) | — | 1 .31 | 1 .28 | — | — | — | — | 1 .28 | 12.53 | 11 .38 | 35,673 | 2 .30 | 2 .07 | 2 .07 | (0 .28 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.26 | (0 .04 | ) | — | 1 .32 | 1 .28 | — | — | — | — | 1 .28 | 12.54 | 11 .37 | 29,153 | 2 .10 | 2 .10 | 2 .10 | (0 .31 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.12 | 0 .14 | — | 1 .40 | 1 .54 | (0 .08 | ) | — | — | (0 .08 | ) | 1 .46 | 13.58 | 12 .76 | 169,614 | 0 .89 | 0 .89 | 0 .89 | 0 .88 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.67 | 0 .10 | — | 1 .09 | 1 .19 | (0 .08 | ) | — | — | (0 .08 | ) | 1 .11 | 11.78 | 11 .19 | 209,721 | 1 .41 | 1 .40 | 1 .40 | 0 .81 | 61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.20 | (0 .02 | ) | — | 1 .08 | 1 .06 | (0 .01 | ) | — | — | (0 .01 | ) | 1 .05 | 11.25 | 10 .35 | 39,806 | 2 .34 | 2 .15 | 2 .15 | 0 .06 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.22 | (0 .02 | ) | — | 1 .07 | 1 .05 | (0 .01 | ) | — | — | (0 .01 | ) | 1 .04 | 11.26 | 10 .29 | 33,690 | 2 .11 | 2 .11 | 2 .11 | 0 .12 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.99 | 0 .15 | — | 1 .12 | 1 .27 | (0 .14 | ) | — | — | (0 .14 | ) | 1 .13 | 12.12 | 11 .62 | 81,582 | 0 .90 | 0 .90 | 0 .90 | 0 .97 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.08 | 0 .03 | — | 0 .57 | 0 .60 | (0 .01 | ) | — | — | (0 .01 | ) | 0 .59 | 10.67 | 5 .92 | 241,014 | 1 .46 | 1 .45 | 1 .45 | 0 .30 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.70 | (0 .05 | ) | — | 0 .55 | 0 .50 | — | — | — | — | 0 .50 | 10.20 | 5 .16 | 44,561 | 2 .34 | 2 .15 | 2 .15 | (0 .41 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.71 | (0 .05 | ) | — | 0 .56 | 0 .51 | — | — | — | — | 0 .51 | 10.22 | 5 .25 | (h) | 40,965 | 2 .10 | 2 .10 | 2 .10 | (0 .36 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.36 | (0 .01 | ) | — | 0 .69 | 0 .68 | (0 .05 | ) | — | — | (0 .05 | ) | 0 .63 | 10.99 | 6 .55 | 19,578 | 0 .88 | 0 .88 | 0 .88 | 0 .95 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. |
21
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22
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007—2009). |
23
Table of Contents
Directors and Officers (Unaudited)—(continued)
24
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 953.17 | $ | 5.52 | $ | 1,000.00 | $ | 1,019.14 | $ | 5.70 | 1.14 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 951.13 | $ | 7.45 | $ | 1,000.00 | $ | 1,017.15 | $ | 7.70 | 1.54 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 948.86 | $ | 9.71 | $ | 1,000.00 | $ | 1,014.82 | $ | 10.04 | 2.01 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 950.86 | $ | 7.40 | $ | 1,000.00 | $ | 1,017.20 | $ | 7.65 | 1.53 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 952.49 | $ | 6.29 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 954.40 | $ | 4.84 | $ | 1,000.00 | $ | 1,019.83 | $ | 5.00 | 1.00 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 954.58 | $ | 4.31 | $ | 1,000.00 | $ | 1,020.38 | $ | 4.45 | 0.89 | 181 | 365 |
25
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 |
Table of Contents
Inception | Since | |||||||
Date | Inception | |||||||
Diversified International A# | 6/30/08 | -42.32 | % | |||||
Diversified International A## | 6/30/08 | -45.49 | % | |||||
Diversified International B# | 6/30/08 | -42.70 | % | |||||
Diversified International B## | 6/30/08 | -45.57 | % | |||||
Diversified International C# | 6/30/08 | -42.70 | % | |||||
Diversified International C## | 6/30/08 | -43.27 | % | |||||
Diversified International I# | 6/30/08 | -42.15 | % | |||||
Diversified International R3# | 6/30/08 | -42.48 | % | |||||
Diversified International R4# | 6/30/08 | -42.38 | % | |||||
Diversified International R5# | 6/30/08 | -42.18 | % | |||||
Diversified International Y# | 6/30/08 | -42.14 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Cheryl M. Duckworth, CFA | Andrew S. Offit, CPA | Vera M. Trojan, CFA | ||
Senior Vice President | Senior Vice President | Senior Vice President | ||
Theodore B.P. Jayne, CFA | David Elliott, CFA | |||
Vice President | Vice President |
2
Table of Contents
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 4.2 | % | ||
Banks | 11.8 | |||
Capital Goods | 6.4 | |||
Commercial & Professional Services | 1.0 | |||
Consumer Durables & Apparel | 1.8 | |||
Consumer Services | 0.7 | |||
Diversified Financials | 4.3 | |||
Energy | 8.9 | |||
Food & Staples Retailing | 2.0 | |||
Food, Beverage & Tobacco | 5.9 | |||
Health Care Equipment & Services | 1.3 | |||
Household & Personal Products | 0.1 | |||
Insurance | 3.8 | |||
Materials | 9.1 | |||
Media | 1.4 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 6.9 | |||
Real Estate | 1.5 | |||
Retailing | 3.8 | |||
Semiconductors & Semiconductor Equipment | 2.6 | |||
Software & Services | 2.0 | |||
Technology Hardware & Equipment | 4.3 | |||
Telecommunication Services | 5.4 | |||
Transportation | 2.3 | |||
Utilities | 5.2 | |||
Short-Term Investments | 1.5 | |||
Other Assets and Liabilities | 1.8 | |||
Total | 100.0 | % | ||
3
Table of Contents
Percentage of | ||||
Country | Net Assets | |||
Australia | 0.8 | % | ||
Austria | 0.7 | |||
Belgium | 0.9 | |||
Brazil | 3.1 | |||
Canada | 3.4 | |||
China | 1.1 | |||
Denmark | 0.7 | |||
Egypt | 0.1 | |||
Finland | 0.8 | |||
France | 8.7 | |||
Germany | 7.3 | |||
Greece | 0.2 | |||
Hong Kong | 2.1 | |||
India | 1.1 | |||
Ireland | 1.1 | |||
Israel | 0.9 | |||
Italy | 2.4 | |||
Japan | 13.0 | |||
Luxembourg | 0.8 | |||
Malaysia | 0.2 | |||
Mauritius | 0.1 | |||
Mexico | 0.3 | |||
Netherlands | 3.1 | |||
New Zealand | 0.0 | |||
Norway | 0.8 | |||
Panama | 0.1 | |||
Papua New Guinea | 0.1 | |||
Peru | 0.1 | |||
Philippines | 0.0 | |||
Portugal | 0.1 | |||
Russia | 1.5 | |||
Singapore | 0.4 | |||
South Africa | 1.4 | |||
South Korea | 1.6 | |||
Spain | 3.0 | |||
Sweden | 1.9 | |||
Switzerland | 7.9 | |||
Taiwan | 2.1 | |||
Thailand | 0.3 | |||
Turkey | 0.4 | |||
United Kingdom | 20.1 | |||
United States | 2.0 | |||
Short-Term Investments | 1.5 | |||
Other Assets and Liabilities | 1.8 | |||
Total | 100.0 | % | ||
4
Table of Contents
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1% | ||||||||
Australia—0.8% | ||||||||
5 | ABC Learning Centres Ltd. ⌂ • † | $ | — | |||||
2 | Australian Worldwide Exploration Ltd. | 4 | ||||||
1 | Avoca Resources Ltd. • | 1 | ||||||
1 | AWB Ltd. | 1 | ||||||
— | Bradken Ltd. | 1 | ||||||
1 | Challenger Financial Services Group Ltd. | 1 | ||||||
1 | Coffey International Ltd. | 2 | ||||||
1 | CSL Ltd. | 31 | ||||||
2 | Dominion Mining Ltd. | 7 | ||||||
6 | Elders Ltd. | 2 | ||||||
8 | Emeco Holdings Ltd. | 2 | ||||||
4 | ING Office Fund | 1 | ||||||
7 | Macquarie CountryWide Trust | 2 | ||||||
15 | Macquarie Office Trust | 2 | ||||||
2 | Mount Gibson Iron Ltd. • | 1 | ||||||
4 | Pacific Brands Ltd. | 2 | ||||||
6 | Pan Pacific Petroleum • | 1 | ||||||
4 | PaperlinX Ltd. | 2 | ||||||
4 | PMP Ltd. | 1 | ||||||
1 | Rio Tinto Ltd. | 41 | ||||||
7 | Sigma Pharmaceuticals Ltd. | 6 | ||||||
10 | Virgin Blue Holdings Ltd. | 2 | ||||||
113 | ||||||||
Austria—0.7% | ||||||||
— | BWIN Interactive Entertainment • | 7 | ||||||
3 | OMV AG | 84 | ||||||
91 | ||||||||
Belgium—0.9% | ||||||||
— | Delhaize-Le Lion S.A. | 20 | ||||||
— | D’ieteren S.A. | 1 | ||||||
— | GIMV NPV | 1 | ||||||
10 | Hansen Transmissions • | 21 | ||||||
— | Nyrstar N.V. | 3 | ||||||
— | Omega Pharma S.A. | 3 | ||||||
— | Sipef N.V. | 1 | ||||||
— | Tessenderlo Chemie N.V. | 7 | ||||||
2 | UCB S.A. | 45 | ||||||
— | Umicore | 6 | ||||||
— | Wereldhave Belgium | 1 | ||||||
109 | ||||||||
Brazil—3.1% | ||||||||
4 | Banco do Estado do Rio Grande do Sul S.A. | 14 | ||||||
3 | BM & F Bovespa S.A. | 13 | ||||||
— | Companhai Brasileira de Distribuicao Grupo Pao de Acucar ADR | 7 | ||||||
— | Companhia de Bebidas das Americas ADR | 4 | ||||||
2 | Companhia Energetica de Minas Gerais | 29 | ||||||
3 | Companhia Energetica de Minas Gerais ADR | 45 | ||||||
3 | Companhia Vale do Rio Doce ADR | 54 | ||||||
1 | Cyrela Brazil Realty S.A. | 6 | ||||||
9 | Itau Unibanco Banco Multiplo S.A. ADR | 125 | ||||||
2 | Petroleo Brasileiro S.A. ADR | 67 | ||||||
1 | Tele Norte Leste Participacoes S.A. ADR | 19 | ||||||
— | Weg S.A. | 3 | ||||||
386 | ||||||||
Canada—3.4% | ||||||||
— | Aecon Group, Inc. | 3 | ||||||
— | Agrium U.S., Inc. | 17 | ||||||
1 | Agrium, Inc. | 22 | ||||||
1 | Alamos Gold, Inc. • | 4 | ||||||
— | Alimentation Couche-Tard, Inc. Class B | 1 | ||||||
— | Altius Minerals Corp. | 2 | ||||||
— | Atrium Innovations, Inc. • | 2 | ||||||
1 | ATS Automation Tooling Systems, Inc. • | 2 | ||||||
1 | Bank of Nova Scotia | 17 | ||||||
1 | Biovail Corp. | 8 | ||||||
1 | Cameco Corp. | 32 | ||||||
1 | Canadian Natural Resources Ltd. | 28 | ||||||
— | Canam Group, Inc. | 3 | ||||||
1 | Cascades, Inc. | 3 | ||||||
1 | Celestica, Inc. • | 6 | ||||||
— | Constellation Software, Inc. | 3 | ||||||
1 | EnCana Corp. | 23 | ||||||
— | Enerflex Systems Income Fund • | 2 | ||||||
— | Enghouse Systems Ltd. | 2 | ||||||
— | Equitable Group, Inc. | 4 | ||||||
— | Flint Energy Services Ltd. | 2 | ||||||
1 | Highpine Oil & Gas Ltd. • | 7 | ||||||
— | Home Capital Group, Inc. | 10 | ||||||
— | Laurentian Bank of Canada | 8 | ||||||
— | Miranda Technologies, Inc. • | 1 | ||||||
— | MOSAID Technologies, Inc. | 1 | ||||||
1 | Patheon, Inc. • | 1 | ||||||
1 | Petro Andina Resources, Inc. • | 4 | ||||||
1 | Potash Corp. of Saskatchewan, Inc. | 69 | ||||||
— | Potash Corp. of Saskatchewan, Inc. ADR | 39 | ||||||
1 | Research In Motion Ltd. • | 56 | ||||||
2 | Semafo, Inc. | 3 | ||||||
— | Sierra Wireless, Inc. • | 1 | ||||||
— | The Churchill Corp. • | 3 | ||||||
1 | Thompson Creek Metals Co., Inc. • | 4 | ||||||
1 | Toronto-Dominion Bank | 50 | ||||||
— | Transcontinental, Inc. | 2 | ||||||
2 | West Energy Ltd. • | 4 | ||||||
— | Winpak Ltd. | 2 | ||||||
451 | ||||||||
China—1.1% | ||||||||
10 | China Communications Construction Co., Ltd. | 12 | ||||||
13 | China Dongxiang Group Co. | 6 | ||||||
8 | China Life Insurance Co., Ltd. | 28 | ||||||
13 | China Shenhua Energy Co., Ltd. | 36 | ||||||
18 | Dongfeng Motor Group Co., Ltd. | 13 | ||||||
22 | Industrial and Commercial Bank of China | 13 | ||||||
1 | Mindray Medical International Ltd. | 25 | ||||||
— | Sohu.com, Inc. • | 4 | ||||||
1 | Suntech Power Holdings Co., Ltd. ADR • | 14 | ||||||
151 | ||||||||
Denmark—0.7% | ||||||||
— | Auriga Industries | 2 | ||||||
1 | Carlsberg A/S Class B | 35 | ||||||
1 | H. Lundbeck A/S | 22 | ||||||
— | TK Development • | 1 | ||||||
— | Vestas Wind Systems A/S • | 20 | ||||||
80 | ||||||||
Egypt—0.1% | ||||||||
— | Orascom Construction | 7 | ||||||
Finland—0.8% | ||||||||
6 | Nokia Oyj | 83 | ||||||
1 | Raisio plc | 2 |
5
Table of Contents
Schedule of Investments—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1%—(continued) | ||||||||
Finland—0.8%—(continued) | ||||||||
1 | Sponda Oyj | $ | 2 | |||||
1 | Tietoenator Oyj | 7 | ||||||
94 | ||||||||
France—8.7% | ||||||||
— | Air France | 4 | ||||||
1 | Alstom RGPT | 42 | ||||||
— | BNP Paribas | 25 | ||||||
— | Boiron | 3 | ||||||
— | Cegereal | 2 | ||||||
— | Compagnie Generale de Geophysique-Veritas • | 1 | ||||||
— | Eiffage | 4 | ||||||
— | Esso Ste. Anonyme Francaise | 3 | ||||||
— | Eurazeo | 11 | ||||||
— | Faiveley S.A. | 2 | ||||||
— | Fonciere des Regions | 4 | ||||||
1 | France Telecom S.A. | 22 | ||||||
1 | Gaz de France | 45 | ||||||
— | Gecina S.A. | 3 | ||||||
1 | Groupe Eurotunnel S.A. • | 4 | ||||||
— | M6-Metropole Television | 2 | ||||||
— | Meetic • | 2 | ||||||
2 | Michelin (C.G.D.E.) Class B | 109 | ||||||
— | Nexans S.A. | 6 | ||||||
— | Nexity | 11 | ||||||
1 | Peugeot S.A. | 31 | ||||||
1 | Pinault-Printemps-Redoute S.A. | 64 | ||||||
3 | Rhodia S.A. | 16 | ||||||
1 | Safran S.A. | 6 | ||||||
2 | Sanofi-Aventis S.A. | 138 | ||||||
— | Schneider Electric S.A. | 22 | ||||||
1 | Scor SE | 11 | ||||||
— | Societe BiC S.A. | 7 | ||||||
— | Societe Fonciere, Financiere et de Participations | 1 | ||||||
1 | Societe Generale Class A | 55 | ||||||
2 | Technip S.A. | 66 | ||||||
— | Teleperformance | 8 | ||||||
— | Thermador Groupe | 1 | ||||||
2 | Thomson Multimedia S.A. • | 3 | ||||||
2 | Total S.A. | 92 | ||||||
1 | Unibail | 84 | ||||||
— | Vallourec | 41 | ||||||
1 | Vinci S.A. | 43 | ||||||
2 | Vivendi S.A. | 55 | ||||||
— | Zodiac Aerospace | 2 | ||||||
1,051 | ||||||||
Germany—7.3% | ||||||||
— | Aareal Bank AG | 2 | ||||||
— | Allianz SE | 28 | ||||||
— | Alstria Office REIT AG | 3 | ||||||
— | Aurubis AG | 6 | ||||||
1 | BASF SE | 47 | ||||||
— | Biotest AG | 3 | ||||||
— | CeWe Color Holdings | 1 | ||||||
3 | Daimler AG | 109 | ||||||
— | Demag Cranes AG | 4 | ||||||
— | Deutsche Beteiligungs AG | 2 | ||||||
2 | Deutsche Boerse AG | 112 | ||||||
1 | Deutsche Lufthansa AG | 15 | ||||||
— | Draegerwerk AG & Co. | 1 | ||||||
5 | E.On AG | 175 | ||||||
— | Fresenius SE | 10 | ||||||
1 | GEA Group AG | 8 | ||||||
— | Gesco AG | 1 | ||||||
— | GFK SE | 2 | ||||||
— | Gildemeister | 2 | ||||||
— | Hochtief AG | 13 | ||||||
1 | Infineon Technologies AG • | 3 | ||||||
— | Jenoptik AG • | 1 | ||||||
— | Jungheinrich AG | 1 | ||||||
— | K+S AG | 27 | ||||||
— | Loewe AG | 1 | ||||||
— | Merck KGaA | 24 | ||||||
1 | Metro AG | 47 | ||||||
— | MTU Aero Engines Holdings AG | 10 | ||||||
— | Muenchener Rueckversicherungs NPV | 46 | ||||||
— | Plambeck Neue Energien AG • | 1 | ||||||
— | Praktiker Bau-Und Heimwerkermaerkte Holding AG | 2 | ||||||
— | Rheinmetall AG | 1 | ||||||
— | RWE AG | 20 | ||||||
— | Salzgitter AG | 10 | ||||||
2 | Siemens AG | 110 | ||||||
— | Software AG | 1 | ||||||
1 | Solarworld AG | 22 | ||||||
��� | TIPP24 AG | 1 | ||||||
— | Vossloh AG | 6 | ||||||
1 | Wirecard • | 8 | ||||||
— | Wuestenrot & Wuerttembergische AG | 5 | ||||||
891 | ||||||||
Greece—0.2% | ||||||||
1 | Public Power Corp. | 23 | ||||||
— | Sarantis S.A. | 1 | ||||||
24 | ||||||||
Hong Kong—2.1% | ||||||||
37 | Anta Sports Products Ltd. | 31 | ||||||
5 | ASM Pacific Technology | 22 | ||||||
4 | China Merchants Holdings International Co., Ltd. | 10 | ||||||
1 | China Mobile Ltd. | 9 | ||||||
2 | China Overseas Land & Investment Ltd. | 4 | ||||||
3 | Chow Sang Sang Holdings | 1 | ||||||
— | CNOOC Ltd. ADR | 17 | ||||||
3 | Esprit Holdings Ltd. | 15 | ||||||
32 | Golden Meditech Co., Ltd. | 4 | ||||||
2 | Great Eagle Holdings Ltd. | 3 | ||||||
4 | HKR International Ltd. | 1 | ||||||
1 | Hong Kong Exchanges & Clearing Ltd. | 8 | ||||||
30 | Huabao International Holdings Ltd. | 21 | ||||||
3 | Hysan Development Co., Ltd. | 5 | ||||||
11 | Johnson Electric Holdings Ltd. | 2 | ||||||
9 | K Wah International Holdings Ltd. | 2 | ||||||
53 | Kingboard Laminates Holdings | 21 | ||||||
12 | Li & Fung Ltd. | 34 | ||||||
6 | New World China Land Ltd. | 2 | ||||||
10 | Noble Group Ltd. | 9 | ||||||
16 | Oriental Press Group | 1 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1%—(continued) | ||||||||
Hong Kong—2.1%—(continued) | ||||||||
19 | Pacific Andes International Holdings Ltd. | $ | 2 | |||||
10 | Regal Real Estate Investment | 1 | ||||||
6 | Shangri-La Asia Ltd. | 9 | ||||||
22 | Sinolink Worldwide Holdings | 2 | ||||||
21 | Skyworth Digital Holdings Ltd. | 2 | ||||||
4 | Techtronic Industries Co., Ltd. | 2 | ||||||
3 | Tian An China Investments Co., Ltd. | 1 | ||||||
241 | ||||||||
India—1.1% | ||||||||
1 | Bharti Televentures • | 10 | ||||||
— | Educomp Solutions Ltd. | 8 | ||||||
1 | HDFC Bank Ltd. ADR ‡ | 89 | ||||||
1 | Larsen & Toubro Ltd. | 9 | ||||||
— | Reliance Industries Ltd. | 15 | ||||||
131 | ||||||||
Ireland—1.1% | ||||||||
1 | CRH plc | 23 | ||||||
4 | Elan Corp. plc ADR • | 24 | ||||||
1 | Genesis Lease Ltd. ADR | 3 | ||||||
1 | Greencore Group plc | 1 | ||||||
2 | Ryanair Holdings plc ADR • | 60 | ||||||
— | SkillSoft plc ADR • | 4 | ||||||
1 | Smurfit Kappa Group plc | 3 | ||||||
5 | Total Produce plc | 2 | ||||||
2 | United Drug plc | 4 | ||||||
124 | ||||||||
Israel—0.9% | ||||||||
2 | Bank Leumi Le-Israel | 5 | ||||||
4 | Bezeq Israeli Telecommunication Corp., Ltd. | 7 | ||||||
2 | Teva Pharmaceutical Industries Ltd. ADR | 92 | ||||||
104 | ||||||||
Italy—2.4% | ||||||||
— | Ansaldo STS S.p.A. | 7 | ||||||
2 | Banco di Desio e della Brianza S.A. | 10 | ||||||
1 | Buzzi Unicem S.p.A. • | 9 | ||||||
— | Davide Campari | 1 | ||||||
— | DiaSorin S.p.A. | 1 | ||||||
4 | Eni S.p.A. | 90 | ||||||
— | Esprinet S.p.A. | 1 | ||||||
— | Exor S.p.A. • | 2 | ||||||
1 | Finmeccanica S.p.A. | 8 | ||||||
3 | Geox S.p.A. | 25 | ||||||
13 | Intesa Sanpaolo | 43 | ||||||
— | Lottomatica S.p.A. | 7 | ||||||
1 | Maire Tecnimont S.p.A. | 2 | ||||||
1 | Parmalat S.p.A. | 2 | ||||||
— | Piccolo Credito Valtellinese | 1 | ||||||
25 | Pirelli & Co. S.p.A. | 10 | ||||||
57 | Telecom Italia S.p.A. | 51 | ||||||
6 | Unipol Gruppo Finanziario S.p.A. | 8 | ||||||
278 | ||||||||
Japan—13.0% | ||||||||
— | Aderans Holdings Co., Ltd. | 2 | ||||||
— | Aichi Bank Ltd. | 6 | ||||||
1 | Aichi Machine Industry Co., Ltd. | 2 | ||||||
— | Ain Pharmaciez, Inc. | 2 | ||||||
— | Aoki Holdings, Inc. | 2 | ||||||
1 | Aoyama Trading Co., Ltd. | 9 | ||||||
— | Arcs Co., Ltd. | 4 | ||||||
1 | Arisawa Manufacturing Co., Ltd. | 2 | ||||||
1 | ASKA Pharmaceutical Co., Ltd. | 6 | ||||||
1 | Astellas Pharma, Inc. | 39 | ||||||
— | BML, Inc. | 4 | ||||||
— | Canon Finetech, Inc. | 2 | ||||||
2 | Canon, Inc. | 72 | ||||||
— | Cawachi Ltd. | 2 | ||||||
1 | Cedyna Financial Corp. | 1 | ||||||
— | Central Japan Railway Co. | 42 | ||||||
— | Century Tokyo Leasing Corp. | 1 | ||||||
— | Chudenko Corp. | 6 | ||||||
1 | Circle K Sunkus Co., Ltd. | 8 | ||||||
— | Coca-Cola Central Japan Co., Ltd. | 1 | ||||||
— | DA Office Investment Corp. | 4 | ||||||
3 | Daiichi Sankyo Co., Ltd. | 55 | ||||||
1 | Daiichikosho Co., Ltd. | 5 | ||||||
1 | DCM Japan Holdings Co., Ltd. | 7 | ||||||
1 | Denso Corp. | 14 | ||||||
— | DTS Corp. | 2 | ||||||
— | Dydo Drinco, Inc. | 3 | ||||||
3 | Eisai Co., Ltd. | 73 | ||||||
— | ESPEC Corp. | 1 | ||||||
— | Fields Corp. | 1 | ||||||
— | Fuji Machine Manufacturing Co. | 2 | ||||||
— | Futaba Corp. | 1 | ||||||
1 | Godo Steel Ltd. | 2 | ||||||
— | Gunze Ltd. | 2 | ||||||
1 | Heiwa Corp. | 9 | ||||||
— | Hikari Tsushin, Inc. | 2 | ||||||
— | Hitachi Systems & Services Ltd. | 2 | ||||||
1 | Hogy Medical Co., Ltd. | 32 | ||||||
6 | Honda Motor Co., Ltd.* | 170 | ||||||
1 | Ibiden Co., Ltd. | 29 | ||||||
— | INES Corp. | 2 | ||||||
— | Itoham Foods, Inc. | 1 | ||||||
1 | Izumiya Co., Ltd. | 6 | ||||||
2 | Jaccs Co., Ltd. | 3 | ||||||
— | Japan Tobacco, Inc. | 10 | ||||||
— | Kanto Automotive Works Ltd. | 2 | ||||||
1 | Kinden Corp. | 12 | ||||||
— | Komori Corp. | 4 | ||||||
— | Kyocera Corp. | 23 | ||||||
— | Kyoei Steel Ltd. | 2 | ||||||
— | Kyosan Electric Manufacturing Co., Ltd. | 2 | ||||||
— | Kyoto Kimono Yuzen | 1 | ||||||
1 | Maeda Corp. | 4 | ||||||
— | MID REIT, Inc. | 2 | ||||||
— | Mimasu Semiconductor Industry Co., Ltd. | 2 | ||||||
1 | Mitsubishi Corp. | 22 | ||||||
4 | Mitsubishi Estate Co., Ltd. | 52 | ||||||
30 | Mitsubishi UFJ Financial Group, Inc.* | 165 | ||||||
— | Mitsui Knowledge Industry Co., Ltd. | 1 | ||||||
— | Mitsui Sugar Co., Ltd. | 1 | ||||||
— | Mitsumi Electric Co., Ltd. | 1 | ||||||
1 | Nabtesco Corp. | 8 | ||||||
— | NEC Mobiling Ltd. | 1 | ||||||
1 | Nintendo Co., Ltd. | 144 | ||||||
1 | Nippo Corp. | 6 | ||||||
3 | Nippon Electric Glass Co., Ltd. | 24 | ||||||
— | Nippon Seiki Co., Ltd. | 2 | ||||||
1 | Nishimatsu Construction Co., Ltd. | 1 | ||||||
1 | Nissan Shatai Co., Ltd. | 7 |
7
Table of Contents
Schedule of Investments—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1%—(continued) | ||||||||
Japan—13.0%—(continued) | ||||||||
1 | Nittetsu Mining Co., Ltd. | $ | 2 | |||||
— | Noevir | 2 | ||||||
— | NTT DoCoMo, Inc. | 20 | ||||||
10 | Osaka Gas Co., Ltd. | 32 | ||||||
2 | Panasonic Corp. | 27 | ||||||
— | Paramound Bed Co. | 1 | ||||||
— | Pasona Group, Inc. | 1 | ||||||
1 | Raito Kogyo | 1 | ||||||
— | Rakuten, Inc. | 30 | ||||||
— | Ricoh Leasing Co., Ltd. | 3 | ||||||
— | Right On Co., Ltd. | 2 | ||||||
— | Round One Corp. | 3 | ||||||
— | Ryosan Co., Ltd. | 2 | ||||||
— | Ryoshoku Ltd. | 2 | ||||||
— | Ryoyo Electro Corp. | 2 | ||||||
1 | Sankyo Co., Ltd. | 41 | ||||||
— | Sanyo Denki Co., Ltd. | 1 | ||||||
2 | Seino Holdings Corp. | 8 | ||||||
1 | Shin-Etsu Chemical Co., Ltd. | 59 | ||||||
1 | Softbank Corp. | 14 | ||||||
— | Sogo Medical Co., Ltd. | 1 | ||||||
1 | Sony Corp. | 26 | ||||||
— | Taikisha Ltd. | 2 | ||||||
1 | Takefuji Corp. | 3 | ||||||
— | The Daiei, Inc. • | 1 | ||||||
1 | The Eighteenth Bank Ltd. | 3 | ||||||
1 | The Kanto Tsukuba Bank Ltd. | 6 | ||||||
— | The Kita-Nippon Bank Ltd. | 3 | ||||||
— | The Okinawa Electric Power Co., Inc. | 5 | ||||||
2 | Toagosei Co., Ltd. | 5 | ||||||
— | Tohokushinsha Film Corp. | 3 | ||||||
1 | Tokuyama Corp. | 5 | ||||||
1 | Tokyo Electron Ltd. | 27 | ||||||
10 | Tokyo Gas Co., Ltd. | 38 | ||||||
1 | Tokyo Steel Manufacturing Co., Ltd. | 8 | ||||||
— | Torii Pharmaceutical Co., Ltd. | 4 | ||||||
— | Toyo Kohan Co., Ltd. | 2 | ||||||
1 | Toyota Automotive Body Co., Ltd. | 13 | ||||||
— | Toyota Motor Corp. | 12 | ||||||
— | TS Technology Co., Ltd. | 5 | ||||||
— | Tsuruha Holdings, Inc. | 4 | ||||||
— | TV Asahi Corp. | 5 | ||||||
— | Unipres Corp. | 3 | ||||||
1 | Uny Co., Ltd. | 5 | ||||||
— | Yonekyu Corp. | 1 | ||||||
1,583 | ||||||||
Luxembourg—0.8% | ||||||||
1 | ArcelorMittal | 19 | ||||||
1 | ArcelorMittal ADR | 28 | ||||||
1 | Colt Telecom Group S.A. • | 2 | ||||||
1 | Millicom International Cellular S.A. | 24 | ||||||
2 | SES Global S.A. | 28 | ||||||
101 | ||||||||
Malaysia—0.2% | ||||||||
30 | Air Asia BHD • | 10 | ||||||
3 | Kulim Malaysia Berhad | 5 | ||||||
21 | PLUS Expressways Berhad | 19 | ||||||
34 | ||||||||
Mauritius—0.1% | ||||||||
40 | Golden Agri Resources Ltd. | 10 | ||||||
Mexico—0.3% | ||||||||
1 | America Movil S.A.B. de C.V. ADR | 19 | ||||||
4 | Cemex S.A. CPO | 3 | ||||||
— | Desarrolladora Homex SAB de CV • | 2 | ||||||
— | Fomento Economico Mexicano S.A.B. De C.V. ADR | 6 | ||||||
— | Grupo Televisa S.A. ADR | 6 | ||||||
36 | ||||||||
Netherlands—3.1% | ||||||||
9 | AerCap Holdings N.V. • | 42 | ||||||
2 | ASML Holding N.V. | 36 | ||||||
— | Crucell N.V. • | 5 | ||||||
— | Gemalto N.V. • | 9 | ||||||
— | Heijmans N.V. | 1 | ||||||
— | Imtech N.V. | 3 | ||||||
7 | Koninklijke (Royal) KPN N.V. | 81 | ||||||
5 | Koninklijke Ahold N.V. | 59 | ||||||
— | Koninklijke Philips Electronics N.V. | 6 | ||||||
— | Koninklijke Ten Cate N.V. | 2 | ||||||
— | OCE N.V. | 3 | ||||||
1 | Ordina N.V. | 3 | ||||||
3 | Plaza Centers N.V. | 2 | ||||||
2 | Qiagen N.V. • | 32 | ||||||
2 | SBM Offshore N.V. | 32 | ||||||
3 | Unilever N.V. CVA | 57 | ||||||
— | Unit 4 Agresso N.V. • | 2 | ||||||
— | USG People N.V. | 3 | ||||||
— | USG People N.V.—Dividend Option † | — | ||||||
— | Vastned Offices | 2 | ||||||
380 | ||||||||
New Zealand—0.0% | ||||||||
4 | New Zealand Oil & Gas Ltd. | 3 | ||||||
Norway—0.8% | ||||||||
— | Atea ASA • | 1 | ||||||
— | Bonheur ASA | 4 | ||||||
9 | DNB Nor ASA | 58 | ||||||
40 | DNO International ASA • | 34 | ||||||
1 | Norske Skogindustrier ASA • | 1 | ||||||
— | Pronova BioPharma A.S. • | 1 | ||||||
— | Sparebanken Midt-Norge | 2 | ||||||
— | TGS Nopec Geophysical Co. ASA • | 2 | ||||||
103 | ||||||||
Panama—0.1% | ||||||||
— | Copa Holdings S.A. Class A | 12 | ||||||
Papua New Guinea—0.1% | ||||||||
1 | New Britain Palm Oil Ltd. | 6 | ||||||
Peru—0.1% | ||||||||
1 | Compania De Minas Buenaventur ADR | 15 | ||||||
Philippines—0.0% | ||||||||
— | Philippine Long Distance Telephone Co. ADR | 5 | ||||||
Portugal—0.1% | ||||||||
1 | Novabase SGPS S.A. • | 6 |
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1%—(continued) | ||||||||
Portugal—0.1%—(continued) | ||||||||
1 | Redes Energeticas Nacionais | $ | 4 | |||||
10 | ||||||||
Russia—1.5% | ||||||||
— | Lukoil ADR | 9 | ||||||
1 | Mining and Metallurgical Co. Norilsk Nickel ADR | 6 | ||||||
7 | OAO Gazprom Class S ADR | 118 | ||||||
3 | OAO Rosneft Oil Co. § | 17 | ||||||
2 | Vimpel-Communications ADR | 22 | ||||||
172 | ||||||||
Singapore—0.4% | ||||||||
15 | Chartered Semiconductor • | 2 | ||||||
4 | DBS Group Holdings Ltd. | 22 | ||||||
11 | K1 Ventures Ltd. | 1 | ||||||
5 | Oversea-Chinese Banking Corp., Ltd. | 20 | ||||||
45 | ||||||||
South Africa—1.4% | ||||||||
3 | Adcock Ingram Holdings Ltd. • | 13 | ||||||
12 | African Bank Investments Ltd. | 39 | ||||||
2 | Aspen Pharmacare Holdings Ltd. | 10 | ||||||
— | Gold Fields Ltd. | 4 | ||||||
1 | Impala Platinum Holdings Ltd. | 16 | ||||||
5 | MTN Group Ltd. | 66 | ||||||
— | Sasol Ltd. | 8 | ||||||
3 | Truworths International Ltd. | 13 | ||||||
169 | ||||||||
South Korea—1.6% | ||||||||
— | CJ Corp. | 2 | ||||||
— | CJ Home Shopping | 3 | ||||||
1 | Dae Duck Electronics | 3 | ||||||
— | Global & Yuasa | 2 | ||||||
— | Infopia Co., Ltd. • | 1 | ||||||
— | Kolon Engineering & Construction Co., Ltd. | 2 | ||||||
— | Kolon Industries, Inc. | 4 | ||||||
— | Korea Kumho Petrochemical Co., Ltd. | 4 | ||||||
— | Kumho Industrial Co., Ltd. | 2 | ||||||
— | LG Dacom Corp. | 5 | ||||||
— | LG Electronics, Inc. • | 8 | ||||||
— | LG Micron Ltd. ⌂ | 4 | ||||||
— | Lotte Shopping Co. • | 20 | ||||||
— | Meritz Fire & Marine Insurance | 2 | ||||||
— | NHN Corp. • | 5 | ||||||
1 | ON*Media Corp. • | 2 | ||||||
— | Pacific Corp. | 2 | ||||||
— | Posco Ltd. • | 8 | ||||||
— | Sambu Construction Co., Ltd. | 2 | ||||||
— | Samsung Electronics Co., Ltd. | 102 | ||||||
— | Samsung Securities Co., Ltd. • | 7 | ||||||
— | Seah Besteel Corp. | 2 | ||||||
— | Shinsegae Co., Ltd. • | 6 | ||||||
— | STX Engine Co., Ltd. | 6 | ||||||
— | TK Corp. • | 2 | ||||||
— | Youngone Corp. | 2 | ||||||
208 | ||||||||
Spain—3.0% | ||||||||
1 | Abertis Infraestructuras S.A. | 14 | ||||||
3 | Banco Bilbao Vizcaya Argentaria S.A. | 37 | ||||||
— | Banco De Sabadell S.A. | 2 | ||||||
— | Construcciones y Auxiliar de | 9 | ||||||
— | Corp Financiera Alba | 8 | ||||||
4 | Iberdrola S.A. | 33 | ||||||
1 | Industria de Diseno Textil S.A. | 22 | ||||||
— | Miquel y Costas & Miquel S.A. | 2 | ||||||
— | Prosegur Compania de Seguridad S.A. | 2 | ||||||
2 | Red Electrica Corporacion S.A. | 85 | ||||||
7 | Telefonica S.A. | 136 | ||||||
— | Viscofan S.A. | 5 | ||||||
355 | ||||||||
Sweden—1.9% | ||||||||
— | AF Ab Class B | 3 | ||||||
— | Betsson Ab | 2 | ||||||
1 | Boliden Ab | 4 | ||||||
1 | Bure Equity Ab | 4 | ||||||
— | Cardo Ab | 3 | ||||||
— | Hennes & Mauritz Ab | 10 | ||||||
— | Investment Ab Latour | 3 | ||||||
— | Lundbergforetagen Ab | 7 | ||||||
10 | Lundin Petroleum Ab • | 63 | ||||||
— | NCC Ab Class B | 4 | ||||||
5 | Swedish Match Ab | 67 | ||||||
5 | Telefonaktiebolaget LM Ericsson | 45 | ||||||
2 | Volvo Ab Class B | 12 | ||||||
227 | ||||||||
Switzerland—7.9% | ||||||||
3 | ABB Ltd. | 46 | ||||||
— | Actelion Ltd. • | 10 | ||||||
1 | Adecco S.A. | 21 | ||||||
— | Baloise Holding AG | 6 | ||||||
— | Basellandschaftliche Kantonalbank | 2 | ||||||
— | Basler Kantonalbank | 2 | ||||||
— | Bell Holding AG | 2 | ||||||
— | Berner Kantonalbank | 6 | ||||||
2 | Clariant AG | 10 | ||||||
2 | Credit Suisse Group AG | 69 | ||||||
1 | Dufry Group | 14 | ||||||
1 | Julius Baer Holding Ltd. | 43 | ||||||
— | Kardex • | 2 | ||||||
— | Kuehne & Nagel International AG | 18 | ||||||
1 | Mobilezone Holdings | 3 | ||||||
8 | Nestle S.A. | 268 | ||||||
1 | Nobel Biocare Holding AG | 30 | ||||||
— | Orascom Development Holding AG • | 2 | ||||||
— | Pargesa Holding S.A. | 2 | ||||||
4 | Paris RE Holdings Ltd. | 69 | ||||||
— | Roche Holding AG | 56 | ||||||
— | Sonova Holding AG | 18 | ||||||
— | Synthes, Inc. | 24 | ||||||
10 | UBS AG • | 133 | ||||||
— | Valiant Holding AG | 4 | ||||||
1 | Zurich Financial Services AG | 95 | ||||||
955 | ||||||||
Taiwan—2.1% | ||||||||
5 | Cathay Financial Holding Co., Ltd. | 5 | ||||||
— | Chunghwa Telecom Co., Ltd. ADR | 5 | ||||||
3 | High Technology Computer Corp. | 35 | ||||||
4 | Hon Hai Precision Industry Co., Ltd. | 12 | ||||||
12 | Hon Hai Precision Industry Co., Ltd. GDR ■ | 69 | ||||||
4 | Hon Hai Precision Industry Co., Ltd. GDR § | 26 | ||||||
1 | MediaTek, Inc. | 7 | ||||||
5 | Taiwan Mobile Co., Ltd. | 8 |
9
Table of Contents
Schedule of Investments—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—95.1%—(continued) | ||||||||
Taiwan—2.1%—(continued) | ||||||||
8 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | $ | 82 | |||||
249 | ||||||||
Thailand—0.3% | ||||||||
10 | Bangkok Bank plc | 23 | ||||||
44 | Bank of Ayudhya plc | 14 | ||||||
37 | ||||||||
Turkey—0.4% | ||||||||
3 | Turkcell Iletisim Hizmetleri AS ADR | 39 | ||||||
6 | Turkiye Garanti Bankasi A.S. | 13 | ||||||
52 | ||||||||
United Kingdom—20.1% | ||||||||
1 | 888 Holdings plc | 1 | ||||||
3 | Admiral Group plc | 40 | ||||||
— | Aggreko plc | 2 | ||||||
2 | Amlin plc | 8 | ||||||
3 | Anite plc | 1 | ||||||
15 | Arm Holdings plc | 26 | ||||||
3 | Ashtead Group plc | 3 | ||||||
1 | AstraZeneca plc | 34 | ||||||
2 | AstraZeneca plc ADR | 77 | ||||||
2 | Autonomy Corp. plc • | 43 | ||||||
11 | BAE Systems plc | 56 | ||||||
10 | Barclays Bank plc | 41 | ||||||
2 | Barratt Developments plc | 4 | ||||||
3 | Beazley Group plc | 4 | ||||||
9 | BG Group plc | 145 | ||||||
2 | BHP Billiton plc | 48 | ||||||
10 | BP plc | 73 | ||||||
2 | BP plc ADR | 81 | ||||||
1 | Brit Insurance Holdings | 2 | ||||||
5 | British American Tobacco plc | 119 | ||||||
2 | Catlin Group Ltd. | 8 | ||||||
— | Clarkson plc | 1 | ||||||
1 | Computacenter plc | 3 | ||||||
4 | Croda International plc | 33 | ||||||
1 | CSR plc • | 2 | ||||||
2 | Devro plc | 3 | ||||||
1 | Diploma plc | 1 | ||||||
2 | Drax Group plc | 15 | ||||||
11 | easyJet plc • | 53 | ||||||
1 | Emerald Energy plc • | 5 | ||||||
2 | Enterprise Inns plc | 5 | ||||||
3 | Ferrexpo plc | 7 | ||||||
4 | Galliford Try plc | 3 | ||||||
2 | GlaxoSmithKline plc | 26 | ||||||
— | Greene King plc | 2 | ||||||
— | Hardy Underwriting Group | 1 | ||||||
27 | Hays plc | 37 | ||||||
2 | Hiscox Ltd. | 8 | ||||||
1 | HMV Group plc | 2 | ||||||
21 | HSBC Holding plc | 150 | ||||||
4 | Imperial Tobacco Group plc | 91 | ||||||
1 | International Personal Finance | 2 | ||||||
2 | Investec plc | 9 | ||||||
4 | J. Sainsbury plc | 20 | ||||||
— | Keller Group plc | 2 | ||||||
23 | Kingfisher plc | 62 | ||||||
7 | Lancashire Holdings Ltd. • | 51 | ||||||
6 | Logica plc | 6 | ||||||
22 | Marks & Spencer Group plc | 111 | ||||||
1 | Marston’s plc | 1 | ||||||
2 | McBride plc | 3 | ||||||
3 | Meggitt plc | 9 | ||||||
4 | Michael Page International plc | 16 | ||||||
1 | Micro Focus International | 3 | ||||||
— | Millennium & Copthorne Hotels plc | 1 | ||||||
1 | Next plc | 24 | ||||||
— | Ocean Wilsons Holdings Ltd. | 1 | ||||||
3 | Paragon Group Companies plc | 3 | ||||||
2 | PV Crystalox Solar plc | 3 | ||||||
4 | Reed Elsevier Capital, Inc. ⌂ | 30 | ||||||
8 | Regus plc | 9 | ||||||
8 | Resolution plc • | 11 | ||||||
— | Reuters Group plc | 7 | ||||||
11 | Rexam plc | 50 | ||||||
5 | Rio Tinto plc | 193 | ||||||
2 | ROK plc | 2 | ||||||
5 | Rolls-Royce Group plc | 26 | ||||||
443 | Rolls-Royce Group-C Share Entitlement ⌂ † | 1 | ||||||
1 | Southern Reserve, Inc. | 5 | ||||||
12 | Standard Chartered plc | 192 | ||||||
5 | Tesco plc | 26 | ||||||
4 | Thomas Cook Group plc | 16 | ||||||
1 | Tomkins plc | 3 | ||||||
4 | Tui Travel plc | 15 | ||||||
1 | UMECO plc | 1 | ||||||
2 | Vedanta Resources plc | 32 | ||||||
50 | Vodafone Group plc | 93 | ||||||
1 | WH Smith plc | 9 | ||||||
5 | Wm Morrison Supermarkets | 19 | ||||||
4 | WPP plc | 31 | ||||||
9 | Xstrata plc | 80 | ||||||
2,442 | ||||||||
United States—0.4% | ||||||||
1 | ACE Ltd. | 37 | ||||||
2 | WSP Holdings Ltd. | 6 | ||||||
43 | ||||||||
Total common stocks (cost $12,698) | $ | 11,578 | ||||||
EXCHANGE TRADED FUNDS—1.6% | ||||||||
United States—1.6% | ||||||||
5 | iShares MSCI EAFE Index Fund | $ | 188 | |||||
Total exchange traded funds (cost $167) | $ | 188 | ||||||
Total long-term investments (cost $12,865) | $ | 11,766 | ||||||
10
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS—1.5% | ||||||||||||
Repurchase Agreements—1.5% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $43, collateralized by GNMA 4.50%—6.50%, 2038—2039, value of $44) | ||||||||||||
$ | 43 | 0.18%, 04/30/2009 | $ | 43 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $52, collateralized by FHLMC 4.50%—6.50%, 2035—2039, FNMA 4.50%—6.50%, 2034 — 2047, value of $53) | ||||||||||||
52 | 0.17%, 04/30/2009 | 52 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $72, collateralized by FHLMC 4.00%—7.00%, 2021—2039, FNMA 6.00%—7.00%, 2034 — 2038, GNMA 4.50%—7.00%, 2024—2039, value of $74) | ||||||||||||
72 | 0.17%, 04/30/2009 | 72 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $-, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $-) | ||||||||||||
— | 0.14%, 04/30/2009 | — | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $16, collateralized by FHLMC 8.00%—15.00%, 2009—2021, FNMA 3.50%—15.50%, 2012—2039, value of $16) | ||||||||||||
16 | 0.16%, 04/30/2009 | 16 | ||||||||||
183 | ||||||||||||
Total short-term investments (cost $183) | $ | 183 | ||||||||||
Total investments (cost $13,048) ▲ | 98 .2 | % | $ | 11,949 | ||||||||
Other assets and liabilities | 1 .8 | % | 222 | |||||||||
Total net assets | 100.0 | % | $ | 12,171 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 94.77% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $13,981 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 848 | ||||||
Unrealized Depreciation | (2,880 | ) | ||||||
Net Unrealized Depreciation | $ | (2,032 | ) | |||||
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $1, which represents 0.01% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $69, which represents 0.57% of total net assets. | |
§ | Securities contain some restrictions as to public resale. These securities comply with Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933, and are determined to be liquid. At April 30, 2009, the market value of these securities amounted to $43 or 0.35% of total net assets. | |
• | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $45. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
06/2008 | 5 | ABC Learning Centres Ltd. | $ | 5 | ||||||||
12/2008 | — | LG Micron Ltd. | 2 | |||||||||
06/2008 - 11/2008 | 4 | Reed Elsevier Capital, Inc. | 43 | |||||||||
06/2008 - 08/2008 | 443 | Rolls-Royce Group-C Share Entitlement | — |
Table of Contents
Schedule of Investments—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Sell) | $ | 35 | $ | 35 | 05/01/09 | $ | — | |||||||||
British Pound (Buy) | 22 | 21 | 05/01/09 | 1 | ||||||||||||
British Pound (Buy) | 23 | 23 | 05/05/09 | — | ||||||||||||
British Pound (Sell) | 11 | 11 | 05/06/09 | — | ||||||||||||
British Pound (Sell) | — | 0 | 05/06/09 | — | ||||||||||||
Danish Krone (Buy) | 5 | 5 | 05/04/09 | — | ||||||||||||
Euro (Sell) | 35 | 35 | 05/04/09 | — | ||||||||||||
Euro (Buy) | 17 | 17 | 05/04/09 | — | ||||||||||||
Euro (Sell) | 5 | 5 | 05/05/09 | — | ||||||||||||
Euro (Buy) | 31 | 31 | 05/05/09 | — | ||||||||||||
Euro (Sell) | 11 | 11 | 05/06/09 | — | ||||||||||||
Hong Kong Dollar (Sell) | 6 | 6 | 05/04/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 17 | 17 | 05/05/09 | — | ||||||||||||
Japanese Yen (Sell) | 13 | 13 | 05/01/09 | — | ||||||||||||
Japanese Yen (Buy) | 12 | 12 | 05/01/09 | — | ||||||||||||
Japanese Yen (Buy) | 25 | 27 | 05/07/09 | (2 | ) | |||||||||||
Japanese Yen (Buy) | 18 | 18 | 05/08/09 | — | ||||||||||||
Swedish Krona (Sell) | 15 | 15 | 05/06/09 | — | ||||||||||||
Swiss Franc (Sell) | 6 | 6 | 05/04/09 | — | ||||||||||||
Swiss Franc (Sell) | 21 | 22 | 05/05/09 | 1 | ||||||||||||
$ | — | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 4.2 | % | ||
Banks | 11 .8 | |||
Capital Goods | 6 .4 | |||
Commercial & Professional Services | 1 .0 | |||
Consumer Durables & Apparel | 1 .8 | |||
Consumer Services | 0 .7 | |||
Diversified Financials | 4 .3 | |||
Energy | 8 .9 | |||
Food & Staples Retailing | 2 .0 | |||
Food, Beverage & Tobacco | 5 .9 | |||
Health Care Equipment & Services | 1 .3 | |||
Household & Personal Products | 0 .1 | |||
Insurance | 3 .8 | |||
Materials | 9 .1 | |||
Media | 1 .4 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 6 .9 | |||
Real Estate | 1 .5 | |||
Retailing | 3 .8 | |||
Semiconductors & Semiconductor Equipment | 2 .6 | |||
Software & Services | 2 .0 | |||
Technology Hardware & Equipment | 4 .3 | |||
Telecommunication Services | 5 .4 | |||
Transportation | 2 .3 | |||
Utilities | 5 .2 | |||
Short-Term Investments | 1 .5 | |||
Other Assets and Liabilities | 1 .8 | |||
Total | 100.0 | % | ||
FAS 157 Disclosure of Investment Valuation Hierarchy Levels | ||||
Assets: | ||||
Investment in securities — Level 1 | $ | 2,531 | ||
Investment in securities — Level 2 | 9,417 | |||
Investment in securities — Level 3 | 1 | |||
Total | $ | 11,949 | ||
Other financial instruments — Level 2 * | 2 | |||
Total | $ | 2 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 2 | |||
Total | $ | 2 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 1 | ||
Change in unrealized appreciation ♦ | 1 | |||
Net sales | (1 | ) | ||
Balance as of April 30, 2009 | $ | 1 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 1 | ||
12
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $13,048) | $ | 11,949 | ||
Cash | 19 | |||
Foreign currency on deposit with custodian (cost $19) | 19 | |||
Unrealized appreciation on forward foreign currency contracts | 2 | |||
Receivables: | ||||
Investment securities sold | 225 | |||
Fund shares sold | 4 | |||
Dividends and interest | 74 | |||
Other assets | 147 | |||
Total assets | 12,439 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 2 | |||
Payables: | ||||
Investment securities purchased | 254 | |||
Investment management fees | 2 | |||
Distribution fees | 1 | |||
Accrued expenses | 9 | |||
Total liabilities | 268 | |||
Net assets | $ | 12,171 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 20,711 | |||
Accumulated undistributed net investment income | 67 | |||
Accumulated net realized loss on investments and foreign currency transactions | (7,509 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (1,098 | ) | ||
Net assets | $ | 12,171 | ||
Shares authorized | 525,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 5.75/$6.08 | ||
Shares outstanding | 495 | |||
Net assets | $ | 2,847 | ||
Class B: Net asset value per share | $ | 5.73 | ||
Shares outstanding | 107 | |||
Net assets | $ | 616 | ||
Class C: Net asset value per share | $ | 5.73 | ||
Shares outstanding | 108 | |||
Net assets | $ | 617 | ||
Class I: Net asset value per share | $ | 5.76 | ||
Shares outstanding | 100 | |||
Net assets | $ | 578 | ||
Class R3: Net asset value per share | $ | 5.75 | ||
Shares outstanding | 100 | |||
Net assets | $ | 575 | ||
Class R4: Net asset value per share | $ | 5.75 | ||
Shares outstanding | 100 | |||
Net assets | $ | 577 | ||
Class R5: Net asset value per share | $ | 5.76 | ||
Shares outstanding | 100 | |||
Net assets | $ | 578 | ||
Class Y: Net asset value per share | $ | 5.76 | ||
Shares outstanding | 1,004 | |||
Net assets | $ | 5,783 | ||
13
Table of Contents
Investment Income: | ||||
Dividends | $ | 199 | ||
Interest | — | |||
Less: Foreign tax withheld | (21 | ) | ||
Total investment income | 178 | |||
Expenses: | ||||
Investment management fees | 55 | |||
Transfer agent fees | 1 | |||
Distribution fees | ||||
Class A | 3 | |||
Class B | 3 | |||
Class C | 3 | |||
Class R3 | 1 | |||
Class R4 | 1 | |||
Custodian fees | 26 | |||
Accounting services | 1 | |||
Registration and filing fees | 48 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 10 | |||
Total expenses (before waivers and fees paid indirectly) | 155 | |||
Expense waivers | (71 | ) | ||
Commission recapture | — | |||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (71 | ) | ||
Total expenses, net | 84 | |||
Net investment income | 94 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (4,440 | ) | ||
Net realized gain on foreign currency transactions | 13 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (4,427 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 4,137 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (15 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 4,122 | |||
Net Loss on Investments and Foreign Currency Transactions | (305 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (211 | ) | |
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For the Six-Month | For the Period | |||||||
Period Ended | June 30, 2008** | |||||||
April 30, 2009 | through | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 94 | $ | 27 | ||||
Net realized loss on investments and foreign currency transactions | (4,427 | ) | (3,115 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 4,122 | (5,220 | ) | |||||
Net decrease in net assets resulting from operations | (211 | ) | (8,308 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (8 | ) | — | |||||
Class I | (3 | ) | — | |||||
Class R3 | — | — | ||||||
Class R4 | (1 | ) | — | |||||
Class R5 | (2 | ) | — | |||||
Class Y | (25 | ) | — | |||||
Total distributions | (39 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class A | 364 | 4,238 | ||||||
Class B | 38 | 1,005 | ||||||
Class C | 21 | 1,034 | ||||||
Class I | 2 | 1,000 | ||||||
Class R3 | — | 1,000 | ||||||
Class R4 | 1 | 1,000 | ||||||
Class R5 | 2 | 1,000 | ||||||
Class Y | 24 | 10,000 | ||||||
Net increase from capital share transactions | 452 | 20,277 | ||||||
Net increase in net assets | 202 | 11,969 | ||||||
Net Assets: | ||||||||
Beginning of period | 11,969 | — | ||||||
End of period | $ | 12,171 | $ | 11,969 | ||||
Accumulated undistributed net investment income | $ | 67 | $ | 12 | ||||
** | Commencement of operations. |
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Diversified International Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
16
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. |
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. |
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The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities - The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $45. | ||
k) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
n) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
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3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 28 | ||
Accumulated Capital Losses* | $ | (2,149 | ) | |
Unrealized Depreciation† | $ | (6,169 | ) | |
Total Accumulated Deficit | $ | (8,290 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $15, increase accumulated net realized gain by $33, and decrease paid in capital by $18. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 2,149 | ||
Total | $ | 2,149 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 1.0000 | % | ||
On next $500 million | 0.9500 | % | ||
On next $4 billion | 0.9000 | % | ||
On next $5 billion | 0.8975 | % | ||
Over $10 billion | 0.8950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.65% | 2.40% | 2.40% | 1.40% | 1.90% | 1.65% | 1.40% | 1.30% |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||
Six-Month | ||||||||
Period | Year Ended | |||||||
Ended April | October 31, | |||||||
30, 2009 | 2008 | |||||||
Class A Shares | 1.61 | % | 1.57 | %* | ||||
Class B Shares | 2.34 | 2.30 | † | |||||
Class C Shares | 2.35 | 2.31 | ‡ | |||||
Class I Shares | 1.31 | 1.29 | § | |||||
Class R3 Shares | 1.89 | 1.89 | ** | |||||
Class R4 Shares | 1.64 | 1.64 | †† | |||||
Class R5 Shares | 1.39 | 1.39 | ‡‡ | |||||
Class Y Shares | 1.29 | 1.30 | §§ |
* | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
† | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
‡ | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
§ | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
** | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
†† | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
‡‡ | From June 30, 2008 (commencement of operations), through October 31, 2008 | |
§§ | From June 30, 2008 (commencement of operations), through October 31, 2008 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $5 and contingent deferred sales charges in an amount that rounds to zero from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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Notes to Financial Statements—(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $1 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: |
Shares | ||||
Class A | 401 | |||
Class B | 100 | |||
Class C | 100 | |||
Class I | 100 | |||
Class R3 | 100 | |||
Class R4 | 100 | |||
Class R5 | 100 | |||
Class Y | 1,004 |
6. | Investment Transactions: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 9,898 | ||
Sales Proceeds Excluding U.S. Government Obligations | 9,313 |
24
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7. | Capital Share Transactions: |
For the Six-Month Period Ended April 30, 2009 | For the Period June 30, 2008 through October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 78 | 1 | (14 | ) | — | 65 | 432 | — | (2 | ) | — | 430 | ||||||||||||||||||||||||||||
Amount | $ | 431 | $ | 8 | $ | (75 | ) | $ | — | $ | 364 | $ | 4,256 | $ | — | $ | (18 | ) | $ | — | $ | 4,238 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 6 | — | — | — | 6 | 101 | — | — | — | 101 | ||||||||||||||||||||||||||||||
Amount | $ | 39 | $ | — | $ | (1 | ) | $ | — | $ | 38 | $ | 1,005 | $ | — | $ | — | $ | — | $ | 1,005 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 12 | — | (8 | ) | — | 4 | 105 | — | (1 | ) | — | 104 | ||||||||||||||||||||||||||||
Amount | $ | 63 | $ | — | $ | (42 | ) | $ | — | $ | 21 | $ | 1,038 | $ | — | $ | (4 | ) | $ | — | $ | 1,034 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | �� | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 100 | — | — | — | 100 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | 1,000 | $ | — | $ | — | $ | — | $ | 1,000 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 4 | — | — | 4 | 1,000 | — | — | — | 1,000 | ||||||||||||||||||||||||||||||
Amount | $ | (1 | ) | $ | 25 | $ | — | $ | — | $ | 24 | $ | 10,000 | $ | — | $ | — | $ | — | $ | 10,000 |
8. | Line of Credit: |
9. | Industry Classifications: |
25
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 5.88 | $ | 0.05 | $ | — | $ | (0.16 | ) | $ | (0.11 | ) | $ | (0.02 | ) | $ | — | $ | — | $ | (0.02 | ) | $ | (0.13 | ) | $ | 5.75 | (1.90 | )%(e) | $ | 2,847 | 2.89 | %(f) | 1.62 | %(f) | 1.62 | %(f) | 1.77 | %(f) | 85 | % | |||||||||||||||||||||||||||||||
B | 5.87 | 0.03 | — | (0.17 | ) | (0.14 | ) | — | — | — | — | (0.14 | ) | 5.73 | (2.39 | ) (e) | 616 | 3.62 | (f) | 2.35 | (f) | 2.35 | (f) | 1.03 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 5.87 | 0.03 | — | (0.17 | ) | (0.14 | ) | — | — | — | — | (0.14 | ) | 5.73 | (2.39 | ) (e) | 617 | 3.62 | (f) | 2.35 | (f) | 2.35 | (f) | 1.00 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 5.89 | 0.05 | — | (0.16 | ) | (0.11 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.13 | ) | 5.76 | (1.78 | ) (e) | 578 | 2.58 | (f) | 1.31 | (f) | 1.31 | (f) | 2.04 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 5.87 | 0.04 | — | (0.16 | ) | (0.12 | ) | — | — | — | — | (0.12 | ) | 5.75 | (2.17 | ) (e) | 575 | 3.28 | (f) | 1.90 | (f) | 1.90 | (f) | 1.44 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 5.88 | 0.05 | — | (0.17 | ) | (0.12 | ) | (0.01 | ) | — | — | (0.01 | ) | (0.13 | ) | 5.75 | (2.01 | ) (e) | 577 | 2.98 | (f) | 1.65 | (f) | 1.65 | (f) | 1.69 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 5.88 | 0.05 | — | (0.15 | ) | (0.10 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.12 | ) | 5.76 | (1.84 | ) (e) | 578 | 2.68 | (f) | 1.40 | (f) | 1.40 | (f) | 1.94 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 5.89 | 0.05 | — | (0.16 | ) | (0.11 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.13 | ) | 5.76 | (1.77 | ) (e) | 5,783 | 2.58 | (f) | 1.30 | (f) | 1.30 | (f) | 2.04 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) June 30, 2008, through October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | 0.01 | — | (4.13 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | (41.20 | ) (e) | 2,528 | 2.01 | (f) | 1.57 | (f) | 1.57 | (f) | 0.26 | (f) | 67 | ||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | (0.01 | ) | — | (4.12 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | (41.30 | ) (e) | 591 | 2.74 | (f) | 2.31 | (f) | 2.31 | (f) | (0.48 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | (0.01 | ) | — | (4.12 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | (41.30 | ) (e) | 611 | 2.75 | (f) | 2.32 | (f) | 2.32 | (f) | (0.49 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
I(j) | 10.00 | 0.01 | — | (4.12 | ) | (4.11 | ) | — | — | — | — | (4.11 | ) | 5.89 | (41.10 | ) (e) | 589 | 1.74 | (f) | 1.30 | (f) | 1.30 | (f) | 0.53 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3(k) | 10.00 | — | — | (4.13 | ) | (4.13 | ) | — | — | — | — | (4.13 | ) | 5.87 | (41.30 | ) (e) | 588 | 2.44 | (f) | 1.90 | (f) | 1.90 | (f) | (0.07 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4(l) | 10.00 | — | — | (4.12 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | (41.20 | ) (e) | 588 | 2.14 | (f) | 1.65 | (f) | 1.65 | (f) | 0.18 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5(m) | 10.00 | 0.01 | — | (4.13 | ) | (4.12 | ) | — | — | — | — | (4.12 | ) | 5.88 | (41.20 | ) (e) | 588 | 1.84 | (f) | 1.40 | (f) | 1.40 | (f) | 0.43 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.01 | — | (4.12 | ) | (4.11 | ) | — | — | — | — | (4.11 | ) | 5.89 | (41.10 | ) (e) | 5,886 | 1.74 | (f) | 1.30 | (f) | 1.30 | (f) | 0.52 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on June 30, 2008. | |
(h) | Commenced operations on June 30, 2008. | |
(i) | Commenced operations on June 30, 2008. | |
(j) | Commenced operations on June 30, 2008. | |
(k) | Commenced operations on June 30, 2008. | |
(l) | Commenced operations on June 30, 2008. | |
(m) | Commenced operations on June 30, 2008. | |
(n) | Commenced operations on June 30, 2008. |
26
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27
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28
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29
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 980.99 | $ | 7.95 | $ | 1,000.00 | $ | 1,016.76 | $ | 8.10 | 1.62 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 976.14 | $ | 11.51 | $ | 1,000.00 | $ | 1,013.14 | $ | 11.73 | 2.35 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 976.14 | $ | 11.51 | $ | 1,000.00 | $ | 1,013.14 | $ | 11.73 | 2.35 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 982.15 | $ | 6.43 | $ | 1,000.00 | $ | 1,018.29 | $ | 6.55 | 1.31 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 978.26 | $ | 9.31 | $ | 1,000.00 | $ | 1,015.37 | $ | 9.49 | 1.90 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 979.92 | $ | 8.10 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 981.62 | $ | 6.87 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.00 | 1.40 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 982.28 | $ | 6.38 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | 181 | 365 |
30
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Dividend & Growth A# | 7/22/96 | -32.18 | % | -0.02 | % | 1.08 | % | 5.74 | % | |||||||||||
Dividend & Growth A## | 7/22/96 | -35.91 | % | -1.14 | % | 0.51 | % | 5.28 | % | |||||||||||
Dividend & Growth B# | 7/22/96 | -32.75 | % | -0.88 | % | NA | * | NA | * | |||||||||||
Dividend & Growth B## | 7/22/96 | -36.07 | % | -1.20 | % | NA | * | NA | * | |||||||||||
Dividend & Growth C# | 7/22/96 | -32.66 | % | -0.74 | % | 0.37 | % | 5.01 | % | |||||||||||
Dividend & Growth C## | 7/22/96 | -33.33 | % | -0.74 | % | 0.37 | % | 5.01 | % | |||||||||||
Dividend & Growth I# | 7/22/96 | -31.96 | % | 0.16 | % | 1.16 | % | 5.82 | % | |||||||||||
Dividend & Growth R3# | 7/22/96 | -32.39 | % | 0.03 | % | 1.39 | % | 6.09 | % | |||||||||||
Dividend & Growth R4# | 7/22/96 | -32.14 | % | 0.21 | % | 1.48 | % | 6.17 | % | |||||||||||
Dividend & Growth R5# | 7/22/96 | -31.96 | % | 0.35 | % | 1.55 | % | 6.22 | % | |||||||||||
Dividend & Growth Y# | 7/22/96 | -31.85 | % | 0.41 | % | 1.58 | % | 6.25 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Edward P. Bousa, CFA
Senior Vice President, Partner
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.4 | % | ||
Banks | 4.0 | |||
Capital Goods | 8.9 | |||
Commercial & Professional Services | 1.4 | |||
Diversified Financials | 5.7 | |||
Energy | 17.2 | |||
Food & Staples Retailing | 2.0 | |||
Food, Beverage & Tobacco | 4.5 | |||
Health Care Equipment & Services | 2.3 | |||
Household & Personal Products | 1.9 | |||
Insurance | 5.4 | |||
Materials | 3.5 | |||
Media | 3.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 11.7 | |||
Real Estate | 0.2 | |||
Retailing | 2.0 | |||
Semiconductors & Semiconductor Equipment | 1.6 | |||
Software & Services | 3.2 | |||
Technology Hardware & Equipment | 5.5 | |||
Telecommunication Services | 5.4 | |||
Transportation | 2.0 | |||
Utilities | 5.7 | |||
Short-Term Investments | 2.9 | |||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCK — 97.5% | ||||||||
Automobiles & Components — 0.4% | ||||||||
452 | Honda Motor Co., Ltd. ADR | $ | 13,132 | |||||
Banks — 4.0% | ||||||||
521 | Comerica, Inc. | 10,930 | ||||||
259 | M&T Bank Corp. | 13,590 | ||||||
632 | PNC Financial Services Group, Inc. | 25,078 | ||||||
767 | US Bancorp. | 13,977 | ||||||
949 | Washington Mutual, Inc. Private Placement ⌂† | 94 | ||||||
3,091 | Wells Fargo & Co. | 61,843 | ||||||
125,512 | ||||||||
Capital Goods — 8.9% | ||||||||
313 | Caterpillar, Inc. | 11,133 | ||||||
1,201 | Deere & Co. | 49,557 | ||||||
410 | Eaton Corp. | 17,945 | ||||||
1,905 | General Electric Co. | 24,094 | ||||||
794 | Honeywell International, Inc. | 24,775 | ||||||
659 | Illinois Tool Works, Inc. | 21,618 | ||||||
524 | Lockheed Martin Corp. | 41,173 | ||||||
620 | Parker-Hannifin Corp. | 28,122 | ||||||
887 | Pentair, Inc. | 23,635 | ||||||
479 | Siemens AG ADR | 32,033 | ||||||
449 | Spirit Aerosystems Holdings, Inc. • | 5,730 | ||||||
279,815 | ||||||||
Commercial & Professional Services — 1.4% | ||||||||
810 | Pitney Bowes, Inc. | 19,865 | ||||||
950 | Waste Management, Inc. | 25,331 | ||||||
45,196 | ||||||||
Diversified Financials — 5.7% | ||||||||
778 | Ameriprise Financial, Inc. | 20,500 | ||||||
148 | Goldman Sachs Group, Inc. | 19,031 | ||||||
1,695 | JP Morgan Chase & Co. | 55,922 | ||||||
1,022 | Morgan Stanley | 24,157 | ||||||
942 | State Street Corp. | 32,162 | ||||||
2,020 | UBS AG ADR • | 27,547 | ||||||
179,319 | ||||||||
Energy — 17.2% | ||||||||
1,426 | Anadarko Petroleum Corp. | 61,412 | ||||||
794 | BP plc ADR | 33,700 | ||||||
1,669 | Chevron Corp. | 110,341 | ||||||
494 | ConocoPhillips Holding Co. | 20,242 | ||||||
993 | EnCana Corp. ADR | 45,406 | ||||||
1,081 | Exxon Mobil Corp. | 72,072 | ||||||
1,627 | Marathon Oil Corp. | 48,331 | ||||||
652 | Schlumberger Ltd. | 31,961 | ||||||
1,466 | Total S.A. ADR | 72,904 | ||||||
1,349 | XTO Energy, Inc. | 46,743 | ||||||
543,112 | ||||||||
Food & Staples Retailing — 2.0% | ||||||||
625 | Walgreen Co. | 19,644 | ||||||
880 | Wal-Mart Stores, Inc. | 44,367 | ||||||
64,011 | ||||||||
Food, Beverage & Tobacco — 4.5% | ||||||||
1,255 | Nestle S.A. ADR | 40,718 | ||||||
737 | PepsiCo, Inc. | 36,668 | ||||||
1,008 | Philip Morris International, Inc. | 36,504 | ||||||
1,105 | SABMiller plc ADR | 18,422 | ||||||
524 | Unilever N.V. NY Shares ADR | 10,368 | ||||||
142,680 | ||||||||
Health Care Equipment & Services — 2.3% | ||||||||
1,394 | Medtronic, Inc. | 44,611 | ||||||
1,181 | UnitedHealth Group, Inc. | 27,784 | ||||||
72,395 | ||||||||
Household & Personal Products — 1.9% | ||||||||
573 | Kimberly-Clark Corp. | 28,162 | ||||||
668 | Procter & Gamble Co. | 33,003 | ||||||
61,165 | ||||||||
Insurance — 5.4% | ||||||||
935 | ACE Ltd. | 43,286 | ||||||
881 | Aflac, Inc. | 25,441 | ||||||
750 | Marsh & McLennan Cos., Inc. | 15,824 | ||||||
1,600 | Metlife, Inc. | 47,612 | ||||||
519 | Prudential Financial, Inc. | 14,982 | ||||||
545 | Travelers Cos., Inc. | 22,405 | ||||||
169,550 | ||||||||
Materials — 3.5% | ||||||||
676 | Agrium U.S., Inc. | 29,069 | ||||||
230 | Air Products and Chemicals, Inc. | 15,144 | ||||||
726 | Barrick Gold Corp. | 21,112 | ||||||
424 | BHP Billiton Ltd. ADR | 20,387 | ||||||
2,119 | International Paper Co. | 26,832 | ||||||
112,544 | ||||||||
Media — 3.0% | ||||||||
1,400 | Comcast Corp. Class A | 21,637 | ||||||
631 | Comcast Corp. Special Class A | 9,260 | ||||||
610 | McGraw-Hill Cos., Inc. | 18,398 | ||||||
1,035 | Time Warner, Inc. | 22,593 | ||||||
1,053 | Walt Disney Co. | 23,054 | ||||||
94,942 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 11.7% | ||||||||
826 | Abbott Laboratories | 34,560 | ||||||
996 | AstraZeneca plc ADR | 34,827 | ||||||
1,823 | Bristol-Myers Squibb Co. | 35,003 | ||||||
1,964 | Eli Lilly & Co. | 64,665 | ||||||
1,731 | Merck & Co., Inc. | 41,955 | ||||||
2,491 | Pfizer, Inc. | 33,282 | ||||||
2,852 | Schering-Plough Corp. | 65,653 | ||||||
368 | Teva Pharmaceutical Industries Ltd. ADR | 16,147 | ||||||
1,030 | Wyeth | 43,685 | ||||||
369,777 | ||||||||
Real Estate — 0.2% | ||||||||
294 | Kimco Realty Corp. | 3,535 | ||||||
26 | Vornado Realty Trust | 1,281 | ||||||
4,816 | ||||||||
Retailing — 2.0% | ||||||||
748 | Gap, Inc. | 11,627 | ||||||
1,062 | Limited Brands, Inc. | 12,129 | ||||||
1,974 | Staples, Inc. | 40,712 | ||||||
64,468 | ||||||||
Semiconductors & Semiconductor Equipment — 1.6% | ||||||||
1,247 | Applied Materials, Inc. | 15,226 | ||||||
1,191 | Maxim Integrated Products, Inc. | 16,138 | ||||||
1,097 | Texas Instruments, Inc. | 19,806 | ||||||
51,170 | ||||||||
Software & Services — 3.2% | ||||||||
1,204 | Accenture Ltd. Class A | 35,440 | ||||||
794 | Automatic Data Processing, Inc. | 27,952 | ||||||
1,882 | Microsoft Corp. | 38,129 | ||||||
101,521 | ||||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCK — 97.5% — (continued) | ||||||||||||
Technology Hardware & Equipment — 5.5% | ||||||||||||
418 | Avnet, Inc. • | $ | 9,157 | |||||||||
1,625 | Corning, Inc . | 23,763 | ||||||||||
537 | Hewlett-Packard Co. | 19,336 | ||||||||||
917 | International Business Machines Corp. | 94,602 | ||||||||||
3,994 | Xerox Corp. | 24,403 | ||||||||||
171,261 | ||||||||||||
Telecommunication Services — 5.4% | ||||||||||||
5,276 | AT&T, Inc. | 135,171 | ||||||||||
1,216 | Verizon Communications, Inc. | 36,901 | ||||||||||
172,072 | ||||||||||||
Transportation — 2.0% | ||||||||||||
500 | FedEx Corp. | 28,002 | ||||||||||
2,136 | Southwest Airlines Co. | 14,906 | ||||||||||
352 | United Parcel Service, Inc. Class B | 18,429 | ||||||||||
61,337 | ||||||||||||
Utilities — 5.7% | ||||||||||||
1,531 | Dominion Resources, Inc. | 46,169 | ||||||||||
887 | Exelon Corp. | 40,907 | ||||||||||
953 | FPL Group, Inc. | 51,267 | ||||||||||
909 | PG&E Corp. | 33,753 | ||||||||||
307 | Veolia Environment ADR | 8,379 | ||||||||||
180,475 | ||||||||||||
Total common stock (cost $3,515,039) | $ | 3,080,270 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Banks 0.0% | ||||||||||||
119 | Washington Mutual, Inc. Private Placement ⌂•† | $ | — | |||||||||
Total warrants (cost $–) | $ | — | ||||||||||
Total long-term investments (cost $3,515,039) | $ | 3,080,270 | ||||||||||
SHORT-TERM INVESTMENTS — 2.9% | ||||||||||||
Repurchase Agreements — 2.9% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $21,910, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $22,348) | ||||||||||||
$ | 21,910 | 0.18%, 04/30/2009 | $ | 21,910 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $26,220, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 - 2047, value of $26,745) | ||||||||||||
26,220 | 0.17%, 04/30/2009 | 26,220 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $36,637, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 - 2038, GNMA 4.50% — 7.00%, 2024 — 2039, value of $37,369) | ||||||||||||
36,637 | 0.17%, 04/30/2009 | 36,637 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $123, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $127) | ||||||||||||
123 | 0.14%, 04/30/2009 | 123 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $7,902, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 - - 2039, value of $8,060) | ||||||||||||
7,902 | 0.16%, 04/30/2009 | 7,902 | ||||||||||
92,792 | ||||||||||||
Total short-term investments (cost $92,792) | $ | 92,792 | ||||||||||
Total investments (cost $3,607,831)▲ | 100.4 | % | $ | 3,173,062 | ||||||||
Other assets and liabilities | (0.4 | )% | (13,016 | ) | ||||||||
Total net assets | 100.0 | % | $ | 3,160,046 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 13.42% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $3,628,583 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 154,936 | ||
Unrealized Depreciation | (610,457 | ) | ||
Net Unrealized Depreciation | $ | (455,521 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $94, which represents 0.00% of total net assets. | |
• | Currently non-income producing. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | 949 | Washington Mutual, Inc. Private Placement | $ | 8,300 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | 119 | Washington Mutual, Inc. Private Placement Warrants | $ | — |
╪ | See Note 2b of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 3,080,176 | ||
Investment in securities — Level 2 | 92,792 | |||
Investment in securities — Level 3 | 94 | |||
Total | $ | 3,173,062 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 53 | ||
Change in unrealized appreciation u | 41 | |||
Balance as of April 30, 2009 | $ | 94 | ||
u Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 41 | ||
6
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Assets: | ||||
Investments in securities, at fair value (cost $3,607,831) | $ | 3,173,062 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 115 | |||
Fund shares sold | 6,747 | |||
Dividends and interest | 6,465 | |||
Other assets | 220 | |||
Total assets | 3,186,610 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 21,267 | |||
Fund shares redeemed | 3,797 | |||
Investment management fees | 325 | |||
Distribution fees | 143 | |||
Accrued expenses | 1,032 | |||
Total liabilities | 26,564 | |||
Net assets | $ | 3,160,046 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 4,088,055 | |||
Accumulated undistributed net investment income | 5,626 | |||
Accumulated net realized loss on investments | (498,866 | ) | ||
Unrealized depreciation of investments | (434,769 | ) | ||
Net assets | $ | 3,160,046 | ||
Shares authorized | 750,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 13.48/$14.26 | ||
Shares outstanding | 148,364 | |||
Net assets | $ | 2,000,175 | ||
Class B: Net asset value per share | $ | 13.26 | ||
Shares outstanding | �� | 13,749 | ||
Net assets | $ | 182,327 | ||
Class C: Net asset value per share | $ | 13.23 | ||
Shares outstanding | 14,577 | |||
Net assets | $ | 192,822 | ||
Class I: Net asset value per share | $ | 13.44 | ||
Shares outstanding | 17,846 | |||
Net assets | $ | 239,932 | ||
Class R3: Net asset value per share | $ | 13.61 | ||
Shares outstanding | 130 | |||
Net assets | $ | 1,763 | ||
Class R4: Net asset value per share | $ | 13.64 | ||
Shares outstanding | 826 | |||
Net assets | $ | 11,273 | ||
Class R5: Net asset value per share | $ | 13.66 | ||
Shares outstanding | 91 | |||
Net assets | $ | 1,248 | ||
Class Y: Net asset value per share | $ | 13.67 | ||
Shares outstanding | 38,815 | |||
Net assets | $ | 530,506 | ||
7
Table of Contents
Investment Income: | ||||
Dividends | $ | 52,922 | ||
Interest | 106 | |||
Securities lending | 29 | |||
Less: Foreign tax withheld | (626 | ) | ||
Total investment income | 52,431 | |||
Expenses: | ||||
Investment management fees | 9,426 | |||
Transfer agent fees | 3,191 | |||
Distribution fees | ||||
Class A | 2,423 | |||
Class B | 935 | |||
Class C | 962 | |||
Class R3 | 3 | |||
Class R4 | 12 | |||
Custodian fees | 5 | |||
Accounting services | 238 | |||
Registration and filing fees | 145 | |||
Board of Directors’ fees | 30 | |||
Interest and dividend expense | — | |||
Audit fees | 42 | |||
Other expenses | 627 | |||
Total expenses (before waivers and fees paid indirectly) | 18,039 | |||
Expense waivers | (1 | ) | ||
Transfer agent fee waivers | (160 | ) | ||
Commission recapture | (18 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (179 | ) | ||
Total expenses, net | 17,860 | |||
Net investment income | 34,571 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (387,968 | ) | ||
Net Realized Loss on Investments | (387,968 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 135,388 | |||
Net Changes in Unrealized Appreciation of Investments | 135,388 | |||
Net Loss on Investments | (252,580 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (218,009 | ) | |
8
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 34,571 | $ | 61,853 | ||||
Net realized loss on investments | (387,968 | ) | (108,309 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 135,388 | (1,479,942 | ) | |||||
Net decrease in net assets resulting from operations | (218,009 | ) | (1,526,398 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (22,054 | ) | (46,956 | ) | ||||
Class B | (1,324 | ) | (2,208 | ) | ||||
Class C | (1,486 | ) | (2,645 | ) | ||||
Class I | (2,509 | ) | (858 | ) | ||||
Class R3 | (10 | ) | (4 | ) | ||||
Class R4 | (114 | ) | (101 | ) | ||||
Class R5 | (10 | ) | (6 | ) | ||||
Class Y | (6,269 | ) | (8,699 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (173,549 | ) | |||||
Class B | — | (21,507 | ) | |||||
Class C | — | (19,864 | ) | |||||
Class I | — | (129 | ) | |||||
Class R3 | — | (9 | ) | |||||
Class R4 | — | (106 | ) | |||||
Class R5 | — | (10 | ) | |||||
Class Y | — | (14,212 | ) | |||||
Total distributions | (33,776 | ) | (290,863 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (39,966 | ) | 270,480 | |||||
Class B | (22,217 | ) | (31,123 | ) | ||||
Class C | (10,988 | ) | (6,590 | ) | ||||
Class I | 81,610 | 202,564 | ||||||
Class R3 | 1,329 | 436 | ||||||
Class R4 | 3,376 | 9,375 | ||||||
Class R5 | 994 | 258 | ||||||
Class Y | 67,434 | 444,967 | ||||||
Net increase from capital share transactions | 81,572 | 890,367 | ||||||
Net decrease in net assets | (170,213 | ) | (926,894 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 3,330,259 | 4,257,153 | ||||||
End of period | $ | 3,160,046 | $ | 3,330,259 | ||||
Accumulated undistributed net investment income | $ | 5,626 | $ | 4,831 | ||||
9
Table of Contents
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
10
Table of Contents
significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase |
11
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | |||
f) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
g) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions |
12
Table of Contents
about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. |
13
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 81,893 | $ | 57,157 | ||||
Long-Term Capital Gains * | 208,970 | 201,659 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 4,831 | ||
Accumulated Capital Losses* | $ | (90,146 | ) | |
Unrealized Depreciation† | $ | (590,909 | ) | |
Total Accumulated Deficit | $ | (676,224 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $72 and increase accumulated net realized gain by $72. |
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d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 90,146 | ||
Total | $ | 90,146 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.7500 | % | ||
On next $500 million | 0.6500 | % | ||
On next $4 billion | 0.6000 | % | ||
On next $5 billion | 0.5975 | % | ||
Over $10 billion | 0.5950 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
15
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||||||||||||||||
1.25% | NA | NA | 1.00 | % | 1.50 | % | 1.20 | % | 0.90 | % | NA |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.20 | % | 1.08 | % | 1.09 | % | 1.13 | % | 1.16 | % | 1.22 | % | ||||||||||||
Class B Shares | 2.01 | 1.97 | 1.95 | 1.98 | 2.01 | 2.03 | ||||||||||||||||||
Class C Shares | 1.95 | 1.83 | 1.82 | 1.86 | 1.88 | 1.89 | ||||||||||||||||||
Class I Shares | 0.87 | 0.81 | 0.76 | 0.98 | * | |||||||||||||||||||
Class R3 Shares | 1.50 | 1.50 | 1.40 | † | ||||||||||||||||||||
Class R4 Shares | 1.11 | 1.09 | 1.09 | ‡ | ||||||||||||||||||||
Class R5 Shares | 0.83 | 0.79 | 0.82 | § | ||||||||||||||||||||
Class Y Shares | 0.71 | 0.68 | 0.68 | 0.70 | 0.72 | 0.74 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $4,458 and contingent deferred sales charges of $213 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 |
16
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years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $66. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $6. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $3,041 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from Payment | ||||||||||||||||
from Affiliate for | ||||||||||||||||
Impact from | Total Return | Transfer Agent | ||||||||||||||
Payment from | Excluding | Allocation | Total Return | |||||||||||||
Affiliate for SEC | Payment from | Methodology | Excluding Payment | |||||||||||||
Settlement for the | Affiliate for the | Reimbursements for | from Affiliate for | |||||||||||||
Year Ended | Year Ended | the Year Ended | the Year Ended | |||||||||||||
October 31, 2007 | October 31, 2007 | October 31, 2004 | October 31, 2004 | |||||||||||||
Class A | 0.03 | % | 16.17 | % | 0.06 | % | 12.47 | % | ||||||||
Class B | 0.03 | 15.19 | — | — | ||||||||||||
Class C | 0.03 | 15.39 | 0.04 | 11.72 | ||||||||||||
Class I | 0.03 | 16.64 | — | — | ||||||||||||
Class Y | 0.03 | 16.65 | — | — |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 635,062 | ||
Sales Proceeds Excluding U.S. Government Obligations | 504,372 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 16,939 | 1,627 | (22,326 | ) | — | (3,760 | ) | 28,976 | 10,493 | (27,322 | ) | — | 12,147 | |||||||||||||||||||||||||||
Amount | $ | 222,548 | $ | 21,591 | $ | (284,105 | ) | $ | — | $ | (39,966 | ) | $ | 556,608 | $ | 216,318 | $ | (502,446 | ) | $ | — | $ | 270,480 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,060 | 98 | (2,967 | ) | — | (1,809 | ) | 1,813 | 1,117 | (4,749 | ) | — | (1,819 | ) | ||||||||||||||||||||||||||
Amount | $ | 13,551 | $ | 1,281 | $ | (37,049 | ) | $ | — | $ | (22,217 | ) | $ | 34,327 | $ | 22,868 | $ | (88,318 | ) | $ | — | $ | (31,123 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,700 | 105 | (2,763 | ) | — | (958 | ) | 2,241 | 1,031 | (3,824 | ) | — | (552 | ) | ||||||||||||||||||||||||||
Amount | $ | 22,020 | $ | 1,367 | $ | (34,375 | ) | $ | — | $ | (10,988 | ) | $ | 41,699 | $ | 21,027 | $ | (69,316 | ) | $ | — | $ | (6,590 | ) | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,758 | 187 | (1,670 | ) | — | 6,275 | 11,984 | 51 | (546 | ) | — | 11,489 | ||||||||||||||||||||||||||||
Amount | $ | 99,917 | $ | 2,467 | $ | (20,774 | ) | $ | — | $ | 81,610 | $ | 210,565 | $ | 952 | $ | (8,953 | ) | $ | — | $ | 202,564 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 109 | 1 | (11 | ) | — | 99 | 30 | — | (7 | ) | — | 23 | ||||||||||||||||||||||||||||
Amount | $ | 1,461 | $ | 10 | $ | (142 | ) | $ | — | $ | 1,329 | $ | 569 | $ | 13 | $ | (146 | ) | $ | — | $ | 436 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 298 | 8 | (51 | ) | — | 255 | 525 | 10 | (49 | ) | — | 486 | ||||||||||||||||||||||||||||
Amount | $ | 3,938 | $ | 114 | $ | (676 | ) | $ | — | $ | 3,376 | $ | 10,068 | $ | 208 | $ | (901 | ) | $ | — | $ | 9,375 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 72 | 1 | (3 | ) | — | 70 | 14 | 1 | (2 | ) | — | 13 | ||||||||||||||||||||||||||||
Amount | $ | 1,019 | $ | 10 | $ | (35 | ) | $ | — | $ | 994 | $ | 279 | $ | 16 | $ | (37 | ) | $ | — | $ | 258 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 8,008 | 460 | (3,142 | ) | — | 5,326 | 23,180 | 1,110 | (1,697 | ) | — | 22,593 | ||||||||||||||||||||||||||||
Amount | $ | 103,716 | $ | 6,179 | $ | (42,461 | ) | $ | — | $ | 67,434 | $ | 449,513 | $ | 22,787 | $ | (27,333 | ) | $ | — | $ | 444,967 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 445 | $ | 5,662 | |||||
For the Year Ended October 31, 2008 | 654 | $ | 12,822 |
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19
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 14.56 | $ | 0.15 | $ | — | $ | (1.08 | ) | $ | (0.93 | ) | $ | (0.15 | ) | $ | — | $ | — | $ | (0.15 | ) | $ | (1.08 | ) | $ | 13.48 | (6.38 | )%(e) | $ | 2,000,175 | 1.20 | %(f) | 1.20 | %(f) | 1.20 | %(f) | 2.33 | %(f) | 17 | % | |||||||||||||||||||||||||||||||
B | 14.32 | 0.10 | — | (1.07 | ) | (0.97 | ) | (0.09 | ) | — | — | (0.09 | ) | (1.06 | ) | 13.26 | (6.76 | ) (e) | 182,327 | 2.18 | (f) | 2.01 | (f) | 2.01 | (f) | 1.54 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 14.28 | 0.10 | — | (1.05 | ) | (0.95 | ) | (0.10 | ) | — | — | (0.10 | ) | (1.05 | ) | 13.23 | (6.65 | ) (e) | 192,822 | 1.95 | (f) | 1.95 | (f) | 1.95 | (f) | 1.58 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 14.52 | 0.16 | — | (1.07 | ) | (0.91 | ) | (0.17 | ) | — | — | (0.17 | ) | (1.08 | ) | 13.44 | (6.24 | ) (e) | 239,932 | 0.87 | (f) | 0.87 | (f) | 0.87 | (f) | 2.58 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 14.71 | 0.13 | — | (1.09 | ) | (0.96 | ) | (0.14 | ) | — | — | (0.14 | ) | (1.10 | ) | 13.61 | (6.51 | ) (e) | 1,763 | 1.56 | (f) | 1.50 | (f) | 1.50 | (f) | 1.86 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 14.73 | 0.15 | — | (1.08 | ) | (0.93 | ) | (0.16 | ) | — | — | (0.16 | ) | (1.09 | ) | 13.64 | (6.32 | ) (e) | 11,273 | 1.11 | (f) | 1.11 | (f) | 1.11 | (f) | 2.34 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 14.75 | 0.16 | — | (1.08 | ) | (0.92 | ) | (0.17 | ) | — | — | (0.17 | ) | (1.09 | ) | 13.66 | (6.19 | ) (e) | 1,248 | 0.83 | (f) | 0.83 | (f) | 0.83 | (f) | 2.49 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 14.75 | 0.18 | — | (1.08 | ) | (0.90 | ) | (0.18 | ) | — | — | (0.18 | ) | (1.08 | ) | 13.67 | (6.07 | ) (e) | 530,506 | 0.71 | (f) | 0.71 | (f) | 0.71 | (f) | 2.79 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 23.12 | 0.31 | — | (7.32 | ) | (7.01 | ) | (0.31 | ) | (1.24 | ) | — | (1.55 | ) | (8.56 | ) | 14.56 | (32.24 | ) | 2,214,358 | 1.09 | 1.09 | 1.09 | 1.62 | 36 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 22.76 | 0.14 | — | (7.21 | ) | (7.07 | ) | (0.13 | ) | (1.24 | ) | — | (1.37 | ) | (8.44 | ) | 14.32 | (32.85 | ) | 222,732 | 1.97 | 1.97 | 1.97 | 0.73 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 22.72 | 0.17 | — | (7.21 | ) | (7.04 | ) | (0.16 | ) | (1.24 | ) | — | (1.40 | ) | (8.44 | ) | 14.28 | (32.80 | ) | 221,895 | 1.83 | 1.83 | 1.83 | 0.87 | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 23.07 | 0.34 | — | (7.27 | ) | (6.93 | ) | (0.38 | ) | (1.24 | ) | — | (1.62 | ) | (8.55 | ) | 14.52 | (32.02 | ) | 167,989 | 0.82 | 0.82 | 0.82 | 1.77 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 23.37 | 0.23 | — | (7.40 | ) | (7.17 | ) | (0.25 | ) | (1.24 | ) | — | (1.49 | ) | (8.66 | ) | 14.71 | (32.53 | ) | 455 | 1.58 | 1.50 | 1.50 | 1.16 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 23.39 | 0.32 | — | (7.42 | ) | (7.10 | ) | (0.32 | ) | (1.24 | ) | — | (1.56 | ) | (8.66 | ) | 14.73 | (32.25 | ) | 8,410 | 1.09 | 1.09 | 1.09 | 1.63 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 23.41 | 0.35 | — | (7.40 | ) | (7.05 | ) | (0.37 | ) | (1.24 | ) | — | (1.61 | ) | (8.66 | ) | 14.75 | (32.06 | ) | 310 | 0.80 | 0.80 | 0.80 | 1.94 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 23.41 | 0.37 | — | (7.40 | ) | (7.03 | ) | (0.39 | ) | (1.24 | ) | — | (1.63 | ) | (8.66 | ) | 14.75 | (31.99 | ) | 494,110 | 0.69 | 0.69 | 0.69 | 2.01 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 21.48 | 0.29 | 0.01 | 2.95 | 3.25 | (0.27 | ) | (1.34 | ) | — | (1.61 | ) | 1.64 | 23.12 | 16.20 | (g) | 3,236,757 | 1.09 | 1.09 | 1.09 | 1.35 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 21.17 | 0.11 | 0.01 | 2.90 | 3.02 | (0.09 | ) | (1.34 | ) | — | (1.43 | ) | 1.59 | 22.76 | 15.22 | (g) | 395,552 | 1.95 | 1.95 | 1.95 | 0.50 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 21.13 | 0.13 | 0.01 | 2.91 | 3.05 | (0.12 | ) | (1.34 | ) | — | (1.46 | ) | 1.59 | 22.72 | 15.42 | (g) | 365,443 | 1.82 | 1.82 | 1.82 | 0.62 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I | 21.46 | 0.36 | — | 2.98 | 3.34 | (0.39 | ) | (1.34 | ) | — | (1.73 | ) | 1.61 | 23.07 | 16.67 | (g) | 1,899 | 0.77 | 0.77 | 0.77 | 1.50 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 21.14 | 0.15 | — | 2.25 | 2.40 | (0.17 | ) | — | — | (0.17 | ) | 2.23 | 23.37 | 11.38 | (e) | 177 | 1.40 | (f) | 1.40 | (f) | 1.40 | (f) | 0.63 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 21.14 | 0.21 | — | 2.26 | 2.47 | (0.22 | ) | — | — | (0.22 | ) | 2.25 | 23.39 | 11.70 | (e) | 1,994 | 1.09 | (f) | 1.09 | (f) | 1.09 | (f) | 0.72 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 21.14 | 0.26 | — | 2.26 | 2.52 | (0.25 | ) | — | — | (0.25 | ) | 2.27 | 23.41 | 11.99 | (e) | 193 | 0.82 | (f) | 0.82 | (f) | 0.82 | (f) | 0.98 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 21.72 | 0.37 | — | 3.02 | 3.39 | (0.36 | ) | (1.34 | ) | — | (1.70 | ) | 1.69 | 23.41 | 16.68 | (g) | 255,138 | 0.69 | 0.69 | 0.69 | 1.72 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (k) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 19.10 | 0.26 | — | 3.14 | 3.40 | (0.26 | ) | (0.76 | ) | — | (1.02 | ) | 2.38 | 21.48 | 18.63 | 2,626,634 | 1.14 | 1.14 | 1.14 | 1.32 | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 18.84 | 0.09 | — | 3.10 | 3.19 | (0.10 | ) | (0.76 | ) | — | (0.86 | ) | 2.33 | 21.17 | 17.63 | 365,678 | 1.99 | 1.99 | 1.99 | 0.48 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 18.81 | 0.12 | — | 3.08 | 3.20 | (0.12 | ) | (0.76 | ) | — | (0.88 | ) | 2.32 | 21.13 | 17.75 | 317,139 | 1.87 | 1.87 | 1.87 | 0.60 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I(l) | 20.48 | 0.03 | — | 1.03 | 1.06 | (0.08 | ) | — | — | (0.08 | ) | 0.98 | 21.46 | 5.20 | (e) | 11 | 1.08 | (f) | 0.98 | (f) | 0.98 | (f) | 0.59 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 19.30 | 0.35 | — | 3.18 | 3.53 | (0.35 | ) | (0.76 | ) | — | (1.11 | ) | 2.42 | 21.72 | 19.15 | 133,376 | 0.71 | 0.71 | 0.71 | 1.75 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 17.79 | 0.23 | — | 1.51 | 1.74 | (0.24 | ) | (0.19 | ) | — | (0.43 | ) | 1.31 | 19.10 | 9.87 | 2,109,617 | 1.17 | 1.17 | 1.17 | 1.25 | 26 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 17.56 | 0.08 | — | 1.48 | 1.56 | (0.09 | ) | (0.19 | ) | — | (0.28 | ) | 1.28 | 18.84 | 8.92 | 343,650 | 2.01 | 2.01 | 2.01 | 0.41 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 17.53 | 0.10 | — | 1.48 | 1.58 | (0.11 | ) | (0.19 | ) | — | (0.30 | ) | 1.28 | 18.81 | 9.08 | 280,967 | 1.89 | 1.89 | 1.89 | 0.54 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.97 | 0.32 | — | 1.53 | 1.85 | (0.33 | ) | (0.19 | ) | — | (0.52 | ) | 1.33 | 19.30 | 10.36 | 114,777 | 0.73 | 0.73 | 0.73 | 1.64 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.94 | 0.16 | 0.01 | 1.82 | 1.99 | (0.14 | ) | — | — | (0.14 | ) | 1.85 | 17.79 | 12.53 | (g) | 1,838,567 | 1.23 | 1.23 | 1.23 | 0.96 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.75 | 0.03 | — | 1.80 | 1.83 | (0.02 | ) | — | — | (0.02 | ) | 1.81 | 17.56 | 11.62 | 319,512 | 2.04 | 2.04 | 2.04 | 0.16 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.72 | 0.05 | 0.01 | 1.79 | 1.85 | (0.04 | ) | — | — | (0.04 | ) | 1.81 | 17.53 | 11.76 | (g) | 277,706 | 1.90 | 1.90 | 1.90 | 0.29 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 16.11 | 0.24 | — | 1.86 | 2.10 | (0.24 | ) | — | — | (0.24 | ) | 1.86 | 17.97 | 13.06 | 69,088 | 0.75 | 0.75 | 0.75 | 1.44 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Per share amounts have been calculated using average shares outstanding method. | |
(l) | Commenced operations on August 31, 2006. |
20
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21
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Directors and Officers (Unaudited) — (continued)
22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 936.20 | $ | 5.76 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.00 | 1.20 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 932.42 | $ | 9.63 | $ | 1,000.00 | $ | 1,014.82 | $ | 10.04 | 2.01 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 933.48 | $ | 9.34 | $ | 1,000.00 | $ | 1,015.12 | $ | 9.74 | 1.95 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 937.60 | $ | 4.17 | $ | 1,000.00 | $ | 1,020.48 | $ | 4.35 | 0.87 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 934.85 | $ | 7.19 | $ | 1,000.00 | $ | 1,017.35 | $ | 7.50 | 1.50 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 936.78 | $ | 5.33 | $ | 1,000.00 | $ | 1,019.29 | $ | 5.55 | 1.11 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 938.11 | $ | 3.98 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.15 | 0.83 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 939.25 | $ | 3.41 | $ | 1,000.00 | $ | 1,021.27 | $ | 3.55 | 0.71 | 181 | 365 |
24
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Equity Growth Allocation A# | 5/28/04 | -37.84 | % | -1.84 | % | |||||||
Equity Growth Allocation A## | 5/28/04 | -41.26 | % | -2.96 | % | |||||||
Equity Growth Allocation B# | 5/28/04 | -38.26 | % | -2.50 | % | |||||||
Equity Growth Allocation B## | 5/28/04 | -41.31 | % | -2.85 | % | |||||||
Equity Growth Allocation C# | 5/28/04 | -38.34 | % | -2.52 | % | |||||||
Equity Growth Allocation C## | 5/28/04 | -38.94 | % | -2.52 | % | |||||||
Equity Growth Allocation I# | 5/28/04 | -37.63 | % | -1.65 | % | |||||||
Equity Growth Allocation R3# | 5/28/04 | -38.00 | % | -1.96 | % | |||||||
Equity Growth Allocation R4# | 5/28/04 | -37.86 | % | -1.83 | % | |||||||
Equity Growth Allocation R5# | 5/28/04 | -37.65 | % | -1.68 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.2 | % | ||
SPDR DJ Wilshire REIT ETF | 0.4 | |||
The Hartford Capital Appreciation Fund, Class Y | 18.7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.1 | |||
The Hartford Disciplined Equity Fund, Class Y | 6.1 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.3 | |||
The Hartford Equity Income Fund, Class Y | 2.9 | |||
The Hartford Fundamental Growth Fund, Class Y | 1.2 | |||
The Hartford Global Growth Fund, Class Y | 4.9 | |||
The Hartford Growth Fund, Class Y | 1.9 | |||
The Hartford Growth Opportunities Fund, Class Y | 8.3 | |||
The Hartford International Opportunities Fund, Class Y | 8.5 | |||
The Hartford International Small Company Fund, Class Y | 5.1 | |||
The Hartford MidCap Value Fund, Class Y | 0.0 | |||
The Hartford Select MidCap Growth Fund, Class Y | 0.0 | |||
The Hartford Select MidCap Value Fund, Class Y | 2.0 | |||
The Hartford Select SmallCap Value Fund, Class Y | 7.0 | |||
The Hartford Small Company Fund, Class Y | 7.6 | |||
The Hartford Value Fund, Class Y | 19.8 | |||
The Hartford Value Opportunities Fund, Class Y | 0.0 | |||
Other Assets and Liabilities | 0.0 | |||
Total | 100.0 | % | ||
3
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 97.4% | ||||||||||||
EQUITY FUNDS — 97.4% | ||||||||||||
1,395 | The Hartford Capital Appreciation Fund, Class Y | $ | 34,475 | |||||||||
428 | The Hartford Capital Appreciation II Fund, Class Y• | 3,833 | ||||||||||
1,233 | The Hartford Disciplined Equity Fund, Class Y | 11,186 | ||||||||||
169 | The Hartford Dividend and Growth Fund, Class Y | 2,309 | ||||||||||
595 | The Hartford Equity Income Fund, Class Y | 5,372 | ||||||||||
288 | The Hartford Fundamental Growth Fund, Class Y• | 2,205 | ||||||||||
827 | The Hartford Global Growth Fund, Class Y• | 9,056 | ||||||||||
296 | The Hartford Growth Fund, Class Y• | 3,574 | ||||||||||
854 | The Hartford Growth Opportunities Fund, Class Y• | 15,398 | ||||||||||
1,544 | The Hartford International Opportunities Fund, Class Y | 15,668 | ||||||||||
1,202 | The Hartford International Small Company Fund, Class Y | 9,391 | ||||||||||
2 | The Hartford MidCap Value Fund, Class Y | 14 | ||||||||||
4 | The Hartford Select MidCap Growth Fund, Class Y• | 28 | ||||||||||
602 | The Hartford Select MidCap Value Fund, Class Y | 3,785 | ||||||||||
1,961 | The Hartford Select SmallCap Value Fund, Class Y | 13,004 | ||||||||||
1,075 | The Hartford Small Company Fund, Class Y | 14,091 | ||||||||||
4,539 | The Hartford Value Fund, Class Y | 36,581 | ||||||||||
5 | The Hartford Value Opportunities Fund, Class Y | 45 | ||||||||||
Total equity funds (cost $257,124) | $ | 180,015 | ||||||||||
Total investments in affiliated investment companies (cost $257,124) | $ | 180,015 | ||||||||||
EXCHANGE TRADED FUNDS — 2.6% | ||||||||||||
160 | SPDR DJ Wilshire International Real Estate ETF | $ | 4,000 | |||||||||
24 | SPDR DJ Wilshire REIT ETF | 837 | ||||||||||
Total exchange traded funds (cost $6,404) | $ | 4,837 | ||||||||||
Total long-term investments (cost $263,528) | $ | 184,852 | ||||||||||
Total investments (cost $263,528) ▲ | 100.0 | % | $ | 184,852 | ||||||||
Other assets and liabilities | — | % | 8 | |||||||||
Total net assets | 100 0 | % | $ | 184,860 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $263,761 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 510 | ||
Unrealized Depreciation | (79,419 | ) | ||
Net Unrealized Depreciation | $ | (78,909 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 184,852 | ||
Total | $ | 184,852 | ||
4
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $6,404) | $ | 4,837 | ||
Investments in underlying affiliated funds, at fair value (cost $257,124) | 180,015 | |||
Receivables: | ||||
Investment securities sold | 78 | |||
Fund shares sold | 220 | |||
Dividends and interest | — | |||
Other assets | 112 | |||
Total assets | 185,262 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 301 | |||
Investment management fees | 4 | |||
Distribution fees | 16 | |||
Accrued expenses | 81 | |||
Total liabilities | 402 | |||
Net assets | $ | 184,860 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 290,817 | |||
Accumulated undistributed net investment income | 679 | |||
Accumulated net realized loss on investments | (27,960 | ) | ||
Unrealized depreciation of investments | (78,676 | ) | ||
Net assets | $ | 184,860 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.68/$8.12 | ||
Shares outstanding | 13,992 | |||
Net assets | $ | 107,430 | ||
Class B: Net asset value per share | $ | 7.64 | ||
Shares outstanding | 3,334 | |||
Net assets | $ | 25,463 | ||
Class C: Net asset value per share | $ | 7.61 | ||
Shares outstanding | 5,663 | |||
Net assets | $ | 43,085 | ||
Class I: Net asset value per share | $ | 7.67 | ||
Shares outstanding | 95 | |||
Net assets | $ | 726 | ||
Class R3: Net asset value per share | $ | 7.65 | ||
Shares outstanding | 86 | |||
Net assets | $ | 661 | ||
Class R4: Net asset value per share | $ | 7.64 | ||
Shares outstanding | 448 | |||
Net assets | $ | 3,422 | ||
Class R5: Net asset value per share | $ | 7.67 | ||
Shares outstanding | 531 | |||
Net assets | $ | 4,073 | ||
5
Table of Contents
Investment Income: | ||||
Dividends | $ | 120 | ||
Dividends from underlying affiliated funds | 2,975 | |||
Total investment income | 3,095 | |||
Expenses: | ||||
Investment management fees | 135 | |||
Transfer agent fees | 291 | |||
Distribution fees | ||||
Class A | 125 | |||
Class B | 121 | |||
Class C | 219 | |||
Class R3 | 2 | |||
Class R4 | 3 | |||
Custodian fees | 1 | |||
Accounting services | 11 | |||
Registration and filing fees | 44 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 5 | |||
Other expenses | 46 | |||
Total expenses (before waivers) | 1,005 | |||
Expense waivers | (128 | ) | ||
Transfer agent fee waivers | (36 | ) | ||
Total waivers | (164 | ) | ||
Total expenses, net | 841 | |||
Net investment income | 2,254 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (27,714 | ) | ||
Net realized loss on investments in securities | (13 | ) | ||
Net Realized Loss on Investments | (27,727 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 15,300 | |||
Net Changes in Unrealized Appreciation of Investments | 15,300 | |||
Net Loss on Investments | (12,427 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (10,173 | ) | |
6
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 2,254 | $ | (667 | ) | |||
Net realized gain (loss) on investments | (27,727 | ) | 13,299 | |||||
Net unrealized appreciation (depreciation) of investments | 15,300 | (145,028 | ) | |||||
Net decrease in net assets resulting from operations | (10,173 | ) | (132,396 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (1,018 | ) | (6,892 | ) | ||||
Class B | — | (1,544 | ) | |||||
Class C | (149 | ) | (2,397 | ) | ||||
Class I | (321 | ) | (7 | ) | ||||
Class R3 | (5 | ) | (33 | ) | ||||
Class R4 | (31 | ) | (40 | ) | ||||
Class R5 | (51 | ) | (4 | ) | ||||
From net realized gain on investments | ||||||||
Class A | (1,143 | ) | (10,090 | ) | ||||
Class B | (288 | ) | (2,785 | ) | ||||
Class C | (459 | ) | (4,316 | ) | ||||
Class I | (7 | ) | (4 | ) | ||||
Class R3 | (7 | ) | (55 | ) | ||||
Class R4 | (28 | ) | (47 | ) | ||||
Class R5 | (16 | ) | (4 | ) | ||||
Total distributions | (3,523 | ) | (28,218 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 2,978 | 34,133 | ||||||
Class B | (823 | ) | 5,149 | |||||
Class C | 1,885 | 9,733 | ||||||
Class I | (1,133 | ) | 901 | |||||
Class R3 | 14 | 283 | ||||||
Class R4 | 1,224 | 3,306 | ||||||
Class R5 | 2,592 | 2,210 | ||||||
Net increase from capital share transactions | 6,737 | 55,715 | ||||||
Net decrease in net assets | (6,959 | ) | (104,899 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 191,819 | 296,718 | ||||||
End of period | $ | 184,860 | $ | 191,819 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 679 | $ | — | ||||
7
Table of Contents
April 30, 2009 (Unaudited)
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. |
8
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Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Funds’ Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
11
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 9,945 | $ | 2,242 | ||||
Long-Term Capital Gains * | 18,273 | 5,366 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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Amount | ||||
Undistributed Long-Term Capital Gain | $ | 1,948 | ||
Unrealized Depreciation* | $ | (94,209 | ) | |
Total Accumulated Deficit | $ | (92,261 | ) | |
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $11,584 and decrease accumulated net realized loss by $11,584. | ||
d) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||||||||||||||
1.60% | 2.35 | % | 2.35 | % | 1.35 | % | 1.85 | % | 1.55 | % | 1.25 | % |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $344 and contingent deferred sales charges of $54 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $29. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $274 for providing such services. These fees are accrued daily and paid monthly. |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 46,812 | ||
Sales Proceeds Excluding U.S. Government Obligations | 41,510 |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,044 | 291 | (1,979 | ) | — | 356 | 3,894 | 1,191 | (2,598 | ) | — | 2,487 | ||||||||||||||||||||||||||||
Amount | $ | 14,844 | $ | 2,116 | $ | (13,982 | ) | $ | — | $ | 2,978 | $ | 47,768 | $ | 16,355 | $ | (29,990 | ) | $ | — | $ | 34,133 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 238 | 39 | (401 | ) | — | (124 | ) | 629 | 301 | (571 | ) | — | 359 | |||||||||||||||||||||||||||
Amount | $ | 1,715 | $ | 275 | $ | (2,813 | ) | $ | — | $ | (823 | ) | $ | 7,627 | $ | 4,107 | $ | (6,585 | ) | $ | — | $ | 5,149 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,430 | 78 | (2,366 | ) | — | 142 | 1,479 | 432 | (1,200 | ) | — | 711 | ||||||||||||||||||||||||||||
Amount | $ | 17,824 | $ | 556 | $ | (16,495 | ) | $ | — | $ | 1,885 | $ | 17,894 | $ | 5,883 | $ | (14,044 | ) | $ | — | $ | 9,733 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,643 | 43 | (2,671 | ) | — | 15 | 82 | — | (6 | ) | — | 76 | ||||||||||||||||||||||||||||
Amount | $ | 19,120 | $ | 312 | $ | (20,565 | ) | $ | — | $ | (1,133 | ) | $ | 942 | $ | 8 | $ | (49 | ) | $ | — | $ | 901 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 10 | 1 | (10 | ) | — | 1 | 29 | 7 | (12 | ) | — | 24 | ||||||||||||||||||||||||||||
Amount | $ | 72 | $ | 12 | $ | (70 | ) | $ | — | $ | 14 | $ | 341 | $ | 88 | $ | (146 | ) | $ | — | $ | 283 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 209 | 8 | (58 | ) | — | 159 | 302 | 7 | (49 | ) | — | 260 | ||||||||||||||||||||||||||||
Amount | $ | 1,560 | $ | 58 | $ | (394 | ) | $ | — | $ | 1,224 | $ | 3,761 | $ | 87 | $ | (542 | ) | $ | — | $ | 3,306 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 399 | 9 | (61 | ) | — | 347 | 196 | 1 | (18 | ) | — | 179 | ||||||||||||||||||||||||||||
Amount | $ | 2,937 | $ | 66 | $ | (411 | ) | $ | — | $ | 2,592 | $ | 2,367 | $ | 8 | $ | (165 | ) | $ | — | $ | 2,210 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 21 | $ | 149 | |||||
For the Year Ended October 31, 2008 | 32 | $ | 385 |
15
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
16
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.29 | $ | 0.09 | $ | — | $ | (0.54 | ) | $ | (0.45 | ) | $ | (0.08 | ) | $ | (0.08 | ) | $ | — | $ | (0.16 | ) | $ | (0.61 | ) | $ | 7.68 | (5.37 | )%(f) | $ | 107,430 | 0.84 | %(g) | 0.68 | %(g) | 0.68 | %(g) | 2.41 | %(g) | 23 | % | ||||||||||||||||||||||||||||||
B | 8.19 | 0.06 | — | (0.53 | ) | (0.47 | ) | — | (0.08 | ) | — | (0.08 | ) | (0.55 | ) | 7.64 | (5.62 | ) (f) | 25,463 | 1.75 | (g) | 1.27 | (g) | 1.27 | (g) | 1.81 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 8.19 | 0.08 | — | (0.56 | ) | (0.48 | ) | (0.02 | ) | (0.08 | ) | — | (0.10 | ) | (0.58 | ) | 7.61 | (5.73 | ) (f) | 43,085 | 1.57 | (g) | 1.46 | (g) | 1.46 | (g) | 2.13 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||
I | 8.31 | 0.58 | — | (1.02 | ) | (0.44 | ) | (0.12 | ) | (0.08 | ) | — | (0.20 | ) | (0.64 | ) | 7.67 | (5.13 | ) (f) | 726 | 0.27 | (g) | 0.27 | (g) | 0.27 | (g) | 11.39 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||
R3 | 8.25 | 0.08 | — | (0.54 | ) | (0.46 | ) | (0.06 | ) | (0.08 | ) | — | (0.14 | ) | (0.60 | ) | 7.65 | (5.46 | ) (f) | 661 | 0.98 | (g) | 0.96 | (g) | 0.96 | (g) | 2.09 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||
R4 | 8.27 | 0.08 | — | (0.54 | ) | (0.46 | ) | (0.09 | ) | (0.08 | ) | — | (0.17 | ) | (0.63 | ) | 7.64 | (5.40 | ) (f) | 3,422 | 0.67 | (g) | 0.66 | (g) | 0.66 | (g) | 2.07 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||
R5 | 8.31 | 0.10 | — | (0.54 | ) | (0.44 | ) | (0.12 | ) | (0.08 | ) | — | (0.20 | ) | (0.64 | ) | 7.67 | (5.17 | ) (f) | 4,073 | 0.37 | (g) | 0.36 | (g) | 0.36 | (g) | 2.74 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.55 | 0.01 | — | (5.82 | ) | (5.81 | ) | (0.55 | ) | (0.90 | ) | — | (1.45 | ) | (7.26 | ) | 8.29 | (40.92 | ) | 113,006 | 0.69 | 0.68 | 0.68 | 0.05 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 15.40 | (0.09 | ) | — | (5.76 | ) | (5.85 | ) | (0.46 | ) | (0.90 | ) | — | (1.36 | ) | (7.21 | ) | 8.19 | (41.40 | ) | 28,322 | 1.52 | 1.49 | 1.49 | (0.72 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 15.39 | (0.08 | ) | — | (5.76 | ) | (5.84 | ) | (0.46 | ) | (0.90 | ) | — | (1.36 | ) | (7.20 | ) | 8.19 | (41.35 | ) | 45,209 | 1.43 | 1.43 | 1.43 | (0.66 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
I | 15.59 | (0.03 | ) | — | (5.75 | ) | (5.78 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.28 | ) | 8.31 | (40.73 | ) | 668 | 0.30 | 0.30 | 0.30 | (0.29 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3 | 15.52 | (0.02 | ) | — | (5.80 | ) | (5.82 | ) | (0.55 | ) | (0.90 | ) | — | (1.45 | ) | (7.27 | ) | 8.25 | (41.10 | ) | 699 | 0.95 | 0.95 | 0.95 | (0.13 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4 | 15.56 | (0.05 | ) | — | (5.75 | ) | (5.79 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.29 | ) | 8.27 | (40.92 | ) | 2,389 | 0.64 | 0.64 | 0.64 | (0.40 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 15.60 | (0.03 | ) | — | (5.76 | ) | (5.79 | ) | (0.60 | ) | (0.90 | ) | — | (1.50 | ) | (7.29 | ) | 8.31 | (40.78 | ) | 1,526 | 0.34 | 0.34 | 0.34 | (0.26 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.21 | 0.03 | — | 2.83 | 2.86 | (0.24 | ) | (0.28 | ) | — | (0.52 | ) | 2.34 | 15.55 | 22.39 | 173,379 | 0.69 | 0.69 | 0.69 | (0.06 | ) | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.10 | (0.07 | ) | — | 2.81 | 2.74 | (0.16 | ) | (0.28 | ) | — | (0.44 | ) | 2.30 | 15.40 | 21.58 | 47,743 | 1.52 | 1.37 | 1.37 | (0.72 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.10 | (0.07 | ) | — | 2.80 | 2.73 | (0.16 | ) | (0.28 | ) | — | (0.44 | ) | 2.29 | 15.39 | 21.50 | 74,047 | 1.42 | 1.37 | 1.37 | (0.72 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 13.22 | 0.19 | — | 2.71 | 2.90 | (0.25 | ) | (0.28 | ) | — | (0.53 | ) | 2.37 | 15.59 | 22.75 | 64 | 0.39 | 0.37 | 0.37 | (0.15 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 13.24 | (0.05 | ) | — | 2.33 | 2.28 | — | — | — | — | 2.28 | 15.52 | 17.22 | (f) | 952 | 0.97 | (g) | 0.96 | (g) | 0.96 | (g) | (0.91 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 13.24 | (0.02 | ) | — | 2.34 | 2.32 | — | — | — | — | 2.32 | 15.56 | 17.52 | (f) | 456 | 0.71 | (g) | 0.69 | (g) | 0.69 | (g) | (0.64 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 13.24 | (0.01 | ) | — | 2.37 | 2.36 | — | — | — | — | 2.36 | 15.60 | 17.82 | (f) | 77 | 0.42 | (g) | 0.38 | (g) | 0.38 | (g) | (0.33 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.46 | 0.02 | — | 1.83 | 1.85 | (0.09 | ) | (0.01 | ) | — | (0.10 | ) | 1.75 | 13.21 | 16.18 | 116,198 | 0.79 | 0.72 | 0.72 | (0.34 | ) | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.37 | (0.12 | ) | — | 1.88 | 1.76 | (0.02 | ) | (0.01 | ) | — | (0.03 | ) | 1.73 | 13.10 | 15.43 | 33,295 | 1.62 | 1.37 | 1.37 | (0.93 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.37 | (0.12 | ) | — | 1.88 | 1.76 | (0.02 | ) | (0.01 | ) | — | (0.03 | ) | 1.73 | 13.10 | 15.43 | 51,936 | 1.51 | 1.37 | 1.37 | (0.92 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I(k) | 12.59 | (0.01 | ) | — | 0.64 | 0.63 | — | — | — | — | 0.63 | 13.22 | 5.00 | (f) | 11 | 0.71 | (g) | 0.48 | (g) | 0.48 | (g) | (0.45 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.38 | (0.02 | ) | — | 1.12 | 1.10 | (0.02 | ) | — | — | (0.02 | ) | 1.08 | 11.46 | 10.60 | 58,087 | 0.85 | 0.68 | 0.68 | (0.43 | ) | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.35 | (0.08 | ) | — | 1.10 | 1.02 | — | — | — | — | 1.02 | 11.37 | 9.88 | 20,155 | 1.64 | 1.33 | 1.33 | (1.08 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.35 | (0.07 | ) | — | 1.09 | 1.02 | — | — | — | — | 1.02 | 11.37 | 9.88 | 32,718 | 1.53 | 1.34 | 1.34 | (1.08 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 28, 2004, through October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(l) | 10.00 | (0.01 | ) | — | 0.39 | 0.38 | — | — | — | — | 0.38 | 10.38 | 3.80 | (f) | 12,415 | 0.86 | (g) | 0.67 | (g) | 0.67 | (g) | (0.58 | ) (g) | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||
B(m) | 10.00 | (0.02 | ) | — | 0.37 | 0.35 | — | — | — | — | 0.35 | 10.35 | 3.50 | (f) | 4,532 | 1.69 | (g) | 1.32 | (g) | 1.32 | (g) | (1.23 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C(n) | 10.00 | (0.02 | ) | — | 0.37 | 0.35 | — | — | — | — | 0.35 | 10.35 | 3.50 | (f) | 5,424 | 1.59 | (g) | 1.32 | (g) | 1.32 | (g) | (1.23 | ) (g) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the Underlying Funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. | |
(l) | Commenced operations on May 28, 2004. | |
(m) | Commenced operations on May 28, 2004. | |
(n) | Commenced operations on May 28, 2004. |
17
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18
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19
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Directors and Officers (Unaudited) — (continued)
20
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 946.26 | $ | 3.28 | $ | 1,000.00 | $ | 1,021.42 | $ | 3.40 | 0.68 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 943.76 | $ | 6.12 | $ | 1,000.00 | $ | 1,018.49 | $ | 6.35 | 1.27 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 942.65 | $ | 7.03 | $ | 1,000.00 | $ | 1,017.55 | $ | 7.30 | 1.46 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 948.66 | $ | 1.30 | $ | 1,000.00 | $ | 1,023.45 | $ | 1.35 | 0.27 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 945.36 | $ | 4.63 | $ | 1,000.00 | $ | 1,020.03 | $ | 4.80 | 0.96 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 945.96 | $ | 3.18 | $ | 1,000.00 | $ | 1,021.52 | $ | 3.30 | 0.66 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 948.31 | $ | 1.73 | $ | 1,000.00 | $ | 1,023.00 | $ | 1.80 | 0.36 | 181 | 365 |
21
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Equity Income A# | 8/28/03 | -31.66 | % | -0.27 | % | 1.51 | % | |||||||||
Equity Income A## | 8/28/03 | -35.42 | % | -1.40 | % | 0.50 | % | |||||||||
Equity Income B# | 8/28/03 | -32.10 | % | -1.08 | % | 0.70 | % | |||||||||
Equity Income B## | 8/28/03 | -35.42 | % | -1.42 | % | 0.54 | % | |||||||||
Equity Income C# | 8/28/03 | -32.15 | % | -0.97 | % | 0.80 | % | |||||||||
Equity Income C## | 8/28/03 | -32.81 | % | -0.97 | % | 0.80 | % | |||||||||
Equity Income I# | 8/28/03 | -31.44 | % | -0.12 | % | 1.65 | % | |||||||||
Equity Income R3# | 8/28/03 | -31.79 | % | -0.12 | % | 1.69 | % | |||||||||
Equity Income R4# | 8/28/03 | -31.66 | % | NA | 1.80 | % | ||||||||||
Equity Income R5# | 8/28/03 | -31.44 | % | 0.15 | % | 1.94 | % | |||||||||
Equity Income Y# | 8/28/03 | -31.31 | % | 0.22 | % | 2.00 | % |
# | Without sales charge | |
## | With sales charge | |
NA Not Applicable | ||
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Karen H. Grimes, CFA | Ian R. Link, CFA | W. Michael Reckmeyer, III, CFA | ||
Senior Vice President | Vice President | Senior Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 5.9 | % | ||
Capital Goods | 8.4 | |||
Commercial & Professional Services | 3.0 | |||
Consumer Durables & Apparel | 2.1 | |||
Diversified Financials | 6.6 | |||
Energy | 15.7 | |||
Food & Staples Retailing | 0.9 | |||
Food, Beverage & Tobacco | 8.4 | |||
Household & Personal Products | 1.8 | |||
Insurance | 6.4 | |||
Materials | 2.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.8 | |||
Real Estate | 0.5 | |||
Retailing | 6.7 | |||
Semiconductors & Semiconductor Equipment | 2.6 | |||
Software & Services | 3.1 | |||
Telecommunication Services | 5.0 | |||
Transportation | 0.8 | |||
Utilities | 7.8 | |||
Short-Term Investments | 1.0 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCK — 98.4% | ||||||||
Banks — 5.9% | ||||||||
184 | Bank of Nova Scotia | $ | 5,225 | |||||
285 | PNC Financial Services Group, Inc. | 11,304 | ||||||
164 | Toronto-Dominion Bank ADR | 6,461 | ||||||
786 | Wells Fargo & Co. | 15,734 | ||||||
38,724 | ||||||||
Capital Goods — 8.4% | ||||||||
182 | 3M Co. | 10,478 | ||||||
71 | Caterpillar, Inc. | 2,512 | ||||||
110 | Deere & Co. | 4,551 | ||||||
153 | Eaton Corp. | 6,706 | ||||||
832 | General Electric Co. | 10,526 | ||||||
267 | Illinois Tool Works, Inc. | 8,754 | ||||||
242 | PACCAR, Inc. | 8,562 | ||||||
47 | Schneider Electric S.A. | 3,588 | ||||||
55,677 | ||||||||
Commercial & Professional Services — 3.0% | ||||||||
387 | Republic Services, Inc. | 8,135 | ||||||
432 | Waste Management, Inc. | 11,519 | ||||||
19,654 | ||||||||
Consumer Durables & Apparel — 2.1% | ||||||||
73 | Fortune Brands, Inc. | 2,882 | ||||||
196 | Stanley Works | 7,442 | ||||||
53 | V.F. Corp. | 3,129 | ||||||
13,453 | ||||||||
Diversified Financials — 6.6% | ||||||||
250 | Bank of New York Mellon Corp. | 6,379 | ||||||
103 | Goldman Sachs Group, Inc. | 13,287 | ||||||
708 | JP Morgan Chase & Co. | 23,367 | ||||||
43,033 | ||||||||
Energy — 15.7% | ||||||||
227 | BP plc ADR | 9,634 | ||||||
429 | Chevron Corp. | 28,384 | ||||||
144 | ConocoPhillips Holding Co. | 5,898 | ||||||
383 | Exxon Mobil Corp. | 25,529 | ||||||
418 | Marathon Oil Corp. | 12,421 | ||||||
118 | Occidental Petroleum Corp. | 6,625 | ||||||
85 | Royal Dutch Shell plc ADR | 3,850 | ||||||
212 | Total S.A. ADR | 10,556 | ||||||
102,897 | ||||||||
Food & Staples Retailing — 0.9% | ||||||||
260 | Sysco Corp. | 6,073 | ||||||
Food, Beverage & Tobacco — 8.4% | ||||||||
578 | Altria Group, Inc. | 9,434 | ||||||
250 | ConAgra Foods, Inc. | 4,420 | ||||||
87 | Diageo plc ADR | 4,182 | ||||||
59 | Lorillard, Inc. | 3,725 | ||||||
351 | Nestle S.A. ADR | 11,375 | ||||||
159 | PepsiCo, Inc. | 7,902 | ||||||
244 | Philip Morris International, Inc. | 8,825 | ||||||
259 | Unilever N.V. NY Shares ADR | 5,120 | ||||||
54,983 | ||||||||
Household & Personal Products — 1.8% | ||||||||
245 | Kimberly-Clark Corp. | 12,060 | ||||||
Insurance — 6.4% | ||||||||
324 | ACE Ltd. | 14,985 | ||||||
126 | Aflac, Inc. | 3,634 | ||||||
241 | Allstate Corp. | 5,625 | ||||||
272 | Chubb Corp. | 10,581 | ||||||
419 | Unum Group | 6,847 | ||||||
41,672 | ||||||||
Materials — 2.9% | ||||||||
103 | Air Products and Chemicals, Inc. | 6,768 | ||||||
275 | E.I. DuPont de Nemours & Co. | 7,686 | ||||||
105 | PPG Industries, Inc. | 4,609 | ||||||
19,063 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 9.8% | ||||||||
53 | Eli Lilly & Co. | 1,728 | ||||||
152 | GlaxoSmithKline plc ADR | 4,682 | ||||||
349 | Johnson & Johnson | 18,247 | ||||||
687 | Merck & Co., Inc. | 16,660 | ||||||
1,231 | Pfizer, Inc. | 16,449 | ||||||
145 | Wyeth | 6,151 | ||||||
63,917 | ||||||||
Real Estate — 0.5% | ||||||||
80 | Regency Centers Corp. | 2,985 | ||||||
Retailing — 6.7% | ||||||||
392 | Genuine Parts Co. | 13,302 | ||||||
714 | Home Depot, Inc. | 18,803 | ||||||
125 | Nordstrom, Inc. | 2,838 | ||||||
171 | Sherwin-Williams Co. | 9,668 | ||||||
44,611 | ||||||||
Semiconductors & Semiconductor Equipment — 2.6% | ||||||||
647 | Intel Corp. | 10,206 | ||||||
372 | Texas Instruments, Inc. | 6,715 | ||||||
16,921 | ||||||||
Software & Services — 3.1% | ||||||||
1,012 | Microsoft Corp. | 20,503 | ||||||
Telecommunication Services — 5.0% | ||||||||
833 | AT&T, Inc. | 21,354 | ||||||
378 | Verizon Communications, Inc. | 11,461 | ||||||
32,815 | ||||||||
Transportation — 0.8% | ||||||||
141 | Norfolk Southern Corp. | 5,042 | ||||||
Utilities — 7.8% | ||||||||
240 | American Electric Power Co., Inc. | 6,331 | ||||||
337 | Dominion Resources, Inc. | 10,149 | ||||||
93 | Entergy Corp. | 6,011 | ||||||
132 | Exelon Corp. | 6,080 | ||||||
365 | FPL Group, Inc. | 19,646 | ||||||
97 | SCANA Corp. | 2,944 | ||||||
51,161 | ||||||||
Total common stock (cost $789,105) | $ | 645,244 | ||||||
Total long-term investments (cost $789,105) | $ | 645,244 | ||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS — 1.0% | ||||||||||||
Repurchase Agreements — 1.0% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,583, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $1,615) | ||||||||||||
$ | 1,583 | 0.18%, 04/30/2009 | $ | 1,583 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,895, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 - 2047, value of $1,933) | ||||||||||||
1,895 | 0.17%, 04/30/2009 | 1,895 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,647, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 - 2038, GNMA 4.50% — 7.00%, 2024 — 2039, value of $2,700) | ||||||||||||
2,647 | 0.17%, 04/30/2009 | 2,647 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $9, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $9) | ||||||||||||
9 | 0.14%, 04/30/2009 | 9 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $571, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 — 2039, value of $582) | ||||||||||||
571 | 0.16%, 04/30/2009 | 571 | ||||||||||
6,705 | ||||||||||||
Total short-term investments (cost $6,705) | $ | 6,705 | ||||||||||
Total investments (cost $795,810) ▲ | 99.4 | % | $ | 651,949 | ||||||||
Other assets and liabilities | 0.6 | % | 3,687 | |||||||||
Total net assets | 100.0 | % | $ | 655,636 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 9.86% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $801,967 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 20,065 | ||
Unrealized Depreciation | (170,083 | ) | ||
Net Unrealized Depreciation | $ | (150,018 | ) | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 641,656 | ||
Investment in securities — Level 2 | 10,293 | |||
Total | $ | 651,949 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $795,810) | $ | 651,949 | ||
Cash | 39 | |||
Receivables: | ||||
Investment securities sold | 5,159 | |||
Fund shares sold | 2,219 | |||
Dividends and interest | 1,248 | |||
Other assets | 117 | |||
Total assets | 660,731 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 3,794 | |||
Fund shares redeemed | 951 | |||
Investment management fees | 79 | |||
Distribution fees | 33 | |||
Accrued expenses | 238 | |||
Total liabilities | 5,095 | |||
Net assets | $ | 655,636 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 905,830 | |||
Accumulated undistributed net investment income | 1,050 | |||
Accumulated net realized loss on investments and foreign currency transactions | (107,383 | ) | ||
Unrealized depreciation of investments | (143,861 | ) | ||
Net assets | $ | 655,636 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.98/$9.50 | ||
Shares outstanding | 59,261 | |||
Net assets | $ | 532,435 | ||
Class B: Net asset value per share | $ | 8.97 | ||
Shares outstanding | 3,259 | |||
Net assets | $ | 29,231 | ||
Class C: Net asset value per share | $ | 8.97 | ||
Shares outstanding | 4,531 | |||
Net assets | $ | 40,665 | ||
Class I: Net asset value per share | $ | 8.96 | ||
Shares outstanding | 178 | |||
Net assets | $ | 1,597 | ||
Class R3: Net asset value per share | $ | 9.02 | ||
Shares outstanding | 21 | |||
Net assets | $ | 192 | ||
Class R4: Net asset value per share | $ | 9.01 | ||
Shares outstanding | 13 | |||
Net assets | $ | 117 | ||
Class R5: Net asset value per share | $ | 9.02 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class Y: Net asset value per share | $ | 9.03 | ||
Shares outstanding | 5,691 | |||
Net assets | $ | 51,392 | ||
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 13,972 | ||
Interest | 18 | |||
Securities lending | 1 | |||
Less: Foreign tax withheld | (70 | ) | ||
Total investment income | 13,921 | |||
Expenses: | ||||
Investment management fees | 2,329 | |||
Transfer agent fees | 647 | |||
Distribution fees | ||||
Class A | 634 | |||
Class B | 141 | |||
Class C | 198 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 5 | |||
Accounting services | 44 | |||
Registration and filing fees | 67 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 11 | |||
Other expenses | 150 | |||
Total expenses (before waivers and fees paid indirectly) | 4,233 | |||
Expense waivers | (141 | ) | ||
Transfer agent fee waivers | (14 | ) | ||
Commission recapture | (16 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (171 | ) | ||
Total expenses, net | 4,062 | |||
Net investment income | 9,859 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (93,575 | ) | ||
Net realized loss on foreign currency transactions | (22 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (93,597 | ) | ||
Net Changes in Unrealized Depreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized depreciation of investments | (2,691 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 11 | |||
Net Changes in Unrealized Depreciation of Investments and Foreign Currency Transactions | (2,680 | ) | ||
Net Loss on Investments and Foreign Currency Transactions | (96,277 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (86,418 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 9,859 | $ | 22,434 | ||||
Net realized loss on investments and foreign currency transactions | (93,597 | ) | (13,793 | ) | ||||
Net unrealized depreciation of investments and foreign currency transactions | (2,680 | ) | (301,519 | ) | ||||
Net decrease in net assets resulting from operations | (86,418 | ) | (292,878 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (8,520 | ) | (17,009 | ) | ||||
Class B | (364 | ) | (667 | ) | ||||
Class C | (521 | ) | (972 | ) | ||||
Class I | (25 | ) | (26 | ) | ||||
Class R3 | (1 | ) | (2 | ) | ||||
Class R4 | — | — | ||||||
Class R5 | — | — | ||||||
Class Y | (989 | ) | (3,366 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (19,859 | ) | |||||
Class B | — | (1,368 | ) | |||||
Class C | — | (1,893 | ) | |||||
Class I | — | (24 | ) | |||||
Class R3 | — | (3 | ) | |||||
Class Y | — | (3,379 | ) | |||||
Total distributions | (10,420 | ) | (48,568 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 46,098 | 62,259 | ||||||
Class B | 1,532 | (4,224 | ) | |||||
Class C | 3,482 | (7,425 | ) | |||||
Class I | 409 | 910 | ||||||
Class R3 | 123 | 19 | ||||||
Class R4 | 111 | — | ||||||
Class R5 | — | — | ||||||
Class Y | (2,375 | ) | (22,304 | ) | ||||
Net increase from capital share transactions | 49,380 | 29,235 | ||||||
Net decrease in net assets | (47,458 | ) | (312,211 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 703,094 | 1,015,305 | ||||||
End of period | $ | 655,636 | $ | 703,094 | ||||
Accumulated undistributed net investment income | $ | 1,050 | $ | 1,611 | ||||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Equity Income Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
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April 30, 2009 (Unaudited)
(000’s Omitted)
significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral |
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invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial |
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April 30, 2009 (Unaudited)
(000’s Omitted)
statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. |
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k) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
l) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 26,921 | $ | 17,199 | ||||
Long-Term Capital Gains * | 21,647 | 25,507 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 1,611 | ||
Accumulated Capital Losses* | $ | (7,629 | ) | |
Unrealized Depreciation† | $ | (147,338 | ) | |
Total Accumulated Deficit | $ | (153,356 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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(000’s Omitted)
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $70 and increase accumulated net realized gain by $70. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 7,629 | ||
Total | $ | 7,629 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.7500 | % | ||
On next $500 million | 0.7000 | % | ||
On next $4 billion | 0.6500 | % | ||
On next $5 billion | 0.6475 | % | ||
Over $10 billion | 0.6450 | % |
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b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.25% | 2.00% | 2.00% | 1.00% | 1.60% | 1.30% | 1.00% | 0.90% |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.25 | % | 1.14 | % | 1.12 | % | 1.00 | % | 0.50 | % | 0.56 | % | ||||||||||||
Class B Shares | 1.90 | 2.00 | 1.96 | 1.84 | 1.38 | 1.36 | ||||||||||||||||||
Class C Shares | 2.00 | 1.87 | 1.83 | 1.70 | 1.22 | 1.19 | ||||||||||||||||||
Class I Shares | 0.96 | 0.84 | 0.81 | 0.80 | * | |||||||||||||||||||
Class R3 Shares | 1.59 | 1.50 | 1.50 | † | ||||||||||||||||||||
Class R4 Shares | 1.30 | 1.13 | 1.18 | ‡ | ||||||||||||||||||||
Class R5 Shares | 0.91 | 0.84 | 0.89 | § | ||||||||||||||||||||
Class Y Shares | 0.83 | 0.74 | 0.73 | 0.57 | 0.10 | 0.10 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $2,025 and contingent deferred sales charges of $32 from the Fund. |
15
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $4. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $633 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R4 | 1 | |||
Class R5 | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 183,381 | ||
Sales Proceeds Excluding U.S. Government Obligations | 126,920 |
16
Table of Contents
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 13,808 | 909 | (9,908 | ) | — | 4,809 | 11,842 | 2,683 | (10,143 | ) | — | 4,382 | ||||||||||||||||||||||||||||
Amount | $ | 124,905 | $ | 8,274 | $ | (87,081 | ) | $ | — | $ | 46,098 | $ | 151,313 | $ | 36,274 | $ | (125,328 | ) | $ | — | $ | 62,259 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 683 | 38 | (569 | ) | — | 152 | 428 | 142 | (931 | ) | — | (361 | ) | |||||||||||||||||||||||||||
Amount | $ | 6,117 | $ | 349 | $ | (4,934 | ) | $ | — | $ | 1,532 | $ | 5,527 | $ | 1,942 | $ | (11,693 | ) | $ | — | $ | (4,224 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,226 | 50 | (951 | ) | — | 325 | 467 | 188 | (1,252 | ) | — | (597 | ) | |||||||||||||||||||||||||||
Amount | $ | 11,252 | $ | 457 | $ | (8,227 | ) | $ | — | $ | 3,482 | $ | 5,716 | $ | 2,567 | $ | (15,708 | ) | $ | — | $ | (7,425 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 150 | 3 | (115 | ) | — | 38 | 93 | 3 | (16 | ) | — | 80 | ||||||||||||||||||||||||||||
Amount | $ | 1,318 | $ | 24 | $ | (933 | ) | $ | — | $ | 409 | $ | 1,039 | $ | 48 | $ | (177 | ) | $ | — | $ | 910 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 13 | — | — | — | 13 | 2 | — | — | — | 2 | ||||||||||||||||||||||||||||||
Amount | $ | 124 | $ | 1 | $ | (2 | ) | $ | — | $ | 123 | $ | 23 | $ | 4 | $ | (8 | ) | $ | — | $ | 19 | ||||||||||||||||||
Class R4 | �� | |||||||||||||||||||||||||||||||||||||||
Shares | 12 | — | — | — | 12 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 111 | $ | — | $ | — | $ | — | $ | 111 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 209 | 108 | (610 | ) | — | (293 | ) | 794 | 498 | (3,863 | ) | — | (2,571 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,806 | $ | 989 | $ | (5,170 | ) | $ | — | $ | (2,375 | ) | $ | 10,513 | $ | 6,745 | $ | (39,562 | ) | $ | — | $ | (22,304 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 24 | $ | 207 | |||||
For the Year Ended October 31, 2008 | 61 | $ | 794 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
17
Table of Contents
- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.35 | $ | 0.14 | $ | — | $ | (1.36 | ) | $ | (1.22 | ) | $ | (0.15 | ) | $ | — | $ | — | $ | (0.15 | ) | $ | (1.37 | ) | $ | 8.98 | (11.81 | )%(e) | $ | 532,435 | 1.29 | %(f) | 1.25 | %(f) | 1.25 | %(f) | 3.16 | %(f) | 20 | % | ||||||||||||||||||||||||||||||||
B | 10.33 | 0.11 | — | (1.35 | ) | (1.24 | ) | (0.12 | ) | — | — | (0.12 | ) | (1.36 | ) | 8.97 | (12.06 | ) (e) | 29,231 | 2.23 | (f) | 1.90 | (f) | 1.90 | (f) | 2.53 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 10.34 | 0.11 | — | (1.36 | ) | (1.25 | ) | (0.12 | ) | — | — | (0.12 | ) | (1.37 | ) | 8.97 | (12.14 | ) (e) | 40,665 | 2.02 | (f) | 2.00 | (f) | 2.00 | (f) | 2.42 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
I | 10.33 | 0.16 | — | (1.37 | ) | (1.21 | ) | (0.16 | ) | — | — | (0.16 | ) | (1.37 | ) | 8.96 | (11.69 | ) (e) | 1,597 | 0.96 | (f) | 0.96 | (f) | 0.96 | (f) | 3.46 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.39 | 0.11 | — | (1.35 | ) | (1.24 | ) | (0.13 | ) | — | — | (0.13 | ) | (1.37 | ) | 9.02 | (11.90 | ) (e) | 192 | 1.71 | (f) | 1.60 | (f) | 1.60 | (f) | 2.66 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.40 | 0.13 | — | (1.37 | ) | (1.24 | ) | (0.15 | ) | — | — | (0.15 | ) | (1.39 | ) | 9.01 | (11.91 | ) (e) | 117 | 1.43 | (f) | 1.30 | (f) | 1.30 | (f) | 3.26 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.40 | 0.16 | — | (1.37 | ) | (1.21 | ) | (0.17 | ) | — | — | (0.17 | ) | (1.38 | ) | 9.02 | (11.69 | ) (e) | 7 | 0.91 | (f) | 0.91 | (f) | 0.91 | (f) | 3.51 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 10.40 | 0.17 | — | (1.37 | ) | (1.20 | ) | (0.17 | ) | — | — | (0.17 | ) | (1.37 | ) | 9.03 | (11.56 | ) (e) | 51,392 | 0.83 | (f) | 0.83 | (f) | 0.83 | (f) | 3.61 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.16 | 0.32 | — | (4.42 | ) | (4.10 | ) | (0.31 | ) | (0.40 | ) | — | (0.71 | ) | (4.81 | ) | 10.35 | (28.08 | ) | 563,703 | 1.19 | 1.14 | 1.14 | 2.49 | 53 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.12 | 0.21 | — | (4.41 | ) | (4.20 | ) | (0.19 | ) | (0.40 | ) | — | (0.59 | ) | (4.79 | ) | 10.33 | (28.67 | ) | 32,097 | 2.06 | 2.00 | 2.00 | 1.63 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.14 | 0.23 | — | (4.42 | ) | (4.19 | ) | (0.21 | ) | (0.40 | ) | — | (0.61 | ) | (4.80 | ) | 10.34 | (28.61 | ) | 43,493 | 1.92 | 1.87 | 1.87 | 1.76 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 15.12 | 0.35 | — | (4.39 | ) | (4.04 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (4.79 | ) | 10.33 | (27.80 | ) | 1,449 | 0.90 | 0.85 | 0.85 | 2.80 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 15.21 | 0.27 | — | (4.41 | ) | (4.14 | ) | (0.28 | ) | (0.40 | ) | — | (0.68 | ) | (4.82 | ) | 10.39 | (28.26 | ) | 78 | 1.55 | 1.50 | 1.50 | 2.14 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 15.22 | 0.32 | — | (4.43 | ) | (4.11 | ) | (0.31 | ) | (0.40 | ) | — | (0.71 | ) | (4.82 | ) | 10.40 | (28.03 | ) | 8 | 1.18 | 1.13 | 1.13 | 2.50 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 15.22 | 0.36 | — | (4.43 | ) | (4.07 | ) | (0.35 | ) | (0.40 | ) | — | (0.75 | ) | (4.82 | ) | 10.40 | (27.82 | ) | 8 | 0.90 | 0.85 | 0.85 | 2.78 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.23 | 0.39 | — | (4.46 | ) | (4.07 | ) | (0.36 | ) | (0.40 | ) | — | (0.76 | ) | (4.83 | ) | 10.40 | (27.80 | ) | 62,258 | 0.80 | 0.75 | 0.75 | 2.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.00 | 0.27 | — | 1.69 | 1.96 | (0.26 | ) | (0.54 | ) | — | (0.80 | ) | 1.16 | 15.16 | 14.68 | 758,905 | 1.22 | 1.12 | 1.12 | 1.93 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.97 | 0.16 | — | 1.67 | 1.83 | (0.14 | ) | (0.54 | ) | — | (0.68 | ) | 1.15 | 15.12 | 13.69 | 52,424 | 2.07 | 1.97 | 1.97 | 1.09 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.99 | 0.18 | — | 1.67 | 1.85 | (0.16 | ) | (0.54 | ) | — | (0.70 | ) | 1.15 | 15.14 | 13.80 | 72,690 | 1.94 | 1.84 | 1.84 | 1.23 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I | 13.99 | 0.31 | — | 1.69 | 2.00 | (0.33 | ) | (0.54 | ) | — | (0.87 | ) | 1.13 | 15.12 | 14.96 | 907 | 0.92 | 0.82 | 0.82 | 2.18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 13.97 | 0.17 | — | 1.24 | 1.41 | (0.17 | ) | — | — | (0.17 | ) | 1.24 | 15.21 | 10.11 | (e) | 95 | 1.60 | (f) | 1.50 | (f) | 1.50 | (f) | 1.51 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 13.97 | 0.23 | — | 1.22 | 1.45 | (0.20 | ) | — | — | (0.20 | ) | 1.25 | 15.22 | 10.44 | (e) | 11 | 1.28 | (f) | 1.18 | (f) | 1.18 | (f) | 1.84 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 13.97 | 0.27 | — | 1.21 | 1.48 | (0.23 | ) | — | — | (0.23 | ) | 1.25 | 15.22 | 10.67 | (e) | 11 | 0.99 | (f) | 0.89 | (f) | 0.89 | (f) | 2.13 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.07 | 0.31 | — | 1.72 | 2.03 | (0.33 | ) | (0.54 | ) | — | (0.87 | ) | 1.16 | 15.23 | 15.12 | 130,262 | 0.83 | 0.73 | 0.73 | 2.30 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.09 | 0.26 | — | 1.96 | 2.22 | (0.28 | ) | (0.03 | ) | — | (0.31 | ) | 1.91 | 14.00 | 18.70 | 529,664 | 1.30 | 1.00 | 1.00 | 2.02 | 24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.07 | 0.16 | — | 1.94 | 2.10 | (0.17 | ) | (0.03 | ) | — | (0.20 | ) | 1.90 | 13.97 | 17.67 | 43,198 | 2.14 | 1.84 | 1.84 | 1.19 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.08 | 0.17 | — | 1.96 | 2.13 | (0.19 | ) | (0.03 | ) | — | (0.22 | ) | 1.91 | 13.99 | 17.88 | 61,572 | 2.01 | 1.71 | 1.71 | 1.33 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 13.52 | 0.08 | — | 0.46 | 0.54 | (0.07 | ) | — | — | (0.07 | ) | 0.47 | 13.99 | 4.05 | (e) | 106 | 1.37 | (f) | 0.80 | (f) | 0.80 | (f) | 1.32 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.15 | 0.30 | — | 1.98 | 2.28 | (0.33 | ) | (0.03 | ) | — | (0.36 | ) | 1.92 | 14.07 | 19.18 | 7,593 | 0.88 | 0.58 | 0.58 | 2.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.28 | 0.27 | — | 0.82 | 1.09 | (0.26 | ) | (0.02 | ) | — | (0.28 | ) | 0.81 | 12.09 | 9.74 | 379,604 | 1.34 | 0.51 | 0.51 | 2.41 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.26 | 0.17 | — | 0.82 | 0.99 | (0.16 | ) | (0.02 | ) | — | (0.18 | ) | 0.81 | 12.07 | 8.84 | 33,989 | 2.18 | 1.38 | 1.38 | 1.53 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.27 | 0.20 | �� | — | 0.81 | 1.01 | (0.18 | ) | (0.02 | ) | — | (0.20 | ) | 0.81 | 12.08 | 9.00 | 53,435 | 2.03 | 1.23 | 1.23 | 1.70 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.33 | 0.32 | — | 0.83 | 1.15 | (0.31 | ) | (0.02 | ) | — | (0.33 | ) | 0.82 | 12.15 | 10.22 | 784 | 0.91 | 0.11 | 0.11 | 2.79 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.37 | 0.21 | — | 0.90 | 1.11 | (0.20 | ) | — | — | (0.20 | ) | 0.91 | 11.28 | 10.82 | 211,826 | 1.40 | 0.56 | 0.56 | 2.26 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.36 | 0.13 | — | 0.89 | 1.02 | (0.12 | ) | — | — | (0.12 | ) | 0.90 | 11.26 | 9.93 | 18,438 | 2.20 | 1.37 | 1.37 | 1.46 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.36 | 0.15 | — | 0.89 | 1.04 | (0.13 | ) | — | — | (0.13 | ) | 0.91 | 11.27 | 10.12 | 44,043 | 2.02 | 1.19 | 1.19 | 1.64 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.39 | 0.24 | — | 0.95 | 1.19 | (0.25 | ) | — | — | (0.25 | ) | 0.94 | 11.33 | 11.53 | 375 | 0.91 | 0.11 | 0.11 | 2.73 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on August 31, 2006. |
18
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19
Table of Contents
Directors and Officers (Unaudited) — (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
20
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21
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 881.94 | $ | 5.83 | $ | 1,000.00 | $ | 1,018.59 | $ | 6.25 | 1.25 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 879.40 | $ | 8.85 | $ | 1,000.00 | $ | 1,015.37 | $ | 9.49 | 1.90 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 878.61 | $ | 9.31 | $ | 1,000.00 | $ | 1,014.87 | $ | 9.99 | 2.00 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 883.14 | $ | 4.48 | $ | 1,000.00 | $ | 1,020.03 | $ | 4.80 | 0.96 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 880.99 | $ | 7.46 | $ | 1,000.00 | $ | 1,016.86 | $ | 8.00 | 1.60 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 880.87 | $ | 6.06 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 883.09 | $ | 4.24 | $ | 1,000.00 | $ | 1,020.28 | $ | 4.55 | 0.91 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 884.36 | $ | 3.87 | $ | 1,000.00 | $ | 1,020.67 | $ | 4.15 | 0.83 | 181 | 365 |
22
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Floating Rate A# | 4/29/05 | -15.03 | % | -1.85 | % | |||||||
Floating Rate A## | 4/29/05 | -17.58 | % | -2.60 | % | |||||||
Floating Rate B# | 4/29/05 | -15.80 | % | -2.63 | % | |||||||
Floating Rate B## | 4/29/05 | -19.80 | % | -3.02 | % | |||||||
Floating Rate C# | 4/29/05 | -15.80 | % | -2.60 | % | |||||||
Floating Rate C## | 4/29/05 | -16.60 | % | -2.60 | % | |||||||
Floating Rate I# | 4/29/05 | -14.92 | % | -1.67 | % | |||||||
Floating Rate R3# | 4/29/05 | -15.35 | % | -1.89 | % | |||||||
Floating Rate R4# | 4/29/05 | -15.15 | % | -1.78 | % | |||||||
Floating Rate R5# | 4/29/05 | -15.20 | % | -1.66 | % | |||||||
Floating Rate Y# | 4/29/05 | -14.89 | % | -1.60 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Michael Bacevich | Frank Ossino | |
Managing Director | Senior Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
BBB | 8.2 | % | ||
BB | 39.1 | |||
B | 44.7 | |||
CCC | 4.1 | |||
D | 0.1 | |||
Not Rated | 3.8 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Basic Materials | 11.9 | % | ||
Capital Goods | 1.8 | |||
Consumer Cyclical | 7.4 | |||
Consumer Staples | 5.8 | |||
Energy | 3.8 | |||
Finance | 5.9 | |||
Health Care | 12.5 | |||
Services | 19.1 | |||
Technology | 14.8 | |||
Transportation | 2.9 | |||
Utilities | 6.3 | |||
Short-Term Investments | 11.2 | |||
Other Assets and Liabilities | (3.4 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 0.6% | ||||||||
Finance - - 0.6% | ||||||||
Bayview Financial Acquisition Trust | ||||||||
$ | 2,600 | 2.59%, 05/28/2037 ⌂†Δ | $ | 65 | ||||
Citibank Credit Card Issuance Trust | ||||||||
3,000 | 0.70%, 01/09/2012 Δ | 2,766 | ||||||
Goldman Sachs Mortgage Securities Corp. | ||||||||
16,890 | 1.99%, 02/01/2009 ⌂Δ | 8,445 | ||||||
Helios Finance L.P. | ||||||||
5,000 | 2.80%, 10/20/2014 ⌂Δ | 587 | ||||||
Structured Asset Securities Corp. | ||||||||
4,453 | 2.94%, 02/25/2037 ⌂Δ | 82 | ||||||
Wells Fargo Home Equity Trust | ||||||||
4,363 | 2.69%, 03/25/2037 ⌂Δ | 51 | ||||||
11,996 | ||||||||
Total asset & commercial mortgage backed securities (cost $35,879) | $ | 11,996 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 3.9% | ||||||||
Basic Materials - 1.1% | ||||||||
Anglo American Capital plc | ||||||||
$ | 9,970 | 9.38%, 04/08/2014 §‡ | $ | 10,346 | ||||
Rio Tinto Finance USA, Ltd. | ||||||||
11,660 | 8.95%, 05/01/2014 ‡ | 12,069 | ||||||
22,415 | ||||||||
Consumer Staples - 0.8% | ||||||||
Anheuser-Busch InBev N.V. | ||||||||
5,000 | 7.20%, 01/15/2014 §‡ | 5,213 | ||||||
10,000 | 7.75%, 01/15/2019 §‡ | 10,470 | ||||||
15,683 | ||||||||
Energy - 0.2% | ||||||||
Valero Energy Corp. | ||||||||
3,688 | 9.38%, 03/15/2019 ‡ | 4,119 | ||||||
Finance - 0.0% | ||||||||
Unicredito Italiano Capital Trust | ||||||||
2,000 | 9.20%, 10/05/2010 §‡♠ | 940 | ||||||
Services - 0.5% | ||||||||
Allied Waste North America, Inc. | ||||||||
10,000 | 7.88%, 04/15/2013 ‡ | 10,150 | ||||||
Technology - 1.3% | ||||||||
Qwest Corp. | ||||||||
9,945 | 8.88%, 03/15/2012 ‡ | 10,094 | ||||||
Time Warner Cable, Inc. | ||||||||
15,000 | 7.50%, 04/01/2014 ‡ | 16,113 | ||||||
26,207 | ||||||||
Total corporate bonds: investment grade (cost $77,725) | $ | 79,514 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 7.0% | ||||||||
Basic Materials - 0.3% | ||||||||
Georgia-Pacific Corp. | ||||||||
$ | 2,000 | 8.13%, 05/15/2011 | 2,005 | |||||
Georgia-Pacific LLC | ||||||||
3,875 | 9.50%, 12/01/2011 | 3,943 | ||||||
5,948 | ||||||||
Consumer Cyclical - 0.6% | ||||||||
Albertson’s, Inc. | ||||||||
4,405 | 7.50%, 02/15/2011 | 4,394 | ||||||
Dollarama Group L.P. | ||||||||
7,190 | 8.88%, 08/15/2012 ‡ | 6,831 | ||||||
Supervalu, Inc. | ||||||||
1,860 | 8.00%, 05/01/2016 | 1,804 | ||||||
13,029 | ||||||||
Consumer Staples - 0.3% | ||||||||
Appleton Papers, Inc. | ||||||||
2,000 | 8.13%, 06/15/2011 | 1,200 | ||||||
Dean Foods Co. | ||||||||
4,000 | 7.00%, 06/01/2016 | 3,900 | ||||||
5,100 | ||||||||
Energy - 0.6% | ||||||||
Ferrellgas L.P./Finance | ||||||||
1,500 | 6.75%, 05/01/2014 | 1,354 | ||||||
Ferrellgas Partners L.P. | ||||||||
2,470 | 6.75%, 05/01/2014 § | 2,229 | ||||||
2,575 | 8.75%, 06/15/2012 | 2,356 | ||||||
Inergy L.P. | ||||||||
1,179 | 8.25%, 03/01/2016 | 1,170 | ||||||
4,835 | 8.75%, 03/01/2015 § | 4,859 | ||||||
11,968 | ||||||||
Finance - 0.4% | ||||||||
LPL Holdings, Inc. | ||||||||
4,685 | 10.75%, 12/15/2015 §‡ | 4,076 | ||||||
Rent-A-Center, Inc. | ||||||||
4,145 | 7.50%, 05/01/2010 ‡ | 4,155 | ||||||
8,231 | ||||||||
Health Care - 0.9% | ||||||||
HCA, Inc. | ||||||||
5,000 | 6.30%, 10/01/2012 | 4,425 | ||||||
3,000 | 7.88%, 02/01/2011 | 2,940 | ||||||
Invacare Corp. | ||||||||
5,820 | 9.75%, 02/15/2015 ‡ | 5,864 | ||||||
Warner Chilcott Corp. | ||||||||
4,510 | 8.75%, 02/01/2015 | 4,431 | ||||||
17,660 | ||||||||
Services - 0.9% | ||||||||
Affinion Group, Inc. | ||||||||
5,305 | 11.50%, 10/15/2015 | 3,820 | ||||||
DirecTV Holdings LLC | ||||||||
7,000 | 8.38%, 03/15/2013 ‡ | 7,105 | ||||||
Mandalay Resort Group | ||||||||
3,025 | 6.50%, 07/31/2009 | 2,813 | ||||||
Videotron Ltee | ||||||||
4,500 | 6.88%, 01/15/2014 | 4,371 | ||||||
18,109 | ||||||||
Technology - 2.8% | ||||||||
CSC Holdings, Inc. | ||||||||
17,265 | 8.50%, 04/15/2014 §‡ | 17,610 | ||||||
DaVita, Inc. | ||||||||
5,000 | 6.63%, 03/15/2013 | 4,912 | ||||||
Frontier Communications Corp. | ||||||||
5,000 | 6.25%, 01/15/2013 | 4,750 | ||||||
4,000 | 8.25%, 05/01/2014 | 3,930 | ||||||
Intelsat Subsidiary Holding Co. | ||||||||
1,000 | 8.50%, 01/15/2013 § | 990 | ||||||
5,000 | 8.88%, 01/15/2015 § | 4,925 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 7.0% — (continued) | ||||||||
Technology - - 2.8% — (continued) | ||||||||
Level 3 Financing, Inc. | ||||||||
$ | 2,000 | 5.48%, 02/15/2015 Δ | $ | 1,220 | ||||
Mediacom LLC | ||||||||
4,000 | 9.50%, 01/15/2013 | 3,920 | ||||||
MetroPCS Wireless, Inc. | ||||||||
7,300 | 9.25%, 11/01/2014 § | 7,273 | ||||||
Windstream Corp. | ||||||||
7,500 | 8.13%, 08/01/2013 | 7,462 | ||||||
56,992 | ||||||||
Utilities - 0.2% | ||||||||
Reliant Energy, Inc. | ||||||||
4,500 | 6.75%, 12/15/2014 | 4,343 | ||||||
Total corporate bonds: non-investment grade (cost $139,928) | $ | 141,380 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 80.7% | ||||||||
Basic Materials - 10.5% | ||||||||
Arizona Chemical Co. | ||||||||
$ | 6,488 | 2.43%, 02/27/2013 ± | $ | 5,158 | ||||
7,250 | 5.93%, 02/27/2014 ±⌂ | 3,897 | ||||||
Boise Paper Holdings LLC | ||||||||
4,000 | 9.25%, 02/20/2015 ±⌂ | 1,730 | ||||||
Brenntag Group | ||||||||
589 | 2.50%, 01/12/2014 ± | 471 | ||||||
2,411 | 3.18%, 12/23/2013 ± | 1,929 | ||||||
10,000 | 5.50%, 12/22/2012 ± | 5,700 | ||||||
Calumet Lubricants Co., L.P. | ||||||||
805 | 1.28%, 12/29/2014 ± | 515 | ||||||
6,020 | 5.24%, 01/03/2015 ± | 3,853 | ||||||
Cenveo, Inc. | ||||||||
13,354 | 5.73%, 06/21/2013 ± | 11,773 | ||||||
Coffeyville Resources | ||||||||
2,439 | 3.15%, 12/21/2010 ± | 2,014 | ||||||
7,837 | 8.75%, 12/21/2013 ± | 6,470 | ||||||
Cognis GMBH | ||||||||
11,000 | 3.32%, 05/04/2014 ± | 7,744 | ||||||
Columbian Chemicals Co. | ||||||||
9,854 | 4.47%, 03/15/2013 ± | 6,011 | ||||||
Georgia-Pacific Corp. | ||||||||
6,362 | 2.72%, 12/20/2013 ± | 5,908 | ||||||
18,172 | 3.24%, 12/20/2012 ± | 16,877 | ||||||
Goodyear Engineered Products | ||||||||
1,111 | 2.97%, 07/31/2014 ± | 593 | ||||||
7,757 | 3.04%, 07/31/2014 ± | 4,140 | ||||||
4,000 | 6.22%, 07/31/2015 ± | 700 | ||||||
Goodyear Tire & Rubber Co. | ||||||||
5,132 | 2.19%, 04/30/2014 ± | 4,281 | ||||||
Graham Packaging Co., Inc. | ||||||||
22,526 | 2.76%, 12/31/2011 *± | 20,330 | ||||||
Hexion Specialty Chemicals | ||||||||
1,463 | 3.44%, 05/05/2013 ± | 724 | ||||||
16,654 | 3.50%, 05/05/2013 - 05/15/2013 *± | 8,261 | ||||||
Hexion Specialty Chemicals, Term Loan C5 | ||||||||
983 | 3.50%, 05/05/2013 ± | 481 | ||||||
Huntsman International LLC | ||||||||
18,768 | 2.18%, 04/19/2014 ± | 15,484 | ||||||
Ineos Group | ||||||||
7,122 | 7.50%, 12/16/2014 ± | 3,721 | ||||||
7,123 | 8.00%, 12/16/2013 ± | 3,811 | ||||||
ISP Chemco LLC | ||||||||
6,788 | 2.74%, 05/31/2014 ± | 6,098 | ||||||
Jarden Corp. | ||||||||
7,201 | 2.97%, 01/24/2012 *± | 6,899 | ||||||
7,837 | 3.72%, 01/24/2012 ± | 7,571 | ||||||
John Maneely Co. | ||||||||
8,692 | 4.11%, 12/08/2013 ± | 6,215 | ||||||
Kranson Industries | ||||||||
3,598 | 2.69%, 07/31/2013 ± | 3,059 | ||||||
MacDermid, Inc. | ||||||||
10,187 | 2.43%, 04/11/2014 ± | 6,112 | ||||||
Mega Bloks, Inc. | ||||||||
4,898 | 9.75%, 07/26/2012 ± | 1,551 | ||||||
Newpage Corp. | ||||||||
13,847 | 4.79%, 12/21/2014 *± | 10,697 | ||||||
Smurfit-Stone Container Enterprises, Inc. | ||||||||
1,226 | 2.78%, 11/01/2009 *± | 932 | ||||||
2,068 | 2.82%, 11/01/2010 - 11/01/2011 *±Ψ | 1,341 | ||||||
3,698 | 3.00%, 10/28/2009 *± | 2,755 | ||||||
1,592 | 3.03%, 11/01/2011 *±Ψ | 1,084 | ||||||
7,000 | 7.00%, 01/28/2010 *◊ | 7,035 | ||||||
Solo Cup Co. | ||||||||
6,532 | 4.72%, 02/27/2011 ± | 6,173 | ||||||
210,098 | ||||||||
Capital Goods - 1.8% | ||||||||
Ewards Ltd. | ||||||||
5,888 | 2.43%, 05/31/2014 ±⌂ | 3,474 | ||||||
Hawker Beechcraft Acquisition Co. | ||||||||
270 | 1.12%, 03/27/2014 ± | 140 | ||||||
4,858 | 2.69%, 03/27/2014 ± | 2,516 | ||||||
Lincoln Industries Corp. | ||||||||
3,440 | 2.97%, 07/11/2014 ± | 2,752 | ||||||
3,500 | 6.20%, 01/10/2015 ±⌂ | 2,555 | ||||||
MacAndrews Amg Holdings LLC | ||||||||
8,973 | 6.18%, 04/17/2012 ±⌂ | 6,102 | ||||||
Nacco Material Handling Group | ||||||||
7,700 | 3.64%, 03/22/2013 ±⌂ | 2,926 | ||||||
Vought Aircraft Industries, Inc. | ||||||||
5,791 | 2.95%, 12/22/2010 ± | 4,227 | ||||||
Yankee Candle Co. | ||||||||
13,256 | 3.21%, 02/06/2014 ± | 10,858 | ||||||
35,550 | ||||||||
Consumer Cyclical - 6.8% | ||||||||
AM General LLC | ||||||||
11,791 | 3.84%, 09/30/2013 ± | 10,730 | ||||||
American General Finance Corp. | ||||||||
528 | 0.44%, 09/30/2012 ± | 480 | ||||||
Brand Energy & Infrastructure Services | ||||||||
6,218 | 3.50%, 02/07/2014 ± | 4,508 | ||||||
1,970 | 4.49%, 02/07/2014 ± | 1,556 | ||||||
Contech Construction Products | ||||||||
3,649 | 2.47%, 01/31/2013 ± | 1,916 | ||||||
Custom Building Products | ||||||||
3,628 | 8.00%, 10/20/2011 ± | 2,811 | ||||||
2,000 | 10.75%, 04/20/2012 ± | 1,130 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 80.7% — (continued) | ||||||||
Consumer Cyclical - 6.8% - (continued) | ||||||||
David’s Bridal, Inc. | ||||||||
$ | 4,364 | 2.88%, 01/25/2014 ± | $ | 3,622 | ||||
Dollar General Corp. | ||||||||
15,210 | 3.18%, 07/06/2014*± | 14,036 | ||||||
Dollarama Group L.P. | ||||||||
10,369 | 2.79%, 11/18/2011 *± | 9,877 | ||||||
Easton-Bell Sports, Inc. | ||||||||
10,537 | 2.25%, 03/16/2012 ± | 9,009 | ||||||
Foster Wheeler LLC | ||||||||
5,500 | 1.02%, 09/12/2011 ± | 5,005 | ||||||
Hanesbrands, Inc. | ||||||||
3,500 | 4.84%, 03/05/2014 ± | 3,095 | ||||||
11,000 | 5.80%, 09/05/2011 *± | 10,734 | ||||||
Lear Corp. | ||||||||
16,287 | 3.21%, 04/25/2012 ± | 6,800 | ||||||
Levi Strauss & Co. | ||||||||
16,878 | 2.70%, 03/09/2014 ± | 11,983 | ||||||
Michaels Stores, Inc. | ||||||||
9,261 | 2.70%, 10/31/2013 ± | 6,483 | ||||||
Roundy’s Supermarkets, Inc. | ||||||||
10,102 | 3.20%, 11/03/2011 ± | 9,226 | ||||||
Sports Authority, Inc. | ||||||||
6,240 | 3.20%, 04/25/2013 ±⌂ | 2,652 | ||||||
Supervalu, Inc. | ||||||||
14,167 | 1.37%, 06/02/2011 ± | 13,338 | ||||||
Tensar Corp. | ||||||||
3,066 | 4.54%, 10/28/2012 ±⌂ | 1,840 | ||||||
Toys R Us, Inc. | ||||||||
10,230 | 3.51%, 11/30/2008 ± | 6,322 | ||||||
137,153 | ||||||||
Consumer Staples - 4.7% | ||||||||
American Seafoods Group | ||||||||
2,799 | 1.75%, 09/30/2011 - 09/13/2012 ± | 2,567 | ||||||
12,906 | 2.18%, 09/30/2012 ± | 11,874 | ||||||
Dean Foods Co. | ||||||||
8,744 | 2.71%, 03/29/2014 ± | 8,124 | ||||||
Dole Food Co., Inc. | ||||||||
2,880 | 1.14%, 04/12/2013 *± | 2,727 | ||||||
5,887 | 7.96%, 04/12/2013 *± | 5,573 | ||||||
18,121 | 7.97%, 04/12/2013 *± | 17,154 | ||||||
Huish Detergents, Inc. | ||||||||
7,824 | 2.18%, 04/25/2014 ± | 7,042 | ||||||
Michael Foods, Inc. | ||||||||
297 | 3.06%, 11/21/2010 ± | 296 | ||||||
Van Houtte, Inc., First Lien Term Loan | ||||||||
3,458 | 3.72%, 07/09/2014 ± | 2,871 | ||||||
Van Houtte, Inc., Second Lien Term Loan | ||||||||
472 | 3.72%, 07/09/2014 ± | 391 | ||||||
WM Wrigley Jr. Co. | ||||||||
37,588 | 6.50%, 10/06/2014 ± | 37,566 | ||||||
96,185 | ||||||||
Energy - 3.0% | ||||||||
Big West Oil LLC | ||||||||
5,482 | 4.50%, 02/02/2015 *±Ψ | 4,386 | ||||||
Big West Oil LLC, Delayed Draw Term Loan | ||||||||
6,892 | 4.50%, 02/02/2015 *±Ψ | 5,513 | ||||||
Lyondell Chemical Co. | ||||||||
18,317 | 5.94%, 12/15/2009 *±Ψ | 14,351 | ||||||
17,510 | 9.17%, 12/15/2009 *±Ψ | 17,777 | ||||||
Lyondell Chemical Co., Dutch RC | ||||||||
149 | 5.75%, 12/20/2013 ±Ψ | 49 | ||||||
Lyondell Chemical Co., Dutch Tranche A | ||||||||
350 | 5.75%, 12/20/2013 ±Ψ | 116 | ||||||
Lyondell Chemical Co., German B-1 | ||||||||
428 | 6.00%, 12/20/2014 ±Ψ | 142 | ||||||
Lyondell Chemical Co., German B-2 | ||||||||
428 | 6.00%, 12/20/2014 ±Ψ | 142 | ||||||
Lyondell Chemical Co., German B-3 | ||||||||
428 | 6.00%, 12/20/2014 ±Ψ | 142 | ||||||
Lyondell Chemical Co., Primary RC | ||||||||
560 | 5.75%, 12/20/2013 ±Ψ | 186 | ||||||
Lyondell Chemical Co., Term Loan A | ||||||||
1,066 | 5.75%, 12/20/2013 ±Ψ | 354 | ||||||
Lyondell Chemical Co., U.S. B-1 | ||||||||
1,859 | 7.00%, 12/20/2014 ±Ψ | 617 | ||||||
Lyondell Chemical Co., U.S. B-2 | ||||||||
1,859 | 7.00%, 12/20/2014 ±Ψ | 617 | ||||||
Lyondell Chemical Co., U.S. B-3 | ||||||||
1,859 | 7.00%, 12/20/2014 ±Ψ | 617 | ||||||
Texas Petrochemicals L.P. | ||||||||
9,774 | 3.00%, 06/27/2013 ± | 4,495 | ||||||
Turbo Beta Ltd. | ||||||||
5,049 | 14.50%, 03/12/2018 ±⌂† | 2,222 | ||||||
Western Refining, Inc. | ||||||||
12,399 | 8.25%, 03/06/2014 ± | 9,857 | ||||||
61,583 | ||||||||
Finance - 4.9% | ||||||||
Amerigroup Corp. | ||||||||
5,368 | 2.44%, 03/26/2012 *± | 5,167 | ||||||
Ashtead Group plc | ||||||||
6,062 | 3.13%, 08/21/2011 ± | 5,456 | ||||||
BNY Convergex Group LLC | ||||||||
2,192 | 3.43%, 09/30/2013 ± | 2,011 | ||||||
BNY Convergex Group LLC & EZE Castle Software | ||||||||
10,214 | 3.43%, 08/30/2013 ± | 9,372 | ||||||
Brickman Group Holdings, Inc. | ||||||||
6,818 | 2.43%, 01/23/2014 *± | 6,067 | ||||||
Buckeye Check Cashing, Inc. | ||||||||
8,555 | 3.71%, 05/01/2012 ±⌂ | 2,781 | ||||||
Community Health Systems, Inc. | ||||||||
783 | 2.68%, 07/25/2014 *± | 704 | ||||||
15,347 | 3.45%, 07/25/2014 *± | 13,799 | ||||||
Crescent Resources LLC | ||||||||
15,071 | 5.04%, 09/07/2012 ±• | 1,959 | ||||||
Dollar Financial Corp., Delayed Draw Term Loan | ||||||||
1,859 | 3.97%, 10/30/2012 ± | 1,320 | ||||||
Dollar Financial Corp., Term Loan | ||||||||
2,528 | 3.97%, 10/30/2012 ± | 1,795 | ||||||
Golden Gate National | ||||||||
9,164 | 3.18%, 03/14/2011 *± | 7,881 | ||||||
HMSC Corp. | ||||||||
3,920 | 2.68%, 04/03/2014 ±⌂ | 1,921 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 80.7% — (continued) | ||||||||
Finance - 4.9% - (continued) | ||||||||
Hub International Holdings, Inc., Delayed Draw Term Loan | ||||||||
$ | 893 | 3.72%, 06/12/2014 ± | $ | 684 | ||||
Hub International Holdings, Inc., Term Loan | ||||||||
3,975 | 3.72%, 06/14/2014 ± | 3,044 | ||||||
LNR Properties Corp. | ||||||||
15,720 | 4.00%, 06/29/2009 - 06/29/2011 ± | 8,036 | ||||||
LPL Holdings, Inc. | ||||||||
5,990 | 2.25%, 06/28/2013*◊ | 5,061 | ||||||
Realogy Corp. | ||||||||
2,060 | 0.35%, 10/05/2013 ± | 1,313 | ||||||
7,651 | 4.18%, 10/05/2014 ± | 4,878 | ||||||
Rent-A-Center, Inc. | ||||||||
8,492 | 2.22%, 10/26/2012 ± | 7,982 | ||||||
Sedgwick CMS Holdings, Inc. | ||||||||
6,019 | 2.68%, 01/31/2013 ± | 5,146 | ||||||
TransFirst Holdings, Inc. | ||||||||
4,912 | 3.18%, 06/12/2014 ± | 2,702 | ||||||
1,000 | 6.43%, 06/12/2015 ± | 150 | ||||||
99,229 | ||||||||
Health Care - 11.6% | ||||||||
AGA Medical Corp. | ||||||||
5,175 | 2.91%, 04/26/2013 ± | 4,398 | ||||||
Carestream Health, Inc. | ||||||||
8,855 | 2.43%, 04/30/2013 - 10/12/2013 ± | 7,189 | ||||||
Carl Zeiss | ||||||||
5,718 | 2.93%, 03/14/2014 ±⌂ | 2,058 | ||||||
EUR | 2,500 | 4.94%, 03/14/2014 ±⌂ | 265 | |||||
Center for Diagnostic Imaging | ||||||||
4,391 | 4.72%, 12/31/2010 ±⌂ | 3,952 | ||||||
DJO Finance LLC | ||||||||
6,913 | 3.77%, 04/07/2013 ± | 6,077 | ||||||
Fresenius SE | ||||||||
18,500 | 6.75%, 10/01/2014*± | 18,406 | ||||||
Generics International, Inc. | ||||||||
2,963 | 4.72%, 11/19/2014 ±⌂ | 2,222 | ||||||
HCA, Inc. | ||||||||
27,036 | 3.47%, 11/17/2013 *± | 24,346 | ||||||
Healthcare Partners LLC | ||||||||
7,883 | 2.18%, 10/20/2013 ± | 6,760 | ||||||
HealthSouth Corp. | ||||||||
11,799 | 2.96%, 03/10/2013 *± | 10,560 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
630 | 0.34%, 03/17/2014 ± | 557 | ||||||
5,686 | 6.29%, 06/13/2014 ± | 2,938 | ||||||
IASIS Healthcare Capital Corp., Delayed Draw Term Loan | ||||||||
2,346 | 2.43%, 03/17/2014 ± | 2,073 | ||||||
IASIS Healthcare Capital Corp., Term Loan B | ||||||||
6,779 | 2.43%, 03/17/2014 ± | 5,991 | ||||||
Invacare Corp. | ||||||||
1,608 | 3.21%, 02/07/2013 ± | 1,405 | ||||||
Inverness Medical Innovation, Inc. | ||||||||
5,895 | 2.78%, 06/27/2014 ± | 5,353 | ||||||
8,575 | 4.74%, 06/26/2015 *± | 7,460 | ||||||
Life Technologies Corp. | ||||||||
19,385 | 5.25%, 11/23/2015 *± | 19,296 | ||||||
LifePoint Hospitals, Inc. | ||||||||
8,726 | 2.89%, 04/15/2012 ± | 8,220 | ||||||
Multiplan Corp. | ||||||||
11,132 | 2.94%, 04/12/2013 ± | 9,704 | ||||||
National Mentor | ||||||||
397 | 0.36%, 06/27/2013 ± | 273 | ||||||
6,426 | 3.22%, 06/27/2013 ± | 4,423 | ||||||
National Renal Institutes, Inc. | ||||||||
9,846 | 6.24%, 03/31/2013 ±⌂ | 5,317 | ||||||
Orthofix Holdings, Inc. | ||||||||
5,654 | 7.17%, 09/22/2013 ± | 5,301 | ||||||
Psychiatric Solutions, Inc. | ||||||||
8,888 | 2.21%, 07/01/2012 ± | 8,110 | ||||||
Rite Aid Corp. | ||||||||
4,194 | 2.20%, 06/01/2014 ± | 3,418 | ||||||
3,980 | 6.00%, 06/04/2014 ± | 3,263 | ||||||
Select Medical Corp. | ||||||||
11,586 | 3.25%, 02/24/2012 ± | 10,157 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
4,864 | 2.67%, 06/15/2012 ± | 4,118 | ||||||
Surgical Care Affiliates LLC | ||||||||
5,895 | 3.22%, 12/29/2014 ± | 4,834 | ||||||
United Surgical Partners International | ||||||||
1,475 | 2.45%, 04/19/2014 ± | 1,283 | ||||||
7,808 | 2.76%, 04/19/2014 ± | 6,754 | ||||||
Vanguard Health Holdings Co. II LLC | ||||||||
18,213 | 2.68%, 09/23/2011 ± | 17,166 | ||||||
Viant Holdings, Inc. | ||||||||
7,142 | 3.47%, 06/25/2014 ± | 5,250 | ||||||
Warner Chilcott Corp. | ||||||||
1,121 | 2.43%, 01/18/2012 ± | 1,059 | ||||||
4,120 | 2.87%, 01/18/2012 ± | 3,893 | ||||||
Youth & Family Centered Services, Inc. | ||||||||
2,004 | 5.39%, 07/10/2013 ± | 1,664 | ||||||
235,513 | ||||||||
Services - 17.7% | ||||||||
24 Hour Fitness Worldwide, Inc. | ||||||||
5,825 | 3.31%, 06/08/2012 ± | 3,786 | ||||||
Acosta, Inc. | ||||||||
11,843 | 2.68%, 12/06/2012 *± | 10,215 | ||||||
Advanstar Holdings Corp. | ||||||||
7,761 | 3.14%, 06/01/2014 ± | 3,104 | ||||||
2,000 | 5.00%, 12/01/2014 ±⌂ | 180 | ||||||
Advantage Sales & Marketing, Inc. | ||||||||
13,740 | 2.48%, 03/29/2013 ± | 11,862 | ||||||
Affinion Group, Inc. | ||||||||
17,732 | 3.73%, 10/17/2012 *± | 15,516 | ||||||
Bresnan Communications LLC | ||||||||
2,000 | 5.00%, 03/29/2014*◊ | 1,580 | ||||||
Cardinal Logistics Management | ||||||||
5,139 | 4.22%, 09/23/2013 ±⌂† | 2,826 | ||||||
Carmike Cinemas, Inc. | ||||||||
1,570 | 5.19%, 09/29/2011 ± | 1,323 | ||||||
5,375 | 6.13%, 05/19/2012 ± | 4,528 | ||||||
Cebridge Communications LLC | ||||||||
4,535 | 2.48%, 11/05/2013 ± | 4,131 | ||||||
10,000 | 5.00%, 05/05/2014 ± | 7,961 | ||||||
Cedar Fair L.P. | ||||||||
9,461 | 2.43%, 06/12/2012 - 08/30/2012 ± | 8,341 | ||||||
Cengage | ||||||||
5,830 | 2.93%, 07/05/2014 ± | 4,271 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 80.7% — (continued) | ||||||||
Services - 17.7% - (continued) | ||||||||
Centaur LLC | ||||||||
$ | 2,410 | 9.25%, 10/30/2012 ± | $ | 1,446 | ||||
2,097 | 14.25%, 10/30/2013 ±⌂ | 315 | ||||||
Clarke American Corp. | ||||||||
18,658 | 3.33%, 02/28/2014 ± | 12,687 | ||||||
CMP Susquehanna Corp. | ||||||||
8,780 | 2.48%, 05/06/2013 ± | 3,749 | ||||||
Cumulus Media, Inc. | ||||||||
11,543 | 2.08%, 06/07/2013 ± | 6,580 | ||||||
CW Media Holdings, Inc. | ||||||||
7,880 | 4.47%, 02/15/2015 ± | 6,337 | ||||||
Dex Media West LLC, Inc. | ||||||||
15,000 | 7.00%, 10/24/2014 *± | 10,061 | ||||||
Emdeon Business Services LLC | ||||||||
4,000 | 4.14%, 05/16/2014 ± | 3,280 | ||||||
5,956 | 5.89%, 11/16/2013 ± | 5,405 | ||||||
Energy Solutions, LLC, Add-On Letter of Credit | ||||||||
1,514 | 0.50%, 06/07/2013 ± | 1,378 | ||||||
F & W Publications, Inc. | ||||||||
6,968 | 3.50%, 08/05/2012 ±⌂ | 1,951 | ||||||
4,500 | 5.48%, 08/05/2012 ±⌂ | 225 | ||||||
F & W Publications, Inc., Term Loan B Add- On | ||||||||
1,466 | 3.48%, 08/05/2012 ±⌂ | 410 | ||||||
Golden Nugget, Inc. | ||||||||
2,545 | 2.23%, 06/22/2014 ±⌂ | 1,213 | ||||||
1,452 | 2.40%, 06/22/2014 * ±⌂ | 692 | ||||||
3,750 | 3.69%, 12/31/2014 ±⌂ | 600 | ||||||
Gray Television, Inc. | ||||||||
10,993 | 4.00%, 12/31/2014 ± | 4,342 | ||||||
Greektown Holdings LLC, Incremental Term Loan | ||||||||
2,200 | 0.00%, 12/03/2012 ±⌂Ω | 407 | ||||||
Greektown Holdings LLC, Term Loan B | ||||||||
2,493 | 0.00%, 12/03/2012 ±⌂Ω | 461 | ||||||
Greenwood Racing, Inc. | ||||||||
10,255 | 2.68%, 11/14/2011 ± | 8,717 | ||||||
Hit Entertainment, Inc. | ||||||||
1,475 | 3.49%, 08/26/2012 ±⌂ | 767 | ||||||
Idearc, Inc. | ||||||||
8,563 | 4.25%, 11/17/2014 ±Ω | 3,288 | ||||||
Las Vegas Sands Corp. | ||||||||
1,995 | 2.27%, 05/23/2013 ± | 1,229 | ||||||
Las Vegas Sands Corp., Delayed Draw Term Loan 1 | ||||||||
3,691 | 2.18%, 05/23/2014 ± | 2,274 | ||||||
Las Vegas Sands Corp., Term Loan B | ||||||||
14,430 | 2.18%, 05/23/2014 ± | 8,889 | ||||||
LBI Media, Inc. | ||||||||
8,932 | 1.93%, 05/01/2012 ± | 6,252 | ||||||
Nelson Education | ||||||||
5,910 | 3.72%, 07/05/2014 ±⌂ | 3,546 | ||||||
NEP Supershooters L.P. | ||||||||
7,840 | 2.69%, 02/13/2014 ±⌂ | 6,625 | ||||||
New World Gaming Partners Ltd. | ||||||||
4,000 | 6.71%, 03/31/2015 ±⌂ | 600 | ||||||
New World Gaming Partners Ltd., Delayed Draw Term Loan | ||||||||
167 | 3.71%, 09/30/2014 ± | 80 | ||||||
New World Gaming Partners Ltd., First Lien Term Loan | ||||||||
823 | 3.71%, 09/30/2014 ± | 393 | ||||||
Penton Media, Inc. | ||||||||
6,909 | 3.23%, 02/06/2013 ± | 4,007 | ||||||
4,000 | 6.04%, 02/06/2014 ±⌂ | 467 | ||||||
Philosophy, Inc. | ||||||||
6,276 | 2.43%, 03/17/2014 ± | 2,511 | ||||||
Pinnacle Foods | ||||||||
11,145 | 3.25%, 03/30/2014 ± | 9,264 | ||||||
R.H. Donnelley, Inc. | ||||||||
11,479 | 6.75%, 06/30/2011 ± | 7,632 | ||||||
Raycom TV Broadcasting, Inc. | ||||||||
14,229 | 2.00%, 07/27/2013 ±⌂ | 9,960 | ||||||
Readers Digest Association, Inc. | ||||||||
13,111 | 3.29%, 03/02/2014 ± | 4,458 | ||||||
5,000 | 3.50%, 03/02/2013 *±⌂ | 1,100 | ||||||
Regal Cinemas, Inc. | ||||||||
24,886 | 4.97%, 10/27/2013 ± | 23,978 | ||||||
Sabre, Inc. | ||||||||
6,951 | 3.07%, 09/30/2014 ± | 3,835 | ||||||
Sheridan Group, Inc. | ||||||||
8,790 | 2.95%, 06/15/2014 ± | 6,483 | ||||||
2,000 | 6.20%, 06/15/2015 ±⌂ | 1,100 | ||||||
Sirius Satellite Radio, Inc. | ||||||||
9,250 | 2.69%, 12/20/2012 ± | 7,493 | ||||||
Southern Graphic Systems | ||||||||
2,958 | 4.02%, 12/30/2011 *± | 2,366 | ||||||
1,543 | 4.02%, 12/30/2011 *±⌂ | 1,202 | ||||||
Synagro Technologies, Inc. | ||||||||
3,930 | 2.46%, 03/28/2014 ± | 2,554 | ||||||
Telesat Canada | ||||||||
5,957 | 3.55%, 09/01/2014 ± | 5,495 | ||||||
454 | 4.22%, 09/01/2014 ± | 419 | ||||||
Town Sports International Holdings, Inc. | ||||||||
5,885 | 2.25%, 02/27/2014 ±⌂ | 3,825 | ||||||
United Site Services, Inc. | ||||||||
1,800 | 4.68%, 06/29/2013 ±⌂ | 810 | ||||||
UPC Financing Partnership | ||||||||
17,500 | 2.32%, 12/31/2014 - 12/31/2016 *± | 15,862 | ||||||
Venetian Macau Ltd. | ||||||||
10,868 | 2.68%, 05/25/2012 - 05/25/2013 ± | 7,880 | ||||||
West Corp. | ||||||||
24,808 | 2.83%, 10/24/2013* ± | 21,323 | ||||||
WideOpenWest Finance LLC | ||||||||
14,000 | 2.94%, 07/01/2014 *± | 10,453 | ||||||
5,496 | 7.49%, 06/29/2015 ± | 2,075 | ||||||
Wynn Resorts Ltd. | ||||||||
7,500 | 2.18%, 06/27/2014 ± | 5,062 | ||||||
Yonkers Racing Corp. | ||||||||
12,511 | 10.50%, 08/12/2011 *± | 12,166 | ||||||
357,603 | ||||||||
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ - 80.7% — (continued) | ||||||||
Technology - 10.7% | ||||||||
Alaska Communication Systems Holdings, Inc. | ||||||||
$ | 181 | 2.97%, 02/01/2012 ± | $ | 165 | ||||
Alaska Communication Systems Holdings, Inc., Incremental Term Loan | ||||||||
2,737 | 2.97%, 02/01/2012 *± | 2,489 | ||||||
Alaska Communication Systems Holdings, Inc., Term Loan | ||||||||
9,038 | 2.97%, 02/01/2012 *± | 8,219 | ||||||
Canwest MediaWorks L.P. | ||||||||
4,903 | 3.26%, 07/10/2014 ± | 1,863 | ||||||
Caribe Information Investment, Inc. | ||||||||
11,798 | 2.47%, 03/29/2013 ±⌂ | 5,899 | ||||||
Charter Communications Operating LLC | ||||||||
17,000 | 4.69%, 03/06/2014 *±Ψ | 14,389 | ||||||
DaVita, Inc. | ||||||||
1,769 | 1.93%, 10/05/2011 ± | 1,658 | ||||||
Fleetcor Technologies Operating Co. LLC, Delayed Draw Term Loan | ||||||||
2,524 | 2.77%, 04/30/2013 *± | 2,246 | ||||||
Fleetcor Technologies Operating Co. LLC, Term Loan B | ||||||||
7,855 | 2.76%, 04/30/2013 *± | 6,991 | ||||||
Gatehouse Media Operating, Inc. | ||||||||
17,245 | 2.44%, 08/05/2014 ± | 4,193 | ||||||
5,315 | 2.47%, 08/05/2014 ± | 1,292 | ||||||
Infor Global Solutions | ||||||||
983 | 3.27%, 07/28/2012 ± | 697 | ||||||
2,000 | 6.02%, 03/02/2014 ± | 635 | ||||||
3,000 | 6.68%, 03/02/2014 ± | 997 | ||||||
Infor Global Solutions, Delayed Draw Term Loan | ||||||||
1,958 | 4.18%, 07/28/2012 ± | 1,449 | ||||||
Infor Global Solutions, U.S. Term Loan | ||||||||
3,753 | 4.18%, 07/28/2012 ± | 2,777 | ||||||
Intelsat Bermuda Ltd. | ||||||||
2,000 | 2.99%, 07/03/2012 *± | 1,847 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2A | ||||||||
7,338 | 2.99%, 01/03/2014 *± | 6,704 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2B | ||||||||
7,332 | 2.99%, 01/03/2014 *± | 6,698 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2C | ||||||||
7,332 | 2.99%, 01/03/2014 *± | 6,699 | ||||||
Intesat Ltd. | ||||||||
3,413 | 2.99%, 07/03/2012 ± | 3,151 | ||||||
IPC Systems, Inc. | ||||||||
3,870 | 3.47%, 05/31/2014 ±⌂ | 2,121 | ||||||
Kronos, Inc. | ||||||||
4,774 | 3.47%, 06/12/2014 ± | 3,541 | ||||||
Leap Wireless International, Inc. | ||||||||
12,058 | 5.75%, 06/17/2013 ± | 11,541 | ||||||
Level 3 Communications Corp. | ||||||||
17,441 | 3.19%, 03/01/2014 *± | 13,920 | ||||||
2,000 | 11.50%, 03/13/2014 ± | 2,030 | ||||||
Mediacom Broadband LLC | ||||||||
541 | 1.83%, 03/31/2010 ± | 528 | ||||||
1,317 | 2.08%, 01/31/2015 ± | 1,172 | ||||||
8,937 | 6.50%, 01/03/2016 ± | 8,697 | ||||||
Mediacom Broadband LLC, Term Loan D1 | ||||||||
3,399 | 2.08%, 01/31/2015 ± | 3,023 | ||||||
Mediacom LLC | ||||||||
1,740 | 1.58%, 09/30/2012 ± | 1,566 | ||||||
6,801 | 1.83%, 01/31/2015 ± | 6,056 | ||||||
MetroPCS Wireless, Inc. | ||||||||
15,038 | 3.17%, 11/04/2013 ± | 14,016 | ||||||
National Cinemedia, Inc. | ||||||||
9,000 | 3.08%, 02/13/2015 ± | 7,925 | ||||||
Ntelos, Inc. | ||||||||
11,226 | 2.68%, 08/24/2011 ± | 10,693 | ||||||
One Communications Corp. | ||||||||
9,460 | 4.53%, 06/30/2012 ± | 5,865 | ||||||
PAETEC Holding Corp. | ||||||||
5,044 | 2.93%, 02/28/2013 ± | 4,170 | ||||||
RCN Corp. | ||||||||
9,386 | 3.50%, 04/19/2014 ± | 8,463 | ||||||
Time Warner Telecom Holdings, Inc. | ||||||||
13,597 | 2.43%, 01/07/2013 ± | 12,319 | ||||||
Verint Systems, Inc. | ||||||||
10,388 | 3.70%, 05/23/2014 ± | 7,609 | ||||||
Virgin Media Dover LLC | ||||||||
6,969 | 4.60%, 09/03/2012 ± | 6,411 | ||||||
Wind Acquisitions Holdings Finance S.A. | ||||||||
6,481 | 8.36%, 12/12/2011 ± | 5,184 | ||||||
217,908 | ||||||||
Transportation - 2.9% | ||||||||
Delta Air Lines, Inc. | ||||||||
10,880 | 2.36%, 04/25/2012 *± | 8,712 | ||||||
Jacobson Cos. | ||||||||
3,930 | 3.00%, 06/19/2014 ±⌂ | 2,368 | ||||||
Kenan Advantage Group | ||||||||
5,648 | 3.43%, 12/16/2011 ± | 4,518 | ||||||
Louis US Holdco, Inc. | ||||||||
2,481 | 3.43%, 11/04/2013 ± | 1,216 | ||||||
828 | 4.22%, 11/04/2013 ±⌂ | 406 | ||||||
MacQuarie Aircraft Leasing Finance S.A. | ||||||||
18,291 | 2.00%, 11/29/2013 *±⌂ | 12,803 | ||||||
4,970 | 4.43%, 11/29/2013 ±⌂ | 1,491 | ||||||
Northwest Airlines Corp. | ||||||||
10,153 | 2.46%, 12/31/2010 ± | 9,284 | ||||||
RailAmerica Transportation | ||||||||
730 | 5.20%, 06/30/2009 ± | 679 | ||||||
11,270 | 5.44%, 06/30/2009 ± | 10,481 | ||||||
United Air Lines, Inc. | ||||||||
8,407 | 2.44%, 02/01/2014 *± | 4,192 | ||||||
US Airways Group, Inc. | ||||||||
9,855 | 2.94%, 03/23/2014 ± | 4,476 | ||||||
60,626 | ||||||||
Utilities - 6.1% | ||||||||
Astoria Generating Co. Acquisitions LLC | ||||||||
5,695 | 2.20%, 02/23/2012 ± | 5,232 | ||||||
16,500 | 4.20%, 08/23/2013 *± | 13,461 | ||||||
Calpine Corp. | ||||||||
33,361 | 4.10%, 03/29/2014 *± | 28,607 | ||||||
Dynegy Holdings, Inc., Letter of Credit | ||||||||
14,973 | 2.00%, 03/30/2013 ± | 13,514 | ||||||
Dynegy Holdings, Inc., Term Loan | ||||||||
1,010 | 1.93%, 03/30/2013 ± | 911 |
9
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Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ - 80.7% — (continued) | ||||||||||||
Utilities - 6.1% — (continued) | ||||||||||||
Kgen LLC | ||||||||||||
$ | 1,375 | 2.09%, 02/01/2014 ± | $ | 1,169 | ||||||||
2,241 | 2.19%, 02/01/2014 ± | 1,904 | ||||||||||
NRG Energy, Inc. | ||||||||||||
20,093 | 1.12%, 02/01/2013 ± | 18,657 | ||||||||||
4,574 | 2.72%, 02/01/2013 ± | 4,247 | ||||||||||
Reliant Energy, Inc. | ||||||||||||
7,000 | 0.49%, 03/31/2014 ± | 6,218 | ||||||||||
Texas Competitive Electric Holdings Co. LLC | ||||||||||||
22,754 | 3.97%, 10/10/2014 - 10/12/2014 ± | 15,384 | ||||||||||
TPF Generation Holdings LLC | ||||||||||||
7,358 | 2.43%, 12/15/2013 ± | 6,825 | ||||||||||
6,314 | 4.68%, 12/21/2014 ± | 5,146 | ||||||||||
TPF Generation Holdings LLC, Letter of Credit | ||||||||||||
2,516 | 1.12%, 12/15/2013 ± | 2,333 | ||||||||||
TPF Generation Holdings LLC, Revolver | ||||||||||||
789 | 1.22%, 12/15/2011 ± | 732 | ||||||||||
124,340 | ||||||||||||
Total senior floating rate interests: non-investment grade (cost $2,076,085) | $ | 1,635,788 | ||||||||||
COMMON STOCKS - 0.0% | ||||||||||||
Utilities - 0.0% | ||||||||||||
4 | Calpine Corp. • | $ | 31 | |||||||||
Total common stocks (cost $—) | $ | 31 | ||||||||||
Total long-term investments (cost $2,329,617) | $ | 1,868,709 | ||||||||||
SHORT-TERM INVESTMENTS - 11.2% | ||||||||||||
Investment Pools and Funds - 8.8% | ||||||||||||
98,992 | JP Morgan U.S. Government Money Market Fund | $ | 98,992 | |||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
80,025 | Wells Fargo Advantage Government Money Market Fund | 80,025 | ||||||||||
179,017 | ||||||||||||
Repurchase Agreements - 2.4% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $37,322, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $38,024) | ||||||||||||
$ | 37,322 | 0.15%, 04/30/2009 | $ | 37,322 | ||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $10,439, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $10,675) | ||||||||||||
10,439 | 0.13%, 04/30/2009 | 10,439 | ||||||||||
47,761 | ||||||||||||
Total short-term investments (cost $226,778) | $ | 226,778 | ||||||||||
Total investments (cost $2,556,395)▲ | 103.4 | % | $ | 2,095,487 | ||||||||
Other assets and liabilities | (3.4 | )% | (69,670 | ) | ||||||||
Total net assets | 100.0 | % | $ | 2,025,817 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 2.83% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,567,005 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 17,063 | ||
Unrealized Depreciation | (488,581 | ) | ||
Net Unrealized Depreciation | $ | (471,518 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $5,113, which represents 0.25% of total net assets. | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
§ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $68,931, which represents 3.40% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $123,141. | |
± | The interest rate disclosed for these securities represents the average coupon as of April 30, 2009. |
10
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◊ | The interest rate disclosed for these securities represents an estimated average coupon as of April 30, 2009. | |
Ω | Debt security in default due to bankruptcy. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. | |
╬ | All principal amounts are in U.S. dollars unless otherwise indicated. | |
EUR — EURO | ||
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||
Acquired | Par | Security | Cost Basis | |||||||
06/2007 | $ | 2,000 | Advanstar Holdings Corp., 5.00%, 12/01/2014 | $ | 2,000 | |||||
02/2007 - 09/2007 | $ | 7,250 | Arizona Chemical Co., 5.93%, 02/27/2014 | 7,175 | ||||||
04/2007 | $ | 2,600 | Bayview Financial Acquisition Trust, 2.59%, 05/28/2037 | 2,600 | ||||||
03/2008 - 08/2008 | $ | 4,000 | Boise Paper Holdings LLC, 9.25%, 02/20/2015 | 3,832 | ||||||
04/2006 - 05/2008 | $ | 8,555 | Buckeye Check Cashing, Inc., 3.71%, 05/01/2012 | 8,272 | ||||||
03/2007 - 04/2008 | $ | 5,139 | Cardinal Logistics Management, 4.22%, 09/23/2013 | 5,033 | ||||||
03/2006 - 06/2007 | $ | 11,798 | Caribe Information Investment, Inc., 2.47%, 03/29/2013 | 11,816 | ||||||
03/2007 | $ | 5,718 | Carl Zeiss, 2.93%, 03/14/2014 | 5,718 | ||||||
03/2007 - 08/2007 | $ | 2,500 | Carl Zeiss, 4.94%, 03/14/2014 | 3,356 | ||||||
10/2007 - 04/2009 | $ | 2,097 | Centaur LLC, 14.25%, 10/30/2013 | 2,067 | ||||||
09/2006 - 04/2008 | $ | 4,391 | Center for Diagnostic Imaging, 4.72%, 12/31/2010 | 4,249 | ||||||
05/2007 - 09/2007 | $ | 5,888 | Ewards Ltd., 2.43%, 05/31/2014 | 5,746 | ||||||
02/2006 - 11/2006 | $ | 6,968 | F & W Publications, Inc., 3.50%, 08/05/2012 | 6,973 | ||||||
03/2007 - 08/2007 | $ | 4,500 | F & W Publications, Inc., 5.48%, 08/05/2012 | 4,491 | ||||||
03/2007 | $ | 1,466 | F & W Publications, Inc., Term Loan B Add-On, 3.48%, 08/05/2012 | 1,466 | ||||||
11/2007 | $ | 2,963 | Generics International, Inc., 4.72%, 11/19/2014 | 2,933 | ||||||
06/2007 - 07/2007 | $ | 2,545 | Golden Nugget, Inc., 2.23%, 06/22/2014 | 2,543 | ||||||
06/2008 - 07/2008 | $ | 1,452 | Golden Nugget, Inc., 2.40%, 06/22/2014 | 1,452 | ||||||
06/2007 | $ | 3,750 | Golden Nugget, Inc., 3.69%, 12/31/2014 | 3,750 | ||||||
03/2007 | $ | 16,890 | Goldman Sachs Mortgage Securities Corp., 1.99%, 02/01/2009 — Reg D | 16,890 | ||||||
05/2008 | $ | 2,200 | Greektown Holdings LLC, Incremental Term Loan, 0.00%, 12/03/2012 | 1,984 | ||||||
06/2006 - 05/2008 | $ | 2,493 | Greektown Holdings LLC, Term Loan B, 0.00%, 12/03/2012 | 2,421 | ||||||
04/2007 | $ | 5,000 | Helios Finance L.P., 2.80%, 10/20/2014 — 144A | 5,000 | ||||||
08/2005 - 04/2007 | $ | 1,475 | Hit Entertainment, Inc., 3.49%, 08/26/2012 | 1,475 | ||||||
04/2007 | $ | 3,920 | HMSC Corp., 2.68%, 04/03/2014 | 3,924 | ||||||
05/2007 - 06/2007 | $ | 3,870 | IPC Systems, Inc., 3.47%, 05/31/2014 | 3,879 | ||||||
06/2007 | $ | 3,930 | Jacobson Cos., 3.00%, 06/19/2014 | 3,930 | ||||||
07/2007 - 09/2007 | $ | 3,500 | Lincoln Industries Corp., 6.20%, 01/10/2015 | 3,472 | ||||||
12/2006 | $ | 828 | Louis US Holdco, Inc., 4.22%, 11/04/2013 | 828 | ||||||
04/2007 - 01/2008 | $ | 8,973 | MacAndrews Amg Holdings LLC, 6.18%, 04/17/2012 | 8,840 | ||||||
03/2007 - 05/2007 | $ | 18,291 | MacQuarie Aircraft Leasing Finance S.A., 2.00%, 11/29/2013 | 18,291 | ||||||
03/2007 | $ | 4,970 | MacQuarie Aircraft Leasing Finance S.A., 4.43%, 11/29/2013 | 4,970 | ||||||
12/2006 - 06/2007 | $ | 7,700 | Nacco Material Handling Group, 3.64%, 03/22/2013 | 7,713 | ||||||
04/2006 - 12/2008 | $ | 9,846 | National Renal Institutes, Inc., 6.24%, 03/31/2013 | 9,690 | ||||||
07/2007 | $ | 5,910 | Nelson Education, 3.72%, 07/05/2014 | 5,895 | ||||||
02/2007 - 04/2007 | $ | 7,840 | NEP Supershooters L.P., 2.69%, 02/13/2014 | 7,882 | ||||||
07/2007 | $ | 4,000 | New World Gaming Partners Ltd., 6.71%, 03/31/2015 | 4,000 | ||||||
02/2007 - 05/2007 | $ | 4,000 | Penton Media, Inc., 6.04%, 02/06/2014 | 4,047 | ||||||
02/2006 - 05/2007 | $ | 14,229 | Raycom TV Broadcasting, Inc., 2.00%, 07/27/2013 | 14,224 | ||||||
03/2008 | $ | 5,000 | Readers Digest Association, Inc., 3.50%, 03/02/2013 | 5,000 | ||||||
06/2007 | $ | 2,000 | Sheridan Group, Inc., 6.20%, 06/15/2015 | 2,000 | ||||||
03/2007 - 04/2009 | $ | 1,543 | Southern Graphic Systems, 4.02%, 12/30/2011 | 1,413 | ||||||
10/2006 - 05/2007 | $ | 6,240 | Sports Authority, Inc., 3.20%, 04/25/2013 | 6,241 | ||||||
03/2007 | $ | 4,453 | Structured Asset Securities Corp., 2.94%, 02/25/2037 | 4,393 | ||||||
10/2005 - 06/2006 | $ | 3,066 | Tensar Corp., 4.54%, 10/28/2012 | 3,066 | ||||||
06/2007 - 08/2007 | $ | 5,885 | Town Sports International Holdings, Inc., 2.25%, 02/27/2014 | 5,766 | ||||||
06/2008 - 11/2008 | $ | 5,049 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 5,049 | ||||||
07/2006 | $ | 1,800 | United Site Services, Inc., 4.68%, 06/29/2013 | 1,782 |
11
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
03/2007 | $ | 4,363 | Wells Fargo Home Equity Trust, 2.69%, 03/25/2037 | $ | 4,212 |
♦ | Senior floating rate interests in which the Fund invests generally pay interest rates which are periodically adjusted by reference to a base short-term, floating lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States Banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate is the rate in effect at April 30, 2009. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 179,048 | ||
Investment in securities — Level 2 | 1,897,618 | |||
Investment in securities — Level 3 | 18,821 | |||
Total | $ | 2,095,487 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 18,775 | ||
Change in unrealized depreciation ♦ | (7,819 | ) | ||
Net purchases | 2,217 | |||
Transfers in and /or out of Level 3 | 5,648 | |||
Balance as of April 30, 2009 | $ | 18,821 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (10,617 | ) | |
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Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $2,556,395) | $ | 2,095,487 | ||
Receivables: | ||||
Investment securities sold | 39,611 | |||
Fund shares sold | 27,117 | |||
Dividends and interest | 10,061 | |||
Other assets | 163 | |||
Total assets | 2,172,439 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 140,175 | |||
Fund shares redeemed | 2,519 | |||
Investment management fees | 198 | |||
Dividends | 2,697 | |||
Distribution fees | 177 | |||
Accrued expenses | 844 | |||
Other liabilities | 12 | |||
Total liabilities | 146,622 | |||
Net assets | $ | 2,025,817 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,039,864 | |||
Accumulated undistributed net investment income | 3,439 | |||
Accumulated net realized loss on investments and foreign currency transactions | (556,578 | ) | ||
Unrealized depreciation of investments | (460,908 | ) | ||
Net assets | $ | 2,025,817 | ||
Shares authorized | 2,400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.29/$7.51 | ||
Shares outstanding | 116,152 | |||
Net assets | $ | 846,236 | ||
Class B: Net asset value per share | $ | 7.28 | ||
Shares outstanding | 5,371 | |||
Net assets | $ | 39,126 | ||
Class C: Net asset value per share | $ | 7.28 | ||
Shares outstanding | 116,716 | |||
Net assets | $ | 849,711 | ||
Class I: Net asset value per share | $ | 7.29 | ||
Shares outstanding | 30,065 | |||
Net assets | $ | 219,084 | ||
Class R3: Net asset value per share | $ | 7.29 | ||
Shares outstanding | 154 | |||
Net assets | $ | 1,121 | ||
Class R4: Net asset value per share | $ | 7.28 | ||
Shares outstanding | 85 | |||
Net assets | $ | 619 | ||
Class R5: Net asset value per share | $ | 7.29 | ||
Shares outstanding | 3 | |||
Net assets | $ | 18 | ||
Class Y: Net asset value per share | $ | 7.28 | ||
Shares outstanding | 9,602 | |||
Net assets | $ | 69,902 | ||
13
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 67 | ||
Interest | 60,472 | |||
Total investment income | 60,539 | |||
Expenses: | ||||
Investment management fees | 5,206 | |||
Transfer agent fees | 798 | |||
Distribution fees | ||||
Class A | 827 | |||
Class B | 176 | |||
Class C | 3,808 | |||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | 7 | |||
Accounting services | 152 | |||
Registration and filing fees | 117 | |||
Board of Directors’ fees | 25 | |||
Audit fees | 36 | |||
Other expenses | 557 | |||
Total expenses (before waivers and fees paid indirectly) | 11,712 | |||
Expense waivers | (549 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (549 | ) | ||
Total expenses, net | 11,163 | |||
Net investment income | 49,376 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (226,193 | ) | ||
Net realized loss on foreign currency transactions | (67 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (226,260 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 266,660 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 267 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 266,927 | |||
Net Gain on Investments and Foreign Currency Transactions | 40,667 | |||
Net Increase in Net Assets Resulting from Operations | $ | 90,043 | ||
14
Table of Contents
(000’s Omitted)
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 49,376 | $ | 177,819 | ||||
Net realized loss on investments and foreign currency transactions | (226,260 | ) | (277,685 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 266,927 | (590,548 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 90,043 | (690,414 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (21,421 | ) | (76,620 | ) | ||||
Class B | (1,021 | ) | (2,991 | ) | ||||
Class C | (22,140 | ) | (71,154 | ) | ||||
Class I | (5,315 | ) | (16,773 | ) | ||||
Class R3 | (20 | ) | (28 | ) | ||||
Class R4 | (18 | ) | (24 | ) | ||||
Class R5 | (1 | ) | (10 | ) | ||||
Class Y | (2,631 | ) | (6,697 | ) | ||||
Total distributions | (52,567 | ) | (174,297 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 98,962 | (918,574 | ) | |||||
Class B | (1,969 | ) | (14,370 | ) | ||||
Class C | (39,273 | ) | (608,974 | ) | ||||
Class I | 41,822 | (155,838 | ) | |||||
Class R3 | 532 | 436 | ||||||
Class R4 | 77 | 657 | ||||||
Class R5 | (68 | ) | (76 | ) | ||||
Class Y | (28,036 | ) | 26,618 | |||||
Net increase (decrease) from capital share transactions | 72,047 | (1,670,121 | ) | |||||
Net increase (decrease) in net assets | 109,523 | (2,534,832 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 1,916,294 | 4,451,126 | ||||||
End of period | $ | 2,025,817 | $ | 1,916,294 | ||||
Accumulated undistributed net investment income | $ | 3,439 | $ | 6,630 | ||||
15
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Floating Rate Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 3.00%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Trade date for senior floating rate interests purchased in the primary market is considered the date on which the loan allocations are determined. Trade date for senior floating rate loan interests purchased in the secondary market is the date on which the transaction is entered into. | |||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the |
16
Table of Contents
security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
d) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. |
17
Table of Contents
Notes to Financial Statements – (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
e) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
f) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
g) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $123,141. | ||
h) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
i) | Senior Floating Rate Interests — The Fund, as shown in the Schedule of Investments, may invest in senior floating rate interests. Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the |
18
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senior floating rate interest. Senior floating rate interests are typically rated below-investment-grade, which suggests they are more likely to default and generally pay higher interest rates than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the Fund and there can be no assurance that the liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated. | |||
j) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
k) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
n) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 179,028 | $ | 252,120 |
Amount | ||||
Undistributed Ordinary Income | $ | 10,319 | ||
Accumulated Capital Losses* | $ | (319,708 | ) | |
Unrealized Depreciation† | $ | (738,445 | ) | |
Total Accumulated Deficit | $ | (1,047,834 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $1,361 and decrease accumulated net realized loss by $1,361. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2014 | $ | 1,227 | ||
2015 | 48,277 | |||
2016 | 270,204 | |||
Total | $ | 319,708 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.6500 | % | ||
On next $4.5 billion | 0.6000 | % | ||
On next $5 billion | 0.5800 | % | ||
Over $10 billion | 0.5700 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has permanently limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.00% | 1.75% | 1.75% | 0.75% | 1.25% | 1.00% | 0.85% | 0.75% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
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Annualized | ||||||||||||||||||||
Six-Month | ||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.00 | % | 0.99 | % | 0.96 | % | 0.50 | % | 0.29 | %* | ||||||||||
Class B Shares | 1.75 | 1.75 | 1.75 | 1.35 | 1.04 | † | ||||||||||||||
Class C Shares | 1.75 | 1.75 | 1.74 | 1.28 | 1.02 | ‡ | ||||||||||||||
Class I Shares | 0.75 | 0.74 | 0.71 | 0.43 | § | |||||||||||||||
Class R3 Shares | 1.25 | 1.25 | 1.24 | ** | ||||||||||||||||
Class R4 Shares | 1.00 | 1.00 | 1.00 | †† | ||||||||||||||||
Class R5 Shares | 0.85 | 0.85 | 0.85 | ‡‡ | ||||||||||||||||
Class Y Shares | 0.72 | 0.69 | 0.68 | 0.15 | 0.01 | §§ |
* | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
† | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
‡ | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
§ | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
** | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
†† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§§ | From April 29, 2005 (commencement of operations), through October 31, 2005 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $432 and contingent deferred sales charges of $291 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $26. These commissions are in turn paid to sales representatives of the broker/dealers. |
23
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $3. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $846 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 740,303 | ||
Sales Proceeds Excluding U.S. Government Obligations | 503,490 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 60,450 | 2,034 | (48,520 | ) | — | 13,964 | 42,614 | 5,242 | (149,657 | ) | — | (101,801 | ) | |||||||||||||||||||||||||||
Amount | $ | 409,361 | $ | 13,580 | $ | (323,979 | ) | $ | — | $ | 98,962 | $ | 388,034 | $ | 47,024 | $ | (1,353,632 | ) | $ | — | $ | (918,574 | ) | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 591 | 92 | (982 | ) | — | (299 | ) | 1,045 | 190 | (2,862 | ) | — | (1,627 | ) | ||||||||||||||||||||||||||
Amount | $ | 4,002 | $ | 613 | $ | (6,584 | ) | $ | — | $ | (1,969 | ) | $ | 9,526 | $ | 1,692 | $ | (25,588 | ) | $ | — | $ | (14,370 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 15,146 | 2,121 | (23,505 | ) | — | (6,238 | ) | 22,066 | 5,084 | (95,489 | ) | — | (68,339 | ) | ||||||||||||||||||||||||||
Amount | $ | 102,668 | $ | 14,103 | $ | (156,044 | ) | $ | — | $ | (39,273 | ) | $ | 202,059 | $ | 45,465 | $ | (856,498 | ) | $ | — | $ | (608,974 | ) | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 13,055 | 627 | (7,590 | ) | — | 6,092 | 22,355 | 1,270 | (41,211 | ) | — | (17,586 | ) | |||||||||||||||||||||||||||
Amount | $ | 88,050 | $ | 4,188 | $ | (50,416 | ) | $ | — | $ | 41,822 | $ | 201,916 | $ | 11,319 | $ | (369,073 | ) | $ | — | $ | (155,838 | ) | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 99 | 3 | (24 | ) | — | 78 | 49 | 3 | (5 | ) | — | 47 | ||||||||||||||||||||||||||||
Amount | $ | 670 | $ | 20 | $ | (158 | ) | $ | — | $ | 532 | $ | 451 | $ | 29 | $ | (44 | ) | $ | — | $ | 436 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 28 | 3 | (18 | ) | — | 13 | 85 | 3 | (17 | ) | — | 71 | ||||||||||||||||||||||||||||
Amount | $ | 182 | $ | 17 | $ | (122 | ) | $ | — | $ | 77 | $ | 782 | $ | 25 | $ | (150 | ) | $ | — | $ | 657 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | (10 | ) | — | (10 | ) | 1 | 1 | (10 | ) | — | (8 | ) | ||||||||||||||||||||||||||
Amount | $ | 1 | $ | 1 | $ | (70 | ) | $ | — | $ | (68 | ) | $ | 6 | $ | 9 | $ | (91 | ) | $ | — | $ | (76 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,354 | 353 | (5,894 | ) | — | (4,187 | ) | 3,794 | 635 | (1,350 | ) | — | 3,079 | |||||||||||||||||||||||||||
Amount | $ | 9,083 | $ | 2,342 | $ | (39,461 | ) | $ | — | $ | (28,036 | ) | $ | 32,823 | $ | 5,625 | $ | (11,830 | ) | $ | — | $ | 26,618 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 48 | $ | 324 | |||||
For the Year Ended October 31, 2008 | 65 | $ | 561 |
24
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7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
25
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
realized | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | Gain | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | (Loss) | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.13 | $ | 0.20 | $ | — | $ | 0.17 | $ | 0.37 | $ | (0.21 | ) | $ | — | $ | — | $ | (0.21 | ) | $ | 0.16 | $ | 7.29 | 5.58 | %(f) | $ | 846,236 | 1.06 | %(g) | 1.00 | %(g) | 1.00 | %(g) | 6.18 | %(g) | 33 | % | ||||||||||||||||||||||||||||||||||
B | 7.13 | 0.18 | — | 0.16 | 0.34 | (0.19 | ) | — | — | (0.19 | ) | 0.15 | 7.28 | 5.04 | (f) | 39,126 | 1.90 | (g) | 1.75 | (g) | 1.75 | (g) | 5.47 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 7.13 | 0.18 | — | 0.16 | 0.34 | (0.19 | ) | — | — | (0.19 | ) | 0.15 | 7.28 | 5.04 | (f) | 849,711 | 1.82 | (g) | 1.75 | (g) | 1.75 | (g) | 5.47 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 7.13 | 0.21 | — | 0.17 | 0.38 | (0.22 | ) | — | — | (0.22 | ) | 0.16 | 7.29 | 5.69 | (f) | 219,084 | 0.79 | (g) | 0.75 | (g) | 0.75 | (g) | 6.44 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.14 | 0.19 | — | 0.17 | 0.36 | (0.21 | ) | — | — | (0.21 | ) | 0.15 | 7.29 | 5.29 | (f) | 1,121 | 1.52 | (g) | 1.25 | (g) | 1.25 | (g) | 5.88 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.13 | 0.21 | — | 0.15 | 0.36 | (0.21 | ) | — | — | (0.21 | ) | 0.15 | 7.28 | 5.43 | (f) | 619 | 1.20 | (g) | 1.00 | (g) | 1.00 | (g) | 6.14 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.15 | 0.20 | — | 0.16 | 0.36 | (0.22 | ) | — | — | (0.22 | ) | 0.14 | 7.29 | 5.36 | (f) | 18 | 0.99 | (g) | 0.85 | (g) | 0.85 | (g) | 6.39 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.13 | 0.21 | — | 0.16 | 0.37 | (0.22 | ) | — | — | (0.22 | ) | 0.15 | 7.28 | 5.58 | (f) | 69,902 | 0.72 | (g) | 0.72 | (g) | 0.72 | (g) | 6.53 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.79 | 0.55 | — | (2.68 | ) | (2.13 | ) | (0.53 | ) | — | — | (0.53 | ) | (2.66 | ) | 7.13 | (22.71 | ) | 728,882 | 0.99 | 0.99 | 0.99 | 6.02 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.79 | 0.47 | — | (2.67 | ) | (2.20 | ) | (0.46 | ) | — | — | (0.46 | ) | (2.66 | ) | 7.13 | (23.30 | ) | 40,440 | 1.81 | 1.75 | 1.75 | 5.23 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.78 | 0.47 | — | (2.66 | ) | (2.19 | ) | (0.46 | ) | — | — | (0.46 | ) | (2.65 | ) | 7.13 | (23.24 | ) | 876,501 | 1.75 | 1.75 | 1.75 | 5.25 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 9.79 | 0.57 | — | (2.68 | ) | (2.11 | ) | (0.55 | ) | — | — | (0.55 | ) | (2.66 | ) | 7.13 | (22.51 | ) | 171,007 | 0.74 | 0.74 | 0.74 | 6.28 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 9.79 | 0.52 | — | (2.66 | ) | (2.14 | ) | (0.51 | ) | — | — | (0.51 | ) | (2.65 | ) | 7.14 | (22.80 | ) | 544 | 1.45 | 1.25 | 1.25 | 5.63 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 9.78 | 0.54 | — | (2.66 | ) | (2.12 | ) | (0.53 | ) | — | — | (0.53 | ) | (2.65 | ) | 7.13 | (22.63 | ) | 515 | 1.15 | 1.00 | 1.00 | 5.71 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 9.81 | 0.56 | — | (2.68 | ) | (2.12 | ) | (0.54 | ) | — | — | (0.54 | ) | (2.66 | ) | 7.15 | (22.55 | ) | 90 | 0.86 | 0.85 | 0.85 | 6.24 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.78 | 0.57 | — | (2.66 | ) | (2.09 | ) | (0.56 | ) | — | — | (0.56 | ) | (2.65 | ) | 7.13 | (22.39 | ) | 98,315 | 0.69 | 0.69 | 0.69 | 6.23 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.11 | 0.66 | — | (0.31 | ) | 0.35 | (0.67 | ) | — | — | (0.67 | ) | (0.32 | ) | 9.79 | 3.54 | 1,996,644 | 0.96 | 0.96 | 0.96 | 6.61 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.11 | 0.58 | — | (0.31 | ) | 0.27 | (0.59 | ) | — | — | (0.59 | ) | (0.32 | ) | 9.79 | 2.72 | 71,403 | 1.80 | 1.75 | 1.75 | 5.84 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.11 | 0.59 | — | (0.32 | ) | 0.27 | (0.60 | ) | — | — | (0.60 | ) | (0.33 | ) | 9.78 | 2.67 | 1,870,911 | 1.74 | 1.74 | 1.74 | 5.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I | 10.11 | 0.70 | — | (0.32 | ) | 0.38 | (0.70 | ) | — | — | (0.70 | ) | (0.32 | ) | 9.79 | 3.84 | 406,906 | 0.71 | 0.71 | 0.71 | 6.88 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 10.09 | 0.54 | — | (0.31 | ) | 0.23 | (0.53 | ) | — | — | (0.53 | ) | (0.30 | ) | 9.79 | 2.31 | (f) | 285 | 1.75 | (g) | 1.25 | (g) | 1.25 | (g) | 6.59 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 10.09 | 0.56 | — | (0.32 | ) | 0.24 | (0.55 | ) | — | — | (0.55 | ) | (0.31 | ) | 9.78 | 2.42 | (f) | 10 | 1.18 | (g) | 1.00 | (g) | 1.00 | (g) | 6.58 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 10.09 | 0.58 | — | (0.29 | ) | 0.29 | (0.57 | ) | — | — | (0.57 | ) | (0.28 | ) | 9.81 | 2.90 | (f) | 205 | 0.86 | (g) | 0.85 | (g) | 0.85 | (g) | 6.81 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 10.11 | 0.69 | — | (0.32 | ) | 0.37 | (0.70 | ) | — | — | (0.70 | ) | (0.33 | ) | 9.78 | 3.73 | 104,762 | 0.68 | 0.68 | 0.68 | 6.92 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.09 | 0.62 | — | 0.02 | 0.64 | (0.62 | ) | — | — | (0.62 | ) | 0.02 | 10.11 | 6.56 | 1,500,394 | 0.98 | 0.50 | 0.50 | 6.71 | 33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.08 | 0.54 | — | 0.03 | 0.57 | (0.54 | ) | — | — | (0.54 | ) | 0.03 | 10.11 | 5.79 | 42,182 | 1.83 | 1.35 | 1.35 | 5.84 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.08 | 0.55 | — | 0.03 | 0.58 | (0.55 | ) | — | — | (0.55 | ) | 0.03 | 10.11 | 5.86 | 828,910 | 1.77 | 1.28 | 1.28 | 5.93 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I(k) | 10.11 | 0.12 | — | — | 0.12 | (0.12 | ) | — | — | (0.12 | ) | — | 10.11 | 1.21 | (f) | 61,805 | 0.74 | (g) | 0.43 | (g) | 0.43 | (g) | 7.99 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.08 | 0.66 | — | 0.02 | 0.68 | (0.65 | ) | — | — | (0.65 | ) | 0.03 | 10.11 | 7.00 | 50,896 | 0.65 | 0.15 | 0.15 | 6.89 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(l) | 10.00 | 0.22 | — | 0.08 | 0.30 | (0.21 | ) | — | — | (0.21 | ) | 0.09 | 10.09 | 3.06 | (f) | 169,485 | 1.03 | (g) | 0.29 | (g) | 0.29 | (g) | 5.68 | (g) | 15 | |||||||||||||||||||||||||||||||||||||||||||||||
B(m) | 10.00 | 0.19 | — | 0.08 | 0.27 | (0.19 | ) | — | — | (0.19 | ) | 0.08 | 10.08 | 2.66 | (f) | 5,659 | 1.89 | (g) | 1.04 | (g) | 1.04 | (g) | 4.91 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C(n) | 10.00 | 0.18 | — | 0.09 | 0.27 | (0.19 | ) | — | — | (0.19 | ) | 0.08 | 10.08 | 2.67 | (f) | 92,710 | 1.79 | (g) | 1.02 | (g) | 1.02 | (g) | 5.03 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y(o) | 10.00 | 0.23 | — | 0.08 | 0.31 | (0.23 | ) | — | — | (0.23 | ) | 0.08 | 10.08 | 3.10 | (f) | 10,062 | 0.73 | (g) | 0.01 | (g) | 0.01 | (g) | 6.06 | (g) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. | |
(l) | Commenced operations on April 29, 2005. | |
(m) | Commenced operations on April 29, 2005. | |
(n) | Commenced operations on April 29, 2005. | |
(o) | Commenced operations on April 29, 2005. |
26
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27
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Directors and Officers (Unaudited) – (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
28
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29
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,055.75 | $ | 5.09 | $ | 1,000.00 | $ | 1,019.83 | $ | 5.00 | 1.00 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,050.39 | $ | 8.89 | $ | 1,000.00 | $ | 1,016.11 | $ | 8.74 | 1.75 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,050.42 | $ | 8.89 | $ | 1,000.00 | $ | 1,016.11 | $ | 8.74 | 1.75 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,056.89 | $ | 3.82 | $ | 1,000.00 | $ | 1,021.07 | $ | 3.75 | 0.75 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,052.92 | $ | 6.36 | $ | 1,000.00 | $ | 1,018.59 | $ | 6.25 | 1.25 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,054.30 | $ | 5.09 | $ | 1,000.00 | $ | 1,019.83 | $ | 5.00 | 1.00 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,053.57 | $ | 4.32 | $ | 1,000.00 | $ | 1,020.57 | $ | 4.25 | 0.85 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,055.84 | $ | 3.67 | $ | 1,000.00 | $ | 1,021.22 | $ | 3.60 | 0.72 | 181 | 365 |
30
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 |
Table of Contents
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Fundamental Growth A# | 5/24/01 | -36.18 | % | -1.75 | % | -2.13 | % | |||||||||
Fundamental Growth A## | 5/24/01 | -39.69 | % | -2.85 | % | -2.82 | % | |||||||||
Fundamental Growth B# | 5/24/01 | -36.65 | % | -2.48 | % | -2.84 | % | |||||||||
Fundamental Growth B## | 5/24/01 | -39.82 | % | -2.83 | % | -2.84 | % | |||||||||
Fundamental Growth C# | 5/24/01 | -36.71 | % | -2.46 | % | -2.84 | % | |||||||||
Fundamental Growth C## | 5/24/01 | -37.34 | % | -2.46 | % | -2.84 | % | |||||||||
Fundamental Growth Y# | 5/24/01 | -35.85 | % | -1.28 | % | -1.67 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Francis J. Boggan, CFA
Senior Vice President, Partner
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Capital Goods | 8.5 | % | ||
Consumer Durables & Apparel | 3.2 | |||
Consumer Services | 1.2 | |||
Diversified Financials | 2.1 | |||
Energy | 10.0 | |||
Food & Staples Retailing | 4.4 | |||
Food, Beverage & Tobacco | 2.2 | |||
Health Care Equipment & Services | 5.6 | |||
Household & Personal Products | 1.8 | |||
Insurance | 3.8 | |||
Materials | 3.4 | |||
Media | 1.1 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 7.8 | |||
Retailing | 5.1 | |||
Semiconductors & Semiconductor Equipment | 3.6 | |||
Software & Services | 15.4 | |||
Technology Hardware & Equipment | 18.1 | |||
Telecommunication Services | 1.1 | |||
Transportation | 1.0 | |||
Short-Term Investments | 1.4 | |||
Other Assets and Liabilities | (0.8 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS—99.4% | ||||||||
Capital Goods—8.5% | ||||||||
23 | Deere & Co. | $ | 941 | |||||
14 | Flowserve Corp. | 930 | ||||||
30 | Honeywell International, Inc. | 927 | ||||||
13 | Precision Castparts Corp. | 936 | ||||||
3,734 | ||||||||
Consumer Durables & Apparel—3.2% | ||||||||
26 | Coach, Inc. • | 625 | ||||||
17 | D.R. Horton, Inc. | 219 | ||||||
10 | NIKE, Inc. Class B | 545 | ||||||
1,389 | ||||||||
Consumer Services—1.2% | ||||||||
10 | McDonald’s Corp. | 528 | ||||||
Diversified Financials—2.1% | ||||||||
22 | Ameriprise Financial, Inc. | 587 | ||||||
3 | Goldman Sachs Group, Inc. | 347 | ||||||
934 | ||||||||
Energy—10.0% | ||||||||
12 | Apache Corp. | 896 | ||||||
29 | Atwood Oceanics, Inc. • | 654 | ||||||
9 | Hess Corp. | 504 | ||||||
16 | Marathon Oil Corp. | 472 | ||||||
13 | Nabors Industries Ltd. • | 201 | ||||||
18 | National Oilwell Varco, Inc. • | 536 | ||||||
14 | Petroleo Brasileiro S.A. ADR | 463 | ||||||
3 | Transocean, Inc. • | 189 | ||||||
11 | Ultra Petroleum Corp. • | 471 | ||||||
4,386 | ||||||||
Food & Staples Retailing—4.4% | ||||||||
39 | CVS/Caremark Corp. | 1,236 | ||||||
13 | Wal-Mart Stores, Inc. | 676 | ||||||
1,912 | ||||||||
Food, Beverage & Tobacco—2.2% | ||||||||
10 | PepsiCo, Inc. | 517 | ||||||
12 | Philip Morris International, Inc. | 427 | ||||||
944 | ||||||||
Health Care Equipment & Services—5.6% | ||||||||
13 | Covidien Ltd. | 439 | ||||||
17 | Medtronic, Inc. | 531 | ||||||
12 | St. Jude Medical, Inc. • | 402 | ||||||
27 | UnitedHealth Group, Inc. | 630 | ||||||
11 | Wellpoint, Inc. • | 479 | ||||||
2,481 | ||||||||
Household & Personal Products—1.8% | ||||||||
16 | Procter & Gamble Co. | 771 | ||||||
Insurance—3.8% | ||||||||
36 | Aflac, Inc. | 1,049 | ||||||
64 | Assured Guaranty Ltd. | 622 | ||||||
1,671 | ||||||||
Materials—3.4% | ||||||||
6 | Freeport-McMoRan Copper & Gold, Inc. | 252 | ||||||
7 | Monsanto Co. | 620 | ||||||
7 | Potash Corp. of Saskatchewan, Inc. | 614 | ||||||
1,486 | ||||||||
Media—1.1% | ||||||||
21 | Walt Disney Co | 464 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences—7.8% | ||||||||
10 | Abbott Laboratories | 418 | ||||||
8 | Amgen, Inc. • | 397 | ||||||
25 | AstraZeneca plc ADR | 857 | ||||||
17 | Celgene Corp. • | 709 | ||||||
10 | Genzyme Corp. • | 507 | ||||||
7 | Johnson & Johnson | 346 | ||||||
4 | Teva Pharmaceutical Industries Ltd. ADR | 180 | ||||||
3,414 | ||||||||
Retailing—5.1% | ||||||||
16 | Kohl’s Corp. • | 730 | ||||||
31 | Lowe’s Co., Inc. | 662 | ||||||
40 | Staples, Inc. | 815 | ||||||
2,207 | ||||||||
Semiconductors & Semiconductor Equipment—3.6% | ||||||||
46 | Intel Corp. | 721 | ||||||
88 | Micron Technology, Inc. • | 427 | ||||||
23 | Texas Instruments, Inc. | 414 | ||||||
1,562 | ||||||||
Software & Services—15.4% | ||||||||
27 | Accenture Ltd. Class A | 786 | ||||||
13 | Alliance Data Systems Corp. • | 532 | ||||||
2 | Google, Inc. • | 919 | ||||||
81 | Microsoft Corp. | 1,641 | ||||||
68 | Oracle Corp. • | 1,305 | ||||||
9 | Visa, Inc. | 611 | ||||||
57 | Western Union Co. | 956 | ||||||
6,750 | ||||||||
Technology Hardware & Equipment—18.1% | ||||||||
8 | Apple, Inc. • | 1,032 | ||||||
69 | Cisco Systems, Inc. • | 1,331 | ||||||
54 | Corning, Inc. | 794 | ||||||
47 | EMC Corp. • | 593 | ||||||
42 | Hewlett-Packard Co. | 1,507 | ||||||
14 | International Business Machines Corp. | 1,435 | ||||||
23 | NetApp, Inc. • | 419 | ||||||
20 | Qualcomm, Inc. | 825 | ||||||
7,936 | ||||||||
Telecommunication Services—1.1% | ||||||||
18 | AT&T, Inc. | 464 | ||||||
Transportation—1.0% | ||||||||
13 | Norfolk Southern Corp. | 464 | ||||||
Total common stocks (cost $44,656) | $ | 43,497 | ||||||
Total long-term investments (cost $44,656) | $ | 43,497 | ||||||
SHORT-TERM INVESTMENTS—1.4% | ||||||||
Repurchase Agreements—1.4% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $148, collateralized by GNMA 4.50% - - 6.50%, 2038—2039, value of $151) | ||||||||
$ | 147 | 0.18%, 04/30/2009 | $ | 147 |
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Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS—1.4% — (continued) | ||||||||||||
Repurchase Agreements—1.4% — (continued) | ||||||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $177, collateralized by FHLMC 4.50%—6.50%, 2035—2039, FNMA 4.50%—6.50%, 2034 - 2047, value of $180) | ||||||||||||
$ | 177 | 0.17%, 04/30/2009 | $ | 177 | ||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $247, collateralized by FHLMC 4.00%—7.00%, 2021—2039, FNMA 6.00%—7.00%, 2034 - 2038, GNMA 4.50%—7.00%, 2024—2039, value of $252) | ||||||||||||
247 | 0.17%, 04/30/2009 | 247 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1) | ||||||||||||
1 | 0.14%, 04/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $53, collateralized by FHLMC 8.00%—15.00%, 2009—2021, FNMA 3.50%—15.50%, 2012—2039, value of $54) | ||||||||||||
53 | 0.16%, 04/30/2009 | 53 | ||||||||||
625 | ||||||||||||
Total short-term investments (cost $625) | $ | 625 | ||||||||||
Total investments (cost $45,281) ▲ | 100.8 | % | $ | 44,122 | ||||||||
Other assets and liabilities | (0.8 | )% | (367 | ) | ||||||||
Total net assets | 100.0 | % | $ | 43,755 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 4.83% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $46,761 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 2,670 | ||
Unrealized Depreciation | (5,309 | ) | ||
Net Unrealized Depreciation | $ | (2,639 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 43,497 | ||
Investment in securities — Level 2 | 625 | |||
Total | $ | 44,122 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $45,281) | $ | 44,122 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost $—) | — | |||
Receivables: | ||||
Investment securities sold | 178 | |||
Fund shares sold | 87 | |||
Dividends and interest | 60 | |||
Other assets | 58 | |||
Total assets | 44,506 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 614 | |||
Fund shares redeemed | 107 | |||
Investment management fees | 6 | |||
Distribution fees | 3 | |||
Accrued expenses | 21 | |||
Total liabilities | 751 | |||
Net assets | $ | 43,755 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 65,245 | |||
Accumulated undistributed net investment income | 91 | |||
Accumulated net realized loss on investments | (20,422 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (1,159 | ) | ||
Net assets | $ | 43,755 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.41/$7.84 | ||
Shares outstanding | 2,801 | |||
Net assets | $ | 20,750 | ||
Class B: Net asset value per share | $ | 7.00 | ||
Shares outstanding | 783 | |||
Net assets | $ | 5,486 | ||
Class C: Net asset value per share | $ | 7.00 | ||
Shares outstanding | 993 | |||
Net assets | $ | 6,952 | ||
Class Y: Net asset value per share | $ | 7.66 | ||
Shares outstanding | 1,380 | |||
Net assets | $ | 10,567 | ||
6
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 401 | ||
Interest | 1 | |||
Securities lending | 11 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 413 | |||
Expenses: | ||||
Investment management fees | 189 | |||
Transfer agent fees | 67 | |||
Distribution fees | ||||
Class A | 25 | |||
Class B | 26 | |||
Class C | 34 | |||
Custodian fees | 4 | |||
Accounting services | 2 | |||
Registration and filing fees | 20 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 11 | |||
Total expenses (before waivers and fees paid indirectly) | 382 | |||
Expense waivers | (40 | ) | ||
Transfer agent fee waivers | (19 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (60 | ) | ||
Total expenses, net | 322 | |||
Net investment income | 91 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (14,004 | ) | ||
Net Realized Loss on Investments | (14,004 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 11,706 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 11,706 | |||
Net Loss on Investments | (2,298 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (2,207 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 91 | $ | (195 | ) | |||
Net realized loss on investments | (14,004 | ) | (6,345 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 11,706 | (20,038 | ) | |||||
Net decrease in net assets resulting from operations | (2,207 | ) | (26,578 | ) | ||||
Distributions to Shareholders: | ||||||||
From net realized gain on investments | ||||||||
Class A | — | (4,325 | ) | |||||
Class B | — | (1,393 | ) | |||||
Class C | — | (1,555 | ) | |||||
Class Y | — | (42 | ) | |||||
Total distributions | — | (7,315 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (2,420 | ) | 4,220 | |||||
Class B | (544 | ) | (339 | ) | ||||
Class C | (977 | ) | 1,595 | |||||
Class Y | 512 | 11,577 | ||||||
Net increase (decrease) from capital share transactions | (3,429 | ) | 17,053 | |||||
Net decrease in net assets | (5,636 | ) | (16,840 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 49,391 | 66,231 | ||||||
End of period | $ | 43,755 | $ | 49,391 | ||||
Accumulated undistributed net investment income (loss) | $ | 91 | $ | — | ||||
8
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Fundamental Growth Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income—Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation—The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
c) | Foreign Currency Transactions—The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending—The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market |
10
Table of Contents
prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account—Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements—A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts—The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders—Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157—Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4—In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 161—In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging |
12
Table of Contents
Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
l) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. | ||
3. | Federal Income Taxes: |
a) | Federal Income Taxes—For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | ||||
October 31, 2008 | ||||
Ordinary Income | $ | 6,221 | ||
Long-Term Capital Gains * | 1,094 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses* | $ | (4,937 | ) | |
Unrealized Depreciation† | $ | (14,346 | ) | |
Total Accumulated Deficit | $ | (19,283 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts—In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution |
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $195 and decrease paid in capital by $195. | |||
d) | Capital Loss Carryforward—At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 4,937 | ||
Total | $ | 4,937 | ||
e) | Financial Accounting Standards Board Interpretation No. 48—On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements—Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Annual Fee | ||||
On first $500 million | 0.8500 | % | ||
On next $500 million | 0.8000 | % | ||
On next $4 billion | 0.7500 | % | ||
On next $5 billion | 0.7475 | % | ||
Over $10 billion | 0.7450 | % |
b) | Accounting Services Agreement—Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives a fee of 0.01% on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. | ||
c) | Operating Expenses—Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.45% | 2.20 | % | 2.20 | % | 1.05 | % |
14
Table of Contents
d) | Fees Paid Indirectly—The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.34 | % | 1.45 | % | 1.47 | % | 1.48 | % | 1.57 | % | 1.59 | % | ||||||||||||
Class B Shares | 1.95 | 2.18 | 2.22 | 2.23 | 2.32 | 2.32 | ||||||||||||||||||
Class C Shares | 2.13 | 2.20 | 2.20 | 2.23 | 2.32 | 2.25 | ||||||||||||||||||
Class Y Shares | 1.04 | 0.96 | 1.02 | 1.05 | 1.13 | 1.08 |
e) | Distribution and Service Plan for Class A, B and C Shares—HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $13 and contingent deferred sales charges of $4 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $1. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions—Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $60 for providing such services. These fees are accrued daily and paid monthly. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from Payment | ||||||||||||||||
from Affiliate for | ||||||||||||||||
Impact from | Total Return | Transfer Agent | ||||||||||||||
Payment from | Excluding | Allocation | Total Return | |||||||||||||
Affiliate for SEC | Payment from | Methodology | Excluding Payment | |||||||||||||
Settlement for the | Affiliate for the | Reimbursements for | from Affiliate for | |||||||||||||
Year Ended | Year Ended | the Year Ended | the Year Ended | |||||||||||||
October 31, 2007 | October 31, 2007 | October 31, 2004 | October 31, 2004 | |||||||||||||
Class A | 0.28 | % | 26.24 | % | 0.03 | % | 2.21 | % | ||||||||
Class B | 0.29 | 25.34 | — | 1.48 | ||||||||||||
Class C | 0.29 | 25.32 | 0.06 | 1.53 | ||||||||||||
Class Y | 0.28 | 26.83 | — | — |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 27,873 | ||
Sales Proceeds Excluding U.S. Government Obligations | 29,613 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 232 | — | (600 | ) | — | (368 | ) | 755 | 357 | (799 | ) | — | 313 | |||||||||||||||||||||||||||
Amount | $ | 1,568 | $ | — | $ | (3,988 | ) | $ | — | $ | (2,420 | ) | $ | 8,345 | $ | 4,174 | $ | (8,299 | ) | $ | — | $ | 4,220 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 34 | — | (122 | ) | — | (88 | ) | 77 | 118 | (243 | ) | — | (48 | ) | ||||||||||||||||||||||||||
Amount | $ | 218 | $ | — | $ | (762 | ) | $ | — | $ | (544 | ) | $ | 819 | $ | 1,320 | $ | (2,478 | ) | $ | — | $ | (339 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 78 | — | (237 | ) | — | (159 | ) | 210 | 126 | (206 | ) | — | 130 | |||||||||||||||||||||||||||
Amount | $ | 494 | $ | — | $ | (1,471 | ) | $ | — | $ | (977 | ) | $ | 2,279 | $ | 1,405 | $ | (2,089 | ) | $ | — | $ | 1,595 | |||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 819 | — | (830 | ) | — | (11 | ) | 1,387 | 4 | (27 | ) | — | 1,364 | |||||||||||||||||||||||||||
Amount | $ | 5,905 | $ | — | $ | (5,393 | ) | $ | — | $ | 512 | $ | 11,816 | $ | 41 | $ | (280 | ) | $ | — | $ | 11,577 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 6 | $ | 41 | |||||
For the Year Ended October 31, 2008 | 5 | $ | 58 |
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7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
17
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.57 | $ | 0.02 | $ | — | $ | (0.18 | ) | $ | (0.16 | ) | $ | — | $ | — | $ | — | $ | — | $ | (0.16 | ) | $ | 7.41 | (2.11 | )%(e) | $ | 20,750 | 1.69 | %(f) | 1.35 | %(f) | 1.35 | %(f) | 0.51 | %(f) | 63 | % | |||||||||||||||||||||||||||||||||
B | 7.18 | — | — | (0.18 | ) | (0.18 | ) | — | — | — | — | (0.18 | ) | 7.00 | (2.51 | ) (e) | 5,486 | 2.58 | (f) | 1.95 | (f) | 1.95 | (f) | (0.10 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 7.18 | (0.01 | ) | — | (0.17 | ) | (0.18 | ) | — | — | — | — | (0.18 | ) | 7.00 | (2.51 | ) (e) | 6,952 | 2.40 | (f) | 2.13 | (f) | 2.13 | (f) | (0.28 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 7.82 | 0.04 | — | (0.20 | ) | (0.16 | ) | — | — | — | — | (0.16 | ) | 7.66 | (1.92 | ) (e) | 10,567 | 1.04 | (f) | 1.04 | (f) | 1.04 | (f) | 0.84 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.95 | (0.01 | ) | — | (4.85 | ) | (4.86 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.38 | ) | 7.57 | (38.66 | ) | 23,989 | 1.48 | 1.45 | 1.45 | (0.06 | ) | 110 | ||||||||||||||||||||||||||||||||||||||||||||||
B | 13.40 | (0.09 | ) | — | (4.61 | ) | (4.70 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.22 | ) | 7.18 | (39.11 | ) | 6,254 | 2.30 | 2.19 | 2.19 | (0.80 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 13.41 | (0.09 | ) | — | (4.62 | ) | (4.71 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.23 | ) | 7.18 | (39.16 | ) | 8,276 | 2.21 | 2.20 | 2.20 | (0.81 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.27 | — | — | (4.93 | ) | (4.93 | ) | — | (1.52 | ) | — | (1.52 | ) | (6.45 | ) | 7.82 | (38.24 | ) | 10,872 | 0.96 | 0.96 | 0.96 | 0.36 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.02 | (0.04 | ) | 0.04 | 2.93 | 2.93 | — | — | — | — | 2.93 | 13.95 | 26.59 | (g) | 39,831 | 1.50 | 1.47 | 1.47 | (0.30 | ) | 159 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.66 | (0.14 | ) | 0.04 | 2.84 | 2.74 | — | — | — | — | 2.74 | 13.40 | 25.70 | (g) | 12,307 | 2.30 | 2.22 | 2.22 | (1.04 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.67 | (0.13 | ) | 0.04 | 2.83 | 2.74 | — | — | — | — | 2.74 | 13.41 | 25.68 | (g) | 13,703 | 2.22 | 2.20 | 2.20 | (1.04 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.22 | 0.02 | 0.04 | 2.99 | 3.05 | — | — | — | — | 3.05 | 14.27 | 27.18 | (g) | 390 | 1.02 | 1.02 | 1.02 | 0.17 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.26 | 0.02 | — | 0.81 | 0.83 | (0.07 | ) | — | — | (0.07 | ) | 0.76 | 11.02 | 8.07 | 40,215 | 1.68 | 1.50 | 1.50 | 0.14 | 123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.94 | (0.06 | ) | — | 0.78 | 0.72 | — | — | — | — | 0.72 | 10.66 | 7.24 | 13,162 | 2.47 | 2.25 | 2.25 | (0.61 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.94 | (0.07 | ) | — | 0.80 | 0.73 | — | — | — | — | 0.73 | 10.67 | 7.34 | 13,065 | 2.39 | 2.25 | 2.25 | (0.61 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.44 | 0.04 | — | 0.85 | 0.89 | (0.11 | ) | — | — | (0.11 | ) | 0.78 | 11.22 | 8.57 | 487 | 1.18 | 1.07 | 1.07 | 0.56 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.14 | 0.08 | — | 1.04 | 1.12 | — | — | — | — | 1.12 | 10.26 | 12.31 | 50,067 | 1.65 | 1.60 | 1.60 | 0.68 | 112 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 8.92 | (0.01 | ) | — | 1.03 | 1.02 | — | — | — | — | 1.02 | 9.94 | 11.44 | 15,156 | 2.45 | 2.35 | 2.35 | (0.09 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 8.92 | (0.01 | ) | — | 1.03 | 1.02 | — | — | — | — | 1.02 | 9.94 | 11.44 | 16,737 | 2.36 | 2.35 | 2.35 | (0.05 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.28 | 0.13 | — | 1.06 | 1.19 | (0.03 | ) | — | — | (0.03 | ) | 1.16 | 10.44 | 12.86 | 473 | 1.16 | 1.16 | 1.16 | 1.27 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 8.94 | (0.02 | ) | — | 0.22 | 0.20 | — | — | — | — | 0.20 | 9.14 | 2.24 | (g) | 67,212 | 1.62 | 1.62 | 1.62 | (0.25 | ) | 104 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 8.79 | (0.10 | ) | — | 0.23 | 0.13 | — | — | — | — | 0.13 | 8.92 | 1.48 | (g) | 18,610 | 2.36 | 2.35 | 2.35 | (0.98 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 8.78 | (0.10 | ) | 0.01 | 0.23 | 0.14 | — | — | — | — | 0.14 | 8.92 | 1.59 | (g) | 23,901 | 2.28 | 2.28 | 2.28 | (0.91 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.04 | 0.03 | — | 0.21 | 0.24 | — | — | — | — | 0.24 | 9.28 | 2.65 | 815 | 1.11 | 1.11 | 1.11 | 0.27 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. |
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19
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Directors and Officers (Unaudited)—(continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
20
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21
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 978.86 | $ | 6.62 | $ | 1,000.00 | $ | 1,018.10 | $ | 6.75 | 1.35 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 974.93 | $ | 9.54 | $ | 1,000.00 | $ | 1,015.12 | $ | 9.74 | 1.95 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 974.93 | $ | 10.43 | $ | 1,000.00 | $ | 1,014.23 | $ | 10.63 | 2.13 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 980.79 | $ | 5.10 | $ | 1,000.00 | $ | 1,019.63 | $ | 5.20 | 1.04 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
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(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Global Communications A# | 10/31/00 | -45.77 | % | 1.41 | % | -6.53 | % | |||||||||
Global Communications A## | 10/31/00 | -48.75 | % | 0.27 | % | -7.15 | % | |||||||||
Global Communications B# | 10/31/00 | -46.18 | % | 0.69 | % | NA | * | |||||||||
Global Communications B## | 10/31/00 | -48.74 | % | 0.33 | % | NA | * | |||||||||
Global Communications C# | 10/31/00 | -46.26 | % | 0.65 | % | -7.22 | % | |||||||||
Global Communications C## | 10/31/00 | -46.77 | % | 0.65 | % | -7.22 | % | |||||||||
Global Communications Y# | 10/31/00 | -45.64 | % | 1.85 | % | -6.11 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | Inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Archana Basi, CFA
Senior Vice President, Partner
2
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We continue to favor stocks in emerging markets given the favorable relative growth outlook in many of these countries, despite slowing global economic growth and signs of some weakening in emerging economies.
The Board of Directors has called for a Special Meeting of Shareholders of each Acquired Fund (the “Meeting”) to be held on or about August 4, 2009, for the purpose of seeking the approval of an Agreement and Plan of Reorganization (“Reorganization Agreement”) by the shareholders of the respective Acquired Fund.
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Alternative Carriers | 2.9 | % | ||
Cable & Satellite | 2.1 | |||
Integrated Telecommunication Services | 48.8 | |||
Internet Software & Services | 6.3 | |||
Wireless Telecommunication Services | 38.3 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Brazil | 11.8 | % | ||
France | 7.2 | |||
Germany | 5.4 | |||
India | 4.8 | |||
Indonesia | 4.5 | |||
Israel | 6.1 | |||
Italy | 4.0 | |||
Luxembourg | 6.9 | |||
Netherlands | 1.4 | |||
Russia | 5.6 | |||
South Africa | 6.5 | |||
Spain | 8.5 | |||
Turkey | 2.1 | |||
United States | 23.6 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
3
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April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 89.0% | ||||||||||||
Brazil — 7.2% | ||||||||||||
43 | Brasil Telecom S.A. ADR | $ | 804 | |||||||||
29 | Tele Norte Leste Participacoes S.A. ADR | 454 | ||||||||||
1,258 | ||||||||||||
France — 7.2% | ||||||||||||
56 | France Telecom S.A. | 1,253 | ||||||||||
Germany — 5.4% | ||||||||||||
78 | Deutsche Telekom AG | 941 | ||||||||||
Indonesia — 4.5% | ||||||||||||
27 | P.T. Telekomunikasi Indonesia ADR | 779 | ||||||||||
Israel — 6.1% | ||||||||||||
14 | Cellcom Israel Ltd. | 309 | ||||||||||
46 | Partner Communications Co., Ltd. ADR | 749 | ||||||||||
1,058 | ||||||||||||
Italy — 4.0% | ||||||||||||
767 | Telecom Italia S.p.A. | 686 | ||||||||||
Luxembourg — 6.9% | ||||||||||||
25 | Millicom International Cellular S.A. | 1,197 | ||||||||||
Netherlands — 1.4% | ||||||||||||
20 | Koninklijke (Royal) KPN N.V. | 245 | ||||||||||
Russia — 5.6% | ||||||||||||
20 | Mobile Telesystems OJSC ADR | 665 | ||||||||||
33 | Vimpel-Communications ADR | 308 | ||||||||||
973 | ||||||||||||
South Africa — 6.5% | ||||||||||||
86 | MTN Group Ltd. | 1,120 | ||||||||||
Spain — 8.5% | ||||||||||||
26 | Telefonica S.A. ADR | 1,472 | ||||||||||
Turkey — 2.1% | ||||||||||||
29 | Turkcell Iletisim Hizmetleri AS ADR | 365 | ||||||||||
United States — 23.6% | ||||||||||||
19 | American Tower Corp. Class A • | 592 | ||||||||||
12 | CenturyTel, Inc. | 334 | ||||||||||
12 | Comcast Corp. Special Class A | 175 | ||||||||||
16 | Equinix, Inc. • | 1,092 | ||||||||||
50 | NII Holdings, Inc. Class B • | 815 | ||||||||||
103 | Qwest Communications International, Inc. | 401 | ||||||||||
6 | Time Warner Cable, Inc. | 185 | ||||||||||
54 | TW Telecom, Inc. • | 496 | ||||||||||
4,090 | ||||||||||||
Total common stocks (cost $23,076) | $ | 15,437 | ||||||||||
PREFERRED STOCKS — 4.6% | ||||||||||||
Brazil — 4.6% | ||||||||||||
32 | Telemar Norte Leste S.A. | $ | 796 | |||||||||
Total preferred stocks (cost $907) | $ | 796 | ||||||||||
WARRANTS-4.8% | ||||||||||||
India 4.8% | ||||||||||||
56 | Citigroup Global Certificate — Bharti Televentures ⌂• | $ | 843 | |||||||||
Total warrants (cost $641) | $ | 843 | ||||||||||
Total long-term investments (cost $24,624) | $ | 17,076 | ||||||||||
SHORT-TERM INVESTMENTS — 0.8% | ||||||||||||
Repurchase Agreements — 0.8% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $35, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $35) | ||||||||||||
$ | 35 | 0.18%, 04/30/2009 | $ | 35 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $41, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $42) | ||||||||||||
41 | 0.17%, 04/30/2009 | 41 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $58, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $59) | ||||||||||||
58 | 0.17%, 04/30/2009 | 58 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $-, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $-) | ||||||||||||
— | 0.14%, 04/30/2009 | — | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $12, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $13) | ||||||||||||
12 | 0.16%, 04/30/2009 | 12 | ||||||||||
146 | ||||||||||||
Total short-term investments (cost $146) | $ | 146 | ||||||||||
Total investments (cost $24,770)▲ | 99.2 | % | $ | 17,222 | ||||||||
Other assets and liabilities | 0.8 | % | 131 | |||||||||
Total net assets | 100.0 | % | $ | 17,353 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 74.84% of total net assets at April 30, 2009. |
4
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Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $24,850 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 352 | ||
Unrealized Depreciation | (7,980 | ) | ||
Net Unrealized Depreciation | $ | (7,628 | ) | |
• | Currently non-income producing. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
08/2005 - 01/2008 | 56 | Citigroup Global Certificate Bharti Televentures - 144A Warrants | $ | 641 | ||||||||
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Euro (Sell) | $ | 169 | $ | 170 | 05/05/09 | $ | 1 | |||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Alternative Carriers | 2.9 | % | ||
Cable & Satellite | 2.1 | |||
Integrated Telecommunication Services | 48.8 | |||
Internet Software & Services | 6.3 | |||
Wireless Telecommunication Services | 38.3 | |||
Short-Term Investments | 0.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 13,772 | ||
Investment in securities — Level 2 | 3,450 | |||
Total | $ | 17,222 | ||
Other financial instruments — Level 2 * | 1 | |||
Total | $ | 1 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $24,770) | $ | 17,222 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost $–) | — | |||
Unrealized appreciation on forward foreign currency contracts | 1 | |||
Receivables: | ||||
Investment securities sold | 254 | |||
Fund shares sold | 32 | |||
Dividends and interest | 106 | |||
Other assets | 62 | |||
Total assets | 17,678 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | — | |||
Payables: | ||||
Investment securities purchased | 258 | |||
Fund shares redeemed | 38 | |||
Investment management fees | 3 | |||
Distribution fees | 1 | |||
Accrued expenses | 25 | |||
Total liabilities | 325 | |||
Net assets | $ | 17,353 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 31,635 | |||
Accumulated undistributed net investment income | 129 | |||
Accumulated net realized loss on investments and foreign currency transactions | (6,864 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (7,547 | ) | ||
Net assets | $ | 17,353 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 4.89/$5.17 | ||
Shares outstanding | 2,357 | |||
Net assets | $ | 11,525 | ||
Class B: Net asset value per share | $ | 4.70 | ||
Shares outstanding | 498 | |||
Net assets | $ | 2,343 | ||
Class C: Net asset value per share | $ | 4.72 | ||
Shares outstanding | 651 | |||
Net assets | $ | 3,074 | ||
Class Y: Net asset value per share | $ | 4.97 | ||
Shares outstanding | 83 | |||
Net assets | $ | 411 | ||
6
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 345 | ||
Interest | — | |||
Securities lending | 2 | |||
Less: Foreign tax withheld | (42 | ) | ||
Total investment income | 305 | |||
Expenses: | ||||
Investment management fees | 81 | |||
Transfer agent fees | 55 | |||
Distribution fees | ||||
Class A | 15 | |||
Class B | 12 | |||
Class C | 17 | |||
Custodian fees | 5 | |||
Accounting services | 1 | |||
Registration and filing fees | 21 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 4 | |||
Other expenses | 11 | |||
Total expenses (before waivers and fees paid indirectly) | 223 | |||
Expense waivers | (56 | ) | ||
Transfer agent fee waivers | (28 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (85 | ) | ||
Total expenses, net | 138 | |||
Net investment income | 167 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (3,832 | ) | ||
Net realized loss on foreign currency transactions | (8 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (3,840 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 2,379 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 10 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 2,389 | |||
Net Loss on Investments and Foreign Currency Transactions | (1,451 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (1,284 | ) | |
7
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 167 | $ | 1,059 | ||||
Net realized loss on investments and foreign currency transactions | (3,840 | ) | (2,455 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 2,389 | (22,152 | ) | |||||
Net decrease in net assets resulting from operations | (1,284 | ) | (23,548 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (674 | ) | (31 | ) | ||||
Class B | (123 | ) | — | |||||
Class C | (151 | ) | — | |||||
Class Y | (26 | ) | (9 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (1,352 | ) | |||||
Class B | — | (282 | ) | |||||
Class C | — | (502 | ) | |||||
Class Y | — | (43 | ) | |||||
Total distributions | (974 | ) | (2,219 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (1,584 | ) | 1,151 | |||||
Class B | (286 | ) | 6 | |||||
Class C | (745 | ) | (1,389 | ) | ||||
Class Y | 6 | 83 | ||||||
Net decrease from capital share transactions | (2,609 | ) | (149 | ) | ||||
Net decrease in net assets | (4,867 | ) | (25,916 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 22,220 | 48,136 | ||||||
End of period | $ | 17,353 | $ | 22,220 | ||||
Accumulated undistributed net investment income | $ | 129 | $ | 936 | ||||
8
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Communications Fund (the “Fund”), a series of the Company, are included in this report. The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. |
10
Table of Contents
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
12
Table of Contents
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 40 | $ | 391 | ||||
Long-Term Capital Gains * | 2,179 | 153 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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April 30, 2009 (Unaudited)
(000’s Omitted)
Amount | ||||
Undistributed Ordinary Income | $ | 933 | ||
Accumulated Capital Losses* | $ | (2,944 | ) | |
Unrealized Depreciation† | $ | (10,013 | ) | |
Total Accumulated Deficit | $ | (12,024 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $80 and increase accumulated net realized gain by $80. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 2,944 | ||
Total | $ | 2,944 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. |
14
Table of Contents
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.60% | 2.35 | % | 2.35 | % | 1.20 | % |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.30 | % | 1.60 | % | 1.60 | % | 1.11 | % | 1.49 | % | 1.63 | % | ||||||||||||
Class B Shares | 1.90 | 2.24 | 2.30 | 1.73 | 2.24 | 2.33 | ||||||||||||||||||
Class C Shares | 2.11 | 2.35 | 2.34 | 1.85 | 2.23 | 2.33 | ||||||||||||||||||
Class Y Shares | 1.20 | 1.11 | 1.11 | 0.70 | 1.04 | 1.17 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $11 and contingent deferred sales charges of $5 from the Fund. |
15
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $1. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $39 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.02 | % | 39.00 | % | ||||
Class B | 0.02 | 37.99 | ||||||
Class C | 0.02 | 37.94 | ||||||
Class Y | 0.02 | 39.55 |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 2,836 | ||
Sales Proceeds Excluding U.S. Government Obligations | 6,074 |
16
Table of Contents
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 208 | 120 | (674 | ) | — | (346 | ) | 1,270 | 113 | (1,406 | ) | — | (23 | ) | ||||||||||||||||||||||||||
Amount | $ | 986 | $ | 582 | $ | (3,152 | ) | $ | — | $ | (1,584 | ) | $ | 11,947 | $ | 1,149 | $ | (11,945 | ) | $ | — | $ | 1,151 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 16 | 20 | (104 | ) | — | (68 | ) | 155 | 21 | (191 | ) | — | (15 | ) | ||||||||||||||||||||||||||
Amount | $ | 73 | $ | 95 | $ | (454 | ) | $ | — | $ | (286 | ) | $ | 1,385 | $ | 210 | $ | (1,589 | ) | $ | — | $ | 6 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 58 | 22 | (258 | ) | — | (178 | ) | 269 | 33 | (513 | ) | — | (211 | ) | ||||||||||||||||||||||||||
Amount | $ | 279 | $ | 105 | $ | (1,129 | ) | $ | — | $ | (745 | ) | $ | 2,451 | $ | 323 | $ | (4,163 | ) | $ | — | $ | (1,389 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 12 | 5 | (17 | ) | — | — | 107 | 5 | (119 | ) | — | (7 | ) | |||||||||||||||||||||||||||
Amount | $ | 56 | $ | 26 | $ | (76 | ) | $ | — | $ | 6 | $ | 1,142 | $ | 51 | $ | (1,110 | ) | $ | — | $ | 83 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 15 | $ | 69 | |||||
For the Year Ended October 31, 2008 | 6 | $ | 53 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Proposed Reorganization: | |
At a meeting held on February 4, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved the reorganizations (each, a “Reorganization”) of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund (each, an “Acquired Fund”) with and into The Hartford Global Equity Fund (the “Acquiring Fund”). | ||
In connection with the mergers, effective as of the close of business on or about April 30, 2009, all shares of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund will no longer be sold to new investors or existing shareholders (except through reinvested dividends) or be eligible for exchanges from other Hartford Mutual Funds. | ||
The Board of Directors has called for a Special Meeting of Shareholders of each Acquired Fund (the “Meeting”) to be held on or about August 4, 2009, for the purpose of seeking the approval of an Agreement and Plan of Reorganization (“Reorganization Agreement”) with respect to each Acquired Fund. If approved, each Reorganization is expected to occur on or about August 28, 2009. |
17
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
If each Reorganization Agreement is approved by the shareholders of the respective Acquired Fund, the Reorganization Agreement contemplates: (1) the transfer of all of the assets of the Acquired Fund with and into the Acquiring Fund in exchange for shares of the Acquiring Fund having equal net asset value of the Acquired Fund; (2) the assumption by the Acquiring Fund of all of the liabilities of each Acquired Fund; and (3) the distribution of shares of the Acquiring Fund to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund. Each shareholder of an Acquired Fund would receive shares of the Acquiring Fund equal in value to the shares of the Acquired Fund held by that shareholder as of the closing date of the respective Reorganization. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
18
Table of Contents
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 5.39 | $ | 0.07 | $ | — | $ | (0.30 | ) | $ | (0.23 | ) | $ | (0.27 | ) | $ | — | $ | — | $ | (0.27 | ) | $ | (0.50 | ) | $ | 4.89 | (4.21) | %(e) | $ | 11,525 | 2.23 | %(f) | 1.30 | %(f) | 1.30 | %(f) | 2.09 | %(f) | 16 | % | |||||||||||||||||||||||||||||||
B | 5.16 | 0.04 | — | (0.28 | ) | (0.24 | ) | (0.22 | ) | — | — | (0.22 | ) | (0.46 | ) | 4.70 | (4.56 | ) (e) | 2,343 | 3.13 | (f) | 1.91 | (f) | 1.91 | (f) | 1.48 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 5.15 | 0.04 | — | (0.28 | ) | (0.24 | ) | (0.19 | ) | — | — | (0.19 | ) | (0.43 | ) | 4.72 | (4.62 | ) (e) | 3,074 | 2.93 | (f) | 2.11 | (f) | 2.11 | (f) | 1.26 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 5.52 | 0.06 | — | (0.29 | ) | (0.23 | ) | (0.32 | ) | — | — | (0.32 | ) | (0.55 | ) | 4.97 | (4.17 | ) (e) | 411 | 1.37 | (f) | 1.20 | (f) | 1.20 | (f) | 2.12 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.99 | 0.28 | — | (5.39 | ) | (5.11 | ) | (0.01 | ) | (0.48 | ) | — | (0.49 | ) | (5.60 | ) | 5.39 | (48.60 | ) | 14,567 | 1 .66 | 1.60 | 1.60 | 2.75 | 66 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 10.61 | 0.20 | — | (5.17 | ) | (4.97 | ) | — | (0.48 | ) | — | (0.48 | ) | (5.45 | ) | 5.16 | (49.00 | ) | 2,920 | 2.53 | 2.24 | 2.24 | 2.10 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.59 | 0.21 | — | (5.17 | ) | (4.96 | ) | — | (0.48 | ) | — | (0.48 | ) | (5.44 | ) | 5.15 | (49.00 | ) | 4,274 | 2.37 | 2.35 | 2.35 | 1.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.23 | 0.27 | — | (5.45 | ) | (5.18 | ) | (0.05 | ) | (0.48 | ) | — | (0.53 | ) | (5.71 | ) | 5.52 | (48.34 | ) | 459 | 1.11 | 1.11 | 1.11 | 2.79 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 8.05 | 0.02 | — | 3.07 | 3.09 | (0.13 | ) | (0.02 | ) | — | (0.15 | ) | 2.94 | 10.99 | 39.03 | (g) | 29,950 | 1.61 | 1.60 | 1.60 | 0.30 | 102 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 7.81 | (0.04 | ) | — | 2.97 | 2.93 | (0.11 | ) | (0.02 | ) | — | (0.13 | ) | 2.80 | 10.61 | 38.02 | (g) | 6,161 | 2.49 | 2.30 | 2.30 | (0.40 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.80 | (0.01 | ) | — | 2.93 | 2.92 | (0.11 | ) | (0.02 | ) | — | (0.13 | ) | 2.79 | 10.59 | 37.97 | (g) | 11,019 | 2.34 | 2.34 | 2.34 | (0.47 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 8.23 | 0.10 | — | 3.10 | 3.20 | (0.18 | ) | (0.02 | ) | — | (0.20 | ) | 3.00 | 11.23 | 39.58 | (g) | 1,006 | 1.11 | 1.11 | 1.11 | 0.88 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.12 | 0.15 | — | 0.88 | 1.03 | (0.10 | ) | — | — | (0.10 | ) | 0.93 | 8.05 | 14.60 | 17,091 | 1.89 | 1.15 | 1.15 | 1.83 | 104 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 6.92 | 0.09 | — | 0.87 | 0.96 | (0.07 | ) | — | — | (0.07 | ) | 0.89 | 7.81 | 13.93 | 4,124 | 2.87 | 1.78 | 1.78 | 1.18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 6.91 | 0.06 | — | 0.88 | 0.94 | (0.05 | ) | — | — | (0.05 | ) | 0.89 | 7.80 | 13.74 | 5,321 | 2.74 | 1.90 | 1.90 | 1.01 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.27 | 0.17 | — | 0.92 | 1.09 | (0.13 | ) | — | — | (0.13 | ) | 0.96 | 8.23 | 15.14 | 992 | 1.41 | 0.75 | 0.75 | 2.09 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 5.48 | 0.09 | — | 1.60 | 1.69 | (0.05 | ) | — | — | (0.05 | ) | 1.64 | 7.12 | 31.01 | 15,986 | 2.01 | 1.51 | 1.51 | 1.75 | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 5.34 | 0.05 | — | 1.55 | 1.60 | (0.02 | ) | — | — | (0.02 | ) | 1.58 | 6.92 | 29.92 | 2,815 | 3.22 | 2.26 | 2.26 | 1.02 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 5.33 | 0.05 | — | 1.55 | 1.60 | (0.02 | ) | — | — | (0.02 | ) | 1.58 | 6.91 | 29.97 | 2,765 | 2.94 | 2.25 | 2.25 | 1.08 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 5.60 | 0.02 | — | 1.73 | 1.75 | (0.08 | ) | — | — | (0.08 | ) | 1.67 | 7.27 | 31.36 | 638 | 1.36 | 1.06 | 1.06 | 2.10 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 4.67 | 0.06 | — | 0.75 | 0.81 | — | — | — | — | 0.81 | 5.48 | 17.34 | 8,929 | 1.93 | 1.65 | 1.65 | 1.08 | 85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 4.58 | 0.02 | — | 0.74 | 0.76 | — | — | — | — | 0.76 | 5.34 | 16.59 | 1,482 | 3.32 | 2.35 | 2.35 | 0.37 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 4.57 | 0.02 | — | 0.74 | 0.76 | — | — | — | — | 0.76 | 5.33 | 16.63 | 1,306 | 2.97 | 2.35 | 2.35 | 0.43 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 4.74 | 0.09 | — | 0.77 | 0.86 | — | — | — | — | 0.86 | 5.60 | 18.14 | 170 | 1.30 | 1.20 | 1.20 | 1.69 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(h) | Per share amounts have been calculated using average shares outstanding method. |
19
Table of Contents
Directors and officers who are employed by or who have a financial interest in The Hartford are considered “interested” persons of the Fund pursuant to the Investment Company Act of 1940, as amended. Each officer and three of the Fund’s directors, as noted in the chart below, are “interested” persons of the Fund. Each director serves as a director for 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., which collectively consist of 100 funds. Correspondence may be sent to directors and officers c/o Hartford Mutual Funds, P.O. Box 2999, Hartford, Connecticut 06104-2999, except that correspondence to Ms. Fagely may be sent to 500 Bielenberg Drive, Woodbury, Minnesota 55125.
The table below sets forth, for each director and officer, his or her name, year of birth, current position with the Fund and date first elected or appointed to The Hartford Mutual Funds, Inc. (“MF”) and The Hartford Mutual Funds II, Inc. (“MF2”), principal occupation, and, for directors, other directorships held. The Fund’s statement of additional information contains further information on the directors and is available free of charge by calling 1-888-843-7824 or writing to Hartford Mutual Funds, P.O. Box 64387, St. Paul, MN 55164-0387.
Information on the aggregate remuneration paid to the directors of the Fund can be found in the Statement of Operations herein. The Fund pays a portion of the Chief Compliance Officer’s compensation, but does not pay salaries or compensation to any of its officers or directors who are employed by The Hartford.
Mr. Birdsong is a private investor. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm. Since 2003, Mr. Birdsong has been an independent director of The Japan Fund. From 2003 to March 2005, Mr. Birdsong was an independent director of the Atlantic Whitehall Funds. From 1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder Investments, an investment management firm. During his employment with Scudder, Mr. Birdsong was an interested director of The Japan Fund.
20
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to January 2002, as President and Chief Executive Officer of Hartford Life, Inc. from February 1997 to January 2002, and as President and Chief Operating Officer of The Hartford Life Insurance Companies from January 1989 to January 2002. Mr. Smith serves as a Director of White Mountains Insurance Group, Ltd., One Beacon Insurance, Symetra Financial and as a Managing Director of Whittington Gray Associates.
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
21
Table of Contents
22
Table of Contents
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and CDSC. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would be higher. Expenses are equal to the Fund’s annualized expense ratios multiplied by average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 957.88 | $ | 6.31 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 954.43 | $ | 9.25 | $ | 1,000.00 | $ | 1,015.32 | $ | 9.54 | 1.91 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 953.78 | $ | 10.22 | $ | 1,000.00 | $ | 1,014.33 | $ | 10.53 | 2.11 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 958.27 | $ | 5.82 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.00 | 1.20 | 181 | 365 |
23
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Global Enhanced Dvd A# | 11/28/07 | -39.81 | % | -32.22 | % | |||||||
Global Enhanced Dvd A## | 11/28/07 | -43.12 | % | -34.87 | % | |||||||
Global Enhanced Dvd B# | 11/28/07 | -40.19 | % | -32.66 | % | |||||||
Global Enhanced Dvd B## | 11/28/07 | -42.97 | % | -34.41 | % | |||||||
Global Enhanced Dvd C# | 11/28/07 | -40.19 | % | -32.66 | % | |||||||
Global Enhanced Dvd C## | 11/28/07 | -40.75 | % | -32.66 | % | |||||||
Global Enhanced Dvd I# | 11/28/07 | -39.54 | % | -31.97 | % | |||||||
Global Enhanced Dvd R3# | 11/28/07 | -40.02 | % | -32.49 | % | |||||||
Global Enhanced Dvd R4# | 11/28/07 | -39.90 | % | -32.31 | % | |||||||
Global Enhanced Dvd R5# | 11/28/07 | -39.72 | % | -32.13 | % | |||||||
Global Enhanced Dvd Y# | 11/28/07 | -39.54 | % | -31.97 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Paul Bukowski
Vice President
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 2.7 | % | ||
Banks | 10.3 | |||
Basic Materials | 0.6 | |||
Capital Goods | 10.8 | |||
Commercial & Professional Services | 2.5 | |||
Consumer Durables & Apparel | 3.7 | |||
Consumer Services | 3.0 | |||
Diversified Financials | 5.5 | |||
Energy | 21.6 | |||
Food & Staples Retailing | 1.2 | |||
Food, Beverage & Tobacco | 6.5 | |||
Health Care Equipment & Services | 1.5 | |||
Household & Personal Products | 0.9 | |||
Insurance | 6.9 | |||
Materials | 5.8 | |||
Media | 1.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 10.0 | |||
Real Estate | 4.6 | |||
Retailing | 2.1 | |||
Semiconductors & Semiconductor Equipment | 2.3 | |||
Software & Services | 3.4 | |||
Technology Hardware & Equipment | 7.2 | |||
Telecommunication Services | 11.6 | |||
Transportation | 1.8 | |||
Utilities | 10.4 | |||
Short-Term Investments | 2.4 | |||
Total Long Positions | 141.2 | |||
Short Positions | (40.8 | ) | ||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.1 | % | ||
Banks | 0.4 | |||
Capital Goods | 3.2 | |||
Commercial & Professional Services | 1.3 | |||
Consumer Durables & Apparel | 1.3 | |||
Consumer Services | 1.7 | |||
Consumer Staples | 0.2 | |||
Diversified Financials | 0.4 | |||
Energy | 5.1 | |||
Food & Staples Retailing | 0.5 | |||
Food, Beverage & Tobacco | 1.9 | |||
Health Care Equipment & Services | 0.6 | |||
Insurance | 0.2 | |||
Materials | 2.0 | |||
Media | 1.1 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 2.5 | |||
Real Estate | 1.0 | |||
Retailing | 1.0 | |||
Semiconductors & Semiconductor Equipment | 1.7 | |||
Software & Services | 3.0 | |||
Technology Hardware & Equipment | 3.9 | |||
Telecommunication Services | 3.4 | |||
Transportation | 0.6 | |||
Utilities | 3.7 | |||
Total | 40.8 | % | ||
3
Table of Contents
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.0 | % | ||
Brazil | 0.3 | |||
Canada | 5.8 | |||
Chile | 1.1 | |||
China | 1.2 | |||
Finland | 1.1 | |||
France | 6.0 | |||
Germany | 3.1 | |||
Greece | 0.2 | |||
Hong Kong | 0.9 | |||
India | 0.6 | |||
Italy | 1.5 | |||
Japan | 11.0 | |||
Luxembourg | 0.5 | |||
Mexico | 0.5 | |||
Netherlands | 1.2 | |||
New Zealand | 0.2 | |||
Norway | 0.5 | |||
Philippines | 0.4 | |||
Portugal | 0.2 | |||
South Africa | 0.6 | |||
South Korea | 0.6 | |||
Spain | 1.3 | |||
Sweden | 1.7 | |||
Switzerland | 1.6 | |||
United Kingdom | 10.0 | |||
United States | 85.7 | |||
Short-Term Investments | 2.4 | |||
Total Long Positions | 141.2 | |||
Short Positions | (40.8 | ) | ||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Canada | 1.5 | % | ||
China | 0.6 | |||
India | 0.5 | |||
Ireland | 0.5 | |||
Japan | 0.1 | |||
Mexico | 0.5 | |||
United States | 37.1 | |||
Total | 40.8 | % | ||
4
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
LONG POSITIONS — 138.8% | ||||||||
COMMON STOCKS — 138.8% | ||||||||
Automobiles & Components — 2.7% | ||||||||
2 | Honda Motor Co., Ltd. ADR ‡ | $ | 61 | |||||
4 | Nissan Motor Co., Ltd. ADR ‡ | 43 | ||||||
1 | Toyota Motor Corp ADR ‡ | 51 | ||||||
155 | ||||||||
Banks — 10.3% | ||||||||
1 | Ameris Bancorp ‡ | 4 | ||||||
5 | Banco Bilboa Vizcaya — SP ADR ‡ | 51 | ||||||
— | Banco de Chile ADR ‡ | 17 | ||||||
— | Banco Santander Chili S.A. ADR ‡ | 17 | ||||||
— | Bank of Hawaii Corp. ‡ | 12 | ||||||
1 | Bank of Montreal ‡ | 31 | ||||||
1 | BB&T Corp. ‡ | 13 | ||||||
1 | Canadian Imperial Bank of Commerce ‡ | 25 | ||||||
— | Cullen/Frost Bankers, Inc. ‡ | 5 | ||||||
1 | First Niagara Financial Group, Inc. ‡ | 11 | ||||||
— | FirstMerit Corp. ‡ | 9 | ||||||
— | Hancock Holding Co. ‡ | 7 | ||||||
1 | Hudson City Bancorp, Inc. | 8 | ||||||
— | Iberiabank Corp. ‡ | 5 | ||||||
33 | Mitsubishi UFJ Financial Group, Inc. ADR ‡ | 177 | ||||||
5 | Mizuho Financial Group, Inc. ADR ‡ | 21 | ||||||
2 | National Bank of Greece S.A. ADR ‡ | 9 | ||||||
1 | Royal Bank of Canada ‡ | 47 | ||||||
1 | Sterling Bancshares, Inc. ‡ | 5 | ||||||
— | SunTrust Banks, Inc. ‡ | 3 | ||||||
1 | Toronto-Dominion Bank ADR ‡ | 53 | ||||||
— | Trustmark Corp. ‡ | 6 | ||||||
— | US Bancorp | 2 | ||||||
1 | Westpac Banking Corp. ADR ‡ | 57 | ||||||
595 | ||||||||
Basic Materials — 0.6% | ||||||||
2 | RPM International, Inc. ‡ | 33 | ||||||
Capital Goods — 10.8% | ||||||||
1 | 3M Co. ‡ | 30 | ||||||
4 | Aircastle Ltd. ‡ | 24 | ||||||
1 | Boeing Co. ‡ | 38 | ||||||
— | Caterpillar, Inc. ‡ | 6 | ||||||
— | Crane Co. ‡ | 8 | ||||||
1 | Eaton Corp. | 29 | ||||||
1 | Emerson Electric Co. ‡ | 51 | ||||||
— | Empresa Brasileira de Aeronautica S.A. ADR ‡ | 7 | ||||||
2 | General Electric Co. ‡ | 23 | ||||||
— | Honeywell International, Inc. ‡ | 14 | ||||||
1 | Hubbell, Inc. Class B ‡ | 20 | ||||||
— | Illinois Tool Works, Inc. | 5 | ||||||
1 | Ingersoll-Rand Co. Class A ‡ | 20 | ||||||
3 | Insteel Industries, Inc. ‡ | 20 | ||||||
6 | Masco Corp. ‡ | 52 | ||||||
— | Northrop Grumman Corp. ‡ | 18 | ||||||
3 | Oshkosh Corp. ‡ | 27 | ||||||
3 | PACCAR, Inc. ‡ | 100 | ||||||
1 | Rockwell Automation, Inc. ‡ | 35 | ||||||
— | Siemens AG ADR ‡ | 18 | ||||||
1 | Textron, Inc. ‡ | 16 | ||||||
7 | Tomkins plc ADR ‡ | 66 | ||||||
627 | ||||||||
Commercial & Professional Services — 2.5% | ||||||||
1 | Avery Dennison Corp. ‡ | 25 | ||||||
1 | Corporate Executive Board Co. ‡ | 21 | ||||||
2 | Pitney Bowes, Inc. ‡ | 40 | ||||||
2 | R.R. Donnelley & Sons Co. ‡ | 21 | ||||||
2 | Steelcase, Inc. ‡ | 9 | ||||||
1 | Waste Management, Inc. ‡ | 28 | ||||||
144 | ||||||||
Consumer Durables & Apparel — 3.7% | ||||||||
5 | Eastman Kodak Co. ‡ | 15 | ||||||
4 | Jones Apparel Group, Inc. ‡ | 36 | ||||||
3 | Lennar Corp. ‡ | 25 | ||||||
2 | Mattel, Inc. ‡ | 26 | ||||||
— | National Presto Industries, Inc. ‡ | 6 | ||||||
2 | Panasonic Corp. ‡ | 24 | ||||||
— | Polaris Industries, Inc. ‡ | 8 | ||||||
1 | Sony Corp. ADR ‡ | 33 | ||||||
— | Stanley Works ‡ | 14 | ||||||
— | V.F. Corp. ‡ | 19 | ||||||
206 | ||||||||
Consumer Services — 3.0% | ||||||||
2 | International Game Technology ‡ | 25 | ||||||
2 | McDonald’s Corp. ‡ | 129 | ||||||
1 | Starwood Hotels & Resorts ‡ | 18 | ||||||
172 | ||||||||
Diversified Financials — 5.5% | ||||||||
— | Ameriprise Financial, Inc. ‡ | 12 | ||||||
2 | Bank of America Corp. ‡ | 21 | ||||||
1 | Bank of New York Mellon Corp. ‡ | 15 | ||||||
— | BlackRock, Inc. ‡ | 13 | ||||||
3 | Compass Diversified Holdings ‡ | 29 | ||||||
— | Eaton Vance Corp. ‡ | 13 | ||||||
— | Franklin Resources, Inc. ‡ | 6 | ||||||
2 | Morgan Stanley ‡ | 43 | ||||||
2 | NYSE Euronext ‡ | 53 | ||||||
2 | Orix Corp. ADR ‡ | 51 | ||||||
1 | Prospect Capital Corp. ‡ | 5 | ||||||
2 | SEI Investments Co. ‡ | 22 | ||||||
1 | Waddell and Reed Financial, Inc. Class A ‡ | 31 | ||||||
314 | ||||||||
Energy — 21.6% | ||||||||
4 | BP plc ADR ‡ | 184 | ||||||
1 | Chevron Corp. ‡ | 66 | ||||||
— | CNOOC Ltd. ADR ‡ | 47 | ||||||
1 | ConocoPhillips Holding Co. ‡ | 23 | ||||||
3 | DHT Maritime, Inc. ‡ | 14 | ||||||
1 | Diamond Offshore Drilling, Inc. ‡ | 64 | ||||||
— | EnCana Corp. ADR ‡ | 16 | ||||||
1 | Enerplus Resources Fund ‡ | 14 | ||||||
1 | Eni S.p.A. ADR | 32 | ||||||
1 | Exxon Mobil Corp. ‡ | 73 | ||||||
— | Frontline Ltd. ‡ | 6 | ||||||
3 | General Maritime Corp. ‡ | 32 | ||||||
— | Knightsbridge Tankers Ltd. ADR ‡ | 5 | ||||||
2 | Marathon Oil Corp. | 57 | ||||||
1 | Patterson-UTI Energy, Inc. ‡ | 14 | ||||||
4 | Pengrowth Energy Trust ‡ | 30 | ||||||
— | PetroChina Co. Ltd. ADR ‡ | 30 | ||||||
6 | Precision Drilling Trust ‡ | 26 | ||||||
1 | Repsol-YPF S.A. ADR ‡ | 23 | �� |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
LONG POSITIONS — 138.8% — (continued) | ||||||||
COMMON STOCKS — 138.8% — (continued) | ||||||||
Energy — 21.6% — (continued) | ||||||||
2 | Royal Dutch Shell plc ADR ‡ | $ | 107 | |||||
1 | Sasol Ltd. ADR ‡ | 32 | ||||||
4 | Ship Finance International, Ltd. ‡ | 36 | ||||||
2 | Spectra Energy Corp. ‡ | 30 | ||||||
1 | StatoilHydro ASA-ADR ‡ | 25 | ||||||
2 | Sunoco, Inc. | 55 | ||||||
4 | Total S.A. ADR ‡ | 192 | ||||||
3 | Vaalco Energy, Inc. •‡ | 14 | ||||||
1,247 | ||||||||
Food & Staples Retailing — 1.2% | ||||||||
2 | Supervalu, Inc. ‡ | 40 | ||||||
1 | Sysco Corp. ‡ | 30 | ||||||
70 | ||||||||
Food, Beverage & Tobacco — 6.5% | ||||||||
1 | Coca-Cola Co. ‡ | 43 | ||||||
— | Companhia de Bebidas das Americas ADR ‡ | 15 | ||||||
1 | H.J. Heinz Co. ‡ | 24 | ||||||
2 | Kraft Foods, Inc. ‡ | 46 | ||||||
1 | Lorillard, Inc. | 39 | ||||||
— | PepsiCo, Inc. ‡ | 14 | ||||||
2 | Philip Morris International, Inc. ‡ | 65 | ||||||
2 | Reynolds American, Inc. ‡ | 63 | ||||||
3 | Unilever N.V. NY Shares ADR ‡ | 68 | ||||||
377 | ||||||||
Health Care Equipment & Services — 1.5% | ||||||||
5 | Brookdale Senior Living, Inc. ‡ | 52 | ||||||
1 | Computer Programs and Systems, Inc. ‡ | 19 | ||||||
— | Fresenius Medical Care AG ADR | 10 | ||||||
— | Landauer, Inc. ‡ | 6 | ||||||
87 | ||||||||
Household & Personal Products — 0.9% | ||||||||
— | Clorox Co. ‡ | 15 | ||||||
1 | Kimberly-Clark Corp. ‡ | 39 | ||||||
54 | ||||||||
Insurance — 6.9% | ||||||||
— | Aflac, Inc. ‡ | 10 | ||||||
11 | Allianz SE ADR ‡ | 96 | ||||||
2 | Allstate Corp. ‡ | 35 | ||||||
1 | Arthur J. Gallagher & Co. ‡ | 27 | ||||||
3 | Axa ADR ‡ | 46 | ||||||
— | Axis Capital Holdings Ltd. ‡ | 8 | ||||||
1 | Brown & Brown, Inc. ‡ | 17 | ||||||
1 | Chubb Corp. | 27 | ||||||
1 | Cincinnati Financial Corp. ‡ | 19 | ||||||
— | Harleysville Group, Inc. ‡ | 6 | ||||||
2 | Old Republic International Corp. ‡ | 15 | ||||||
3 | Prudential Financial, Inc. ‡ | 33 | ||||||
1 | Sun Life Financial ‡ | 23 | ||||||
— | Travelers Cos., Inc. ‡ | 12 | ||||||
1 | Unitrin, Inc. ‡ | 23 | ||||||
397 | ||||||||
Materials — 5.8% | ||||||||
1 | ArcelorMittal ADR ‡ | 29 | ||||||
1 | Cemex S.A. de C.V. ADR •‡ | 7 | ||||||
1 | Compass Minerals Group, Inc. | 33 | ||||||
5 | Dow Chemical Co. ‡ | 79 | ||||||
1 | E.I. DuPont de Nemours & Co. ‡ | 24 | ||||||
— | Lubrizol Corp. ‡ | 20 | ||||||
1 | MeadWestvaco Corp. ‡ | 14 | ||||||
— | Nucor Corp. ‡ | 18 | ||||||
1 | Olin Corp. ‡ | 15 | ||||||
2 | Southern Copper Corp. ‡ | 37 | ||||||
1 | Syngenta AG ADR ‡ | 28 | ||||||
— | Weyerhaeuser Co. ‡ | 11 | ||||||
1 | Worthington Industries, Inc. ‡ | 21 | ||||||
336 | ||||||||
Media — 1.9% | ||||||||
1 | A.H. Belo Corp. Class A ‡ | 3 | ||||||
6 | CBS Corp. Class B ‡ | 41 | ||||||
1 | McGraw-Hill Cos., Inc. | 17 | ||||||
— | Meredith Corp. ‡ | 9 | ||||||
1 | Sham Communications, Inc. ‡ | 21 | ||||||
— | Time Warner Cable, Inc. ‡ | 5 | ||||||
1 | Time Warner, Inc. ‡ | 13 | ||||||
109 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 10.0% | ||||||||
5 | Biovail Corp. ‡ | 51 | ||||||
4 | Bristol-Myers Squibb Co. ‡ | 75 | ||||||
2 | Eli Lilly & Co. ‡ | 70 | ||||||
— | Johnson & Johnson ‡ | 22 | ||||||
3 | Merck & Co., Inc. ‡ | 66 | ||||||
2 | Novartis AG ADR ‡ | 61 | ||||||
11 | Pfizer, Inc. ‡ | 149 | ||||||
3 | Sanofi-Aventis S.A. ADR ‡ | 84 | ||||||
578 | ||||||||
Real Estate — 4.6% | ||||||||
2 | Annaly Capital Management, Inc. ‡ | 29 | ||||||
1 | Anworth Mortgage Asset Corp. ‡ | 7 | ||||||
3 | Apartment Investment & Management Co. ‡ | 22 | ||||||
2 | Duke Realty, Inc. ‡ | 16 | ||||||
— | Entertainment Properties Trust ‡ | 6 | ||||||
— | HCP, Inc. ‡ | 6 | ||||||
— | Health Care, Inc. ‡ | 12 | ||||||
1 | Hospitality Properties Trust ‡ | 14 | ||||||
5 | HRPT Properties Trust ‡ | 22 | ||||||
— | Inland Real Estate Corp. ‡ | 3 | ||||||
4 | Lexington Realty Trust ‡ | 13 | ||||||
2 | Medical Properties Trust, Inc. ‡ | 10 | ||||||
1 | MFA Mortgage Investments, Inc. ‡ | 7 | ||||||
1 | Nationwide Health Properties, Inc. ‡ | 31 | ||||||
3 | Northstar Realty Finance Corp. ‡ | 9 | ||||||
3 | Resource Capital Corp. ‡ | 9 | ||||||
5 | UDR, Inc. ‡ | 50 | ||||||
266 | ||||||||
Retailing — 2.1% | ||||||||
1 | Asbury Automotive Group ‡ | 11 | ||||||
— | Barnes & Noble, Inc. ‡ | 8 | ||||||
— | Genuine Parts Co. ‡ | 15 | ||||||
— | Home Depot, Inc. ‡ | 7 | ||||||
— | J.C. Penney Co., Inc. ‡ | 9 | ||||||
1 | Limited Brands, Inc. ‡ | 15 | ||||||
1 | Macy’s, Inc. ‡ | 18 | ||||||
3 | OfficeMax, Inc. ‡ | 25 | ||||||
1 | Williams-Sonoma, Inc. ‡ | 11 | ||||||
119 | ||||||||
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
LONG POSITIONS — 138.8% — (continued) | ||||||||||||
COMMON STOCKS — 138.8% — (continued) | ||||||||||||
Semiconductors & Semiconductor Equipment — 2.3% | ||||||||||||
1 | Analog Devices, Inc. ‡ | $ | 14 | |||||||||
3 | Intel Corp. ‡ | 52 | ||||||||||
2 | Intersil Corp. | 28 | ||||||||||
1 | Linear Technology Corp. ‡ | 12 | ||||||||||
1 | Microchip Technology, Inc. ‡ | 29 | ||||||||||
135 | ||||||||||||
Software & Services — 3.4% | ||||||||||||
— | Automatic Data Processing, Inc. ‡ | 14 | ||||||||||
2 | infoGROUP, Inc. ‡ | 7 | ||||||||||
1 | Infosys Technologies Ltd. ADR ‡ | 32 | ||||||||||
2 | Paychex, Inc. ‡ | 60 | ||||||||||
1 | S.p.A. ADR ‡ | 33 | ||||||||||
8 | United Online, Inc. ‡ | 44 | ||||||||||
190 | ||||||||||||
Technology Hardware & Equipment — 7.2% | ||||||||||||
3 | Canon, Inc. ADR ‡ | 102 | ||||||||||
1 | Fujifilm Holdings Corp. ‡ | 16 | ||||||||||
— | Hitachi Ltd. ‡ | 16 | ||||||||||
2 | Jabil Circuit, Inc. ‡ | 19 | ||||||||||
1 | Molex, Inc. ‡ | 19 | ||||||||||
4 | Nokia Corp. ‡ | 62 | ||||||||||
10 | Seagate Technology ‡ | 83 | ||||||||||
12 | Telefonaktiebolaget LM Ericsson ADR ‡ | 101 | ||||||||||
418 | ||||||||||||
Telecommunication Services — 11.6% | ||||||||||||
2 | Alaska Communication Systems Holdings, Inc. ‡ | 12 | ||||||||||
2 | AT&T, Inc. ‡ | 54 | ||||||||||
4 | BT Group plc ADR ‡ | 61 | ||||||||||
1 | CenturyTel, Inc. ‡ | 26 | ||||||||||
1 | China Telecom Corp. Ltd. ADR •‡ | 41 | ||||||||||
2 | Deutsche Telekom AG ADR ‡ | 20 | ||||||||||
1 | Embarq Corp. ‡ | 53 | ||||||||||
1 | France Telecom S.A. ADR ‡ | 27 | ||||||||||
7 | Frontier Communications Corp. ‡ | 46 | ||||||||||
1 | Hutchinson Telecom Internation Ltd. ADR ‡ | 6 | ||||||||||
2 | Nippon Telegraph & Telephone Corp. ADR ‡ | 41 | ||||||||||
1 | Philippine Long Distance Telephone Co. ADR ‡ | 23 | ||||||||||
1 | Portugal Telecom S.A. ADR ‡ | 10 | ||||||||||
2 | SK Telecom Co., Ltd. ADR ‡ | 33 | ||||||||||
1 | Telecom Corp. of New Zealand Ltd. ADR ‡ | 11 | ||||||||||
4 | Telecom Italia S.p.A. ADR ‡ | 53 | ||||||||||
1 | Verizon Communications, Inc. ‡ | 23 | ||||||||||
6 | Vodafone Group plc ADR ‡ | 114 | ||||||||||
2 | Windstream Corp. ‡ | 14 | ||||||||||
668 | ||||||||||||
Transportation — 1.8% | ||||||||||||
2 | Eagle Bulk Shipping Inc. ‡ | 10 | ||||||||||
1 | Genco Shipping & Trading Ltd. ‡ | 26 | ||||||||||
1 | Grupo Aeroportuario del Pacifico SAB de CV ADR ‡ | 23 | ||||||||||
2 | Horizon Lines, Inc. Class A ‡ | 10 | ||||||||||
3 | Lan Airlines S.A. ADR ‡ | 27 | ||||||||||
1 | Pacer International, Inc. ‡ | 5 | ||||||||||
101 | ||||||||||||
Utilities — 10.4% | ||||||||||||
1 | AGL Resources, Inc. ‡ | 31 | ||||||||||
1 | Allete, Inc. | 20 | ||||||||||
2 | Ameren Corp. ‡ | 35 | ||||||||||
1 | American Electric Power Co., Inc. ‡ | 27 | ||||||||||
3 | CenterPoint Energy, Inc. ‡ | 32 | ||||||||||
— | CIA Saneamento Basico De Estado de Sao Paulo ‡ | 8 | ||||||||||
1 | Consolidated Edison, Inc. ‡ | 45 | ||||||||||
1 | DTE Energy Co. ‡ | 29 | ||||||||||
— | National Grid plc ‡ | 11 | ||||||||||
4 | NiSource, Inc. ‡ | 42 | ||||||||||
1 | OGE Energy Corp. ‡ | 33 | ||||||||||
1 | Oneok, Inc. ‡ | 14 | ||||||||||
2 | Pepco Holdings, Inc. ‡ | 21 | ||||||||||
2 | Pinnacle West Capital Corp. ‡ | 57 | ||||||||||
1 | Progress Energy, Inc. ‡ | 42 | ||||||||||
1 | SCANA Corp. ‡ | 27 | ||||||||||
3 | Southern Co. ‡ | 85 | ||||||||||
2 | TECO Energy, Inc. ‡ | 17 | ||||||||||
1 | Vectren Corp. ‡ | 21 | ||||||||||
597 | ||||||||||||
Total common stocks (cost $10,686) | $ | 7,995 | ||||||||||
Total long-term investments (cost $10,686) | $ | 7,995 | ||||||||||
SHORT-TERM INVESTMENTS — 2.4% | ||||||||||||
Investment Pools and Funds — 2.4% | ||||||||||||
136 | State Street Bank U.S. Government Money Market Fund | $ | 136 | |||||||||
Total short-term investments (cost $136) | $ | 136 | ||||||||||
Total long positions (cost $10,822)▲ | 141.2 | % | $ | 8,131 | ||||||||
Securities sold short (proceeds $2,652)▲ | (40.8 | )% | (2,351 | ) | ||||||||
Other assets and liabilities | (0.4 | )% | (21 | ) | ||||||||
Total net assets | 100.0 | % | $ | 5,759 | ||||||||
Shares | Market Value ╪ | |||||||
SECURITIES SOLD SHORT — 40.8% | ||||||||
COMMON STOCK — 40.8% | ||||||||
Automobiles & Components — 0.1% | ||||||||
1 | Dana Holding Corp.• | $ | 1 | |||||
1 | Tenneco Automotive, Inc.• | 4 | ||||||
5 | ||||||||
Banks — 0.4% | ||||||||
1 | Signature Bank• | 14 | ||||||
1 | Texas Capital Bankshares, Inc.• | 8 | ||||||
22 | ||||||||
Capital Goods — 3.2% | ||||||||
— | Astec Industries, Inc.• | 6 | ||||||
1 | BE Aerospace, Inc.• | 7 | ||||||
1 | Colfax Corp.• | 6 | ||||||
— | Enpro Industries, Inc.• | 5 |
7
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares | Market Value ╪ | |||||||
SECURITIES SOLD SHORT — 40.8% — (continued) | ||||||||
COMMON STOCK — 40.8% — (continued) | ||||||||
Capital Goods — 3.2% — (continued) | ||||||||
— | ESCO Technologies, Inc.• | $ | 14 | |||||
1 | Flow International Corp.• | 2 | ||||||
1 | General Cable Corp.• | 14 | ||||||
1 | Hexcel Corp.• | 7 | ||||||
8 | JA Solar Holdings Co. Ltd. ADR• | 26 | ||||||
— | Kadant, Inc.• | 4 | ||||||
2 | McDermott International, Inc.• | 37 | ||||||
— | Mitsui & Co., Ltd. ADR | 8 | ||||||
— | Moog, Inc. Class A• | 6 | ||||||
— | RBS Bearings, Inc.• | 6 | ||||||
1 | Spirit Aerosystems Holdings, Inc.• | 6 | ||||||
1 | Tecumseh Products Co. Class A • | 7 | ||||||
1 | Titan International, Inc. | 7 | ||||||
— | Titan Machinery, Inc.• | 5 | ||||||
— | TransDigm Group, Inc.• | 8 | ||||||
1 | Trimas Corp.• | 3 | ||||||
184 | ||||||||
Commercial & Professional Services — 1.3% | ||||||||
3 | Cenveo, Inc.• | 14 | ||||||
1 | Consolidated Graphics, Inc.• | 15 | ||||||
1 | Covanta Holding Corp.• | 9 | ||||||
1 | Navigant Consulting, Inc.• | 11 | ||||||
2 | Spherion Corp.• | 8 | ||||||
— | Stericycle, Inc.• | 10 | ||||||
— | Waste Connections, Inc.• | 5 | ||||||
72 | ||||||||
Consumer Durables & Apparel — 1.3% | ||||||||
— | Coach, Inc.• | 10 | ||||||
1 | Gildan Activewear, Inc.• | 7 | ||||||
1 | Hanesbrands, Inc.• | 17 | ||||||
— | Jakks Pacific, Inc.• | 6 | ||||||
1 | Mohawk Industries, Inc.• | 26 | ||||||
— | Universal Electronics, Inc.• | 8 | ||||||
74 | ||||||||
Consumer Services — 1.7% | ||||||||
1 | Cheesecake Factory, Inc.• | 17 | ||||||
2 | Gaylord Entertainment Co.• | 23 | ||||||
1 | Scientific Games Corp. Class A• | 25 | ||||||
1 | Sonic Corp.• | 8 | ||||||
1 | Starbucks Corp.• | 10 | ||||||
1 | Texas Roadhouse, Inc.• | 12 | ||||||
95 | ||||||||
Consumer Staples — 0.2% | ||||||||
— | Seaboard Corp. | 12 | ||||||
Diversified Financials — 0.4% | ||||||||
— | Nasdaq OMX Group, Inc.• | 6 | ||||||
— | PHH Corp.• | 6 | ||||||
— | Riskmetrics Group, Inc.• | 8 | ||||||
20 | ||||||||
Energy — 5.1% | ||||||||
— | Bill Barrett Corp.• | 8 | ||||||
— | Bristow Group, Inc.• | 4 | ||||||
1 | Bronco Drilling Co., Inc.• | 6 | ||||||
— | Carrizo Oil & Gas, Inc.• | 4 | ||||||
1 | CNX Gas Corp.• | 15 | ||||||
1 | Continental Resources, Inc.• | 20 | ||||||
3 | Exco Resources, Inc.• | 33 | ||||||
1 | Forest Oil Corp.• | 19 | ||||||
— | Goodrich Petroleum Corp.• | 7 | ||||||
4 | Hercules Offshore, Inc.• | 13 | ||||||
— | Newfield Exploration Co.• | 10 | ||||||
4 | Parker Drilling Co.• | 12 | ||||||
1 | Petrohawk Energy Corp.• | 27 | ||||||
1 | Quicksilver Resources, Inc.• | 8 | ||||||
2 | Sandridge Energy, Inc.• | 14 | ||||||
1 | Southwestern Energy Co.• | 21 | ||||||
1 | Suncor Energy, Inc. ADR | 29 | ||||||
1 | TETRA Technologies, Inc.• | 6 | ||||||
— | Ultra Petroleum Corp.• | 19 | ||||||
1 | Williams Cos., Inc. | 20 | ||||||
295 | ||||||||
Food & Staples Retailing — 0.5% | ||||||||
1 | United Natural Foods, Inc.• | 31 | ||||||
Food, Beverage & Tobacco — 1.9% | ||||||||
1 | Chiquita Brands International, Inc.• | 8 | ||||||
1 | Dr Pepper Snapple Group• | 31 | ||||||
1 | Hain Celestial Group, Inc.• | 19 | ||||||
— | Hansen National Corp.• | 10 | ||||||
2 | Omega Protein Corp.• | 6 | ||||||
2 | Smart Balance, Inc.• | 15 | ||||||
2 | Smithfield Foods, Inc.• | 21 | ||||||
110 | ||||||||
Health Care Equipment & Services — 0.6% | ||||||||
1 | Boston Scientific Corp.• | 8 | ||||||
1 | Emeritus Corp.• | 12 | ||||||
— | Hologic, Inc.• | 7 | ||||||
— | NuVasive, Inc.• | 7 | ||||||
34 | ||||||||
Insurance — 0.2% | ||||||||
— | Argo Group International Holdings Ltd.• | 5 | ||||||
3 | Conseco, Inc.• | 4 | ||||||
1 | PMA Capital Corp. Class A• | 5 | ||||||
14 | ||||||||
Materials — 2.0% | ||||||||
— | Agnico Eagle Mines Ltd. | 10 | ||||||
1 | Buckeye Technologies, Inc.• | 7 | ||||||
— | Haynes International, Inc.• | 11 | ||||||
2 | Headwaters, Inc.• | 5 | ||||||
1 | Intrepid Potash, Inc.• | 30 | ||||||
1 | Rockwood Holdings, Inc.• | 7 | ||||||
1 | RTI International Metals, Inc.• | 12 | ||||||
16 | Smurfit-Stone Container Corp.• | 1 | ||||||
4 | Sterlite Industries Ltd. | 32 | ||||||
115 | ||||||||
Media — 1.1% | ||||||||
2 | CTC Media, Inc.• | 16 | ||||||
1 | DISH Network Corp.• | 15 | ||||||
2 | Lakes Entertainment, Inc.• | 6 | ||||||
2 | Liberty Media Corp. — Capital• | 24 | ||||||
— | Scholastic Corp. | 2 | ||||||
63 | ||||||||
8
Table of Contents
Shares | Market Value ╪ | |||||||||||
SECURITIES SOLD SHORT — 40.8% — (continued) | ||||||||||||
COMMON STOCK — 40.8% — (continued) | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 2.5% | ||||||||||||
1 | Auxilium Pharmaceuticals, Inc.• | $ | 21 | |||||||||
2 | Caraco Pharmaceutical Laboratories Ltd.• | 7 | ||||||||||
3 | Cypress Bioscience• | 19 | ||||||||||
5 | DURECT Corp.• | 11 | ||||||||||
5 | Elan Corp. plc ADR• | 29 | ||||||||||
1 | Noven Pharmaceuticals, Inc.• | 12 | ||||||||||
1 | Questcor Pharmaceuticals• | 3 | ||||||||||
2 | Salix Pharmaceuticals Ltd.• | 20 | ||||||||||
3 | SuperGen, Inc.• | 7 | ||||||||||
1 | Xenoport, Inc.• | 12 | ||||||||||
141 | ||||||||||||
Real Estate — 1.0% | ||||||||||||
1 | Digital Realty Trust, Inc. | 27 | ||||||||||
1 | Douglas Emmett, Inc. | 14 | ||||||||||
— | Equity Residential Properties Trust | 10 | ||||||||||
— | Essex Property Trust, Inc. | 9 | ||||||||||
60 | ||||||||||||
Retailing — 1.0% | ||||||||||||
1 | AnnTaylor Stores Corp.• | 6 | ||||||||||
1 | Audiovox Corp. Class A• | 5 | ||||||||||
2 | Chico’s FAS, Inc.• | 18 | ||||||||||
1 | Collective Brands, Inc.• | 8 | ||||||||||
1 | Dress Barn, Inc.• | 12 | ||||||||||
2 | Sally Beauty Co., Inc.• | 11 | ||||||||||
60 | ||||||||||||
Semiconductors & Semiconductor Equipment — 1.7% | ||||||||||||
— | Atheros Communications, Inc.• | 7 | ||||||||||
6 | Atmel Corp.• | 22 | ||||||||||
1 | Diodes, Inc.• | 16 | ||||||||||
3 | LSI Corp.• | 13 | ||||||||||
3 | Micron Technology, Inc.• | 16 | ||||||||||
1 | Microsemi Corp.• | 12 | ||||||||||
— | Rambus, Inc.• | 5 | ||||||||||
— | Silicon Laboratories, Inc.• | 9 | ||||||||||
100 | ||||||||||||
Software & Services — 3.0% | ||||||||||||
— | Affiliated Computer Services, Inc. Class A• | 23 | ||||||||||
1 | Ariba, Inc.• | 8 | ||||||||||
1 | AsiaInfo Holdings, Inc.• | 8 | ||||||||||
1 | Computer Sciences Corp.• | 33 | ||||||||||
— | IAC/Interactive Corp.• | 6 | ||||||||||
2 | Internet Capital• | 12 | ||||||||||
2 | Liquidity Services, Inc.• | 16 | ||||||||||
5 | LivePerson, Inc.• | 12 | ||||||||||
— | Mercadolibre, Inc.• | 11 | ||||||||||
1 | Red Hat, Inc.• | 12 | ||||||||||
1 | Valueclick, Inc.• | 10 | ||||||||||
3 | VeriFone Holdings, Inc.• | 24 | ||||||||||
175 | ||||||||||||
Technology Hardware & Equipment — 3.9% | ||||||||||||
— | Agilent Technologies, Inc.• | 5 | ||||||||||
1 | Cogent, Inc.• | 7 | ||||||||||
2 | Cogo Group, Inc.• | 14 | ||||||||||
— | Coherent, Inc.• | 5 | ||||||||||
— | Hughes Communications Inc.• | 8 | ||||||||||
1 | Intermec, Inc.• | 16 | ||||||||||
1 | Juniper Networks, Inc.• | 15 | ||||||||||
1 | Polycom, Inc.• | 27 | ||||||||||
1 | Research In Motion Ltd.• | 39 | ||||||||||
3 | SanDisk Corp.• | 49 | ||||||||||
13 | Sanmina-Sci Corp.• | 7 | ||||||||||
4 | Sycamore Networks, Inc.• | 13 | ||||||||||
1 | Trimble Navigation Ltd.• | 16 | ||||||||||
— | ViaSat, Inc.• | 6 | ||||||||||
227 | ||||||||||||
Telecommunication Services — 3.4% | ||||||||||||
11 | Cincinnati Bell, Inc.• | 30 | ||||||||||
1 | Crown Castle International Corp.• | 28 | ||||||||||
1 | iPCS, Inc.• | 19 | ||||||||||
— | Leap Wireless International, Inc.• | 10 | ||||||||||
1 | NII Holdings, Inc. Class B• | 17 | ||||||||||
1 | SBA Communications Corp.• | 16 | ||||||||||
5 | Sprint Nextel Corp.• | 23 | ||||||||||
3 | Telmex Internacional | 29 | ||||||||||
1 | US Cellular Corp.• | 24 | ||||||||||
196 | ||||||||||||
Transportation — 0.6% | ||||||||||||
2 | American Commercial Lines, Inc.• | 8 | ||||||||||
1 | Atlas Air Worldwide Holdings, Inc.• | 17 | ||||||||||
— | Kirby Corp.• | 8 | ||||||||||
33 | ||||||||||||
Utilities — 3.7% | ||||||||||||
3 | AES Corp.• | 18 | ||||||||||
1 | Allegheny Energy, Inc. | 13 | ||||||||||
1 | Avista Corp. | 13 | ||||||||||
9 | Dynegy Holdings, Inc.• | 16 | ||||||||||
1 | El Paso Electric Co.• | 17 | ||||||||||
— | EQT Corp. | 10 | ||||||||||
1 | ITC Holdings Corp. | 23 | ||||||||||
1 | MDU Resources Group, Inc. | 23 | ||||||||||
— | Northwest Natural Gas Co. | 18 | ||||||||||
4 | Reliant Resources, Inc.• | 20 | ||||||||||
— | South Jersey Industries, Inc. | 11 | ||||||||||
1 | Wisconsin Energy Corp. | 31 | ||||||||||
213 | ||||||||||||
Total common stock (proceeds $2,652) | $ | 2,351 | ||||||||||
Total securities sold short (proceeds $2,652) | 40.8 | % | $ | 2,351 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of long position investments in foreign securities represents 53.10% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $8,157 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,028 | ||
Unrealized Depreciation | (3,405 | ) | ||
Net Unrealized Depreciation | $ | (2,377 | ) | |
• | Currently not paying a dividend. | |
‡ | All or a portion of this security is held in a segregated account to cover the Fund’s short position. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.0 | % | ||
Brazil | 0.3 | |||
Canada | 5.8 | |||
Chile | 1.1 | |||
China | 1.2 | |||
Finland | 1.1 | |||
France | 6.0 | |||
Germany | 3.1 | |||
Greece | 0.2 | |||
Hong Kong | 0.9 | |||
India | 0.6 | |||
Italy | 1.5 | |||
Japan | 11.0 | |||
Luxembourg | 0.5 | |||
Mexico | 0.5 | |||
Netherlands | 1.2 | |||
New Zealand | 0.2 | |||
Norway | 0.5 | |||
Philippines | 0.4 | |||
Portugal | 0.2 | |||
South Africa | 0.6 | |||
South Korea | 0.6 | |||
Spain | 1.3 | |||
Sweden | 1.7 | |||
Switzerland | 1.6 | |||
United Kingdom | 10.0 | |||
United States | 85.7 | |||
Short-Term Investments | 2.4 | |||
Total Long Positions | 141.2 | |||
Short Positions | (40.8 | ) | ||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Canada | 1.5 | % | ||
China | 0.6 | |||
India | 0.5 | |||
Ireland | 0.5 | |||
Japan | 0.1 | |||
Mexico | 0.5 | |||
United States | 37.1 | |||
Total | 40.8 | % | ||
FAS 157 Disclosure of Investment Valuation Hierarchy Levels | ||||
Assets: | ||||
Investment in securities — Level 1 | $ | 8,131 | ||
Total | $ | 8,131 | ||
Liabilities: | ||||
Securities sold short — Level 1 | $ | 2,351 | ||
Total | $ | 2,351 | ||
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $10,822) | $ | 8,131 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 299 | |||
Dividends and interest | 40 | |||
Other assets | 1 | |||
Total assets | 8,472 | |||
Liabilities: | ||||
Securities sold short, at value (proceeds $2,652) | 2,351 | |||
Payables: | ||||
Investment securities purchased | 352 | |||
Investment management fees | 1 | |||
Distribution fees | — | |||
Dividends and interest on short positions | — | |||
Accrued expenses | 9 | |||
Total liabilities | 2,713 | |||
Net assets | $ | 5,759 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 10,927 | |||
Accumulated undistributed net investment income | 38 | |||
Accumulated net realized loss on investments | (2,816 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (2,390 | ) | ||
Net assets | $ | 5,759 | ||
Shares authorized | 850,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 5.21/$5.51 | ||
Shares outstanding | 873 | |||
Net assets | $ | 4,552 | ||
Class B: Net asset value per share | $ | 5.21 | ||
Shares outstanding | 33 | |||
Net assets | $ | 171 | ||
Class C: Net asset value per share | $ | 5.21 | ||
Shares outstanding | 33 | |||
Net assets | $ | 171 | ||
Class I: Net asset value per share | $ | 5.22 | ||
Shares outstanding | 33 | |||
Net assets | $ | 174 | ||
Class R3: Net asset value per share | $ | 5.21 | ||
Shares outstanding | 33 | |||
Net assets | $ | 172 | ||
Class R4: Net asset value per share | $ | 5.21 | ||
Shares outstanding | 33 | |||
Net assets | $ | 173 | ||
Class R5: Net asset value per share | $ | 5.21 | ||
Shares outstanding | 33 | |||
Net assets | $ | 173 | ||
Class Y: Net asset value per share | $ | 5.22 | ||
Shares outstanding | 33 | |||
Net assets | $ | 173 | ||
11
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 280 | ||
Less: Foreign tax withheld | (7 | ) | ||
Total investment income | 273 | |||
Expenses: | ||||
Investment management fees | 29 | |||
Distribution fees | ||||
Class A | 6 | |||
Class B | 1 | |||
Class C | 1 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 3 | |||
Accounting services | — | |||
Board of Directors’ fees | 1 | |||
Interest and dividend expense | 6 | |||
Audit fees | 3 | |||
Other expenses | 14 | |||
Total expenses (before waivers and fees paid indirectly) | 64 | |||
Expense waivers | (29 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (29 | ) | ||
Total expenses, net | 35 | |||
Net investment income | 238 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (3,475 | ) | ||
Net realized gain on securities sold short | 1,109 | |||
Net realized gain on foreign currency transactions | — | |||
Net Realized Loss on Investments | (2,366 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 2,279 | |||
Net unrealized depreciation of securities sold short | (1,153 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 1,126 | |||
Net Loss on Investments | (1,240 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (1,002 | ) | |
12
Table of Contents
For the Period | ||||||||
For the Six-Month | November 28, | |||||||
Period Ended | 2007** | |||||||
April 30, 2009 | through | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 238 | $ | 759 | ||||
Net realized loss on investments | (2,366 | ) | (482 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 1,126 | (3,516 | ) | |||||
Net decrease in net assets resulting from operations | (1,002 | ) | (3,239 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (167 | ) | (454 | ) | ||||
Class B | (6 | ) | (16 | ) | ||||
Class C | (6 | ) | (16 | ) | ||||
Class I | (6 | ) | (18 | ) | ||||
Class R3 | (6 | ) | (16 | ) | ||||
Class R4 | (6 | ) | (17 | ) | ||||
Class R5 | (6 | ) | (17 | ) | ||||
Class Y | (7 | ) | (18 | ) | ||||
Total distributions | (210 | ) | (572 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 167 | 8,354 | ||||||
Class B | 6 | 316 | ||||||
Class C | 6 | 316 | ||||||
Class I | 6 | 318 | ||||||
Class R3 | 6 | 316 | ||||||
Class R4 | 6 | 317 | ||||||
Class R5 | 6 | 317 | ||||||
Class Y | 7 | 318 | ||||||
Net increase from capital share transactions | 210 | 10,572 | ||||||
Net increase (decrease) in net assets | (1,002 | ) | 6,761 | |||||
Net Assets: | ||||||||
Beginning of period | 6,761 | — | ||||||
End of period | $ | 5,759 | $ | 6,761 | ||||
Accumulated undistributed net investment income | $ | 38 | $ | 10 | ||||
** | Commencement of operations. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Enhanced Dividend Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
This Fund’s shares were not offered to the public for the period from November 27, 2007 through April 30, 2009. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
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circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty |
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cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
f) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. |
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The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid quarterly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund had no illiquid or restricted securities as of April 30, 2009. | ||
i) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently |
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than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | |||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
l) | Securities Sold Short — As part of its principal investment strategy, the Fund will enter into short sales. In a short sale, the Fund sells a borrowed security (typically from a broker or other institution). The Fund may not always be able to borrow the security at a particular time or at an acceptable price. Thus, there is a risk that the fund may be unable to implement its investment strategy due to the lack of available stocks or for other reasons. After selling the borrowed security, the Fund is obligated to “cover” the short sale by purchasing the security and returning the security to the lender. If a security sold short increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss. Because the Fund’s loss on a short sale arises from increases in the value of the security sold short, such loss is theoretically unlimited. In certain cases, purchasing a security to cover a short position can itself cause the price of the security to rise further, thereby exacerbating the loss. | ||
Short sales also involve other costs. The Fund must normally repay to the lender an amount equal to any dividends or interest that accrues while the loan is outstanding. In addition, to borrow the security, the Fund may be required to pay a premium. The Fund also will incur transaction costs in effecting short sales. The amount of any ultimate gain for the |
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Fund resulting from a short sale will be decreased, and the amount of any ultimate loss will be increased, by the amount of the premiums, dividends, interest or expenses the Fund may be required to pay in connection with the short sale. Until the Fund replaces a borrowed security, it is required to maintain a segregated account of cash or liquid assets to cover the Fund’s short position. Securities held in a segregated account can not be sold while the position they are covering is outstanding, unless they are replaced with similar securities. Additionally, the Fund must maintain a sufficient liquid asset (less any additional collateral held by the broker) to cover the short sale obligation. This may limit the Fund’s investment flexibility, as well as its ability to meet redemption or other current obligations. | |||
Dividends declared on short positions existing on the record date are recorded on the ex-dividend date as an expense on the Statement of Operations. | |||
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | ||||
October 31, 2008 * | ||||
Ordinary Income | $ | 572 |
* | Commenced operations on November 28, 2007. |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 10 | ||
Accumulated Capital Losses* | $ | (464 | ) | |
Unrealized Depreciation† | $ | (3,502 | ) | |
Total Accumulated Deficit | $ | (3,956 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $177, increase accumulated net realized gain by $32, and increase paid in capital by $145. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 464 | ||
Total | $ | 464 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 1.00 | % | ||
On next $500 million | 0.95 | % | ||
On next $4 billion | 0.90 | % | ||
On next $5 billion | 0.88 | % | ||
Over $10 billion | 0.87 | % |
HIFSCO has voluntarily agreed to waive 100% of the management fees through February 28, 2010. |
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b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.60% | 2.35% | 2.35% | 1.35% | 1.85% | 1.60% | 1.35% | 1.25% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||
Six-Month | ||||||||
Period | Year Ended | |||||||
Ended April | October 31, | |||||||
30, 2009 | 2008 | |||||||
Class A Shares | 1.17 | % | 0.58 | %* | ||||
Class B Shares | 1.92 | 1.33 | † | |||||
Class C Shares | 1.92 | 1.33 | ‡ | |||||
Class I Shares | 0.92 | 0.33 | § | |||||
Class R3 Shares | 1.62 | 1.03 | ** | |||||
Class R4 Shares | 1.32 | 0.73 | †† | |||||
Class R5 Shares | 1.02 | 0.43 | ‡‡ | |||||
Class Y Shares | 0.92 | 0.33 | §§ |
* | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
† | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
‡ | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
§ | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
** | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
†† | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
‡‡ | From November 28, 2007 (commencement of operations), through October 31, 2008 | |
§§ | From November 28, 2007 (commencement of operations), through October 31, 2008 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through |
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broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges in an amount that rounds to zero and contingent deferred sales charges in an amount that rounds to zero from the Fund. | |||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class A | 873 | |||
Class B | 33 | |||
Class C | 33 | |||
Class I | 33 | |||
Class R3 | 33 | |||
Class R4 | 33 | |||
Class R5 | 33 | |||
Class Y | 33 |
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For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 2,327 | ||
Sales Proceeds Excluding U.S. Government Obligations | 1,936 |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 31 | — | — | 31 | 790 | 52 | — | — | 842 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 167 | $ | — | $ | — | $ | 167 | $ | 7,900 | $ | 454 | $ | — | $ | — | $ | 8,354 | ||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 18 | $ | — | $ | — | $ | 318 | ||||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 16 | $ | — | $ | — | $ | 316 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 17 | $ | — | $ | — | $ | 317 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 6 | $ | — | $ | — | $ | 6 | $ | 300 | $ | 17 | $ | — | $ | — | $ | 317 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 30 | 2 | — | — | 32 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 7 | $ | — | $ | — | $ | 7 | $ | 300 | $ | 18 | $ | — | $ | — | $ | 318 |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
23
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.34 | $ | 0.21 | $ | — | $ | (1.14 | ) | $ | (0.93 | ) | $ | (0.20 | ) | $ | — | $ | — | $ | (0.20 | ) | $ | (1.13 | ) | $ | 5.21 | (14.85) | %(e) | $ | 4,552 | 2.17 | %(f) | 1.17 | %(f) | 0.68 | %(f) | 8.11 | %(f) | 34 | % | |||||||||||||||||||||||||||||||
B | 6 33 | 0.19 | — | (1.13 | ) | (0.94 | ) | (0.18 | ) | — | — | (0.18 | ) | (1.12 | ) | 5.21 | (15.03 | ) (e) | 171 | 2.92 | (f) | 1.92 | (f) | 1.43 | (f) | 7.36 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 6 33 | 0.19 | — | (1.13 | ) | (0.94 | ) | (0.18 | ) | — | — | (0.18 | ) | (1.12 | ) | 5.21 | (15.03 | ) (e) | 171 | 2.92 | (f) | 1.92 | (f) | 1.43 | (f) | 7.36 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 6.34 | 0.22 | — | (1.14 | ) | (0.92 | ) | (0.20 | ) | — | — | (0.20 | ) | (1.12 | ) | 5.22 | (14.58 | ) (e) | 174 | 1.92 | (f) | 0.92 | (f) | 0.43 | (f) | 8.36 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 6.34 | 0.20 | — | (1.15 | ) | (0.95 | ) | (0.18 | ) | — | — | (0.18 | ) | (1.13 | ) | 5.21 | (15.04 | ) (e) | 172 | 2.62 | (f) | 1.62 | (f) | 1.13 | (f) | 7.66 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 6.34 | 0.21 | — | (1.15 | ) | (0.94 | ) | (0.19 | ) | — | — | (0.19 | ) | (1.13 | ) | 5.21 | (14.92 | ) (e) | 173 | 2.32 | (f) | 1.32 | (f) | 0.83 | (f) | 7.96 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 6.34 | 0.22 | — | (1.15 | ) | (0.93 | ) | (0.20 | ) | — | — | (0.20 | ) | (1.13 | ) | 5.21 | (14.79 | ) (e) | 173 | 2.02 | (f) | 1.02 | (f) | 0.53 | (f) | 8.26 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 6.34 | 0.22 | — | (1.14 | ) | (0.92 | ) | (0.20 | ) | — | — | (0.20 | ) | (1.12 | ) | 5.22 | (14.58 | ) (e) | 173 | 1.92 | (f) | 0.92 | (f) | 0.43 | (f) | 8.36 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) November 28, 2007, through October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | 0.74 | — | (3.84 | ) | (3.10 | ) | (0.56 | ) | — | — | (0.56 | ) | (3.66 | ) | 6.34 | (32.37 | ) (e) | 5,343 | 2.09 | (f) | 1.09 | (f) | 0 .58 | (f) | 9.20 | (f) | 70 | ||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | 0.68 | — | (3.84 | ) | (3.16 | ) | (0.51 | ) | — | — | (0.51 | ) | (3.67 | ) | 6 33 | (32.86 | ) (e) | 202 | 2.84 | (f) | 1.84 | (f) | 1.33 | (f) | 8.45 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | 0.68 | — | (3.84 | ) | (3.16 | ) | (0.51 | ) | — | — | (0.51 | ) | (3.67 | ) | 6 33 | (32.86 | ) (e) | 202 | 2.84 | (f) | 1.84 | (f) | 1.33 | (f) | 8.45 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I(j) | 10.00 | 0.76 | — | (3.84 | ) | (3.08 | ) | (0.58 | ) | — | — | (0.58 | ) | (3.66 | ) | 6.34 | (32.24 | ) (e) | 203 | 1.84 | (f) | 0.84 | (f) | 0.33 | (f) | 9.45 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3(k) | 10.00 | 0.71 | — | (3.84 | ) | (3.13 | ) | (0.53 | ) | — | — | (0.53 | ) | (3.66 | ) | 6.34 | (32.60 | ) (e) | 202 | 2.54 | (f) | 1.54 | (f) | 1.03 | (f) | 8.75 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4(l) | 10.00 | 0.73 | — | (3.84 | ) | (3.11 | ) | (0.55 | ) | — | — | (0.55 | ) | (3.66 | ) | 6.34 | (32.44 | ) (e) | 203 | 2.24 | (f) | 1.24 | (f) | 0.73 | (f) | 9.05 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5(m) | 10.00 | 0.75 | — | (3.84 | ) | (3.09 | ) | (0.57 | ) | — | — | (0.57 | ) | (3.66 | ) | 6.34 | (32.29 | ) (e) | 203 | 1.94 | (f) | 0.94 | (f) | 0.43 | (f) | 9.35 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.76 | — | (3.84 | ) | (3.08 | ) | (0.58 | ) | — | — | (0.58 | ) | (3.66 | ) | 6.34 | (32.24 | ) (e) | 203 | 1.84 | (f) | 0.84 | (f) | 0.33 | (f) | 9.45 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on November 28, 2007. | |
(h) | Commenced operations on November 28, 2007. | |
(i) | Commenced operations on November 28, 2007. | |
(j) | Commenced operations on November 28, 2007. | |
(k) | Commenced operations on November 28, 2007. | |
(l) | Commenced operations on November 28, 2007. | |
(m) | Commenced operations on November 28, 2007. | |
(n) | Commenced operations on November 28, 2007. |
24
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25
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
26
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27
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 851.51 | $ | 5.37 | $ | 1,000.00 | $ | 1,018.99 | $ | 5.86 | 1.17 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 849.73 | $ | 8.81 | $ | 1,000.00 | $ | 1,015.27 | $ | 9.59 | 1.92 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 849.73 | $ | 8.81 | $ | 1,000.00 | $ | 1,015.27 | $ | 9.59 | 1.92 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 854.19 | $ | 4.23 | $ | 1,000.00 | $ | 1,020.23 | $ | 4.61 | 0.92 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 849.56 | $ | 7.43 | $ | 1,000.00 | $ | 1,016.76 | $ | 8.10 | 1.62 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 850.84 | $ | 6.06 | $ | 1,000.00 | $ | 1,018.25 | $ | 6.61 | 1.32 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 852.13 | $ | 4.68 | $ | 1,000.00 | $ | 1,019.74 | $ | 5.11 | 1.02 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 854.19 | $ | 4.23 | $ | 1,000.00 | $ | 1,020.23 | $ | 4.61 | 0.92 | 181 | 365 |
28
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 |
Table of Contents
(subadvised by Wellington Management Company, LLP) |
Growth of a $10,000 investment in Class A which includes Sales Charge
Average Annual Total Returns(2,3) (as of 4/30/09)
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Global Equity A# | 2/29/08 | -37.69 | % | -31.56 | % | |||||||
Global Equity A## | 2/29/08 | -41.11 | % | -34.80 | % | |||||||
Global Equity B# | 2/29/08 | -38.17 | % | -32.07 | % | |||||||
Global Equity B## | 2/29/08 | -41.25 | % | -34.40 | % | |||||||
Global Equity C# | 2/29/08 | -38.17 | % | -32.07 | % | |||||||
Global Equity C## | 2/29/08 | -38.78 | % | -32.07 | % | |||||||
Global Equity I# | 2/29/08 | -37.57 | % | -31.39 | % | |||||||
Global Equity R3# | 2/29/08 | -37.94 | % | -31.80 | % | |||||||
Global Equity R4# | 2/29/08 | -37.76 | % | -31.62 | % | |||||||
Global Equity R5# | 2/29/08 | -37.57 | % | -31.44 | % | |||||||
Global Equity Y# | 2/29/08 | -37.55 | % | -31.37 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | |||
Cheryl M. Duckworth, CFA | Mark D. Mandel, CFA | ||
Senior Vice President | Senior Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 1.8 | % | ||
Banks | 9.2 | |||
Basic Materials | 0.1 | |||
Capital Goods | 5.2 | |||
Consumer Durables & Apparel | 0.5 | |||
Consumer Services | 0.7 | |||
Diversified Financials | 4.4 | |||
Energy | 11.9 | |||
Food & Staples Retailing | 0.8 | |||
Food, Beverage & Tobacco | 6.7 | |||
Health Care Equipment & Services | 3.9 | |||
Household & Personal Products | 0.1 | |||
Insurance | 2.9 | |||
Materials | 7.3 | |||
Media | 1.6 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.7 | |||
Real Estate | 1.7 | |||
Retailing | 4.6 | |||
Semiconductors & Semiconductor Equipment | 0.9 | |||
Software & Services | 5.2 | |||
Technology Hardware & Equipment | 5.4 | |||
Telecommunication Services | 4.2 | |||
Transportation | 3.3 | |||
Utilities | 4.5 | |||
Short-Term Investments | 2.0 | |||
Other Assets and Liabilities | 1.4 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 0.6 | % | ||
Austria | 0.5 | |||
Belgium | 0.5 | |||
Bermuda | 0.1 | |||
Brazil | 3.1 | |||
Canada | 4.8 | |||
China | 1.6 | |||
Denmark | 1.0 | |||
France | 3.3 | |||
Germany | 2.7 | |||
Hong Kong | 1.2 | |||
India | 0.5 | |||
Indonesia | 0.1 | |||
Ireland | 0.6 | |||
Israel | 1.0 | |||
Italy | 1.2 | |||
Japan | 3.7 | |||
Luxembourg | 0.7 | |||
Malaysia | 0.4 | |||
Netherlands | 0.2 | |||
Norway | 1.0 | |||
Panama | 0.1 | |||
Russia | 1.2 | |||
Singapore | 0.5 | |||
South Africa | 0.4 | |||
South Korea | 0.4 | |||
Spain | 0.8 | |||
Sweden | 1.1 | |||
Switzerland | 3.2 | |||
Taiwan | 0.5 | |||
Thailand | 0.4 | |||
Turkey | 0.4 | |||
United Kingdom | 8.6 | |||
United States | 50.2 | |||
Short-Term Investments | 2.0 | |||
Other Assets and Liabilities | 1.4 | |||
Total | 100.0 | % | ||
3
Table of Contents
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.5% | ||||||||
Automobiles & Components - 1.8% | ||||||||
— | Daimler AG | $ | 14 | |||||
6 | Ford Motor Co. • | 38 | ||||||
4 | Honda Motor Co., Ltd. | 125 | ||||||
— | Johnson Controls, Inc. | 8 | ||||||
1 | Michelin (C.G.D.E.) Class B | 45 | ||||||
1 | Peugeot S.A. | 22 | ||||||
252 | ||||||||
Banks - 8.6% | ||||||||
8 | Banco do Estado do Rio Grande do Sul S.A. | 26 | ||||||
1 | Banco Latinoamericano de Exportaciones S.A. ADR Class E | 14 | ||||||
24 | Bangkok Bank plc | 59 | ||||||
3 | Bank of Nova Scotia | 92 | ||||||
— | BNP Paribas | 14 | ||||||
13 | Citizens Republic Bancorp, Inc. | 22 | ||||||
10 | DBS Group Holdings Ltd. | 64 | ||||||
21 | DNB Nor ASA | 131 | ||||||
— | First Citizens Bancshares Class A | 14 | ||||||
4 | First National Financial, Inc. | 38 | ||||||
— | Gronlandsbanken | 22 | ||||||
— | HDFC Bank Ltd. ADR | 33 | ||||||
6 | HSBC Holding plc | 46 | ||||||
7 | Intesa Sanpaolo | 23 | ||||||
7 | Itau Unibanco Banco Multiplo S.A. ADR | 91 | ||||||
4 | Mitsubishi UFJ Financial Group, Inc. | 23 | ||||||
6 | Nordea Bank AB | 48 | ||||||
3 | Oversea-Chinese Banking Corp., Ltd. | 12 | ||||||
— | PNC Financial Services Group, Inc. | 7 | ||||||
7 | Popular, Inc. | 20 | ||||||
— | Ringkjoebing Landbobank | 16 | ||||||
1 | Societe Generale Class A | 34 | ||||||
4 | Sparebanken Midt-Norge | 16 | ||||||
7 | Standard Chartered plc | 111 | ||||||
2 | Sydbank A/S | 39 | ||||||
1 | Toronto-Dominion Bank | 55 | ||||||
2 | Toronto-Dominion Bank ADR | 65 | ||||||
2 | Webster Financial Corp. | 10 | ||||||
4 | Wells Fargo & Co. | 88 | ||||||
1,233 | ||||||||
Basic Materials - 0.1% | ||||||||
— | Rio Tinto plc ADR | 14 | ||||||
Capital Goods - 5.2% | ||||||||
— | Alstom RGPT | 9 | ||||||
— | AMETEK, Inc. | 9 | ||||||
3 | BAE Systems plc | 16 | ||||||
— | Carlisle Cos., Inc. | 3 | ||||||
1 | Danaher Corp. | 43 | ||||||
— | Deere & Co. | 10 | ||||||
— | Flowserve Corp | 3 | ||||||
11 | General Electric Co. | 138 | ||||||
7 | Hino Motors Ltd. | 22 | ||||||
1 | Hochtief AG | 25 | ||||||
1 | Honeywell International, Inc. | 36 | ||||||
1 | Illinois Tool Works, Inc. | 33 | ||||||
— | Ingersoll-Rand Co. Class A | 11 | ||||||
1 | Lockheed Martin Corp. | 84 | ||||||
1 | Parker-Hannifin Corp. | 28 | ||||||
1 | Pentair, Inc. | 26 | ||||||
— | Precision Castparts Corp. | 21 | ||||||
— | Raytheon Co. | 21 | ||||||
1 | Rockwell Automation, Inc. | 16 | ||||||
3 | Rolls-Royce Group plc | 14 | ||||||
234 | Rolls-Royce Group-C Share Entitlement ⌂† | — | ||||||
1 | Siemens AG | 67 | ||||||
— | SPX Corp. | 1 | ||||||
1 | Teledyne Technologies, Inc. • | 25 | ||||||
1 | United Technologies Corp. | 64 | ||||||
— | Vinci S.A. | 17 | ||||||
2 | Volvo Ab Class B | 12 | ||||||
754 | ||||||||
Commercial & Professional Services - 0.0% | ||||||||
— | Manpower, Inc. | 4 | ||||||
Consumer Durables & Apparel - 0.5% | ||||||||
36 | Anta Sports Products Ltd. | 30 | ||||||
55 | China Dongxiang Group Co. | 27 | ||||||
16 | Peace Mark Holdings Ltd. ⌂† | — | ||||||
7 | Ports Design Ltd. | 11 | ||||||
68 | ||||||||
Consumer Services - 0.7% | ||||||||
— | DineEquity, Inc. | 10 | ||||||
104 | NagaCorp Ltd. | 10 | ||||||
7 | Shangri-La Asia Ltd. | 10 | ||||||
8 | Thomas Cook Group plc | 31 | ||||||
1 | WMS Industries, Inc. • | 33 | ||||||
94 | ||||||||
Diversified Financials - 4.2% | ||||||||
1 | African Bank Investments Ltd. | 4 | ||||||
3 | Ameriprise Financial, Inc. | 72 | ||||||
2 | Bank of America Corp. | 20 | ||||||
4 | BM & F Bovespa S.A. | 17 | ||||||
2 | Deutsche Boerse AG | 113 | ||||||
6 | Discover Financial Services, Inc. | 50 | ||||||
1 | Goldman Sachs Group, Inc. | 122 | ||||||
— | Groupe Bruxelles Lambert S.A. | 10 | ||||||
1 | Invesco Ltd. | 12 | ||||||
2 | Julius Baer Holding Ltd. | 66 | ||||||
— | Moody’s Corp. | 4 | ||||||
1 | MSCI, Inc. • | 15 | ||||||
3 | Nasdaq OMX Group, Inc. • | 61 | ||||||
2 | UBS AG • | 29 | ||||||
595 | ||||||||
Energy - 11.9% | ||||||||
1 | Baker Hughes, Inc. | 28 | ||||||
7 | BG Group plc | 109 | ||||||
9 | BP plc | 62 | ||||||
2 | BP plc ADR | 83 | ||||||
1 | Cabot Oil & Gas Corp. | 17 | ||||||
3 | Canadian Natural Resources Ltd. ADR | 123 | ||||||
1 | Canadian Oil SandsTrust | 18 | ||||||
1 | Chesapeake Energy Corp. | 12 | ||||||
1 | Chevron Corp. | 40 | ||||||
66 | China Shenhua Energy Co., Ltd. | 183 | ||||||
— | ConocoPhillips Holding Co. | 20 | ||||||
— | Consol Energy, Inc. | 13 | ||||||
1 | Devon Energy Corp. | 74 | ||||||
— | Enbridge Energy Management • | 15 | ||||||
1 | EnCana Corp. ADR | 26 | ||||||
— | Eni S.p.A. ADR | 19 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.5% — (continued) | ||||||||
Energy - 11.9% — (continued) | ||||||||
2 | EOG Resources, Inc. | $ | 103 | |||||
1 | Exxon Mobil Corp. | 68 | ||||||
1 | Halliburton Co. | 26 | ||||||
— | Hess Corp. | 15 | ||||||
— | Husky Energy, Inc. | 9 | ||||||
10 | Lundin Petroleum Ab • | 65 | ||||||
1 | Marathon Oil Corp. | 17 | ||||||
— | Newfield Exploration Co. • | 6 | ||||||
1 | Noble Energy, Inc. | 56 | ||||||
6 | OAO Gazprom Class S ADR | 101 | ||||||
1 | Occidental Petroleum Corp. | 37 | ||||||
2 | OMV AG | 75 | ||||||
— | Peabody Energy Corp. | 9 | ||||||
— | Petro-Canada | 13 | ||||||
1 | Petroleo Brasileiro S.A. ADR | 29 | ||||||
— | Reliance Industries GDR § | 14 | ||||||
1 | Royal Dutch Shell plc ADR | 23 | ||||||
1 | Schlumberger Ltd. | 37 | ||||||
1 | Suncor Energy, Inc. ADR | 25 | ||||||
1 | Talisman Energy, Inc. | 7 | ||||||
1 | Total S.A. ADR | 39 | ||||||
— | Transocean, Inc. • | 11 | ||||||
— | Ultra Petroleum Corp. • | 4 | ||||||
— | Valero Energy Corp. | 9 | ||||||
2 | Weatherford International Ltd. | 33 | ||||||
1 | Williams Cos., Inc. | 13 | ||||||
— | Woodside Petroleum Ltd. | 13 | ||||||
— | XTO Energy, Inc. | 7 | ||||||
1,706 | ||||||||
Food & Staples Retailing - 0.8% | ||||||||
5 | Tesco plc | 23 | ||||||
1 | Walgreen Co. | 17 | ||||||
1 | Wal-Mart Stores, Inc. | 75 | ||||||
115 | ||||||||
Food, Beverage & Tobacco - 6.7% | ||||||||
2 | Altria Group, Inc. | 41 | ||||||
5 | British American Tobacco plc | 127 | ||||||
1 | Carlsberg A/S Class B | 54 | ||||||
6 | China Mengniu Dairy Co. | 10 | ||||||
1 | Coca-Cola Enterprises, Inc. | 21 | ||||||
16 | Cott Corp. | 33 | ||||||
— | General Mills, Inc. | 8 | ||||||
— | Groupe Danone ⌂ | 16 | ||||||
— | Hain Celestial Group, Inc. • | 5 | ||||||
— | Hormel Foods Corp. | 6 | ||||||
4 | Imperial Tobacco Group plc | 100 | ||||||
2 | Kellogg Co. | 84 | ||||||
— | Lorillard, Inc. | 6 | ||||||
13 | Marine Harvest • | 6 | ||||||
— | Molson Coors Brewing Co. | 9 | ||||||
5 | Nestle S.A. | 179 | ||||||
3 | Pepsi Bottling Group, Inc. | 85 | ||||||
2 | Philip Morris International, Inc. | 77 | ||||||
22 | Premier Foods plc | 12 | ||||||
— | Ralcorp Holdings, Inc. • | 26 | ||||||
1 | Smithfield Foods, Inc. • | 8 | ||||||
2 | Swedish Match Ab | 25 | ||||||
1 | Tyson Foods, Inc. Class A | 7 | ||||||
1 | Unilever N.V. CVA | 25 | ||||||
970 | ||||||||
Health Care Equipment & Services - 3.9% | ||||||||
— | Amerisource Bergen Corp. | 10 | ||||||
1 | Baxter International, Inc. | 71 | ||||||
— | Beckman Coulter, Inc. | 21 | ||||||
— | Cardinal Health, Inc. | 14 | ||||||
— | Community Health Systems, Inc. • | 9 | ||||||
1 | Coventry Health Care, Inc. • | 15 | ||||||
2 | Covidien Ltd. | 64 | ||||||
— | Eclipsys Corp. • | 5 | ||||||
2 | Health Management Associates, Inc. Class A • | 7 | ||||||
2 | Hospira, Inc. • | 53 | ||||||
— | Humana, Inc. • | 14 | ||||||
3 | Medtronic, Inc. | 103 | ||||||
2 | SSL International plc | 11 | ||||||
1 | St. Jude Medical, Inc. • | 27 | ||||||
— | Synthes, Inc. | 29 | ||||||
5 | UnitedHealth Group, Inc. | 119 | ||||||
572 | ||||||||
Household & Personal Products - 0.1% | ||||||||
— | Herbalife Ltd. | 4 | ||||||
— | Reckitt Benckiser Group plc | 10 | ||||||
14 | ||||||||
Insurance - - 2.9% | ||||||||
3 | ACE Ltd. | 131 | ||||||
1 | Aflac, Inc. | 18 | ||||||
1 | Everest Re Group Ltd. | 54 | ||||||
2 | Hilltop Holdings, Inc. • | 25 | ||||||
4 | Lancashire Holdings Ltd. • | 25 | ||||||
1 | Marsh & McLennan Cos., Inc. | 21 | ||||||
1 | Paris RE Holdings Ltd. | 24 | ||||||
— | Transatlantic Holdings, Inc. | 4 | ||||||
1 | Travelers Cos., Inc. | 45 | ||||||
2 | Unum Group | 25 | ||||||
— | Zurich Financial Services AG | 40 | ||||||
412 | ||||||||
Materials - - 7.3% | ||||||||
— | Agnico Eagle Mines Ltd. | 13 | ||||||
— | Agrium, Inc. | 7 | ||||||
— | Air Products and Chemicals, Inc. | 23 | ||||||
1 | Albemarle Corp. | 19 | ||||||
2 | Aquarius Platinum Ltd. | 9 | ||||||
1 | ArcelorMittal ADR | 16 | ||||||
— | Barrick Gold Corp. | 11 | ||||||
1 | BASF SE | 25 | ||||||
1 | BHP Billiton Ltd. ADR | 37 | ||||||
1 | BHP Billiton plc | 27 | ||||||
2 | Celanese Corp. | 37 | ||||||
1 | Cliff’s Natural Resources, Inc. | 18 | ||||||
8 | Companhia Vale do Rio Doce ADR | 127 | ||||||
2 | CRH plc | 42 | ||||||
1 | Croda International plc | 5 | ||||||
1 | FMC Corp. | 62 | ||||||
— | Freeport-McMoRan Copper & Gold, Inc. | 9 | ||||||
85 | Huabao International Holdings Ltd. | 60 | ||||||
— | Monsanto Co. | 26 | ||||||
1 | Mosaic Co. | 55 | ||||||
— | Newmont Mining Corp. | 10 | ||||||
— | Potash Corp. of Saskatchewan, Inc. | 43 | ||||||
1 | Potash Corp. of Saskatchewan, Inc. ADR | 43 | ||||||
1 | Praxair, Inc. | 42 |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.5% — (continued) | ||||||||
Materials - 7.3% — (continued) | ||||||||
5 | Rexam plc | $ | 21 | |||||
5 | Rhodia S.A. | 27 | ||||||
1 | Rio Tinto Ltd. | 28 | ||||||
2 | Rio Tinto plc | 74 | ||||||
1 | Shin-Etsu Chemical Co., Ltd. | 57 | ||||||
1 | Umicore | 26 | ||||||
2 | Vedanta Resources plc | 34 | ||||||
1 | Xstrata plc | 12 | ||||||
1,045 | ||||||||
Media - 1.6% | ||||||||
— | Arbitron, Inc. | 3 | ||||||
— | CBS Corp. Class B | 3 | ||||||
1 | Comcast Corp. Class A | 18 | ||||||
— | Comcast Corp. Special Class A | 4 | ||||||
— | DirecTV Group, Inc. • | 6 | ||||||
— | Discovery Communications, Inc. • | 2 | ||||||
— | DreamWorks Animation SKG, Inc. • | 8 | ||||||
— | Elsevier N.V. | 3 | ||||||
2 | Informa Group plc | 9 | ||||||
— | Marvel Entertainment, Inc. • | 2 | ||||||
1 | McGraw-Hill Cos., Inc. | 32 | ||||||
4 | Reed Elsevier Capital, Inc. ⌂ | 33 | ||||||
— | Scripps Networks Interactive Class A | 2 | ||||||
2 | SES Global S.A. | 40 | ||||||
— | Time Warner Cable, Inc. | 9 | ||||||
1 | Time Warner, Inc. | 12 | ||||||
— | Viacom, Inc. Class B • | 2 | ||||||
— | Vivendi S.A. | 13 | ||||||
1 | Walt Disney Co. | 15 | ||||||
1 | WPP plc | 9 | ||||||
225 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 9.7% | ||||||||
— | Abbott Laboratories | 15 | ||||||
1 | Amgen, Inc. • | 50 | ||||||
1 | Amylin Pharmaceuticals, Inc. • | 15 | ||||||
1 | Astellas Pharma, Inc. | 29 | ||||||
1 | AstraZeneca plc | 36 | ||||||
1 | AstraZeneca plc ADR | 38 | ||||||
— | Cephalon, Inc. • | 23 | ||||||
3 | Daiichi Sankyo Co., Ltd. | 51 | ||||||
3 | Eisai Co., Ltd. | 93 | ||||||
6 | Elan Corp. plc ADR • | 33 | ||||||
3 | Eli Lilly & Co. | 83 | ||||||
1 | Forest Laboratories, Inc. • | 30 | ||||||
— | Genzyme Corp. • | 24 | ||||||
1 | Gilead Sciences, Inc. • | 40 | ||||||
— | H. Lundbeck A/S | 6 | ||||||
— | Ipsen | 13 | ||||||
— | Johnson & Johnson | 23 | ||||||
1 | Laboratorios Almiral S.A. | 6 | ||||||
1 | Medicines Co. • | 7 | ||||||
1 | Merck & Co., Inc. | 29 | ||||||
— | OSI Pharmaceuticals, Inc. • | 10 | ||||||
1 | PAREXEL International Corp. • | 6 | ||||||
8 | Pfizer, Inc. | 100 | ||||||
1 | Regeneron Pharmaceuticals, Inc. • | 9 | ||||||
— | Roche Holding AG | 54 | ||||||
1 | Sanofi-Aventis S.A. | 39 | ||||||
1 | Sanofi-Aventis S.A. ADR | 41 | ||||||
8 | Schering-Plough Corp. | 186 | ||||||
3 | Shionogi & Co., Ltd. | 47 | ||||||
3 | Teva Pharmaceutical Industries Ltd. ADR | 136 | ||||||
1 | UCB S.A. | 30 | ||||||
1 | Vertex Pharmaceuticals, Inc. • | 16 | ||||||
2 | Wyeth | 82 | ||||||
1,400 | ||||||||
Real Estate - 1.7% | ||||||||
— | AMB Property Corp. | 9 | ||||||
— | Boston Properties, Inc. | 3 | ||||||
7 | Brasil Brokers Participacoes • | 8 | ||||||
— | Brookfield Asset Management, Inc. | 5 | ||||||
2 | China Resources Land Ltd. | 3 | ||||||
6 | DB Rreef Trust | 3 | ||||||
2 | Diamondrock Hospitality | 14 | ||||||
— | Douglas Emmett, Inc. | 2 | ||||||
— | Equity Residential Properties Trust | 1 | ||||||
— | Forest City Enterprises, Inc. Class A | 1 | ||||||
2 | Host Hotels & Resorts, Inc. | 14 | ||||||
1 | Kerry Properties Ltd. | 1 | ||||||
3 | Kimco Realty Corp. | 32 | ||||||
1 | Link Reit | 2 | ||||||
4 | Mitsubishi Estate Co., Ltd. | 52 | ||||||
— | Public Storage | 7 | ||||||
— | Regency Centers Corp. | 6 | ||||||
— | RioCan Real Estate Investment Trust | 3 | ||||||
— | Simon Property Group, Inc. | 5 | ||||||
2 | Sino-Ocean Land Holdings Ltd. | 2 | ||||||
— | Spazio Investment N.V. | — | ||||||
— | Sun Hung Kai Properties Ltd. | 3 | ||||||
— | Unibail | 45 | ||||||
— | Vornado Realty Trust | 20 | ||||||
— | Westfield Group | 3 | ||||||
244 | ||||||||
Retailing - 4.6% | ||||||||
— | Advance Automotive Parts, Inc. | 12 | ||||||
2 | American Eagle Outfitters, Inc. | 25 | ||||||
— | AutoZone, Inc. • | 57 | ||||||
2 | Best Buy Co., Inc. | 84 | ||||||
6 | Gap, Inc. | 87 | ||||||
2 | Home Depot, Inc. | 58 | ||||||
1 | Hot Topic, Inc. • | 14 | ||||||
6 | Kingfisher plc | 16 | ||||||
1 | Kohl’s Corp. • | 40 | ||||||
— | Lotte Shopping Co. • | 24 | ||||||
10 | Marks & Spencer Group plc | 47 | ||||||
— | Next plc | 7 | ||||||
1 | Pinault-Printemps-Redoute S.A. | 41 | ||||||
1 | Ross Stores, Inc. | 21 | ||||||
— | Sherwin-Williams Co. | 11 | ||||||
4 | Staples, Inc. | 78 | ||||||
1 | Target Corp. | 28 | ||||||
1 | TJX Cos., Inc. | 16 | ||||||
666 | ||||||||
Semiconductors & Semiconductor Equipment - 0.9% | ||||||||
— | Atheros Communications, Inc. • | 7 | ||||||
1 | Lam Research Corp. • | 24 | ||||||
1 | Marvell Technology Group Ltd. • | 10 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.5% - (continued) | ||||||||
Semiconductors & Semiconductor Equipment - 0.9% - (continued) | ||||||||
2 | Maxim Integrated Products, Inc. | $ | 30 | |||||
2 | ON Semiconductor Corp. • | 9 | ||||||
— | Samsung Electronics Co., Ltd. | 37 | ||||||
1 | Texas Instruments, Inc. | 12 | ||||||
129 | ||||||||
Software & Services - 5.2% | ||||||||
2 | Accenture Ltd. Class A | 60 | ||||||
1 | Adobe Systems, Inc. • | 18 | ||||||
— | Alliance Data Systems Corp. • | 19 | ||||||
1 | Automatic Data Processing, Inc. | 46 | ||||||
1 | BMC Software, Inc. • | 18 | ||||||
1 | DST Systems, Inc. • | 19 | ||||||
3 | Electronic Arts, Inc. • | 57 | ||||||
1 | Equinix, Inc. • | 39 | ||||||
— | Google, Inc. • | 35 | ||||||
— | Mastercard, Inc. | 2 | ||||||
6 | Microsoft Corp. | 117 | ||||||
— | Nintendo Co., Ltd. | 3 | ||||||
4 | Oracle Corp. • | 85 | ||||||
— | Red Hat, Inc. • | 8 | ||||||
— | Shanda Interactive Entertainment Ltd. ADR • | 9 | ||||||
2 | Symantec Corp. • | 34 | ||||||
1 | Visa, Inc. | 53 | ||||||
6 | Western Union Co. | 103 | ||||||
2 | Yahoo!, Inc. • | 22 | ||||||
747 | ||||||||
Technology Hardware & Equipment - 5.4% | ||||||||
1 | Apple, Inc. • | 118 | ||||||
7 | Cisco Systems, Inc. • | 142 | ||||||
5 | Corning, Inc. | 67 | ||||||
1 | Dell, Inc. • | 14 | ||||||
3 | Hewlett-Packard Co. | 117 | ||||||
— | High Technology Computer Corp. | 6 | ||||||
3 | Hon Hai Precision Industry Co., Ltd. | 10 | ||||||
8 | Hon Hai Precision Industry Co., Ltd. GDR § | 52 | ||||||
— | International Business Machines Corp. | 17 | ||||||
5 | Motorola, Inc. | 29 | ||||||
— | NetApp, Inc. • | 6 | ||||||
2 | Qualcomm, Inc. | 100 | ||||||
1 | Research In Motion Ltd. • | 39 | ||||||
4 | Seagate Technology | 34 | ||||||
1 | Western Digital Corp. • | 28 | ||||||
— | Yaskawa Electric Corp. | 2 | ||||||
781 | ||||||||
Telecommunication Services - 3.9% | ||||||||
— | American Tower Corp. Class A • | 14 | ||||||
1 | Brasil Telecom S.A. ADR | 20 | ||||||
— | Cellcom Israel Ltd. | 7 | ||||||
— | CenturyTel, Inc. | 8 | ||||||
1 | China Mobile Ltd. | 8 | ||||||
2 | Deutsche Telekom AG | 23 | ||||||
1 | France Telecom S.A. | 30 | ||||||
1 | Koninklijke (Royal) KPN N.V. | 6 | ||||||
1 | Millicom International Cellular S.A. | 48 | ||||||
2 | Mobile Telesystems OJSC ADR | 74 | ||||||
4 | MTN Group Ltd. | 51 | ||||||
1 | NII Holdings, Inc. Class B • | 20 | ||||||
1 | P.T. Telekomunikasi Indonesia ADR | 19 | ||||||
1 | Partner Communications Co., Ltd. ADR | 18 | ||||||
2 | Qwest Communications International, Inc. | 10 | ||||||
1 | Tele Norte Leste Participacoes S.A. ADR | 11 | ||||||
75 | Telecom Italia S.p.A. | 67 | ||||||
1 | Telefonica S.A. | 23 | ||||||
1 | Telefonica S.A. ADR | 35 | ||||||
4 | Turkcell Iletisim Hizmetleri AS ADR | 54 | ||||||
1 | TW Telecom, Inc. • | 12 | ||||||
1 | Vimpel-Communications ADR | 8 | ||||||
566 | ||||||||
Transportation - 3.3% | ||||||||
2 | Abertis Infraestructuras S.A. | 30 | ||||||
1 | C.H. Robinson Worldwide, Inc. | 50 | ||||||
9 | China Merchants Holdings International Co., Ltd. | 20 | ||||||
7 | Covenant Transport • | 13 | ||||||
2 | Delta Air Lines, Inc. • | 10 | ||||||
— | East Japan Railway Co. | 6 | ||||||
1 | easyJet plc • | 5 | ||||||
1 | Expeditors International of Washington, Inc. | 21 | ||||||
1 | FedEx Corp. | 34 | ||||||
1 | Forward Air Corp. | 15 | ||||||
2 | Hub Group, Inc. • | 41 | ||||||
— | Iino Kaiun Kaisha Ltd. | 1 | ||||||
2 | J.B. Hunt Transport Services, Inc. | 59 | ||||||
— | Japan Airport Terminal | 2 | ||||||
3 | JetBlue Airways Corp. • | 15 | ||||||
1 | Kuehne & Nagel International AG | 57 | ||||||
16 | PLUS Expressways Berhad | 15 | ||||||
1 | Ryanair Holdings plc ADR • | 16 | ||||||
— | Sumitomo Warehouse | 1 | ||||||
— | United Parcel Service, Inc. Class B | 21 | ||||||
2 | US Airways Group, Inc. • | 8 | ||||||
9 | YRC Worldwide, Inc. • | 26 | ||||||
466 | ||||||||
Utilities - 4.5% | ||||||||
— | American Electric Power Co., Inc. | 10 | ||||||
— | CenterPoint Energy, Inc. | 3 | ||||||
1 | CIA Saneamento Minas Gerais | 8 | ||||||
— | CMS Energy Corp. | 3 | ||||||
4 | Companhia Energetica de Minas Gerais ADR | 58 | ||||||
— | DPL, Inc. | 6 | ||||||
3 | E.On AG | 95 | ||||||
— | Electricite de France | 6 | ||||||
2 | Eni S.p.A. | 50 | ||||||
— | EQT Corp. | 14 | ||||||
2 | Exelon Corp. | 89 | ||||||
1 | FirstEnergy Corp. | 26 | ||||||
— | FPL Group, Inc. | 6 | ||||||
1 | Gaz de France | 37 | ||||||
1 | International Power plc | 5 | ||||||
1 | N.V. Energy, Inc. | 8 | ||||||
2 | National Grid plc | 17 | ||||||
1 | Northeast Utilities | 17 | ||||||
1 | PG&E Corp. | 23 | ||||||
— | PPL Corp. | 7 | ||||||
— | Questar Corp. | 11 | ||||||
1 | Red Electrica Corporacion S.A. | 28 | ||||||
1 | Severn Trent plc | 8 | ||||||
2 | Snam Rete Gas S.p.A — Rights | 2 | ||||||
2 | Snam Rete Gas S.p.A. | 9 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.5% - (continued) | ||||||||
Utilities - - 4.5% - (continued) | ||||||||
— | Southern Co. | $ | 7 | |||||
13 | Tenaga Nasional Bhd | 27 | ||||||
7 | Tokyo Gas Co., Ltd. | 28 | ||||||
— | UniSource Energy Corp. | 13 | ||||||
— | Wisconsin Energy Corp. | 6 | ||||||
1 | Xcel Energy, Inc. | 14 | ||||||
25 | YTL Power International Berhad | 14 | ||||||
655 | ||||||||
Total common stocks (cost $16,059) | $ | 13,727 | ||||||
PREFERRED STOCKS - 0.3% | ||||||||
Diversified Financials - 0.2% | ||||||||
2 | Banco Itau Holding | $ | 34 | |||||
Telecommunication Services - 0.1% | ||||||||
1 | Telemar Norte Leste S.A. | 19 | ||||||
Total preferred stocks (cost $77) | $ | 53 | ||||||
WARRANTS - 0.2% | ||||||||
Energy 0.0% | ||||||||
— | Deutsche — CW17 Oil & Natural Gas Corp. ⌂• | $ | 6 | |||||
Telecommunication Services 0.2% | ||||||||
1 | Citigroup Global Certificate — Bharti Televentures ⌂• | 14 | ||||||
— | JP Morgan International Derivative — Bharti Airtel Ltd. ⌂• | 7 | ||||||
21 | ||||||||
Total warrants (cost $31) | $ | 27 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 0.0% | ||||||||
Finance - 0.0% | ||||||||
Kimco Realty Corp. | ||||||||
$ 2 | 5.70%, 05/01/2017 | $ | 1 | |||||
Simon Property Group L.P. | ||||||||
1 | 6.13%, 05/30/2018 | 1 | ||||||
Vornado Realty Trust | ||||||||
1 | 2.85%, 04/01/2027 ۞ | 1 | ||||||
3 | ||||||||
Total corporate bonds: investment grade (cost $3) | $ | 3 | ||||||
EXCHANGE TRADED FUNDS - 0.6% | ||||||||
Banks - 0.6% | ||||||||
1 | iShares MSCI EAFE Index Fund | 59 | ||||||
1 | SPDR S&P Retail ETF | 24 | ||||||
83 | ||||||||
Total exchange traded funds (cost $79) | $ | 83 | ||||||
Total long-term investments (cost $16,249) | $ | 13,893 | ||||||
SHORT-TERM INVES TMENTS - 2.0% | ||||||||
Repurchase Agreements - 2.0% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $67, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $68) | ||||||||
$ 67 | 0.18%, 04/30/2009 | $ | 67 | |||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $80, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $82) | ||||||||
80 | 0.17%, 04/30/2009 | 80 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $112, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $114) | ||||||||
112 | 0.17%, 04/30/2009 | 112 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $-, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $-) | ||||||||
— | 0.14%, 04/30/2009 | — | ||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $24, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $25) | ||||||||
24 | 0.16%, 04/30/2009 | 24 | ||||||
283 | ||||||||
Total short-term investments (cost $283) | $ | 283 |
Total investments (cost $16,532)▲ | 98.6 | % | $ | 14,176 | ||||||||
Other assets and liabilities | 1.4 | % | 199 | |||||||||
Total net assets | 100.0 | % | $ | 14,375 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 46.41% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. |
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▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $16,737 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 817 | ||
Unrealized Depreciation | (3,378 | ) | ||
Net Unrealized Depreciation | $ | (2,561 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $0, which represents 0.00% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $14, which represents 0.10% of total net assets. | |
§ | Securities contain some restrictions as to public resale. These securities comply with Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933, and are determined to be liquid. At April 30, 2009, the market value of these securities amounted to $52 or 0.36% of total net assets. | |
۞ | Convertible security. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
02/2008 - 01/2009 | 1 | Citigroup Global Certificate — Bharti Televentures — 144A Warrants | $ | 18 | ||||||||
06/2008 - 07/2008 | — | Deutsche — CW17 Oil & Natural Gas Corp. — 144A Warrants | 7 | |||||||||
03/2009 | — | Groupe Danone | 16 | |||||||||
01/2009 - 03/2009 | — | JP Morgan International Derivative — Bharti Airtel Ltd. — 144A Warrants | 6 | |||||||||
02/2008 - 05/2008 | 16 | Peace Mark Holdings Ltd. | 16 | |||||||||
07/2008 - 04/2009 | 4 | Reed Elsevier Capital, Inc. | 34 | |||||||||
08/2008 - 02/2009 | 234 | Rolls-Royce Group-C Share Entitlement | — |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Sell) | $ | 25 | $ | 24 | 05/04/09 | $ | (1 | ) | ||||||||
British Pound (Sell) | 27 | 27 | 05/01/09 | — | ||||||||||||
British Pound (Sell) | 28 | 28 | 05/05/09 | — | ||||||||||||
British Pound (Buy) | 5 | 5 | 05/05/09 | — | ||||||||||||
Euro (Buy) | 1 | 1 | 05/04/09 | — | ||||||||||||
Euro (Sell) | 14 | 14 | 05/05/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 70 | 70 | 05/04/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 1 | 1 | 05/05/09 | — | ||||||||||||
Swiss Franc (Sell) | 26 | 26 | 05/04/09 | — | ||||||||||||
Swiss Franc (Buy) | 3 | 3 | 05/04/09 | — | ||||||||||||
$ | (1 | ) | ||||||||||||||
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
S&P 500 Mini | 1 | Long | Jun 2009 | $ | 6 | |||||||||||
* | The number of contracts does not omit 000’s. | |
Cash of $5 was pledged as initial margin deposit for open futures contracts at April 30, 2009. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
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Percentage of | ||||
Country | Net Assets | |||
Australia | 0.6 | % | ||
Austria | 0.5 | |||
Belgium | 0.5 | |||
Bermuda | 0.1 | |||
Brazil | 3.1 | |||
Canada | 4.8 | |||
China | 1.6 | |||
Denmark | 1.0 | |||
France | 3.3 | |||
Germany | 2.7 | |||
Hong Kong | 1.2 | |||
India | 0.5 | |||
Indonesia | 0.1 | |||
Ireland | 0.6 | |||
Israel | 1.0 | |||
Italy | 1.2 | |||
Japan | 3.7 | |||
Luxembourg | 0.7 | |||
Malaysia | 0.4 | |||
Netherlands | 0.2 | |||
Norway | 1.0 | |||
Panama | 0.1 | |||
Russia | 1.2 | |||
Singapore | 0.5 | |||
South Africa | 0.4 | |||
South Korea | 0.4 | |||
Spain | 0.8 | |||
Sweden | 1.1 | |||
Switzerland | 3.2 | |||
Taiwan | 0.5 | |||
Thailand | 0.4 | |||
Turkey | 0.4 | |||
United Kingdom | 8.6 | |||
United States | 50.2 | |||
Short-Term Investments | 2.0 | |||
Other Assets and Liabilities | 1.4 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 9,436 | ||
Investment in securities — Level 2 | 4,740 | |||
Investment in securities — Level 3 | — | |||
Total | $ | 14,176 | ||
Other financial instruments — Level 1 * | $ | 6 | ||
Total | $ | 6 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 1 | |||
Total | $ | 1 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | — | ||
Net realized loss | (1 | ) | ||
Change in unrealized appreciation ♦ | 2 | |||
Net sales | (1 | ) | ||
Balance as of April 30, 2009 | $ | — | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | — | ||
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Assets: | ||||
Investments in securities, at fair value (cost $16,532) | $ | 14,176 | ||
Cash | 5 | * | ||
Foreign currency on deposit with custodian (cost $16) | 16 | |||
Unrealized appreciation on forward foreign currency contracts | — | |||
Receivables: | ||||
Investment securities sold | 269 | |||
Fund shares sold | — | |||
Dividends and interest | 42 | |||
Variation margin | — | |||
Other assets | 102 | |||
Total assets | 14,610 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 1 | |||
Payables: | ||||
Investment securities purchased | 222 | |||
Investment management fees | 2 | |||
Distribution fees | — | |||
Accrued expenses | 10 | |||
Total liabilities | 235 | |||
Net assets | $ | 14,375 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 22,179 | |||
Accumulated undistributed net investment income | 52 | |||
Accumulated net realized loss on investments and foreign currency transactions | (5,506 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (2,350 | ) | ||
Net assets | $ | 14,375 | ||
Shares authorized | 850,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.36/$6.73 | ||
Shares outstanding | 2,029 | |||
Net assets | $ | 12,907 | ||
Class B: Net asset value per share | $ | 6.35 | ||
Shares outstanding | 34 | |||
Net assets | $ | 217 | ||
Class C: Net asset value per share | $ | 6.35 | ||
Shares outstanding | 44 | |||
Net assets | $ | 282 | ||
Class I: Net asset value per share | $ | 6.36 | ||
Shares outstanding | 31 | |||
Net assets | $ | 195 | ||
Class R3: Net asset value per share | $ | 6.36 | ||
Shares outstanding | 30 | |||
Net assets | $ | 194 | ||
Class R4: Net asset value per share | $ | 6.36 | ||
Shares outstanding | 30 | |||
Net assets | $ | 193 | ||
Class R5: Net asset value per share | $ | 6.36 | ||
Shares outstanding | 30 | |||
Net assets | $ | 193 | ||
Class Y: Net asset value per share | $ | 6.36 | ||
Shares outstanding | 30 | |||
Net assets | $ | 194 | ||
* | Cash of $5 was designated to cover open futures contracts. |
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Investment Income: | ||||
Dividends | $ | 193 | ||
Interest | 1 | |||
Less: Foreign tax withheld | (14 | ) | ||
Total investment income | 180 | |||
Expenses: | ||||
Investment management fees | 61 | |||
Transfer agent fees | 2 | |||
Distribution fees | ||||
Class A | 14 | |||
Class B | 1 | |||
Class C | 1 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 12 | |||
Accounting services | 1 | |||
Registration and filing fees | 49 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 10 | |||
Total expenses (before waivers and fees paid indirectly) | 155 | |||
Expense waivers | (51 | ) | ||
Commission recapture | — | |||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (51 | ) | ||
Total expenses, net | 104 | |||
Net investment income | 76 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (4,188 | ) | ||
Net realized loss on futures | (17 | ) | ||
Net realized gain on foreign currency transactions | 3 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (4,202 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 3,899 | |||
Net unrealized appreciation of futures | 2 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (2 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 3,899 | |||
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (303 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (227 | ) | |
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For the Period | ||||||||
For the Six-Month | February 29, | |||||||
Period Ended | 2008** | |||||||
April 30, 2009 | through | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 76 | $ | 99 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (4,202 | ) | (1,314 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 3,899 | (6,249 | ) | |||||
Net decrease in net assets resulting from operations | (227 | ) | (7,464 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (131 | ) | — | |||||
Class B | (1 | ) | — | |||||
Class C | (1 | ) | — | |||||
Class I | (2 | ) | — | |||||
Class R3 | (1 | ) | — | |||||
Class R4 | (2 | ) | — | |||||
Class R5 | (2 | ) | — | |||||
Class Y | (3 | ) | — | |||||
Total distributions | (143 | ) | — | |||||
Capital Share Transactions: | ||||||||
Class A | 493 | 19,466 | ||||||
Class B | 1 | 331 | ||||||
Class C | 60 | 341 | ||||||
Class I | 3 | 304 | ||||||
Class R3 | 3 | 300 | ||||||
Class R4 | 2 | 300 | ||||||
Class R5 | 2 | 300 | ||||||
Class Y | 3 | 300 | ||||||
Net increase from capital share transactions | 567 | 21,642 | ||||||
Net increase in net assets | 197 | 14,178 | ||||||
Net Assets: | ||||||||
Beginning of period | 14,178 | — | ||||||
End of period | $ | 14,375 | $ | 14,178 | ||||
Accumulated undistributed net investment income | $ | 52 | $ | 119 | ||||
** | Commencement of operations. |
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Equity Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
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15
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April 30, 2009 (Unaudited)
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the |
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Table of Contents
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
k) | Prepayment Risks — Certain debt securities allow for prepayment of principal without penalty. Securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. The potential for the value of a debt security to increase in response to interest rate declines is limited. For certain securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, |
17
Table of Contents
April 30, 2009 (Unaudited)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related |
18
Table of Contents
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: | |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | ||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | ||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | ||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | ||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. | ||
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
b) | As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 121 | ||
Accumulated Capital Losses* | $ | (1,096 | ) | |
Unrealized Depreciation† | $ | (6,459 | ) | |
Total Accumulated Deficit | $ | (7,434 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $20, increase accumulated net realized gain by $10, and decrease paid in capital by $30. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 1,096 | ||
Total | $ | 1,096 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after October 31, 2008. Management has evaluated the implications of FIN 48 for all open tax years (tax year ended October 31, 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in |
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Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9500 | % | ||
On next $500 million | 0.9000 | % | ||
On next $4 billion | 0.8500 | % | ||
On next $5 billion | 0.8475 | % | ||
Over $10 billion | 0.8450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||||||||||||||||
1.65% | 2.40 | % | 2.40 | % | 1.40 | % | 1.90 | % | 1.65 | % | 1.40 | % | 1.30 | % |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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April 30, 2009 (Unaudited)
Annualized | ||||||||
Six-Month | ||||||||
Period | Year Ended | |||||||
Ended April | October 31, | |||||||
30, 2009 | 2008 | |||||||
Class A Shares | 1.57 | % | 1.56 | %* | ||||
Class B Shares | 2.40 | 2.33 | † | |||||
Class C Shares | 2.40 | 2.34 | ‡ | |||||
Class I Shares | 1.30 | 1.31 | § | |||||
Class R3 Shares | 1.90 | 1.90 | ** | |||||
Class R4 Shares | 1.65 | 1.65 | †† | |||||
Class R5 Shares | 1.40 | 1.40 | ‡‡ | |||||
Class Y Shares | 1.30 | 1.30 | §§ |
* | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
† | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
‡ | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
§ | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
** | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
†† | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
‡‡ | From February 29, 2008 (commencement of operations), through October 31, 2008 | |
§§ | From February 29, 2008 (commencement of operations), through October 31, 2008 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $5 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $1 for providing such services. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: |
Shares | ||||
Class A | 1,810 | |||
Class B | 30 | |||
Class C | 30 | |||
Class I | 30 | |||
Class R3 | 30 | |||
Class R4 | 30 | |||
Class R5 | 30 | |||
Class Y | 30 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 9,363 | ||
Sales Proceeds Excluding U.S. Government Obligations | 8,921 |
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April 30, 2009 (Unaudited)
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 70 | 22 | (10 | ) | — | 82 | 1,961 | — | (14 | ) | — | 1,947 | ||||||||||||||||||||||||||||
Amount | $ | 420 | $ | 130 | $ | (57 | ) | $ | — | $ | 493 | $ | 19,595 | $ | — | $ | (129 | ) | $ | — | $ | 19,466 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 5 | — | (5 | ) | — | — | 34 | — | — | — | 34 | |||||||||||||||||||||||||||||
Amount | $ | 31 | $ | 1 | $ | (31 | ) | $ | — | $ | 1 | $ | 331 | $ | — | $ | — | $ | — | $ | 331 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 18 | — | (9 | ) | — | 9 | 35 | — | — | — | 35 | |||||||||||||||||||||||||||||
Amount | $ | 111 | $ | 1 | $ | (52 | ) | $ | — | $ | 60 | $ | 341 | $ | — | $ | — | $ | — | $ | 341 | |||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 31 | — | (1 | ) | — | 30 | |||||||||||||||||||||||||||||
Amount | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | $ | 311 | $ | — | $ | (7 | ) | $ | — | $ | 304 | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 30 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Amount | $ | 2 | $ | 1 | $ | — | $ | — | $ | 3 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 30 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 30 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | 30 | — | — | — | 30 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | $ | 300 | $ | — | $ | — | $ | — | $ | 300 |
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Proposed Reorganization: | |
At a meeting held on February 4, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved the reorganizations (each, a “Reorganization”) of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund (each, an “Acquired Fund”) with and into The Hartford Global Equity Fund (the “Acquiring Fund”). | ||
The Board of Directors has called for a Special Meeting of Shareholders of each Acquired Fund (the “Meeting”) to be held on or about August 4, 2009, for the purpose of seeking the approval of an Agreement and Plan of Reorganization (“Reorganization Agreement”) by the shareholders of the respective Acquired Fund. | ||
If each Reorganization Agreement is approved by the shareholders of the respective Acquired Fund, the Reorganization Agreement contemplates: (1) the transfer of all of the assets of the Acquired Fund with and into the Acquiring Fund in exchange for shares of the Acquiring Fund having equal net asset value of the Acquired Fund; (2) the assumption by the Acquiring Fund of all of the liabilities of each Acquired Fund; and (3) the distribution of shares of the Acquiring Fund to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund. Each shareholder of an Acquired Fund |
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11. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.55 | $ | 0.03 | $ | — | $ | (0.15 | ) | $ | (0.12 | ) | $ | (0.07 | ) | $ | — | $ | — | $ | (0.07 | ) | $ | (0.19 | ) | $ | 6.36 | (1.82) | %(e) | $ | 12,907 | 2.36 | %(f) | 1.57 | %(f) | 1.57 | %(f) | 1.22 | %(f) | 70 | % | |||||||||||||||||||||||||||||||
B | 6.51 | 0.01 | — | (0.15 | ) | (0.14 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.16 | ) | 6.35 | (2.08 | ) (e) | 217 | 3.21 | (f) | 2.40 | (f) | 2.40 | (f) | 0.37 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 6.51 | 0.01 | — | (0.15 | ) | (0.14 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.16 | ) | 6.35 | (2.07 | ) (e) | 282 | 3.25 | (f) | 2.40 | (f) | 2.40 | (f) | 0.38 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 6.56 | 0.04 | — | (0.16 | ) | (0.12 | ) | (0.08 | ) | — | — | (0.08 | ) | (0.20 | ) | 6.36 | (1.69 | ) (e) | 195 | 2.09 | (f) | 1.30 | (f) | 1.30 | (f) | 1.48 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 6.53 | 0.03 | — | (0.16 | ) | (0.13 | ) | (0.04 | ) | — | — | (0.04 | ) | (0.17 | ) | 6.36 | (1.93 | ) (e) | 194 | 2.79 | (f) | 1.90 | (f) | 1.90 | (f) | 0.88 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 6.54 | 0.03 | — | (0.15 | ) | (0.12 | ) | (0.06 | ) | — | — | (0.06 | ) | (0.18 | ) | 6.36 | (1.78 | ) (e) | 193 | 2.48 | (f) | 1.65 | (f) | 1.65 | (f) | 1.13 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 6.55 | 0.04 | — | (0.15 | ) | (0.11 | ) | (0.08 | ) | — | — | (0.08 | ) | (0.19 | ) | 6.36 | (1.63 | ) (e) | 193 | 2.18 | (f) | 1.40 | (f) | 1.40 | (f) | 1.38 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 6.56 | 0.04 | — | (0.15 | ) | (0.11 | ) | (0.09 | ) | — | — | (0.09 | ) | (0.20 | ) | 6.36 | (1.66 | ) (e) | 194 | 2.09 | (f) | 1.30 | (f) | 1.30 | (f) | 1.48 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) February 29, 2008, through October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | 0.05 | — | (3.50 | ) | (3.45 | ) | — | — | — | — | (3.45 | ) | 6.55 | (34.50 | ) (e) | 12,746 | 1.92 | (f) | 1.56 | (f) | 1.56 | (f) | 0.78 | (f) | 56 | ||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | — | — | (3.49 | ) | (3.49 | ) | — | — | — | — | (3.49 | ) | 6.51 | (34.90 | ) (e) | 223 | 2.70 | (f) | 2.34 | (f) | 2.34 | (f) | 0.03 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | — | — | (3.49 | ) | (3.49 | ) | — | — | — | — | (3.49 | ) | 6.51 | (34.90 | ) (e) | 225 | 2.71 | (f) | 2.34 | (f) | 2.34 | (f) | 0.02 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 10.00 | 0.07 | — | (3.51 | ) | (3.44 | ) | — | — | — | — | (3.44 | ) | 6.56 | (34.40 | ) (e) | 199 | 1.67 | (f) | 1.31 | (f) | 1.31 | (f) | 1.06 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3(k) | 10.00 | 0.03 | — | (3.50 | ) | (3.47 | ) | — | — | — | — | (3.47 | ) | 6.53 | (34.70 | ) (e) | 196 | 2.36 | (f) | 1.90 | (f) | 1.90 | (f) | 0.47 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4(l) | 10.00 | 0.04 | — | (3.50 | ) | (3.46 | ) | — | — | — | — | (3.46 | ) | 6.54 | (34.60 | ) (e) | 196 | 2.06 | (f) | 1.65 | (f) | 1.65 | (f) | 0.72 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5(m) | 10.00 | 0.06 | — | (3.51 | ) | (3.45 | ) | — | — | — | — | (3.45 | ) | 6.55 | (34.50 | ) (e) | 196 | 1.76 | (f) | 1.40 | (f) | 1.40 | (f) | 0.97 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.07 | — | (3.51 | ) | (3.44 | ) | — | — | — | — | (3.44 | ) | 6.56 | (34.40 | ) (e) | 197 | 1.66 | (f) | 1.30 | (f) | 1.30 | (f) | 1.07 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on February 29, 2008. | |
(h) | Commenced operations on February 29, 2008. | |
(i) | Commenced operations on February 29, 2008. | |
(j) | Commenced operations on February 29, 2008. | |
(k) | Commenced operations on February 29, 2008. | |
(l) | Commenced operations on February 29, 2008. | |
(m) | Commenced operations on February 29, 2008. | |
(n) | Commenced operations on February 29, 2008. |
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 981.80 | $ | 7.71 | $ | 1,000.00 | $ | 1,017.00 | $ | 7.85 | 1.57 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 979.15 | $ | 11.77 | $ | 1,000.00 | $ | 1,012.89 | $ | 11.97 | 2.40 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 979.28 | $ | 11.77 | $ | 1,000.00 | $ | 1,012.89 | $ | 11.97 | 2.40 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 983.10 | $ | 6.39 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 980.72 | $ | 9.33 | $ | 1,000.00 | $ | 1,015.37 | $ | 9.49 | 1.90 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 982.20 | $ | 8.10 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 983.70 | $ | 6.88 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.00 | 1.40 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 983.37 | $ | 6.39 | $ | 1,000.00 | $ | 1,018.34 | $ | 6.50 | 1.30 | 181 | 365 |
30
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Global Financial Services A# | 10/31/00 | -39.21 | % | -5.01 | % | -2.56 | % | |||||||||
Global Financial Services A## | 10/31/00 | -42.55 | % | -6.08 | % | -3.21 | % | |||||||||
Global Financial Services B# | 10/31/00 | -39.44 | % | -5.55 | % | NA | * | |||||||||
Global Financial Services B## | 10/31/00 | -42.37 | % | -5.84 | % | NA | * | |||||||||
Global Financial Services C# | 10/31/00 | -39.72 | % | -5.73 | % | -3.27 | % | |||||||||
Global Financial Services C## | 10/31/00 | -40.30 | % | -5.73 | % | -3.27 | % | |||||||||
Global Financial Services Y# | 10/31/00 | -39.00 | % | -4.61 | % | -2.13 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | Inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Mark T. Lynch, CFA
Senior Vice President, Partner,
Global Industry Analyst
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Brazil | 7.2 | % | ||
Canada | 12.6 | |||
Denmark | 5.1 | |||
France | 2.1 | |||
Germany | 5.8 | |||
Norway | 7.7 | |||
Panama | 0.3 | |||
Singapore | 3.9 | |||
Sweden | 3.5 | |||
Switzerland | 5.3 | |||
Thailand | 4.3 | |||
United Kingdom | 5.7 | |||
United States | 32.3 | |||
Short-Term Investments | 4.2 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 93.4% | ||||||||
Brazil - 4.8% | ||||||||
105 | Banco do Estado do Rio Grande do Sul S.A. | $ | 344 | |||||
36 | Itau Unibanco Banco Multiplo S.A. ADR | 494 | ||||||
838 | ||||||||
Canada - 12.6% | ||||||||
30 | Bank of Nova Scotia | 853 | ||||||
54 | First National Financial, Inc. | 476 | ||||||
3 | Gluskin Sheff Associates, Inc. | 26 | ||||||
22 | Toronto-Dominion Bank ADR | 855 | ||||||
2,210 | ||||||||
Denmark - 5.1% | ||||||||
5 | Gronlandsbanken | 282 | ||||||
1 | Ringkjoebing Landbobank | 82 | ||||||
31 | Sydbank A/S | 524 | ||||||
888 | ||||||||
France - 2.1% | ||||||||
3 | BNP Paribas | 175 | ||||||
4 | Societe Generale Class A | 190 | ||||||
365 | ||||||||
Germany - 5.8% | ||||||||
14 | Deutsche Boerse AG | 1,013 | ||||||
Norway - 7.7% | ||||||||
183 | DNB Nor ASA | 1,142 | ||||||
49 | Sparebanken Midt-Norge | 220 | ||||||
1,362 | ||||||||
Panama - 0.3% | ||||||||
4 | Banco Latinoamericano de Exportaciones S.A. ADR Class E | 53 | ||||||
Singapore - 3.9% | ||||||||
107 | DBS Group Holdings Ltd. | 682 | ||||||
Sweden - 3.5% | ||||||||
81 | Nordea Bank AB | 606 | ||||||
Switzerland - 5.3% | ||||||||
19 | Julius Baer Holding Ltd. | 630 | ||||||
16 | Paris RE Holdings Ltd. | 307 | ||||||
937 | ||||||||
Thailand - 4.3% | ||||||||
316 | Bangkok Bank plc | 763 | ||||||
United Kingdom - 5.7% | ||||||||
46 | Lancashire Holdings Ltd. • | 321 | ||||||
44 | Standard Chartered plc | 685 | ||||||
1,006 | ||||||||
United States - 32.3% | ||||||||
14 | ACE Ltd. | 634 | ||||||
15 | Ameriprise Financial, Inc. | 403 | ||||||
148 | Citizens Republic Bancorp, Inc. | 249 | ||||||
77 | Discover Financial Services, Inc. | 625 | ||||||
3 | Everest Re Group Ltd. | 258 | ||||||
7 | Goldman Sachs Group, Inc. | 841 | ||||||
28 | Hilltop Holdings, Inc. • | 314 | ||||||
41 | Nasdaq OMX Group, Inc. • | 781 | ||||||
43 | Popular, Inc. | 124 | ||||||
15 | Travelers Cos., Inc. | 609 | ||||||
57 | Washington Mutual, Inc. Private Placement ⌂† | 6 | ||||||
26 | Webster Financial Corp. | 134 | ||||||
34 | Wells Fargo & Co. | 688 | ||||||
5,666 | ||||||||
Total common stocks (cost $20,648) | $ | 16,389 | ||||||
PREFERRED STOCKS - 2.4% | ||||||||
Brazil - 2.4% | ||||||||
30 | Banco Itau Holding | $ | 418 | |||||
Total preferred stocks (cost $611) | $ | 418 | ||||||
WARRANTS - 0.0% | ||||||||
United States 0.0% | ||||||||
7 | Washington Mutual, Inc. Private Placement ⌂•† | $ | — | |||||
Total warrants (cost $—) | $ | — | ||||||
Total long-term investments (cost $21,259) | $ | 16,807 | ||||||
SHORT-TERM INVESTMENTS — 4.2% | ||||||||
Repurchase Agreements - 4.2% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $174, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $177) | ||||||||
$ | 174 | 0.18%, 04/30/2009 | $ | 174 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $208, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $212) | ||||||||
208 | 0.17%, 04/30/2009 | 208 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $291, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $296) | ||||||||
290 | 0.17%, 04/30/2009 | 290 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1) | ||||||||
1 | 0.14%, 04/30/2009 | 1 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 4.2% - (continued) | ||||||||||||
Repurchase Agreements - 4.2% - (continued) | ||||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $63, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $64) | ||||||||||||
$ | 63 | 0.16%, 04/30/2009 | $ | 63 | ||||||||
736 | ||||||||||||
Total short-term investments (cost $736) | $ | 736 | ||||||||||
Total investments (cost $21,995)▲ | 100.0 | % | $ | 17,543 | ||||||||
Other assets and liabilities | — | % | (9 | ) | ||||||||
Total net assets | 100 .0 | % | $ | 17,534 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 63.54% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $22,617 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,347 | ||
Unrealized Depreciation | (6,421 | ) | ||
Net Unrealized Depreciation | $ | (5,074 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $6, which represents 0.03% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | 57 | Washington Mutual, Inc. Private Placement | $ | 500 | ||||||||
04/2008 | 7 | Washington Mutual, Inc. Private Placement Warrants | $ | — |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Asset Management & Custody Banks | 6.0 | % | ||
Consumer Finance | 3.6 | |||
Diversified Banks | 46.0 | |||
Investment Banking & Brokerage | 4.8 | |||
Other Diversified Financial Services | 2.4 | |||
Property & Casualty Insurance | 8.9 | |||
Regional Banks | 6.2 | |||
Reinsurance | 5.0 | |||
Specialized Finance | 10.2 | |||
Thrifts & Mortgage Finance | 2.7 | |||
Short-Term Investments | 4.2 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 9,178 | ||
Investment in securities — Level 2 | 8,359 | |||
Investment in securities — Level 3 | 6 | |||
Total | $ | 17,543 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 3 | ||
Change in unrealized appreciation ♦ | 3 | |||
Balance as of April 30, 2009. | $ | 6 | ||
♦ Change in unrealized gains or losses relating to asset still held at April 30, 2009 | $ | 3 | ||
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $21,995) | $ | 17,543 | ||
Cash | 10 | |||
Foreign currency on deposit with custodian (cost $5) | 5 | |||
Receivables: | ||||
Dividends and interest | 45 | |||
Other assets | 68 | |||
Total assets | 17,671 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 33 | |||
Fund shares redeemed | 82 | |||
Investment management fees | 2 | |||
Distribution fees | 1 | |||
Accrued expenses | 19 | |||
Total liabilities | 137 | |||
Net assets | $ | 17,534 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 36,769 | |||
Accumulated undistributed net investment income | 127 | |||
Accumulated net realized loss on investments and foreign currency transactions | (14,910 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (4,452 | ) | ||
Net assets | $ | 17,534 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.04/$6.39 | ||
Shares outstanding | 1,804 | |||
Net assets | $ | 10,900 | ||
Class B: Net asset value per share | $ | 5.93 | ||
Shares outstanding | 337 | |||
Net assets | $ | 2,000 | ||
Class C: Net asset value per share | $ | 5.90 | ||
Shares outstanding | 541 | |||
Net assets | $ | 3,196 | ||
Class Y: Net asset value per share | $ | 6.10 | ||
Shares outstanding | 236 | |||
Net assets | $ | 1,438 | ||
6
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 331 | ||
Interest | — | |||
Securities lending | — | |||
Less: Foreign tax withheld | (30 | ) | ||
Total investment income | 301 | |||
Expenses: | ||||
Investment management fees | 78 | |||
Transfer agent fees | 48 | |||
Distribution fees | ||||
Class A | 14 | |||
Class B | 10 | |||
Class C | 16 | |||
Custodian fees | 6 | |||
Accounting services | 1 | |||
Registration and filing fees | 25 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 8 | |||
Total expenses (before waivers and fees paid indirectly) | 209 | |||
Expense waivers | (53 | ) | ||
Transfer agent fee waivers | (23 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (76 | ) | ||
Total expenses, net | 133 | |||
Net investment income | 168 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (8,470 | ) | ||
Net realized gain on foreign currency transactions | 9 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (8,461 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 5,322 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 5,322 | |||
Net Loss on Investments and Foreign Currency Transactions | (3,139 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (2,971 | ) | |
7
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 168 | $ | 660 | ||||
Net realized loss on investments and foreign currency transactions | (8,461 | ) | (6,360 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 5,322 | (13,584 | ) | |||||
Net decrease in net assets resulting from operations | (2,971 | ) | (19,284 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (404 | ) | (356 | ) | ||||
Class B | (74 | ) | (16 | ) | ||||
Class C | (102 | ) | (30 | ) | ||||
Class Y | (50 | ) | (23 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (2,764 | ) | |||||
Class B | — | (428 | ) | |||||
Class C | — | (593 | ) | |||||
Class Y | — | (166 | ) | |||||
Total distributions | (630 | ) | (4,376 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (3,616 | ) | 9,173 | |||||
Class B | (286 | ) | 1,146 | |||||
Class C | (486 | ) | 2,692 | |||||
Class Y | 405 | 874 | ||||||
Net increase (decrease) from capital share transactions | (3,983 | ) | 13,885 | |||||
Net decrease in net assets | (7,584 | ) | (9,775 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 25,118 | 34,893 | ||||||
End of period | $ | 17,534 | $ | 25,118 | ||||
Accumulated undistributed net investment income | $ | 127 | $ | 589 | ||||
8
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Financial Services Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation – The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. |
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the |
10
Table of Contents
value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. |
f) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Illiquid and Restricted Securities – The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
i) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial |
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April 30, 2009 (Unaudited)
(000’s Omitted)
statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. |
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. |
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k) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
l) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 681 | $ | 200 | ||||
Long-Term Capital Gains * | 3,695 | 1,748 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 589 | ||
Accumulated Capital Losses* | $ | (5,826 | ) | |
Unrealized Depreciation† | $ | (10,397 | ) | |
Total Accumulated Deficit | $ | (15,634 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $20 and increase accumulated net realized gain by $20. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 5,826 | ||
Total | $ | 5,826 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
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b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.60% | 2.35 | % | 2.35 | % | 1.20 | % |
d) | Fees Paid Indirectly - The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.37 | % | 1.60 | % | 1.60 | % | 1.14 | % | 1.48 | % | 1.63 | % | ||||||||||||
Class B Shares | 1.66 | 2.04 | 2.22 | 1.77 | 2.25 | 2.33 | ||||||||||||||||||
Class C Shares | 2.13 | 2.35 | 2.35 | 1.90 | 2.25 | 2.33 | ||||||||||||||||||
Class Y Shares | 1.20 | 1.17 | 1.14 | 0.74 | 1.07 | 1.18 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $31 and contingent deferred sales charges of $9 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor |
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April 30, 2009 (Unaudited)
(000’s Omitted)
1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $1. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $37 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.02 | % | 8.40 | % | ||||
Class B | 0.02 | 7.73 | ||||||
Class C | 0.02 | 7.55 | ||||||
Class Y | 0.02 | 8.89 |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases for U.S. Government Obligations | 9,382 | |||
Sales Proceeds for U.S. Government Obligations | 14,459 |
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6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Share | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 250 | 66 | (963 | ) | — | (647 | ) | 2,959 | 259 | (2,492 | ) | — | 726 | |||||||||||||||||||||||||||
Amount | $ | 1,354 | $ | 372 | $ | (5,342 | ) | $ | — | $ | (3,616 | ) | $ | 28,547 | $ | 2,953 | $ | (22,327 | ) | $ | — | $ | 9,173 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 22 | 12 | (92 | ) | — | (58 | ) | 169 | 37 | (85 | ) | — | 121 | |||||||||||||||||||||||||||
Amount | $ | 118 | $ | 70 | $ | (474 | ) | $ | — | $ | (286 | ) | $ | 1,534 | $ | 417 | $ | (805 | ) | $ | — | $ | 1,146 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 64 | 15 | (176 | ) | — | (97 | ) | 425 | 52 | (213 | ) | — | 264 | |||||||||||||||||||||||||||
Amount | $ | 335 | $ | 82 | $ | (903 | ) | $ | — | $ | (486 | ) | $ | 4,096 | $ | 582 | $ | (1,986 | ) | $ | — | $ | 2,692 | |||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 188 | 9 | (153 | ) | — | 44 | 94 | 16 | (23 | ) | — | 87 | ||||||||||||||||||||||||||||
Amount | $ | 1,063 | $ | 50 | $ | (708 | ) | $ | — | $ | 405 | $ | 911 | $ | 190 | $ | (227 | ) | $ | — | $ | 874 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 17 | $ | 88 | |||||
For the Year Ended October 31, 2008 | 12 | $ | 116 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Proposed Reorganization: | |
At a meeting held on February 4, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved the reorganizations (each, a “Reorganization”) of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund (each, an “Acquired Fund”) with and into The Hartford Global Equity Fund (the “Acquiring Fund”). | ||
In connection with the mergers, effective as of the close of business on or about April 30, 2009, all shares of The Hartford Global Communications Fund, The Hartford Global Financial Services Fund and The Hartford Global Technology Fund will no longer be sold to new investors or existing shareholders (except through reinvested dividends) or be eligible for exchanges from other Hartford Mutual Funds. | ||
The Board of Directors has called for a Special Meeting of Shareholders of each Acquired Fund (the “Meeting”) to be held on or about August 4, 2009, for the purpose of seeking the approval of an Agreement and Plan of Reorganization (“Reorganization Agreement”) with respect to each Acquired Fund. If approved, each Reorganization is expected to occur on or about August 28, 2009. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
If each Reorganization Agreement is approved by the shareholders of the respective Acquired Fund, the Reorganization Agreement contemplates: (1) the transfer of all of the assets of the Acquired Fund with and into the Acquiring Fund in exchange for shares of the Acquiring Fund having equal net asset value of the Acquired Fund; (2) the assumption by the Acquiring Fund of all of the liabilities of each Acquired Fund; and (3) the distribution of shares of the Acquiring Fund to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund. Each shareholder of an Acquired Fund would receive shares of the Acquiring Fund equal in value to the shares of the Acquired Fund held by that shareholder as of the closing date of the respective Reorganization. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.87 | $ | 0.06 | $ | — | $ | (0.68 | ) | $ | (0.62 | ) | $ | (0.21 | ) | $ | — | $ | — | $ | (0.21 | ) | $ | (0.83 | ) | $ | 6.04 | (8.77 | )%(f) | $ | 10,900 | 2.18 | %(g) | 1.37 | %(g) | 1.37 | %(g) | 2.09 | %(g) | 53 | % | |||||||||||||||||||||||||||||||
B | 6.74 | 0.05 | — | (0.66 | ) | (0.61 | ) | (0.20 | ) | — | — | (0.20 | ) | (0.81 | ) | 5.93 | (8.89 | ) (f) | 2,000 | 3.39 | (g) | 1.66 | (g) | 1.66 | (g) | 1.81 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 6.69 | 0.04 | — | (0.67 | ) | (0.63 | ) | (0.16 | ) | — | — | (0.16 | ) | (0.79 | ) | 5.90 | (9.17 | ) (f) | 3,196 | 2.92 | (g) | 2.13 | (g) | 2.13 | (g) | 1.33 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 6.99 | 0.06 | — | (0.69 | ) | (0.63 | ) | (0.26 | ) | — | — | (0.26 | ) | (0.89 | ) | 6.10 | (8.72 | ) (f) | 1,438 | 1.42 | (g) | 1.20 | (g) | 1.20 | (g) | 2.17 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.16 | 0.20 | — | (5.76 | ) | (5.56 | ) | (0.14 | ) | (1.59 | ) | — | (1.73 | ) | (7.29 | ) | 6.87 | (44.03 | ) | 16,849 | 1.64 | 1.60 | 1.60 | 2.10 | 132 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 13.87 | 0.16 | — | (5.65 | ) | (5.49 | ) | (0.05 | ) | (1.59 | ) | — | (1.64 | ) | (7.13 | ) | 6.74 | (44.25 | ) | 2,662 | 2.78 | 2.04 | 2.04 | 1.69 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 13.82 | 0.13 | — | (5.61 | ) | (5.48 | ) | (0.06 | ) | (1.59 | ) | — | (1.65 | ) | (7.13 | ) | 6.69 | (44.39 | ) | 4,267 | 2.48 | 2.35 | 2.35 | 1.43 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.35 | 0.25 | — | (5.84 | ) | (5.59 | ) | (0.18 | ) | (1.59 | ) | — | (1.77 | ) | (7.36 | ) | 6.99 | (43.70 | ) | 1,340 | 1.17 | 1.17 | 1.17 | 2.59 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.01 | 0.17 | — | 0.94 | 1.11 | (0.11 | ) | (0.85 | ) | — | (0.96 | ) | 0.15 | 14.16 | 8.42 | (h) | 24,420 | 1.61 | 1.60 | 1.60 | 1.31 | 104 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.74 | 0.10 | — | 0.90 | 1.00 | (0.02 | ) | (0.85 | ) | — | (0.87 | ) | 0.13 | 13.87 | 7.75 | (h) | 3,803 | 2.62 | 2.22 | 2.22 | 0.70 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.73 | 0.07 | — | 0.91 | 0.98 | (0.04 | ) | (0.85 | ) | — | (0.89 | ) | 0.09 | 13.82 | 7.57 | (h) | 5,164 | 2.43 | 2.35 | 2.35 | 0.58 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.16 | 0.24 | — | 0.95 | 1.19 | (0.15 | ) | (0.85 | ) | — | (1.00 | ) | 0.19 | 14.35 | 8.91 | (h) | 1,506 | 1.14 | 1.14 | 1.14 | 1.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.60 | 0.12 | — | 2.40 | 2.52 | (0.11 | ) | — | — | (0.11 | ) | 2.41 | 14.01 | 21.87 | 21,369 | 1.80 | 1.15 | 1.15 | 1.11 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.39 | 0.08 | — | 2.31 | 2.39 | (0.04 | ) | — | — | (0.04 | ) | 2.35 | 13.74 | 21.06 | 3,828 | 2.81 | 1.78 | 1.78 | 0.49 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.39 | 0.05 | — | 2.32 | 2.37 | (0.03 | ) | — | — | (0.03 | ) | 2.34 | 13.73 | 20.88 | 4,082 | 2.65 | 1.90 | 1.90 | 0.35 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.73 | 0.19 | — | 2.40 | 2.59 | (0.16 | ) | — | — | (0.16 | ) | 2.43 | 14.16 | 22.24 | 942 | 1.34 | 0.75 | 0.75 | 1.52 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.44 | 0.11 | — | 1.18 | 1.29 | (0.13 | ) | — | — | (0.13 | ) | 1.16 | 11.60 | 12.39 | 13,958 | 1.88 | 1.51 | 1.51 | 0.91 | 33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.26 | 0.01 | — | 1.18 | 1.19 | (0.06 | ) | — | — | (0.06 | ) | 1.13 | 11.39 | 11.58 | 3,147 | 2.91 | 2.28 | 2.28 | 0.15 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.26 | 0.02 | — | 1.17 | 1.19 | (0.06 | ) | — | — | (0.06 | ) | 1.13 | 11.39 | 11.58 | 2,769 | 2.77 | 2.27 | 2.27 | 0.16 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.55 | 0.12 | — | 1.24 | 1.36 | (0.18 | ) | — | — | (0.18 | ) | 1.18 | 11.73 | 12.91 | 773 | 1.36 | 1.09 | 1.09 | 1.30 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.71 | 0.12 | — | 0.69 | 0.81 | (0.08 | ) | — | — | (0.08 | ) | 0.73 | 10.44 | 8.42 | 12,910 | 1.78 | 1.65 | 1.65 | 1.17 | 85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.55 | 0.05 | — | 0.69 | 0.74 | (0.03 | ) | �� | — | — | (0.03 | ) | 0.71 | 10.26 | 7.71 | 3,043 | 2.80 | 2.35 | 2.35 | 0.44 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.55 | 0.05 | — | 0.69 | 0.74 | (0.03 | ) | — | — | (0.03 | ) | 0.71 | 10.26 | 7.71 | 2,459 | 2.68 | 2.35 | 2.35 | 0.44 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.79 | 0.17 | — | 0.71 | 0.88 | (0.12 | ) | — | — | (0.12 | ) | 0.76 | 10.55 | 9.06 | 642 | 1.27 | 1.20 | 1.20 | 1.54 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. |
19
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20
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
21
Table of Contents
Directors and Officers (Unaudited) — (continued)
22
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 912.34 | $ | 6.49 | $ | 1,000.00 | $ | 1,018.00 | $ | 6.85 | 1.37 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 911.06 | $ | 7.86 | $ | 1,000.00 | $ | 1,016.56 | $ | 8.30 | 1.66 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 908.31 | $ | 10.07 | $ | 1,000.00 | $ | 1,014.23 | $ | 10.63 | 2.13 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 912.82 | $ | 5.69 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.00 | 1.20 | 181 | 365 |
23
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Global Growth A# | 9/30/98 | -46.45 | % | -4.71 | % | -0.86 | % | 2.56 | % | |||||||||||
Global Growth A## | 9/30/98 | -49.39 | % | -5.78 | % | -1.42 | % | 2.02 | % | |||||||||||
Global Growth B# | 9/30/98 | -46.73 | % | -5.38 | % | NA | * | NA | * | |||||||||||
Global Growth B## | 9/30/98 | -49.39 | % | -5.69 | % | NA | * | NA | * | |||||||||||
Global Growth C# | 9/30/98 | -46.92 | % | -5.42 | % | -1.56 | % | 1.85 | % | |||||||||||
Global Growth C## | 9/30/98 | -47.45 | % | -5.42 | % | -1.56 | % | 1.85 | % | |||||||||||
Global Growth R3# | 9/30/98 | -46.63 | % | -4.55 | % | -0.51 | % | 2.94 | % | |||||||||||
Global Growth R4# | 9/30/98 | -46.59 | % | -4.48 | % | -0.48 | % | 2.97 | % | |||||||||||
Global Growth R5# | 9/30/98 | -46.39 | % | -4.29 | % | -0.38 | % | 3.07 | % | |||||||||||
Global Growth Y# | 9/30/98 | -46.30 | % | -4.23 | % | -0.34 | % | 3.10 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Andrew S. Offit, CPA | Jean-Marc Berteaux | Matthew D. Hudson, CFA | ||
Senior Vice President, Partner | Senior Vice President, Partner | Vice President |
encouraging economic data added fuel to the recovery. In this environment, the MSCI World Growth Index (-3.9%) outperformed the MSCI World Value Index (-6.4%). Within the MSCI World Growth Index, seven out of ten sectors posted negative returns. Utilities (-15%), Health Care (-11%), and Financials (-11%) fell the most, while Materials (10%), Information Technology (5%), and Telecommunication Services (4%) were the only sectors to post positive returns.
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 1.6 | % | ||
Banks | 2.0 | |||
Capital Goods | 10.9 | |||
Consumer Services | 0.5 | |||
Diversified Financials | 4.1 | |||
Energy | 9.7 | |||
Food & Staples Retailing | 2.3 | |||
Food, Beverage & Tobacco | 4.9 | |||
Health Care Equipment & Services | 4.3 | |||
Household & Personal Products | 2.6 | |||
Insurance | 3.0 | |||
Materials | 7.8 | |||
Media | 1.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 11.2 | |||
Retailing | 4.6 | |||
Semiconductors & Semiconductor Equipment | 1.8 | |||
Software & Services | 8.4 | |||
Technology Hardware & Equipment | 8.8 | |||
Telecommunication Services | 7.5 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.7 | % | ||
Brazil | 0.8 | |||
Canada | 4.7 | |||
China | 0.7 | |||
Denmark | 2.2 | |||
France | 3.2 | |||
Germany | 5.7 | |||
Hong Kong | 0.8 | |||
Israel | 1.7 | |||
Japan | 4.6 | |||
Luxembourg | 0.5 | |||
Netherlands | 1.2 | |||
Norway | 1.0 | |||
Spain | 2.2 | |||
Switzerland | 4.6 | |||
Taiwan | 1.1 | |||
United Kingdom | 7.1 | |||
United States | 53.7 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 97.5% | ||||||||
Automobiles & Components - 1.6% | ||||||||
104 | Daimler AG | $ | 3,726 | |||||
482 | Nissan Motor Co., Ltd. * | 2,514 | ||||||
6,240 | ||||||||
Banks - 2.0% | ||||||||
217 | Itau Unibanco Banco Multiplo S.A. ADR | 2,978 | ||||||
312 | Standard Chartered plc | 4,819 | ||||||
7,797 | ||||||||
Capital Goods - 10.9% | ||||||||
64 | Alstom RGPT | 3,992 | ||||||
65 | Danaher Corp. | 3,822 | ||||||
105 | Deere & Co. | 4,328 | ||||||
129 | Illinois Tool Works, Inc. | 4,221 | ||||||
84 | Lockheed Martin Corp. | 6,573 | ||||||
44 | Parker-Hannifin Corp. | 1,996 | ||||||
83 | Siemens AG | 5,576 | ||||||
167 | Sunpower Corp. • | 4,564 | ||||||
95 | Vestas Wind Systems A/S • | 6,199 | ||||||
41,271 | ||||||||
Consumer Services - 0.5% | ||||||||
138 | Royal Caribbean Cruises Ltd. | 2,031 | ||||||
Diversified Financials - 4.1% | ||||||||
41 | Goldman Sachs Group, Inc. | 5,243 | ||||||
166 | JP Morgan Chase & Co. | 5,475 | ||||||
149 | Julius Baer Holding Ltd. | 4,898 | ||||||
15,616 | ||||||||
Energy - 9.7% | ||||||||
293 | BG Group plc | 4,676 | ||||||
116 | Canadian Natural Resources Ltd. | 5,324 | ||||||
81 | Hess Corp. | 4,460 | ||||||
129 | National Oilwell Varco, Inc. • | 3,909 | ||||||
133 | Schlumberger Ltd. | 6,501 | ||||||
342 | Seadrill Ltd. | 3,652 | ||||||
88 | Total S.A. | 4,386 | ||||||
113 | XTO Energy, Inc. | 3,924 | ||||||
36,832 | ||||||||
Food & Staples Retailing - 2.3% | ||||||||
420 | Koninklijke Ahold N.V. | 4,600 | ||||||
94 | Metro AG | 4,014 | ||||||
8,614 | ||||||||
Food, Beverage & Tobacco - 4.9% | ||||||||
246 | British American Tobacco plc | 5,936 | ||||||
46 | Carlsberg A/S Class B | 2,221 | ||||||
70 | Groupe Danone ⌂ | 3,347 | ||||||
213 | Nestle S.A. | 6,957 | ||||||
18,461 | ||||||||
Health Care Equipment & Services - 4.3% | ||||||||
97 | Fresenius Medical Care AG & Co. | 3,774 | ||||||
17 | Intuitive Surgical, Inc. • | 2,501 | ||||||
157 | St. Jude Medical, Inc. • | 5,259 | ||||||
219 | UnitedHealth Group, Inc. | 5,151 | ||||||
16,685 | ||||||||
Household & Personal Products - 2.6% | ||||||||
80 | Clorox Co. | 4,473 | ||||||
140 | Reckitt Benckiser Group plc | 5,481 | ||||||
9,954 | ||||||||
Insurance - 3.0% | ||||||||
30 | Muenchener Rueckversicherungs NPV | 4,126 | ||||||
425 | Ping An Insurance (Group) Co. | 2,622 | ||||||
158 | Prudential Financial, Inc. | 4,563 | ||||||
11,311 | ||||||||
Materials - 7.8% | ||||||||
122 | Barrick Gold Corp. | 3,541 | ||||||
314 | BHP Billiton plc | 6,519 | ||||||
83 | Monsanto Co. | 7,063 | ||||||
62 | Potash Corp. of Saskatchewan, Inc. | 5,353 | ||||||
54 | Praxair, Inc. | 4,044 | ||||||
73 | Shin-Etsu Chemical Co., Ltd. | 3,524 | ||||||
30,044 | ||||||||
Media - 1.5% | ||||||||
358 | Comcast Corp. Class A | 5,536 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences - 11.2% | ||||||||
108 | Abbott Laboratories | 4,516 | ||||||
78 | Allergan, Inc. | 3,658 | ||||||
114 | Amgen, Inc. • | 5,511 | ||||||
59 | Celgene Corp. • | 2,516 | ||||||
255 | CSL Ltd. | 6,360 | ||||||
218 | Daiichi Sankyo Co., Ltd. | 3,650 | ||||||
98 | Gilead Sciences, Inc. • | 4,470 | ||||||
46 | Roche Holding AG | 5,741 | ||||||
145 | Teva Pharmaceutical Industries Ltd. ADR | 6,342 | ||||||
42,764 | ||||||||
Retailing - 4.6% | ||||||||
51 | Best Buy Co., Inc. | 1,965 | ||||||
182 | Gap, Inc. | 2,821 | ||||||
73 | Industria de Diseno Textil S.A. | 3,114 | ||||||
46 | Kohl’s Corp. • | 2,095 | ||||||
1,140 | Li & Fung Ltd. | 3,203 | ||||||
221 | Lowe’s Co., Inc. | 4,758 | ||||||
17,956 | ||||||||
Semiconductors & Semiconductor Equipment - 1.8% | ||||||||
175 | Altera Corp. | 2,854 | ||||||
386 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR | 4,077 | ||||||
�� | 6,931 | |||||||
Software & Services - 8.4% | ||||||||
101 | Electronic Arts, Inc. • | 2,045 | ||||||
14 | Google, Inc. • | 5,631 | ||||||
15 | Nintendo Co., Ltd. | 4,006 | ||||||
505 | Oracle Corp. • | 9,773 | ||||||
78 | Visa, Inc. ‡ | 5,047 | ||||||
338 | Western Union Co. | 5,665 | ||||||
32,167 | ||||||||
Technology Hardware & Equipment - 8.8% | ||||||||
40 | Apple, Inc. • | 5,021 | ||||||
469 | Cisco Systems, Inc.• | 9,057 | ||||||
151 | Hewlett-Packard Co. | 5,436 | ||||||
255 | NetApp, Inc. • | 4,661 | ||||||
126 | Qualcomm, Inc. | 5,333 | ||||||
58 | Research In Motion Ltd. • | 4,003 | ||||||
33,511 | ||||||||
Telecommunication Services - 7.5% | ||||||||
213 | American Tower Corp. Class A • | 6,774 | ||||||
608 | MetroPCS Communications, Inc. • | 10,391 | ||||||
40 | Millicom International Cellular S.A. | 1,929 | ||||||
257 | Softbank Corp. | 4,067 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 97.5% - (continued) | ||||||||||||
Telecommunication Services - 7.5% - (continued) | ||||||||||||
289 | Telefonica S.A. | $ | 5,481 | |||||||||
28,642 | ||||||||||||
Total common stocks (cost $400,414) | $ | 372,363 | ||||||||||
Total long-term investments (cost $400,414) | $ | 372,363 | ||||||||||
SHORT-TERM INVESTMENTS - 1.9% | ||||||||||||
Repurchase Agreements - 1.9% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,756, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $1,791) | ||||||||||||
$ | 1,756 | 0.18%, 04/30/2009 | $ | 1,756 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,101, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $2,143) | ||||||||||||
2,101 | 0.17%, 04/30/2009 | 2,101 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,936, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $2,994) | ||||||||||||
2,935 | 0.17%, 04/30/2009 | 2,935 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $10, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $10) | ||||||||||||
10 | 0.14%, 04/30/2009 | 10 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $633, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $646) | ||||||||||||
633 | 0.16%, 04/30/2009 | 633 | ||||||||||
7,435 | ||||||||||||
Total short-term investments (cost $7,435) | $ | 7,435 | ||||||||||
Total investments (cost $407,849) ▲ | 99.4 | % | $ | 379,798 | ||||||||
Other assets and liabilities | 0.6 | % | 2,210 | |||||||||
Total net assets | 100.0 | % | $ | 382,008 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 43.65% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $413,856 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 22,779 | ||
Unrealized Depreciation | (56,837 | ) | ||
Net Unrealized Depreciation | $ | (34,058 | ) | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $623. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||
Acquired | Par | Security | Cost Basis | |||||||
09/2008 - 12/2008 | 70 | Groupe Danone | $ | 4,730 |
The aggregate value of these securities at April 30, 2009 was $3,347 which represents 0.88% of total net assets. |
Unrealized | ||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||
Euro (Buy) | $ | 764 | $ | 769 | 05/04/09 | $ | (5 | ) | ||||||
Japanese Yen (Sell) | 119 | 120 | 05/08/09 | 1 | ||||||||||
Swiss Franc (Sell) | 484 | 482 | 05/04/09 | (2 | ) | |||||||||
$ | (6 | ) | ||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
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April 30, 2009 (Unaudited)
(000’s Omitted)
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.7 | % | ||
Brazil | 0.8 | |||
Canada | 4.7 | |||
China | 0.7 | |||
Denmark | 2.2 | |||
France | 3.2 | |||
Germany | 5.7 | |||
Hong Kong | 0.8 | |||
Israel | 1.7 | |||
Japan | 4.6 | |||
Luxembourg | 0.5 | |||
Netherlands | 1.2 | |||
Norway | 1.0 | |||
Spain | 2.2 | |||
Switzerland | 4.6 | |||
Taiwan | 1.1 | |||
United Kingdom | 7.1 | |||
United States | 53.7 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 244,664 | ||
Investment in securities — Level 2 | 135,134 | |||
Total | $ | 379,798 | ||
Other financial instruments — Level 2 * | 1 | |||
Total | $ | 1 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 7 | |||
Total | $ | 7 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
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Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $407,849) | $ | 379,798 | ||
Cash | 1 | |||
Foreign currency on deposit with custodian (cost $—) | — | |||
Unrealized appreciation on forward foreign currency contracts | 1 | |||
Receivables: | ||||
Investment securities sold | 2,920 | |||
Fund shares sold | 54 | |||
Dividends and interest | 1,324 | |||
Other assets | 116 | |||
Total assets | 384,214 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 7 | |||
Payables: | ||||
Investment securities purchased | 1,663 | |||
Fund shares redeemed | 240 | |||
Investment management fees | 53 | |||
Distribution fees | 14 | |||
Accrued expenses | 229 | |||
Total liabilities | 2,206 | |||
Net assets | $ | 382,008 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 568,066 | |||
Accumulated undistributed net investment income | 1,338 | |||
Accumulated net realized loss on investments and foreign currency transactions | (159,364 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (28,032 | ) | ||
Net assets | $ | 382,008 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.32/$10.92 | ||
Shares outstanding | 18,115 | |||
Net assets | $ | 186,916 | ||
Class B: Net asset value per share | $ | 9.45 | ||
Shares outstanding | 1,886 | |||
Net assets | $ | 17,827 | ||
Class C: Net asset value per share | $ | 9.47 | ||
Shares outstanding | 2,602 | |||
Net assets | $ | 24,645 | ||
Class R3: Net asset value per share | $ | 10.76 | ||
Shares outstanding | 2 | |||
Net assets | $ | 18 | ||
Class R4: Net asset value per share | $ | 10.80 | ||
Shares outstanding | 4 | |||
Net assets | $ | 48 | ||
Class R5: Net asset value per share | $ | 10.91 | ||
Shares outstanding | 1 | |||
Net assets | $ | 6 | ||
Class Y: Net asset value per share | $ | 10.95 | ||
Shares outstanding | 13,930 | |||
Net assets | $ | 152,548 | ||
7
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 3,637 | ||
Interest | 10 | |||
Securities lending | 19 | |||
Less: Foreign tax withheld | (334 | ) | ||
Total investment income | 3,332 | |||
Expenses: | ||||
Investment management fees | 1,537 | |||
Transfer agent fees | 816 | |||
Distribution fees | ||||
Class A | 226 | |||
Class B | 94 | |||
Class C | 123 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 17 | |||
Accounting services | 29 | |||
Registration and filing fees | 50 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 10 | |||
Other expenses | 100 | |||
Total expenses (before waivers and fees paid indirectly) | 3,009 | |||
Expense waivers | (517 | ) | ||
Transfer agent fee waivers | (477 | ) | ||
Commission recapture | (6 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (1,000 | ) | ||
Total expenses, net | 2,009 | |||
Net investment income | 1,323 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (108,340 | ) | ||
Net realized gain on foreign currency transactions | 14 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (108,326 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 98,633 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 13 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 98,646 | |||
Net Loss on Investments and Foreign Currency Transactions | (9,680 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (8,357 | ) | |
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Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 1,323 | $ | (1,079 | ) | |||
Net realized loss on investments and foreign currency transactions | (108,326 | ) | (50,551 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 98,646 | (377,759 | ) | |||||
Net decrease in net assets resulting from operations | (8,357 | ) | (429,389 | ) | ||||
Distributions to Shareholders: | ||||||||
From net realized gain on investments | ||||||||
Class A | — | (52,363 | ) | |||||
Class B | — | (8,994 | ) | |||||
Class C | — | (8,596 | ) | |||||
Class R3 | — | (1 | ) | |||||
Class R4 | — | (1 | ) | |||||
Class R5 | — | (1 | ) | |||||
Class Y | — | (19,921 | ) | |||||
Total distributions | — | (89,877 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (20,137 | ) | 22,809 | |||||
Class B | (4,845 | ) | (13,917 | ) | ||||
Class C | (4,584 | ) | 235 | |||||
Class R3 | 7 | 9 | ||||||
Class R4 | 37 | 17 | ||||||
Class R5 | (5 | ) | 11 | |||||
Class Y | 17,332 | 69,486 | ||||||
Net increase (decrease) from capital share transactions | (12,195 | ) | 78,650 | |||||
Net decrease in net assets | (20,552 | ) | (440,616 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 402,560 | 843,176 | ||||||
End of period | $ | 382,008 | $ | 402,560 | ||||
Accumulated undistributed net investment income (loss) | $ | 1,338 | $ | 15 | ||||
9
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Growth Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
10
Table of Contents
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
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Table of Contents
i) | Illiquid and Restricted Securities - The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $623. | ||
k) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
n) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 18,484 | $ | 15,315 | ||||
Long-Term Capital Gains * | 71,393 | 22,227 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses* | $ | (45,031 | ) | |
Unrealized Depreciation† | $ | (132,670 | ) | |
Total Accumulated Deficit | $ | (177,701 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $1,095, increase accumulated net realized gain by $79, and decrease paid in capital by $1,174. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 45,031 | ||
Total | $ | 45,031 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
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Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8500 | % | ||
On next $500 million | 0.7500 | % | ||
On next $4 billion | 0.7000 | % | ||
On next $5 billion | 0.6975 | % | ||
Over $10 billion | 0.6950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||
1.48% | 2.23% | 2.23% | 1.73% | 1.43% | 1.13% | 1.13% |
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Table of Contents
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.07 | % | 1.43 | % | 1.47 | % | 1.45 | % | 1.36 | % | 1.53 | % | ||||||||||||
Class B Shares | 1.46 | 2.01 | 2.18 | 2.15 | 2.23 | 2.26 | ||||||||||||||||||
Class C Shares | 1.96 | 2.16 | 2.14 | 2.18 | 2.13 | 2.15 | ||||||||||||||||||
Class R3 Shares | 1.36 | 1.72 | 1.65 | * | ||||||||||||||||||||
Class R4 Shares | 1.42 | 1.43 | 1.34 | † | ||||||||||||||||||||
Class R5 Shares | 1.08 | 1.05 | 1.05 | ‡ | ||||||||||||||||||||
Class Y Shares | 0.97 | 0.90 | 0.89 | 0.91 | 0.85 | 0.84 |
* | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $136 and contingent deferred sales charges of $14 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
17
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $17. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $384 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.26 | % | 35.50 | % | ||||
Class B | 0.27 | 34.45 | ||||||
Class C | 0.27 | 34.58 | ||||||
Class Y | 0.25 | 36.28 |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 | |||
Class R4 | 1 | |||
Class R5 | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 150,830 | ||
Sales Proceeds Excluding U.S. Government Obligations | 156,153 |
18
Table of Contents
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 997 | — | (3,160 | ) | — | (2,163 | ) | 2,818 | 2,438 | (4,703 | ) | — | 553 | |||||||||||||||||||||||||||
Amount | $ | 9,434 | $ | — | $ | (29,571 | ) | $ | — | $ | (20,137 | ) | $ | 51,785 | $ | 50,714 | $ | (79,690 | ) | $ | — | $ | 22,809 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 64 | — | (628 | ) | — | (564 | ) | 198 | 457 | (1,596 | ) | — | (941 | ) | ||||||||||||||||||||||||||
Amount | $ | 549 | $ | — | $ | (5,394 | ) | $ | — | $ | (4,845 | ) | $ | 3,339 | $ | 8,763 | $ | (26,019 | ) | $ | — | $ | (13,917 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 162 | — | (693 | ) | — | (531 | ) | 221 | 419 | (744 | ) | — | (104 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,417 | $ | — | $ | (6,001 | ) | $ | — | $ | (4,584 | ) | $ | 3,869 | $ | 8,096 | $ | (11,730 | ) | $ | — | $ | 235 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 8 | $ | — | $ | (1 | ) | $ | — | $ | 7 | $ | 8 | $ | 1 | $ | — | $ | — | $ | 9 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 3 | — | — | — | 3 | 27 | — | (27 | ) | — | — | |||||||||||||||||||||||||||||
Amount | $ | 37 | $ | — | $ | — | $ | — | $ | 37 | $ | 516 | $ | 1 | $ | (500 | ) | $ | — | $ | 17 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | (5 | ) | $ | — | $ | (5 | ) | $ | 10 | $ | 1 | $ | — | $ | — | $ | 11 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,619 | — | (870 | ) | — | 1,749 | 4,002 | 907 | (210 | ) | — | 4,699 | ||||||||||||||||||||||||||||
Amount | $ | 26,032 | $ | — | $ | (8,700 | ) | $ | — | $ | 17,332 | $ | 53,425 | $ | 19,921 | $ | (3,860 | ) | $ | — | $ | 69,486 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 220 | $ | 2,064 | |||||
For the Year Ended October 31, 2008 | 649 | $ | 11,746 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
19
Table of Contents
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.50 | $ | 0.04 | $ | — | $ | (0.22 | ) | $ | (0.18 | ) | $ | — | $ | — | $ | — | $ | — | $ | (0.18 | ) | $ | 10.32 | (1.71) | %(f) | $ | 186,916 | 1.93 | %(g) | 1.07 | %(g) | 1.07 | %(g) | 0.76 | %(g) | 42 | % | |||||||||||||||||||||||||||||||||
B | 9.64 | 0.01 | — | (0.20 | ) | (0.19 | ) | — | — | — | — | (0.19 | ) | 9.45 | (1.97 | ) (f) | 17,827 | 3.03 | (g) | 1.47 | (g) | 1.47 | (g) | 0.32 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 9.68 | (0.01 | ) | — | (0.20 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 9.47 | (2.17 | ) (f) | 24,645 | 2.53 | (g) | 1.97 | (g) | 1.97 | (g) | (0.16 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.97 | 0.03 | — | (0.24 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 10.76 | (1.91 | ) (f) | 18 | 2.29 | (g) | 1.36 | (g) | 1.36 | (g) | 0.68 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 11.01 | 0.03 | — | (0.24 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 10.80 | (1.91 | ) (f) | 48 | 1.42 | (g) | 1.42 | (g) | 1.42 | (g) | 0.51 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 11.10 | 0.04 | — | (0.23 | ) | (0.19 | ) | — | — | — | — | (0.19 | ) | 10.91 | (1.71 | ) (f) | 6 | 1.08 | (g) | 1.08 | (g) | 1.08 | (g) | 0.73 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.14 | 0.05 | — | (0.24 | ) | (0.19 | ) | — | — | — | — | (0.19 | ) | 10.95 | (1.71 | ) (f) | 152,548 | 0.97 | (g) | 0.97 | (g) | 0.97 | (g) | 0.91 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 24.97 | (0.03 | ) | — | (11.78 | ) | (11.81 | ) | — | (2.66 | ) | — | (2.66 | ) | (14.47 | ) | 10.50 | (52.57 | ) | 212,910 | 1.49 | 1.43 | 1.43 | (0.18 | ) | 82 | ||||||||||||||||||||||||||||||||||||||||||||||
B | 23.27 | (0.14 | ) | — | (10.83 | ) | (10.97 | ) | — | (2.66 | ) | — | (2.66 | ) | (13.63 | ) | 9.64 | (52.83 | ) | 23,614 | 2.42 | 2.01 | 2.01 | (0.79 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 23.40 | (0.16 | ) | — | (10.90 | ) | (11.06 | ) | — | (2.66 | ) | — | (2.66 | ) | (13.72 | ) | 9.68 | (52.94 | ) | 30,334 | 2.16 | 2.16 | 2.16 | (0.92 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 26.02 | (0.08 | ) | — | (12.31 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 10.97 | (52.69 | ) | 10 | 1.88 | 1.73 | 1.73 | (0.42 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 26.09 | (0.05 | ) | — | (12.37 | ) | (12.42 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.08 | ) | 11.01 | (52.66 | ) | 7 | 1.58 | 1.43 | 1.43 | (0.57 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 26.15 | 0.05 | — | (12.44 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 11.10 | (52.40 | ) | 12 | 1.06 | 1.06 | 1.06 | 0.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 26.19 | 0.07 | — | (12.46 | ) | (12.39 | ) | — | (2.66 | ) | — | (2.66 | ) | (15.05 | ) | 11.14 | (52.31 | ) | 135,673 | 0.90 | 0.90 | 0.90 | 0.36 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 19.35 | (0.14 | ) | 0.05 | 6.69 | 6.60 | — | (0.98 | ) | — | (0.98 | ) | 5.62 | 24.97 | 35.85 | (h) | 492,466 | 1.48 | 1.48 | 1.48 | (0.62 | ) | 85 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 18.23 | (0.32 | ) | 0.06 | 6.28 | 6.02 | — | (0.98 | ) | — | (0.98 | ) | 5.04 | 23.27 | 34.81 | (h) | 78,931 | 2.40 | 2.19 | 2.19 | (1.33 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 18.31 | (0.28 | ) | 0.05 | 6.30 | 6.07 | — | (0.98 | ) | — | (0.98 | ) | 5.09 | 23.40 | 34.94 | (h) | 75,742 | 2.15 | 2.15 | 2.15 | (1.29 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 20.00 | (0.14 | ) | — | 6.16 | 6.02 | — | — | — | — | 6.02 | 26.02 | 30.10 | (f) | 13 | 1.65 | (g) | 1.65 | (g) | 1.65 | (g) | (0.78 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 20.00 | (0.09 | ) | — | 6.18 | 6.09 | — | — | — | — | 6.09 | 26.09 | 30.45 | (f) | 13 | 1.34 | (g) | 1.34 | (g) | 1.34 | (g) | (0.47 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 20.00 | (0.03 | ) | — | 6.18 | 6.15 | — | — | — | — | 6.15 | 26.15 | 30.75 | (f) | 13 | 1.05 | (g) | 1.05 | (g) | 1.05 | (g) | (0.17 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 20.14 | — | 0.06 | 6.97 | 7.03 | — | (0.98 | ) | — | (0.98 | ) | 6.05 | 26.19 | 36.61 | (h) | 195,998 | 0.89 | 0.89 | 0.89 | (0.01 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.80 | (0.05 | ) | — | 2.81 | 2.76 | (0.02 | ) | (0.19 | ) | — | (0.21 | ) | 2.55 | 19.35 | 16.58 | 417,840 | 1.53 | 1.48 | 1.48 | (0.25 | ) | 125 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.93 | (0.17 | ) | — | 2.66 | 2.49 | — | (0.19 | ) | — | (0.19 | ) | 2.30 | 18.23 | 15.80 | 74,805 | 2.44 | 2.18 | 2.18 | (0.95 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 16.01 | (0.17 | ) | — | 2.66 | 2.49 | — | (0.19 | ) | — | (0.19 | ) | 2.30 | 18.31 | 15.72 | 66,121 | 2.20 | 2.20 | 2.20 | (0.98 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.46 | 0.06 | — | 2.91 | 2.97 | (0.10 | ) | (0.19 | ) | — | (0.29 | ) | 2.68 | 20.14 | 17.25 | 169,270 | 0.93 | 0.93 | 0.93 | 0.31 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.49 | 0.08 | — | 0.23 | 0.31 | — | — | — | — | 0.31 | 16.80 | 1.88 | 419,648 | 1.58 | 1.48 | 1.48 | 0.41 | 270 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.77 | (0.08 | ) | — | 0.24 | 0.16 | — | — | — | — | 0.16 | 15.93 | 1.02 | 78,986 | 2.51 | 2.35 | 2.35 | (0.45 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.84 | (0.06 | ) | — | 0.23 | 0.17 | — | — | — | — | 0.17 | 16.01 | 1.07 | 71,623 | 2.25 | 2.25 | 2.25 | (0.34 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.06 | 0.13 | — | 0.27 | 0.40 | — | — | — | — | 0.40 | 17.46 | 2.34 | 83,896 | 0.97 | 0.97 | 0.97 | 0.87 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.96 | (0.06 | ) | — | 2.59 | 2.53 | — | — | — | — | 2.53 | 16.49 | 18.12 | 466,013 | 1.62 | 1.62 | 1.62 | (0.36 | ) | 271 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.45 | (0.17 | ) | — | 2.49 | 2.32 | — | — | — | — | 2.32 | 15.77 | 17.25 | 90,179 | 2.52 | 2.35 | 2.35 | (1.09 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.49 | (0.15 | ) | — | 2.50 | 2.35 | — | — | — | — | 2.35 | 15.84 | 17.42 | 87,518 | 2.24 | 2.24 | 2.24 | (0.98 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.34 | 0.03 | — | 2.69 | 2.72 | — | — | — | — | 2.72 | 17.06 | 18.97 | 58,791 | 0.93 | 0.93 | 0.93 | 0.31 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. |
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 982.85 | $ | 5.26 | $ | 1,000.00 | $ | 1,019.48 | $ | 5.35 | 1.07 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 980.29 | $ | 7.21 | $ | 1,000.00 | $ | 1,017.50 | $ | 7.35 | 1.47 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 978.30 | $ | 9.66 | $ | 1,000.00 | $ | 1,015.02 | $ | 9.84 | 1.97 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 980.85 | $ | 6.67 | $ | 1,000.00 | $ | 1,018.05 | $ | 6.80 | 1.36 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 980.92 | $ | 6.97 | $ | 1,000.00 | $ | 1,017.75 | $ | 7.10 | 1.42 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 982.88 | $ | 5.30 | $ | 1,000.00 | $ | 1,019.43 | $ | 5.40 | 1.08 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 982.94 | $ | 4.76 | $ | 1,000.00 | $ | 1,019.98 | $ | 4.85 | 0.97 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
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(subadvised by Wellington Management Company, LLP)
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Global Health A# | 5/01/00 | -25.34 | % | -0.90 | % | 5.45 | % | |||||||||
Global Health A## | 5/01/00 | -29.44 | % | -2.02 | % | 4.79 | % | |||||||||
Global Health B# | 5/01/00 | -25.91 | % | -1.66 | % | NA | * | |||||||||
Global Health B## | 5/01/00 | -29.41 | % | -1.96 | % | NA | * | |||||||||
Global Health C# | 5/01/00 | -25.92 | % | -1.65 | % | 4.68 | % | |||||||||
Global Health C## | 5/01/00 | -26.62 | % | -1.65 | % | 4.68 | % | |||||||||
Global Health I# | 5/01/00 | -25.14 | % | -0.71 | % | 5.57 | % | |||||||||
Global Health R3# | 5/01/00 | -25.57 | % | -0.80 | % | 5.78 | % | |||||||||
Global Health R4# | 5/01/00 | -25.29 | % | -0.61 | % | 5.90 | % | |||||||||
Global Health R5# | 5/01/00 | -25.04 | % | -0.45 | % | 5.99 | % | |||||||||
Global Health Y# | 5/01/00 | -25.01 | % | -0.42 | % | 6.01 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||||
Robert L. Deresiewicz | Ann C. Gallo | Jean M. Hynes, CFA | Kirk J. Mayer, CFA | |||
Vice President | Senior Vice President, Partner | Senior Vice President, Partner | Senior Vice President |
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as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Biotechnology | 20.7 | % | ||
Drug Retail | 2.3 | |||
Health Care Distributors | 2.1 | |||
Health Care Equipment | 25.6 | |||
Health Care Facilities | 1.4 | |||
Health Care Services | 1.0 | |||
Health Care Supplies | 0.7 | |||
Health Care Technology | 0.4 | |||
Life Sciences Tools & Services | 0.4 | |||
Managed Health Care | 8.9 | |||
Pharmaceuticals | 35.4 | |||
Short-Term Investments | 0.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Belgium | 1.2 | % | ||
Cayman Islands | 1.4 | |||
China | 0.5 | |||
Denmark | 0.6 | |||
France | 2.7 | |||
Germany | 1.0 | |||
Ireland | 1.4 | |||
Israel | 3.5 | |||
Italy | 0.7 | |||
Japan | 7.6 | |||
Spain | 0.4 | |||
Switzerland | 2.2 | |||
United Kingdom | 1.1 | |||
United States | 74.6 | |||
Short-Term Investments | 0.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.9% | ||||||||
Biotechnology - 20.7% | ||||||||
250 | 3SBio, Inc. ADR • | $ | 1,773 | |||||
411 | Amgen, Inc. • | 19,931 | ||||||
384 | Amylin Pharmaceuticals, Inc. • | 4,204 | ||||||
731 | Celera Corp. • | 5,912 | ||||||
65 | Cephalon, Inc. • | 4,248 | ||||||
155 | Cougar Biotechnology, Inc. • | 5,419 | ||||||
850 | Cytokinetics, Inc. • | 1,582 | ||||||
122 | Genzyme Corp. • | 6,479 | ||||||
122 | Gilead Sciences, Inc. • | 5,565 | ||||||
1,087 | Incyte Corp. • | 2,566 | ||||||
820 | Ligand Pharmaceuticals Class B • | 2,453 | ||||||
69 | OSI Pharmaceuticals, Inc. • | 2,306 | ||||||
495 | Progenics Pharmaceuticals, Inc. • | 2,715 | ||||||
233 | Regeneron Pharmaceuticals, Inc. • | 3,084 | ||||||
347 | Seattle Genetics, Inc. • | 3,202 | ||||||
173 | Vertex Pharmaceuticals, Inc. • | 5,326 | ||||||
76,765 | ||||||||
Drug Retail - 2.3% | ||||||||
273 | Walgreen Co. | 8,587 | ||||||
Health Care Distributors - 2.1% | ||||||||
115 | Amerisource Bergen Corp. | 3,858 | ||||||
116 | Cardinal Health, Inc. | 3,913 | ||||||
7,771 | ||||||||
Health Care Equipment - 25.6% | ||||||||
335 | Baxter International, Inc. | 16,225 | ||||||
143 | Beckman Coulter, Inc. | 7,537 | ||||||
57 | Becton, Dickinson & Co. | 3,453 | ||||||
259 | China Medical Technologies, Inc. ADR | 5,067 | ||||||
351 | Covidien Ltd. | 11,560 | ||||||
120 | DiaSorin S.p.A. | 2,670 | ||||||
275 | Hospira, Inc. • | 9,052 | ||||||
556 | Medtronic, Inc. | 17,776 | ||||||
184 | St. Jude Medical, Inc. • | 6,164 | ||||||
272 | Symmetry Medical, Inc. • | 1,976 | ||||||
43 | Synthes, Inc. | 4,343 | ||||||
662 | Volcano Corp. • | 8,730 | ||||||
94,553 | ||||||||
Health Care Facilities - 1.4% | ||||||||
117 | Community Health Systems, Inc. • | 2,679 | ||||||
490 | Health Management Associates, Inc. Class A • | 2,290 | ||||||
4,969 | ||||||||
Health Care Services - 1.0% | ||||||||
100 | Fresenius Medical Care AG ADR | 3,840 | ||||||
Health Care Supplies - 0.7% | ||||||||
82 | Inverness Medical Innovation, Inc. • | 2,661 | ||||||
Health Care Technology - 0.4% | ||||||||
101 | Eclipsys Corp. • | 1,330 | ||||||
Life Sciences Tools & Services - 0.4% | ||||||||
136 | PAREXEL International Corp. • | 1,351 | ||||||
Managed Health Care - 8.9% | ||||||||
552 | Coventry Health Care, Inc. • | 8,781 | ||||||
259 | Health Net, Inc. • | 3,734 | ||||||
141 | Humana, Inc. • | 4,060 | ||||||
697 | UnitedHealth Group, Inc. | 16,388 | ||||||
32,963 | ||||||||
Pharmaceuticals - 35.4% | ||||||||
105 | Abbott Laboratories | 4,382 | ||||||
110 | Astellas Pharma, Inc. | 3,564 | ||||||
115 | AstraZeneca plc ADR | 4,032 | ||||||
475 | Daiichi Sankyo Co., Ltd. | 7,941 | ||||||
222 | Eisai Co., Ltd. | 5,968 | ||||||
867 | Elan Corp. plc ADR • | 5,123 | ||||||
128 | Eli Lilly & Co. | 4,227 | ||||||
372 | Forest Laboratories, Inc. • | 8,075 | ||||||
132 | H. Lundbeck A/S | 2,393 | ||||||
88 | Ipsen | 3,605 | ||||||
166 | Laboratorios Almiral S.A. | 1,496 | ||||||
386 | Medicines Co. • | 3,851 | ||||||
691 | Pfizer, Inc. | 9,226 | ||||||
29 | Roche Holding AG | 3,607 | ||||||
216 | Sanofi-Aventis S.A. ADR | 6,209 | ||||||
943 | Schering-Plough Corp. | 21,710 | ||||||
637 | Shionogi & Co., Ltd. | 10,959 | ||||||
293 | Teva Pharmaceutical Industries Ltd. ADR | 12,844 | ||||||
167 | UCB S.A. | 4,547 | ||||||
175 | Wyeth | 7,416 | ||||||
131,175 | ||||||||
Total common stocks (cost $464,934) | $ | 365,965 | ||||||
Total long-term investments (cost $464,934) | $ | 365,965 | ||||||
SHORT-TERM INVESTMENTS - 0.6% | ||||||||
Repurchase Agreements - 0.6% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $512, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $522) | ||||||||
$ | 512 | 0.18%, 04/30/2009 | $ | 512 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $613, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $625) | ||||||||
613 | 0.17%, 04/30/2009 | 613 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $856, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $873) | ||||||||
856 | 0.17%, 04/30/2009 | 856 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $3, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $3) | ||||||||
3 | 0.14%, 04/30/2009 | 3 |
5
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 0.6% - (continued) | ||||||||||||
Repurchase Agreements - 0.6% - (continued) | ||||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $185, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $188) | ||||||||||||
$ | 185 | 0.16%, 04/30/2009 | $ | 185 | ||||||||
2,169 | ||||||||||||
Total short-term investments (cost $2,169) | $ | 2,169 | ||||||||||
Total investments (cost $467,103) ▲ | 99.5 | % | $ | 368,134 | ||||||||
Other assets and liabilities | 0.5 | % | 1,814 | |||||||||
Total net assets | 100.0 | % | $ | 369,948 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 24.32% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $475,913 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 12,529 | ||
Unrealized Depreciation | (120,308 | ) | ||
Net Unrealized Depreciation | $ | (107,779 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Belgium | 1.2 | % | ||
Cayman Islands | 1.4 | |||
China | 0.5 | |||
Denmark | 0.6 | |||
France | 2.7 | |||
Germany | 1.0 | |||
Ireland | 1.4 | |||
Israel | 3.5 | |||
Italy | 0.7 | |||
Japan | 7.6 | |||
Spain | 0.4 | |||
Switzerland | 2.2 | |||
United Kingdom | 1.1 | |||
United States | 74.6 | |||
Short-Term Investments | 0.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 316,368 | ||
Investment in securities — Level 2 | 51,766 | |||
Total | $ | 368,134 | ||
6
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $467,103) | $ | 368,134 | ||
Cash | 5 | |||
Receivables: | ||||
Investment securities sold | 1,553 | |||
Fund shares sold | 494 | |||
Dividends and interest | 946 | |||
Other assets | 102 | |||
Total assets | 371,234 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 1,008 | |||
Investment management fees | 54 | |||
Distribution fees | 28 | |||
Accrued expenses | 196 | |||
Total liabilities | 1,286 | |||
Net assets | $ | 369,948 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 598,359 | |||
Accumulated distribution in excess of net investment income | (915 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (128,527 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (98,969 | ) | ||
Net assets | $ | 369,948 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 11.15/$11.79 | ||
Shares outstanding | 21,744 | |||
Net assets | $ | 242,362 | ||
Class B: Net asset value per share | $ | 10.24 | ||
Shares outstanding | 3,238 | |||
Net assets | $ | 33,158 | ||
Class C: Net asset value per share | $ | 10.26 | ||
Shares outstanding | 7,268 | |||
Net assets | $ | 74,603 | ||
Class I: Net asset value per share | $ | 11.27 | ||
Shares outstanding | 986 | |||
Net assets | $ | 11,111 | ||
Class R3: Net asset value per share | $ | 11.59 | ||
Shares outstanding | 65 | |||
Net assets | $ | 750 | ||
Class R4: Net asset value per share | $ | 11.71 | ||
Shares outstanding | 422 | |||
Net assets | $ | 4,940 | ||
Class R5: Net asset value per share | $ | 11.81 | ||
Shares outstanding | 122 | |||
Net assets | $ | 1,442 | ||
Class Y: Net asset value per share | $ | 11.83 | ||
Shares outstanding | 134 | |||
Net assets | $ | 1,582 | ||
7
Table of Contents
Investment Income: | ||||
Dividends | $ | 3,094 | ||
Interest | 4 | |||
Securities lending | 147 | |||
Less: Foreign tax withheld | (63 | ) | ||
Total investment income | 3,182 | |||
Expenses: | ||||
Investment management fees | 2,340 | |||
Transfer agent fees | 694 | |||
Distribution fees | ||||
Class A | 328 | |||
Class B | 191 | |||
Class C | 406 | |||
Class R3 | 1 | |||
Class R4 | 5 | |||
Custodian fees | 9 | |||
Accounting services | 37 | |||
Registration and filing fees | 65 | |||
Board of Directors’ fees | 8 | |||
Audit fees | 11 | |||
Other expenses | 131 | |||
Total expenses (before waivers and fees paid indirectly) | 4,226 | |||
Expense waivers | (40 | ) | ||
Transfer agent fee waivers | (84 | ) | ||
Commission recapture | (5 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (129 | ) | ||
Total expenses, net | 4,097 | |||
Net investment loss | (915 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (119,822 | ) | ||
Net realized gain on foreign currency transactions | 106 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (119,716 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 69,831 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (79 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 69,752 | |||
Net Loss on Investments and Foreign Currency Transactions | (49,964 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (50,879 | ) | |
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Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (915 | ) | $ | (2,072 | ) | ||
Net realized gain (loss) on investments and foreign currency transactions | (119,716 | ) | 23,413 | |||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 69,752 | (281,548 | ) | |||||
Net decrease in net assets resulting from operations | (50,879 | ) | (260,207 | ) | ||||
Distributions to Shareholders: | ||||||||
Class A | — | — | ||||||
Class C | — | — | ||||||
Class I | — | — | ||||||
From net realized gain on investments | ||||||||
Class A | (14,159 | ) | (35,144 | ) | ||||
Class B | (2,332 | ) | (6,084 | ) | ||||
Class C | (4,728 | ) | (10,053 | ) | ||||
Class I | (1,547 | ) | (1,046 | ) | ||||
Class R3 | (23 | ) | (7 | ) | ||||
Class R4 | (189 | ) | (36 | ) | ||||
Class R5 | (65 | ) | (26 | ) | ||||
Class Y | (7,032 | ) | (14,030 | ) | ||||
Total distributions | (30,075 | ) | (66,426 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (20,556 | ) | (40,482 | ) | ||||
Class B | (6,598 | ) | (11,375 | ) | ||||
Class C | (6,571 | ) | 3,916 | |||||
Class I | (27,760 | ) | 37,815 | |||||
Class R3 | 307 | 521 | ||||||
Class R4 | 1,545 | 4,527 | ||||||
Class R5 | 152 | 1,511 | ||||||
Class Y | (132,012 | ) | 14,054 | |||||
Net increase (decrease) from capital share transactions | (191,493 | ) | 10,487 | |||||
Net decrease in net assets | (272,447 | ) | (316,146 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 642,395 | 958,541 | ||||||
End of period | $ | 369,948 | $ | 642,395 | ||||
Accumulated distribution in excess of net investment loss | $ | (915 | ) | $ | — | |||
9
Table of Contents
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Health Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation – The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on |
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a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | |||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. |
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Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining |
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whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
l) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 18,256 | $ | 6,779 | ||||
Long-Term Capital Gains * | 48,170 | 21,945 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Long-Term Capital Gain | $ | 30,075 | ||
Unrealized Depreciation* | $ | (177,532 | ) | |
Total Accumulated Deficit | $ | (147,457 | ) | |
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
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c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $2,063, decrease accumulated net realized loss by $706, and decrease paid in capital by $1,357. | ||
d) | Capital Loss Carryforward - The Fund had no capital loss carryforwards for U.S. federal income tax purposes as of October 31, 2008. | ||
e) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
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c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.60% | 2.35% | 2.35% | 1.35% | 1.85% | 1.55% | 1.25% | 1.20% |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.55 | % | 1.41 | % | 1.40 | % | 1.60 | % | 1.58 | % | 1.63 | % | ||||||||||||
Class B Shares | 2.09 | 2.24 | 2.29 | 2.31 | 2.33 | 2.34 | ||||||||||||||||||
Class C Shares | 2.29 | 2.14 | 2.14 | 2.31 | 2.33 | 2.34 | ||||||||||||||||||
Class I Shares | 1.27 | 1.10 | 1.08 | 1.14 | * | |||||||||||||||||||
Class R3 Shares | 1.83 | 1.85 | 1.77 | † | ||||||||||||||||||||
Class R4 Shares | 1.40 | 1.35 | 1.45 | ‡ | ||||||||||||||||||||
Class R5 Shares | 1.10 | 1.05 | 1.17 | § | ||||||||||||||||||||
Class Y Shares | 0.98 | 0.95 | 0.95 | 1.08 | 1.06 | 1.10 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $160 and contingent deferred sales charges of $52 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 |
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years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $8. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $642 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.01 | % | 9.94 | % | ||||
Class B | 0.01 | 8.90 | ||||||
Class C | 0.01 | 9.09 | ||||||
Class I | 0.01 | 10.46 | ||||||
Class Y | 0.01 | 10.44 |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases for U.S. Government Obligations | 247,450 | |||
Sales Proceeds for U.S. Government Obligations | 477,064 |
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6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,927 | 1,127 | (4,924 | ) | — | (1,870 | ) | 6,482 | 1,678 | (11,571 | ) | — | (3,411 | ) | ||||||||||||||||||||||||||
Amount | $ | 22,007 | $ | 12,851 | $ | (55,414 | ) | $ | — | $ | (20,556 | ) | $ | 104,793 | $ | 28,823 | $ | (174,098 | ) | $ | — | $ | (40,482 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 104 | 203 | (941 | ) | — | (634 | ) | 338 | 351 | (1,509 | ) | — | (820 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,098 | $ | 2,130 | $ | (9,826 | ) | $ | — | $ | (6,598 | ) | $ | 5,133 | $ | 5,622 | $ | (22,130 | ) | $ | — | $ | (11,375 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 436 | 363 | (1,443 | ) | — | (644 | ) | 1,437 | 515 | (1,782 | ) | — | 170 | |||||||||||||||||||||||||||
Amount | $ | 4,649 | $ | 3,822 | $ | (15,042 | ) | $ | — | $ | (6,571 | ) | $ | 21,700 | $ | 8,271 | $ | (26,055 | ) | $ | — | $ | 3,916 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 316 | 131 | (2,820 | ) | — | (2,373 | ) | 4,410 | 49 | (1,892 | ) | — | 2,567 | |||||||||||||||||||||||||||
Amount | $ | 3,750 | $ | 1,501 | $ | (33,011 | ) | $ | — | $ | (27,760 | ) | $ | 63,808 | $ | 851 | $ | (26,844 | ) | $ | — | $ | 37,815 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 29 | 2 | (4 | ) | — | 27 | 35 | — | (3 | ) | — | 32 | ||||||||||||||||||||||||||||
Amount | $ | 328 | $ | 24 | $ | (45 | ) | $ | — | $ | 307 | $ | 557 | $ | 7 | $ | (43 | ) | $ | — | $ | 521 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 144 | 16 | (33 | ) | — | 127 | 294 | 2 | (26 | ) | — | 270 | ||||||||||||||||||||||||||||
Amount | $ | 1,737 | $ | 189 | $ | (381 | ) | $ | — | $ | 1,545 | $ | 4,897 | $ | 36 | $ | (406 | ) | $ | — | $ | 4,527 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 23 | 6 | (15 | ) | — | 14 | 110 | 1 | (25 | ) | — | 86 | ||||||||||||||||||||||||||||
Amount | $ | 271 | $ | 65 | $ | (184 | ) | $ | — | $ | 152 | $ | 1,917 | $ | 25 | $ | (431 | ) | $ | — | $ | 1,511 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 17 | 583 | (12,040 | ) | — | (11,440 | ) | 29 | 777 | (28 | ) | — | 778 | |||||||||||||||||||||||||||
Amount | $ | 203 | $ | 7,032 | $ | (139,247 | ) | $ | — | $ | (132,012 | ) | $ | 519 | $ | 14,028 | $ | (493 | ) | $ | — | $ | 14,054 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 294 | $ | 3,350 | |||||
For the Year Ended October 31, 2008 | 324 | $ | 5,117 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
18
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Ratio of Net | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | Investment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average Net | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 12.69 | $ | (0.02 | ) | $ | — | $ | (0.91 | ) | $ | (0.93 | ) | $ | — | $ | (0.61 | ) | $ | — | $ | (0.61 | ) | $ | (1.54 | ) | $ | 11.15 | (7.45 | )%(f) | $ | 242,362 | 1.58 | %(g) | 1.55 | %(g) | 1.55 | %(g) | (0.29 | )%(g) | 47 | % | ||||||||||||||||||||||||||||||
B | 11.74 | (0.04 | ) | — | (0.85 | ) | (0.89 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.50 | ) | 10.24 | (7.73 | ) (f) | 33,158 | 2.56 | (g) | 2.09 | (g) | 2.09 | (g) | (0.85 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||
C | 11.78 | (0.05 | ) | — | (0.86 | ) | (0.91 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.52 | ) | 10.26 | (7.88 | ) (f) | 74,603 | 2.29 | (g) | 2.29 | (g) | 2.29 | (g) | (1.03 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||
I | 12.81 | — | — | (0.93 | ) | (0.93 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.54 | ) | 11.27 | (7.38 | ) (f) | 11,111 | 1.27 | (g) | 1.27 | (g) | 1.27 | (g) | (0.08 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 13.19 | (0.03 | ) | — | (0.96 | ) | (0.99 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.60 | ) | 11.59 | (7.63 | ) (f) | 750 | 1.83 | (g) | 1.83 | (g) | 1.83 | (g) | (0.46 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||
R4 | 13.29 | (0.01 | ) | — | (0.96 | ) | (0.97 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.58 | ) | 11.71 | (7.41 | ) (f) | 4,940 | 1.40 | (g) | 1.40 | (g) | 1.40 | (g) | (0.10 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||
R5 | 13.38 | 0.01 | — | (0.97 | ) | (0.96 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.57 | ) | 11.81 | (7.28 | ) (f) | 1,442 | 1.11 | (g) | 1.11 | (g) | 1.11 | (g) | 0.17 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 13.40 | 0.01 | — | (0.97 | ) | (0.96 | ) | — | (0.61 | ) | — | (0.61 | ) | (1.57 | ) | 11.83 | (7.27 | ) (f) | 1,582 | 0.98 | (g) | 0.98 | (g) | 0.98 | (g) | 0.11 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 18.85 | (0.03 | ) | — | (4.83 | ) | (4.86 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.16 | ) | 12.69 | (27.59 | ) | 299,699 | 1.41 | 1.41 | 1.41 | (0.18 | ) | 67 | ||||||||||||||||||||||||||||||||||||||||||||||
B | 17.67 | (0.18 | ) | — | (4.45 | ) | (4.63 | ) | — | (1.30 | ) | — | (1.30 | ) | (5.93 | ) | 11.74 | (28.17 | ) | 45,475 | 2.32 | 2.24 | 2.24 | (1.02 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 17.71 | (0.14 | ) | — | (4.49 | ) | (4.63 | ) | — | (1.30 | ) | — | (1.30 | ) | (5.93 | ) | 11.78 | (28.10 | ) | 93,208 | 2.15 | 2.15 | 2.15 | (0.92 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 18.96 | 0.01 | — | (4.86 | ) | (4.85 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.15 | ) | 12.81 | (27.36 | ) | 43,036 | 1.11 | 1.11 | 1.11 | 0.10 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 19.59 | (0.03 | ) | — | (5.07 | ) | (5.10 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.40 | ) | 13.19 | (27.78 | ) | 503 | 1.91 | 1.85 | 1.85 | (0.67 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 19.66 | — | — | (5.07 | ) | (5.07 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.37 | ) | 13.29 | (27.52 | ) | 3,921 | 1.35 | 1.35 | 1.35 | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 19.70 | 0.03 | — | (5.05 | ) | (5.02 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.32 | ) | 13.38 | (27.18 | ) | 1,449 | 1.05 | 1.05 | 1.05 | 0.27 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 19.74 | 0.05 | — | (5.09 | ) | (5.04 | ) | — | (1.30 | ) | — | (1.30 | ) | (6.34 | ) | 13.40 | (27.23 | ) | 155,104 | 0.95 | 0.95 | 0.95 | 0.28 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 17.84 | (0.04 | ) | — | 1.73 | 1.69 | — | (0.68 | ) | — | (0.68 | ) | 1.01 | 18.85 | 9.96 | (h) | 509,341 | 1.41 | 1.41 | 1.41 | (0.25 | ) | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 16.92 | (0.20 | ) | — | 1.63 | 1.43 | — | (0.68 | ) | — | (0.68 | ) | 0.75 | 17.67 | 8.92 | (h) | 82,932 | 2.30 | 2.29 | 2.29 | (1.15 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 16.93 | (0.15 | ) | — | 1.61 | 1.46 | — | (0.68 | ) | — | (0.68 | ) | 0.78 | 17.71 | 9.11 | (h) | 137,101 | 2.15 | 2.15 | 2.15 | (0.99 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 17.86 | 0.01 | — | 1.77 | 1.78 | — | (0.68 | ) | — | (0.68 | ) | 1.10 | 18.96 | 10.48 | (h) | 15,017 | 1.07 | 1.07 | 1.07 | 0.08 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 18.27 | (0.02 | ) | — | 1.34 | 1.32 | — | — | — | — | 1.32 | 19.59 | 7.22 | (f) | 112 | 1.75 | (g) | 1.75 | (g) | 1.75 | (g) | (0.50 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 18.27 | — | — | 1.39 | 1.39 | — | — | — | — | 1.39 | 19.66 | 7.61 | (f) | 494 | 1.41 | (g) | 1.41 | (g) | 1.41 | (g) | — | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 18.27 | — | — | 1.43 | 1.43 | — | — | — | — | 1.43 | 19.70 | 7.83 | (f) | 434 | 1.14 | (g) | 1.14 | (g) | 1.14 | (g) | — | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 18.57 | 0.04 | — | 1.81 | 1.85 | — | (0.68 | ) | — | (0.68 | ) | 1.17 | 19.74 | 10.45 | (h) | 213,110 | 0.95 | 0.95 | 0.95 | 0.20 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.50 | (0.07 | ) | — | 2.41 | 2.34 | — | (1.00 | ) | — | (1.00 | ) | 1.34 | 17.84 | 14.96 | 370,285 | 1.61 | 1.60 | 1.60 | (0.53 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.81 | (0.20 | ) | — | 2.31 | 2.11 | — | (1.00 | ) | — | (1.00 | ) | 1.11 | 16.92 | 14.10 | 80,574 | 2.45 | 2.32 | 2.32 | (1.27 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.81 | (0.18 | ) | — | 2.30 | 2.12 | — | (1.00 | ) | — | (1.00 | ) | 1.12 | 16.93 | 14.17 | 97,956 | 2.31 | 2.31 | 2.31 | (1.25 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I(l) | 17.34 | — | — | 0.52 | 0.52 | — | — | — | — | 0.52 | 17.86 | 3.00 | (f) | 785 | 1.26 | (g) | 1.15 | (g) | 1.15 | (g) | (0.20 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.05 | (0.01 | ) | — | 2.53 | 2.52 | — | (1.00 | ) | — | (1.00 | ) | 1.52 | 18.57 | 15.56 | 192,814 | 1.08 | 1.08 | 1.08 | (0.03 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.00 | (0.08 | ) | — | 2.35 | 2.27 | — | (0.77 | ) | — | (0.77 | ) | 1.50 | 16.50 | 15.67 | 209,835 | 1.71 | 1.60 | 1.60 | (0.55 | ) | 50 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.50 | (0.20 | ) | — | 2.28 | 2.08 | — | (0.77 | ) | — | (0.77 | ) | 1.31 | 15.81 | 14.86 | 71,204 | 2.52 | 2.35 | 2.35 | (1.30 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.51 | (0.19 | ) | — | 2.26 | 2.07 | — | (0.77 | ) | — | (0.77 | ) | 1.30 | 15.81 | 14.78 | 72,546 | 2.36 | 2.35 | 2.35 | (1.30 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.41 | (0.01 | ) | — | 2.42 | 2.41 | — | (0.77 | ) | — | (0.77 | ) | 1.64 | 17.05 | 16.19 | 169,698 | 1.08 | 1.08 | 1.08 | (0.12 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.80 | (0.10 | ) | — | 1.36 | 1.26 | — | (0.06 | ) | — | (0.06 | ) | 1.20 | 15.00 | 9.21 | 170,672 | 1.81 | 1.65 | 1.65 | (0.68 | ) | 41 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.43 | (0.20 | ) | — | 1.33 | 1.13 | — | (0.06 | ) | — | (0.06 | ) | 1.07 | 14.50 | 8.49 | 66,035 | 2.55 | 2.35 | 2.35 | (1.38 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.44 | (0.20 | ) | — | 1.33 | 1.13 | — | (0.06 | ) | — | (0.06 | ) | 1.07 | 14.51 | 8.49 | 61,390 | 2.37 | 2.35 | 2.35 | (1.38 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.09 | (0.02 | ) | — | 1.40 | 1.38 | — | (0.06 | ) | — | (0.06 | ) | 1.32 | 15.41 | 9.88 | 1,299 | 1.12 | 1.12 | 1.12 | (0.14 | ) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on August 31, 2006. |
19
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20
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21
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22
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 925.48 | $ | 7.39 | $ | 1,000.00 | $ | 1,017.10 | $ | 7.75 | 1.55 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 922.71 | $ | 9.96 | $ | 1,000.00 | $ | 1,014.43 | $ | 10.43 | 2.09 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 921.23 | $ | 10.90 | $ | 1,000.00 | $ | 1,013.43 | $ | 11.43 | 2.29 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 926.23 | $ | 6.06 | $ | 1,000.00 | $ | 1,018.49 | $ | 6.35 | 1.27 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 923.72 | $ | 8.72 | $ | 1,000.00 | $ | 1,015.71 | $ | 9.14 | 1.83 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 925.88 | $ | 6.68 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.00 | 1.40 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 927.17 | $ | 5.30 | $ | 1,000.00 | $ | 1,019.29 | $ | 5.55 | 1.11 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 927.28 | $ | 4.68 | $ | 1,000.00 | $ | 1,019.93 | $ | 4.90 | 0.98 | 181 | 365 |
23
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Manager Discussions (Unaudited) | 2 | |||
Financial Satements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 |
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(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Global Technology A# | 5/01/00 | -33.66 | % | -1.85 | % | -9.55 | % | |||||||||
Global Technology A## | 5/01/00 | -37.31 | % | -2.96 | % | -10.12 | % | |||||||||
Global Technology B# | 5/01/00 | -34.08 | % | -2.51 | % | NA | * | |||||||||
Global Technology B## | 5/01/00 | -37.38 | % | -2.91 | % | NA | * | |||||||||
Global Technology C# | 5/01/00 | -34.32 | % | -2.72 | % | -10.29 | % | |||||||||
Global Technology C## | 5/01/00 | -34.97 | % | -2.72 | % | -10.29 | % | |||||||||
Global Technology Y# | 5/01/00 | -33.60 | % | -1.58 | % | -9.23 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
John F. Averill, CFA | Anita M. Killian, CFA | Nicolas B. Boullet | ||
Senior Vice President, Partner | Senior Vice President, Partner | Assistant Vice President | ||
Bruce L. Glazer | Scott E. Simpson* | |||
Senior Vice President, Partner | Senior Vice President, Partner |
2
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* | It is anticipated that on June 30, 2009, Scott Simpson will withdraw as a partner of Wellington Management Company, LLP. Other members of the existing portfolio management team have taken over his responsibilities. |
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Application Software | 1.1 | % | ||
Communications Equipment | 24.2 | |||
Computer Hardware | 20.3 | |||
Computer Storage & Peripherals | 3.8 | |||
Data Processing & Outsourced Services | 11.6 | |||
Electronic Manufacturing Services | 1.2 | |||
Home Entertainment Software | 2.7 | |||
Human Resource & Employment Services | 0.6 | |||
Internet Software & Services | 2.8 | |||
IT Consulting & Other Services | 3.2 | |||
Semiconductor Equipment | 1.2 | |||
Semiconductors | 8.7 | |||
Systems Software | 16.5 | |||
Short-Term Investments | 0.5 | |||
Other Assets and Liabilities | 1.6 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Canada | 2.9 | % | ||
China | 1.0 | |||
Japan | 0.2 | |||
South Korea | 2.3 | |||
Taiwan | 2.6 | |||
United States | 88.9 | |||
Short-Term Investments | 0.5 | |||
Other Assets and Liabilities | 1.6 | |||
Total | 100.0 | % | ||
3
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Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 97.9% | ||||||||||||
Application Software - 1.1% | ||||||||||||
13 | Adobe Systems, Inc. • | $ | 364 | |||||||||
Communications Equipment -24.2% | ||||||||||||
165 | Cisco Systems, Inc. • | 3,190 | ||||||||||
97 | Corning, Inc. | 1,421 | ||||||||||
77 | Motorola, Inc. | 423 | ||||||||||
55 | Qualcomm, Inc. | 2,323 | ||||||||||
14 | Research In Motion Ltd. • | 980 | ||||||||||
8,337 | ||||||||||||
Computer Hardware -20.3% | ||||||||||||
22 | Apple, Inc. • | 2,713 | ||||||||||
47 | Dell, Inc. • | 547 | ||||||||||
73 | Hewlett-Packard Co. | 2,609 | ||||||||||
35 | High Technology Computer Corp. | 477 | ||||||||||
6 | International Business Machines Corp. | 630 | ||||||||||
6,976 | ||||||||||||
Computer Storage & Peripherals -3.8% | ||||||||||||
14 | NetApp, Inc. • | 258 | ||||||||||
61 | Seagate Technology | 495 | ||||||||||
24 | Western Digital Corp. • | 566 | ||||||||||
1,319 | ||||||||||||
Data Processing & Outsourced Services -11.6% | ||||||||||||
18 | Alliance Data Systems Corp. • | 744 | ||||||||||
18 | Automatic Data Processing, Inc. | 619 | ||||||||||
4 | DST Systems, Inc. • | 162 | ||||||||||
— | Mastercard, Inc. | 68 | ||||||||||
12 | Visa, Inc. | 767 | ||||||||||
97 | Western Union Co. | 1,625 | ||||||||||
3,985 | ||||||||||||
Electronic Manufacturing Services -1.2% | ||||||||||||
147 | Hon Hai Precision Industry Co., Ltd. | 425 | ||||||||||
Home Entertainment Software -2.7% | ||||||||||||
25 | Electronic Arts, Inc. • | 505 | ||||||||||
— | Nintendo Co., Ltd. | 80 | ||||||||||
7 | Shanda Interactive Entertainment Ltd. ADR • | 349 | ||||||||||
934 | ||||||||||||
Human Resource & Employment Services -0.6% | ||||||||||||
5 | Manpower, Inc. | 220 | ||||||||||
Internet Software & Services - 2.8% | ||||||||||||
8 | Equinix, Inc. • | 544 | ||||||||||
1 | Google, Inc. • | 418 | ||||||||||
962 | ||||||||||||
IT Consulting & Other Services - 3.2% | ||||||||||||
37 | Accenture Ltd. Class A | 1,095 | ||||||||||
Semiconductor Equipment -1.2% | ||||||||||||
14 | Lam Research Corp. • | 399 | ||||||||||
Semiconductors -8.7% | ||||||||||||
15 | Atheros Communications, Inc. • | 251 | ||||||||||
39 | Marvell Technology Group Ltd. • | 431 | ||||||||||
44 | Maxim Integrated Products, Inc. | 592 | ||||||||||
91 | ON Semiconductor Corp. • | 492 | ||||||||||
2 | Samsung Electronics Co., Ltd. | 787 | ||||||||||
25 | Texas Instruments, Inc. | 457 | ||||||||||
3,010 | ||||||||||||
Systems Software - 16.5% | ||||||||||||
8 | BMC Software, Inc. • | 260 | ||||||||||
121 | Microsoft Corp. | 2,441 | ||||||||||
106 | Oracle Corp. • | 2,044 | ||||||||||
19 | Red Hat, Inc. • | 320 | ||||||||||
36 | Symantec Corp. • | 616 | ||||||||||
5,681 | ||||||||||||
Total common stocks (cost $31,579) | $ | 33,707 | ||||||||||
Total long-term investments (cost $31,579) | $ | 33,707 | ||||||||||
SHORT-TERM INVESTMENTS - 0.5% | ||||||||||||
Repurchase Agreements -0.5% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $41, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $42) | ||||||||||||
$ | 41 | 0.18%, 04/30/2009 | $ | 41 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $49, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $50) | ||||||||||||
49 | 0.17%, 04/30/2009 | 49 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $68, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $70) | ||||||||||||
68 | 0.17%, 04/30/2009 | 68 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $-, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $-) | ||||||||||||
— | 0.14%, 04/30/2009 | — | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $15, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $15) | ||||||||||||
15 | 0.16%, 04/30/2009 | 15 | ||||||||||
173 | ||||||||||||
Total short-term investments (cost $173) | $ | 173 | ||||||||||
Total investments (cost $31,752) ▲ | 98.4 | % | $ | 33,880 | ||||||||
Other assets and liabilities | 1.6 | % | 565 | |||||||||
Total net assets | 100.0 | % | $ | 34,445 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 9.00% of total net assets at April 30, 2009. |
4
Table of Contents
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $33,738 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 3,421 | ||
Unrealized Depreciation | (3,279 | ) | ||
Net Unrealized Appreciation | $ | 142 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Canada | 2.9 | % | ||
China | 1.0 | |||
Japan | 0.2 | |||
South Korea | 2.3 | |||
Taiwan | 2.6 | |||
United States | 88.9 | |||
Short-Term Investments | 0.5 | |||
Other Assets and Liabilities | 1.6 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 31,937 | ||
Investment in securities — Level 2 | 1,943 | |||
Total | $ | 33,880 | ||
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $31,752) | $ | 33,880 | ||
Cash | — | |||
Foreign currency on deposit with custodian (cost $112) | 112 | |||
Receivables: | ||||
Investment securities sold | 674 | |||
Fund shares sold | 131 | |||
Dividends and interest | 11 | |||
Other assets | 93 | |||
Total assets | 34,901 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 328 | |||
Fund shares redeemed | 89 | |||
Investment management fees | 5 | |||
Distribution fees | 3 | |||
Accrued expenses | 31 | |||
Total liabilities | 456 | |||
Net assets | $ | 34,445 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 94,804 | |||
Accumulated distribution in excess of net investment income | (31 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (62,456 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 2,128 | |||
Net assets | $ | 34,445 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 4.08/$4.31 | ||
Shares outstanding | 5,129 | |||
Net assets | $ | 20,918 | ||
Class B: Net asset value per share | $ | 3.83 | ||
Shares outstanding | 1,247 | |||
Net assets | $ | 4,777 | ||
Class C: Net asset value per share | $ | 3.79 | ||
Shares outstanding | 1,935 | |||
Net assets | $ | 7,339 | ||
Class Y: Net asset value per share | $ | 4.21 | ||
Shares outstanding | 335 | |||
Net assets | $ | 1,411 | ||
6
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 171 | ||
Interest | 1 | |||
Securities lending | — | |||
Less: Foreign tax withheld | (5 | ) | ||
Total investment income | 167 | |||
Expenses: | ||||
Investment management fees | 139 | |||
Transfer agent fees | 134 | |||
Distribution fees | ||||
Class A | 24 | |||
Class B | 23 | |||
Class C | 33 | |||
Custodian fees | 8 | |||
Accounting services | 2 | |||
Registration and filing fees | 25 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 11 | |||
Total expenses (before waivers and fees paid indirectly) | 403 | |||
Expense waivers | (114 | ) | ||
Transfer agent fee waivers | (90 | ) | ||
Commission recapture | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (205 | ) | ||
Total expenses, net | 198 | |||
Net investment loss | (31 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (15,504 | ) | ||
Net realized gain on foreign currency transactions | 2 | |||
Net Realized Loss on Investments and Foreign Currency Transactions | (15,502 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 17,396 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 17,396 | |||
Net Gain on Investments and Foreign Currency Transactions | 1,894 | |||
Net Increase in Net Assets Resulting from Operations | $ | 1,863 | ||
7
Table of Contents
For the Six- | ||||||||
Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (31 | ) | $ | (496 | ) | ||
Net realized loss on investments and foreign currency transactions | (15,502 | ) | (6,581 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 17,396 | (27,536 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 1,863 | (34,613 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (1,626 | ) | (4,831 | ) | ||||
Class B | (955 | ) | (3,074 | ) | ||||
Class C | (524 | ) | (838 | ) | ||||
Class Y | 306 | (752 | ) | |||||
Net decrease from capital share transactions | (2,799 | ) | (9,495 | ) | ||||
Net decrease in net assets | (936 | ) | (44,108 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 35,381 | 79,489 | ||||||
End of period | $ | 34,445 | $ | 35,381 | ||||
Accumulated distribution in excess of net investment loss | $ | (31 | ) | $ | — | |||
8
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Global Technology Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in |
10
Table of Contents
book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | |||
f) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
12
Table of Contents
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Accumulated Capital Losses* | $ | (44,968 | ) | |
Unrealized Depreciation† | $ | (17,254 | ) | |
Total Accumulated Deficit | $ | (62,222 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $496, increase accumulated net realized gain by $13, and decrease paid in capital by $509. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2009 | $ | 5,132 | ||
2010 | 34,893 | |||
2016 | 4,943 | |||
Total | $ | 44,968 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN |
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||
1.60% | 2.35% | 2.35% | 1.20% |
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d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.98 | % | 1.39 | % | 1.43 | % | 1.32 | % | 1.53 | % | 1.60 | % | ||||||||||||
Class B Shares | 1.50 | 1.95 | 2.03 | 1.96 | 2.28 | 2.30 | ||||||||||||||||||
Class C Shares | 1.99 | 2.27 | 2.30 | 2.21 | 2.28 | 2.30 | ||||||||||||||||||
Class Y Shares | 1.20 | 1.08 | 1.08 | 1.17 | 1.13 | 1.09 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $23 and contingent deferred sales charges of $6 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $2. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $71 for providing such services. These fees are accrued daily and paid monthly. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.04 | % | 27.46 | % | ||||
Class B | 0.04 | 26.57 | ||||||
Class C | 0.04 | 26.25 | ||||||
Class Y | 0.04 | 27.96 |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 56,999 | ||
Sales Proceeds Excluding U.S. Government Obligations | 59,647 |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,235 | — | (3,635 | ) | — | (400 | ) | 1,924 | — | (2,860 | ) | — | (936 | ) | ||||||||||||||||||||||||||
Amount | $ | 11,783 | $ | — | $ | (13,409 | ) | $ | — | $ | (1,626 | ) | $ | 11,500 | $ | — | $ | (16,331 | ) | $ | — | $ | (4,831 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 79 | — | (380 | ) | — | (301 | ) | 177 | — | (753 | ) | — | (576 | ) | ||||||||||||||||||||||||||
Amount | $ | 268 | $ | — | $ | (1,223 | ) | $ | — | $ | (955 | ) | $ | 984 | $ | — | $ | (4,058 | ) | $ | — | $ | (3,074 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 176 | — | (339 | ) | — | (163 | ) | 234 | — | (402 | ) | — | (168 | ) | ||||||||||||||||||||||||||
Amount | $ | 598 | $ | — | $ | (1,122 | ) | $ | — | $ | (524 | ) | $ | 1,308 | $ | — | $ | (2,146 | ) | $ | — | $ | (838 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 166 | — | (82 | ) | — | 84 | 120 | — | (233 | ) | — | (113 | ) | |||||||||||||||||||||||||||
Amount | $ | 618 | $ | — | $ | (312 | ) | $ | — | $ | 306 | $ | 694 | $ | — | $ | (1,446 | ) | $ | — | $ | (752 | ) |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 154 | $ | 529 | |||||
For the Year Ended October 31, 2008 | 229 | $ | 1,331 |
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17
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 3.84 | $ | — | $ | — | $ | 0.24 | $ | 0.24 | $ | — | $ | — | $ | — | $ | — | $ | 0.24 | $ | 4.08 | 6.25 | %(e) | $ | 20,918 | 2.38 | %(f) | 0.98 | %(f) | 0.98 | %(f) | 0.10 | %(f) | 184 | % | ||||||||||||||||||||||||||||||||||||
B | 3.62 | (0.01 | ) | — | 0.22 | 0.21 | — | — | — | — | 0.21 | 3.83 | 5.80 | (e) | 4,777 | 3.37 | (f) | 1.50 | (f) | 1.50 | (f) | (0.40 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 3.59 | (0.02 | ) | — | 0.22 | 0.20 | — | — | — | — | 0.20 | 3.79 | 5.57 | (e) | 7,339 | 2.88 | (f) | 1.99 | (f) | 1.99 | (f) | (0.91 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 3.97 | — | — | 0.24 | 0.24 | — | — | — | — | 0.24 | 4.21 | 6.05 | (e) | 1,411 | 1.22 | (f) | 1.20 | (f) | 1.20 | (f) | (0.18 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.23 | (0.04 | ) | — | (3.35 | ) | (3.39 | ) | — | — | — | — | (3.39 | ) | 3.84 | (46.89 | ) | 21,246 | 1.84 | 1.40 | 1.40 | (0.56 | ) | 160 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 6.85 | (0.08 | ) | — | (3.15 | ) | (3.23 | ) | — | — | — | — | (3.23 | ) | 3.62 | (47.15 | ) | 5,603 | 2.78 | 1.96 | 1.96 | (1.13 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 6.82 | (0.08 | ) | — | (3.15 | ) | (3.23 | ) | — | — | — | — | (3.23 | ) | 3.59 | (47.36 | ) | 7,537 | 2.46 | 2.27 | 2.27 | (1.44 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.45 | (0.02 | ) | — | (3.46 | ) | (3.48 | ) | — | — | — | — | (3.48 | ) | 3.97 | (46.71 | ) | 995 | 1.08 | 1.08 | 1.08 | (0.26 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 5.67 | (0.05 | ) | — | 1.61 | 1.56 | — | — | — | — | 1.56 | 7.23 | 27.51 | (g) | 46,765 | 1.84 | 1.44 | 1.44 | (0.87 | ) | 146 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 5.41 | (0.09 | ) | — | 1.53 | 1.44 | — | — | — | — | 1.44 | 6.85 | 26.62 | (g) | 14,552 | 2.74 | 2.05 | 2.05 | (1.47 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 5.40 | (0.10 | ) | — | 1.52 | 1.42 | — | — | — | — | 1.42 | 6.82 | 26.30 | (g) | 15,462 | 2.47 | 2.31 | 2.31 | (1.75 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 5.82 | (0.03 | ) | — | 1.66 | 1.63 | — | — | — | — | 1.63 | 7.45 | 28.01 | (g) | 2,710 | 1.10 | 1.10 | 1.10 | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 4.97 | (0.04 | ) | — | 0.74 | 0.70 | — | — | — | — | 0.70 | 5.67 | 14.08 | 33,424 | 2.10 | 1.36 | 1.36 | (0.78 | ) | 144 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 4.77 | (0.08 | ) | — | 0.72 | 0.64 | — | — | — | — | 0.64 | 5.41 | 13.42 | 12,729 | 2.96 | 1.99 | 1.99 | (1.41 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 4.77 | (0.09 | ) | — | 0.72 | 0.63 | — | — | — | — | 0.63 | 5.40 | 13.21 | 11,521 | 2.71 | 2.24 | 2.24 | (1.67 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 5.09 | (0.03 | ) | — | 0.76 | 0.73 | — | — | — | — | 0.73 | 5.82 | 14.34 | 1,137 | 1.26 | 1.20 | 1.20 | (0.62 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 4.42 | — | — | 0.55 | 0.55 | — | — | — | — | 0.55 | 4.97 | 12.44 | 27,620 | 2.22 | 1.60 | 1.60 | — | 132 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 4.28 | (0.04 | ) | — | 0.53 | 0.49 | — | — | — | — | 0.49 | 4.77 | 11.45 | 12,409 | 3.05 | 2.35 | 2.35 | (0.79 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 4.28 | (0.04 | ) | — | 0.53 | 0.49 | — | — | — | — | 0.49 | 4.77 | 11.45 | 10,712 | 2.75 | 2.35 | 2.35 | (0.65 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 4.51 | 0.03 | — | 0.55 | 0.58 | — | — | — | — | 0.58 | 5.09 | 12.86 | 938 | 1.22 | 1.20 | 1.20 | 0.58 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 4.68 | (0.07 | ) | — | (0.19 | ) | (0.26 | ) | — | — | — | — | (0.26 | ) | 4.42 | (5.56 | ) | 31,418 | 2.14 | 1.65 | 1.65 | (1.37 | ) | 165 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 4.56 | (0.10 | ) | — | (0.18 | ) | (0.28 | ) | — | — | — | — | (0.28 | ) | 4.28 | (6.14 | ) | 12,978 | 2.96 | 2.35 | 2.35 | (2.07 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 4.56 | (0.11 | ) | — | (0.17 | ) | (0.28 | ) | — | — | — | — | (0.28 | ) | 4.28 | (6.14 | ) | 13,891 | 2.62 | 2.35 | 2.35 | (2.07 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 4.75 | (0.04 | ) | — | (0.20 | ) | (0.24 | ) | — | — | — | — | (0.24 | ) | 4.51 | (5.05 | ) | 1,186 | 1.15 | 1.15 | 1.15 | (0.85 | ) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. |
18
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19
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
20
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21
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,062.50 | $ | 5.01 | $ | 1,000.00 | $ | 1,019.93 | $ | 4.90 | 0.98 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,058.01 | $ | 7.65 | $ | 1,000.00 | $ | 1,017.35 | $ | 7.50 | 1.50 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,055.71 | $ | 10.14 | $ | 1,000.00 | $ | 1,014.92 | $ | 9.94 | 1.99 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,060.45 | $ | 6.13 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.01 | 1.20 | 181 | 365 |
22
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Growth Allocation A# | 5/28/04 | -31.13 | % | -0.43 | % | |||||||
Growth Allocation A## | 5/28/04 | -34.92 | % | -1.57 | % | |||||||
Growth Allocation B# | 5/28/04 | -31.66 | % | -1.12 | % | |||||||
Growth Allocation B## | 5/28/04 | -34.95 | % | -1.46 | % | |||||||
Growth Allocation C# | 5/28/04 | -31.63 | % | -1.11 | % | |||||||
Growth Allocation C## | 5/28/04 | -32.29 | % | -1.11 | % | |||||||
Growth Allocation I# | 5/28/04 | -30.93 | % | -0.24 | % | |||||||
Growth Allocation R3# | 5/28/04 | -31.42 | % | -0.63 | % | |||||||
Growth Allocation R4# | 5/28/04 | -31.11 | % | -0.43 | % | |||||||
Growth Allocation R5# | 5/28/04 | -30.93 | % | -0.29 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 0.6 | % | ||
SPDR DJ Wilshire REIT ETF | 0.2 | |||
The Hartford Capital Appreciation Fund, Class Y | 21.2 | |||
The Hartford Capital Appreciation II Fund, Class Y | 0.2 | |||
The Hartford Disciplined Equity Fund, Class Y | 3.5 | |||
The Hartford Dividend and Growth Fund, Class Y | 3.3 | |||
The Hartford Equity Income Fund, Class Y | 3.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.9 | |||
The Hartford Global Growth Fund, Class Y | 7.1 | |||
The Hartford Growth Fund, Class Y | 2.8 | |||
The Hartford Growth Opportunities Fund, Class Y | 5.4 | |||
The Hartford Inflation Plus Fund, Class Y | 3.8 | |||
The Hartford International Opportunities Fund, Class Y | 3.9 | |||
The Hartford International Small Company Fund, Class Y | 4.3 | |||
The Hartford MidCap Fund, Class Y | 0.5 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.7 | |||
The Hartford Select SmallCap Value Fund, Class Y | 4.5 | |||
The Hartford Short Duration Fund, Class Y | 2.5 | |||
The Hartford Small Company Fund, Class Y | 4.0 | |||
The Hartford SmallCap Growth Fund, Class Y | 0.1 | |||
The Hartford Total Return Bond Fund, Class Y | 11.7 | |||
The Hartford Value Fund, Class Y | 14.8 | |||
Other Assets and Liabilities | 0.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 99.2% | ||||||||||||
EQUITY FUNDS — 81.2% | ||||||||||||
4,640 | The Hartford Capital Appreciation Fund, Class Y | $ | 114,711 | |||||||||
97 | The Hartford Capital Appreciation II Fund, Class Y • | 872 | ||||||||||
2,086 | The Hartford Disciplined Equity Fund, Class Y | 18,924 | ||||||||||
1,328 | The Hartford Dividend and Growth Fund, Class Y | 18,148 | ||||||||||
1,807 | The Hartford Equity Income Fund, Class Y | 16,321 | ||||||||||
631 | The Hartford Fundamental Growth Fund, Class Y • | 4,831 | ||||||||||
3,485 | The Hartford Global Growth Fund, Class Y | 38,163 | ||||||||||
1,255 | The Hartford Growth Fund, Class Y • | 15,160 | ||||||||||
1,630 | The Hartford Growth Opportunities Fund, Class Y • | 29,384 | ||||||||||
2,100 | The Hartford International Opportunities Fund, Class Y | 21,314 | ||||||||||
2,969 | The Hartford International Small Company Fund, Class Y | 23,190 | ||||||||||
159 | The Hartford MidCap Fund, Class Y • | 2,477 | ||||||||||
1,438 | The Hartford Select MidCap Value Fund, Class Y | 9,042 | ||||||||||
3,697 | The Hartford Select SmallCap Value Fund, Class Y | 24,509 | ||||||||||
1,645 | The Hartford Small Company Fund, Class Y | 21,560 | ||||||||||
24 | The Hartford SmallCap Growth Fund, Class Y • | 434 | ||||||||||
9,967 | The Hartford Value Fund, Class Y | 80,331 | ||||||||||
Total equity funds (cost $672,169) | $ | 439,371 | ||||||||||
FIXED INCOME FUNDS — 18.0% | ||||||||||||
1,916 | The Hartford Inflation Plus Fund, Class Y | $ | 20,524 | |||||||||
1,496 | The Hartford Short Duration Fund, Class Y | 13,640 | ||||||||||
6,559 | The Hartford Total Return Bond Fund, Class Y | 63,036 | ||||||||||
Total fixed income funds (cost $103,624) | $ | 97,200 | ||||||||||
Total investments in affiliated investment companies (cost $775,793) | $ | 536,571 | ||||||||||
EXCHANGE TRADED FUNDS — 0.8% | ||||||||||||
127 | SPDR DJ Wilshire International Real Estate ETF | $ | 3,166 | |||||||||
30 | SPDR DJ Wilshire REIT ETF | 1,036 | ||||||||||
Total exchange traded funds (cost $8,046) | $ | 4,202 | ||||||||||
Total long-term investments (cost $783,839) | $ | 540,773 | ||||||||||
Total investments (cost $783,839) ▲ | 100.0 | % | $ | 540,773 | ||||||||
Other assets and liabilities | — | % | (103 | ) | ||||||||
Total net assets | 100.0 | % | $ | 540,670 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $784,390 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 710 | ||
Unrealized Depreciation | (244,327 | ) | ||
Net Unrealized Depreciation | $ | (243,617 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 540,773 | ||
Total | $ | 540,773 | ||
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Assets: | ||||
Investments in securities, at fair value (cost $8,046) | $ | 4,202 | ||
Investments in underlying affiliated funds, at fair value (cost $775,793) | 536,571 | |||
Receivables: | ||||
Investment securities sold | 3 | |||
Fund shares sold | 847 | |||
Dividends and interest | 237 | |||
Other assets | 123 | |||
Total assets | 541,983 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 1,055 | |||
Investment management fees | 12 | |||
Distribution fees | 48 | |||
Accrued expenses | 198 | |||
Total liabilities | 1,313 | |||
Net assets | $ | 540,670 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 791,598 | |||
Accumulated distribution in excess of net investment income | (55 | ) | ||
Accumulated net realized loss on investments | (7,807 | ) | ||
Unrealized depreciation of investments | (243,066 | ) | ||
Net assets | $ | 540,670 | ||
Shares authorized | 450,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.04/$8.50 | ||
Shares outstanding | 38,752 | |||
Net assets | $ | 311,412 | ||
Class B: Net asset value per share | $ | 8.01 | ||
Shares outstanding | 10,378 | |||
Net assets | $ | 83,082 | ||
Class C: Net asset value per share | $ | 8.00 | ||
Shares outstanding | 16,652 | |||
Net assets | $ | 133,165 | ||
Class I: Net asset value per share | $ | 8.00 | ||
Shares outstanding | 178 | |||
Net assets | $ | 1,424 | ||
Class R3: Net asset value per share | $ | 7.98 | ||
Shares outstanding | 57 | |||
Net assets | $ | 455 | ||
Class R4: Net asset value per share | $ | 8.00 | ||
Shares outstanding | 944 | |||
Net assets | $ | 7,547 | ||
Class R5: Net asset value per share | $ | 8.03 | ||
Shares outstanding | 447 | |||
Net assets | $ | 3,585 | ||
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Investment Income: | ||||
Dividends | $ | 105 | ||
Dividends from underlying affiliated funds | 8,627 | |||
Total investment income | 8,732 | |||
Expenses: | ||||
Investment management fees | 380 | |||
Transfer agent fees | 635 | |||
Distribution fees | ||||
Class A | 370 | |||
Class B | 397 | |||
Class C | 645 | |||
Class R3 | — | |||
Class R4 | 8 | |||
Custodian fees | — | |||
Accounting services | 31 | |||
Registration and filing fees | 57 | |||
Board of Directors’ fees | 6 | |||
Audit fees | 10 | |||
Other expenses | 124 | |||
Total expenses (before waivers) | 2,663 | |||
Expense waivers | (138 | ) | ||
Transfer agent fee waivers | (12 | ) | ||
Total waivers | (150 | ) | ||
Total expenses, net | 2,513 | |||
Net investment income | 6,219 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (7,231 | ) | ||
Net realized loss on investments in securities | (23 | ) | ||
Net Realized Loss on Investments | (7,254 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (13,976 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (13,976 | ) | ||
Net Loss on Investments | (21,230 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (15,011 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 6,219 | $ | 5,854 | ||||
Net realized gain (loss) on investments | (7,254 | ) | 36,540 | |||||
Net unrealized depreciation of investments | (13,976 | ) | (361,257 | ) | ||||
Net decrease in net assets resulting from operations | (15,011 | ) | (318,863 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (6,850 | ) | (17,401 | ) | ||||
Class B | (892 | ) | (4,046 | ) | ||||
Class C | (1,565 | ) | (6,814 | ) | ||||
Class I | (34 | ) | (31 | ) | ||||
Class R3 | (1 | ) | (2 | ) | ||||
Class R4 | (131 | ) | (51 | ) | ||||
Class R5 | (78 | ) | (26 | ) | ||||
From net realized gain on investments | ||||||||
Class A | (7,321 | ) | (27,626 | ) | ||||
Class B | (2,009 | ) | (7,937 | ) | ||||
Class C | (3,309 | ) | (13,242 | ) | ||||
Class I | (29 | ) | (44 | ) | ||||
Class R3 | (1 | ) | (3 | ) | ||||
Class R4 | (122 | ) | (69 | ) | ||||
Class R5 | (66 | ) | (38 | ) | ||||
Total distributions | (22,408 | ) | (77,330 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 4,216 | 50,492 | ||||||
Class B | (1,326 | ) | 9,391 | |||||
Class C | (5,973 | ) | 14,661 | |||||
Class I | 199 | 1,089 | ||||||
Class R3 | 378 | 28 | ||||||
Class R4 | 3,018 | 6,717 | ||||||
Class R5 | 864 | 3,083 | ||||||
Net increase from capital share transactions | 1,376 | 85,461 | ||||||
Net decrease in net assets | (36,043 | ) | (310,732 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 576,714 | 887,446 | ||||||
End of period | $ | 540,671 | $ | 576,714 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (55 | ) | $ | 3,277 | |||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Growth Allocation Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. |
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Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 31,057 | $ | 11,270 | ||||
Long-Term Capital Gains * | 46,273 | 14,424 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 3,277 | ||
Undistributed Long-Term Capital Gain | $ | 12,856 | ||
Unrealized Depreciation* | $ | (229,641 | ) | |
Total Accumulated Deficit | $ | (213,508 | ) | |
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $24,055 and decrease accumulated net realized loss by $24,055. | ||
d) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | ||||||
1.50% | 2.25% | 2.25% | 1.25% | 1.81% | 1.51% | 1.21% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $894 and contingent deferred sales charges of $144 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $60. These commissions are in turn paid to sales representatives of the broker/dealers. |
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e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $633 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 22,894 | ||
Sales Proceeds Excluding U.S. Government Obligations | 37,141 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,116 | 1,811 | (6,545 | ) | — | 382 | 8,156 | 3,356 | (7,836 | ) | — | 3,676 | ||||||||||||||||||||||||||||
Amount | $ | 39,217 | $ | 13,786 | $ | (48,787 | ) | $ | — | $ | 4,216 | $ | 95,331 | $ | 43,714 | $ | (88,553 | ) | $ | — | $ | 50,492 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 691 | 372 | (1,260 | ) | — | (197 | ) | 1,707 | 883 | (1,974 | ) | — | 616 | |||||||||||||||||||||||||||
Amount | $ | 5,210 | $ | 2,803 | $ | (9,339 | ) | $ | — | $ | (1,326 | ) | $ | 20,111 | $ | 11,427 | $ | (22,147 | ) | $ | — | $ | 9,391 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,879 | 587 | (3,329 | ) | — | (863 | ) | 4,885 | 1,351 | (5,357 | ) | — | 879 | |||||||||||||||||||||||||||
Amount | $ | 14,285 | $ | 4,415 | $ | (24,673 | ) | $ | — | $ | (5,973 | ) | $ | 56,954 | $ | 17,474 | $ | (59,767 | ) | $ | — | $ | 14,661 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 32 | 8 | (15 | ) | — | 25 | 122 | 6 | (30 | ) | — | 98 | ||||||||||||||||||||||||||||
Amount | $ | 249 | $ | 63 | $ | (113 | ) | $ | — | $ | 199 | $ | 1,352 | $ | 75 | $ | (338 | ) | $ | — | $ | 1,089 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 55 | — | (4 | ) | — | 51 | 3 | — | (1 | ) | — | 2 | ||||||||||||||||||||||||||||
Amount | $ | 409 | $ | 2 | $ | (33 | ) | $ | — | $ | 378 | $ | 30 | $ | 5 | $ | (7 | ) | $ | — | $ | 28 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 460 | 34 | (114 | ) | — | 380 | 707 | 9 | (174 | ) | — | 542 | ||||||||||||||||||||||||||||
Amount | $ | 3,567 | $ | 253 | $ | (802 | ) | $ | — | $ | 3,018 | $ | 8,547 | $ | 120 | $ | (1,950 | ) | $ | — | $ | 6,717 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 149 | 19 | (60 | ) | — | 108 | 320 | 5 | (40 | ) | — | 285 | ||||||||||||||||||||||||||||
Amount | $ | 1,126 | $ | 144 | $ | (406 | ) | $ | — | $ | 864 | $ | 3,486 | $ | 65 | $ | (468 | ) | $ | — | $ | 3,083 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 75 | $ | 562 | |||||
For the Year Ended October 31, 2008 | 110 | $ | 1,271 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000's) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.58 | $ | 0.10 | $ | — | $ | (0.28 | ) | $ | (0.18 | ) | $ | (0.17 | ) | $ | (0.19 | ) | $ | — | $ | (0.36 | ) | $ | (0.54 | ) | $ | 8.04 | (1.75) | %(f) | $ | 311,412 | 0.72 | %(g) | 0.68 | %(g) | 0.68 | %(g) | 2.71 | %(g) | 4 | % | |||||||||||||||||||||||||||||||
B | 8.48 | 0.07 | — | (0.27 | ) | (0.20 | ) | (0.08 | ) | (0.19 | ) | — | (0.27 | ) | (0.47 | ) | 8.01 | (2.08 | ) (f) | 83,082 | 1.56 | (g) | 1.40 | (g) | 1.40 | (g) | 1.99 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 8.48 | 0.07 | — | (0.27 | ) | (0.20 | ) | (0.09 | ) | (0.19 | ) | — | (0.28 | ) | (0.48 | ) | 8.00 | (2.13 | ) (f) | 133,165 | 1.47 | (g) | 1.43 | (g) | 1.43 | (g) | 1.98 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 8.57 | 0.11 | — | (0.27 | ) | (0.16 | ) | (0.22 | ) | (0.19 | ) | — | (0.41 | ) | (0.57 | ) | 8.00 | (1.60 | ) (f) | 1,424 | 0.31 | (g) | 0.31 | (g) | 0.31 | (g) | 2.95 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 8.51 | 0.03 | — | (0.22 | ) | (0.19 | ) | (0.15 | ) | (0.19 | ) | — | (0.34 | ) | (0.53 | ) | 7.98 | (1.92 | ) (f) | 455 | 1.20 | (g) | 0.90 | (g) | 0.90 | (g) | 0.91 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 8.56 | 0.09 | — | (0.27 | ) | (0.18 | ) | (0.19 | ) | (0.19 | ) | — | (0.38 | ) | (0.56 | ) | 8.00 | (1.82 | ) (f) | 7,547 | 0.64 | (g) | 0.64 | (g) | 0.64 | (g) | 2.38 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 8.60 | 0.11 | — | (0.28 | ) | (0.17 | ) | (0.21 | ) | (0.19 | ) | — | (0.40 | ) | (0.57 | ) | 8.03 | (1.62 | ) (f) | 3,585 | 0.34 | (g) | 0.34 | (g) | 0.34 | (g) | 2.85 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.51 | 0.14 | — | (4.81 | ) | (4.67 | ) | (0.47 | ) | (0.79 | ) | — | (1.26 | ) | (5.93 | ) | 8.58 | (35.00 | ) | 329,312 | 0.59 | 0.59 | 0.59 | 1.06 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.37 | 0.03 | — | (4.74 | ) | (4.71 | ) | (0.39 | ) | (0.79 | ) | — | (1.18 | ) | (5.89 | ) | 8.48 | (35.52 | ) | 89,717 | 1.41 | 1.41 | 1.41 | 0.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.37 | 0.04 | — | (4.75 | ) | (4.71 | ) | (0.39 | ) | (0.79 | ) | — | (1.18 | ) | (5.89 | ) | 8.48 | (35.50 | ) | 148,584 | 1.34 | 1.34 | 1.34 | 0.34 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 14.49 | 0.37 | — | (4.98 | ) | (4.61 | ) | (0.52 | ) | (0.79 | ) | — | (1.31 | ) | (5.92 | ) | 8.57 | (34.75 | ) | 1,310 | 0.23 | 0.23 | 0.23 | 0.97 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 14.46 | 0.18 | — | (4.87 | ) | (4.69 | ) | (0.47 | ) | (0.79 | ) | — | (1.26 | ) | (5.95 | ) | 8.51 | (35.32 | ) | 49 | 1.06 | 1.06 | 1.06 | 0.34 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 14.51 | 0.43 | — | (5.08 | ) | (4.65 | ) | (0.51 | ) | (0.79 | ) | — | (1.30 | ) | (5.95 | ) | 8.56 | (34.95 | ) | 4,825 | 0.59 | 0.59 | 0.59 | 0.17 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 14.54 | 0.46 | — | (5.09 | ) | (4.63 | ) | (0.52 | ) | (0.79 | ) | — | (1.31 | ) | (5.94 | ) | 8.60 | (34.78 | ) | 2,917 | 0.30 | 0.30 | 0.30 | 0.63 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.66 | 0.14 | — | 2.23 | 2.37 | (0.24 | ) | (0.28 | ) | — | (0.52 | ) | 1.85 | 14.51 | 19.35 | 503,345 | 0.60 | 0.60 | 0.60 | 0.93 | 39 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.57 | 0.04 | — | 2.21 | 2.25 | (0.17 | ) | (0.28 | ) | — | (0.45 | ) | 1.80 | 14.37 | 18.40 | 143,140 | 1.41 | 1.32 | 1.32 | 0.22 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.57 | 0.05 | — | 2.20 | 2.25 | (0.17 | ) | (0.28 | ) | — | (0.45 | ) | 1.80 | 14.37 | 18.44 | 238,997 | 1.34 | 1.31 | 1.31 | 0.25 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I | 12.67 | 0.26 | — | 2.14 | 2.40 | (0.30 | ) | (0.28 | ) | — | (0.58 | ) | 1.82 | 14.49 | 19.71 | 804 | 0.23 | 0.23 | 0.23 | 0.58 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 12.59 | (0.02 | ) | — | 1.89 | 1.87 | — | — | — | — | 1.87 | 14.46 | 14.85 | (f) | 53 | 0.95 | (g) | 0.93 | (g) | 0.93 | (g) | (0.26 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 12.59 | — | — | 1.92 | 1.92 | — | — | — | — | 1.92 | 14.51 | 15.25 | (f) | 325 | 0.66 | (g) | 0.65 | (g) | 0.65 | (g) | (0.01 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 12.59 | — | — | 1.95 | 1.95 | — | — | — | — | 1.95 | 14.54 | 15.49 | (f) | 782 | 0.38 | (g) | 0.38 | (g) | 0.38 | (g) | 0.25 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.27 | 0.07 | — | 1.46 | 1.53 | (0.13 | ) | (0.01 | ) | — | (0.14 | ) | 1.39 | 12.66 | 13.64 | 370,088 | 0.69 | 0.67 | 0.67 | 0.49 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.19 | 0.03 | — | 1.42 | 1.45 | (0.06 | ) | (0.01 | ) | — | (0.07 | ) | 1.38 | 12.57 | 12.96 | 107,818 | 1.51 | 1.32 | 1.32 | (0.15 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.19 | 0.03 | — | 1.42 | 1.45 | (0.06 | ) | (0.01 | ) | — | (0.07 | ) | 1.38 | 12.57 | 12.96 | 181,434 | 1.44 | 1.32 | 1.32 | (0.16 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I(k) | 12.16 | (0.01 | ) | — | 0.52 | 0.51 | — | — | — | — | 0.51 | 12.67 | 4.19 | (f) | 10 | 0.66 | (g) | 0.42 | (g) | 0.42 | (g) | 0.16 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.36 | 0.05 | — | 0.89 | 0.94 | (0.03 | ) | — | — | (0.03 | ) | 0.91 | 11.27 | 9.12 | 205,331 | 0.72 | 0.64 | 0.64 | 0.42 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.34 | (0.01 | ) | — | 0.87 | 0.86 | (0.01 | ) | — | — | (0.01 | ) | 0.85 | 11.19 | 8.37 | 65,739 | 1.53 | 1.29 | 1.29 | (0.23 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.33 | (0.01 | ) | — | 0.88 | 0.87 | (0.01 | ) | — | — | (0.01 | ) | 0.86 | 11.19 | 8.47 | 100,339 | 1.47 | 1.29 | 1.29 | (0.23 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 28, 2004, through October 31, 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(l) | 10.00 | — | — | 0.36 | 0.36 | — | — | — | — | 0.36 | 10.36 | 3.60 | (f) | 43,279 | 0.72 | (g) | 0.63 | (g) | 0.63 | (g) | 0.13 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
B(m) | 10.00 | (0.01 | ) | — | 0.35 | 0.34 | — | — | — | — | 0.34 | 10.34 | 3.40 | (f) | 14,177 | 1.52 | (g) | 1.28 | (g) | 1.28 | (g) | (0.53 | ) (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C(n) | 10.00 | (0.01 | ) | — | 0.34 | 0.33 | — | — | — | — | 0.33 | 10.33 | 3.30 | (f) | 21,221 | 1.44 | (g) | 1.28 | (g) | 1.28 | (g) | (0.52 | ) (g) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the Underlying Funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. | |
(l) | Commenced operations on May 28, 2004. | |
(m) | Commenced operations on May 28, 2004. | |
(n) | Commenced operations on May 28, 2004. |
17
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18
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
19
Table of Contents
Directors and Officers (Unaudited) — (continued)
20
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 982.45 | $ | 3.34 | $ | 1,000.00 | $ | 1,021.42 | $ | 3.40 | 0.68 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 979.19 | $ | 6.87 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.00 | 1.40 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 978.72 | $ | 7.01 | $ | 1,000.00 | $ | 1,017.70 | $ | 7.15 | 1.43 | 181 | 365 | ||||||||||||||||||||||
Class I. | $ | 1,000.00 | $ | 984.04 | $ | 1.52 | $ | 1,000.00 | $ | 1,023.25 | $ | 1.55 | 0.31 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 980.81 | $ | 4.42 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 981.83 | $ | 3.14 | $ | 1,000.00 | $ | 1,021.62 | $ | 3.20 | 0.64 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 983.84 | $ | 1.67 | $ | 1,000.00 | $ | 1,023.10 | $ | 1.70 | 0.34 | 181 | 365 |
21
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
25 | ||||
26 | ||||
28 | ||||
28 | ||||
29 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
High Yield A# | 9/30/98 | -15.87 | % | 0.68 | % | 1.94 | % | 2.59 | % | |||||||||||
High Yield A## | 9/30/98 | -19.65 | % | -0.25 | % | 1.47 | % | 2.14 | % | |||||||||||
High Yield B# | 9/30/98 | -16.36 | % | -0.04 | % | NA* | NA* | |||||||||||||
High Yield B## | 9/30/98 | -20.19 | % | -0.33 | % | NA* | NA* | |||||||||||||
High Yield C# | 9/30/98 | -16.54 | % | 0.00 | % | 1.24 | % | 1.88 | % | |||||||||||
High Yield C## | 9/30/98 | -17.31 | % | 0.00 | % | 1.24 | % | 1.88 | % | |||||||||||
High Yield I# | 9/30/98 | -15.49 | % | 0.83 | % | 2.02 | % | 2.66 | % | |||||||||||
High Yield R3# | 9/30/98 | -16.09 | % | 0.79 | % | 2.19 | % | 2.86 | % | |||||||||||
High Yield R4# | 9/30/98 | -15.84 | % | 0.93 | % | 2.26 | % | 2.93 | % | |||||||||||
High Yield R5# | 9/30/98 | -15.67 | % | 1.03 | % | 2.31 | % | 2.98 | % | |||||||||||
High Yield Y# | 9/30/98 | -15.59 | % | 1.09 | % | 2.34 | % | 3.00 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Class I shares commenced operations on 5/31/07. Performance prior to 5/31/07 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Mark Niland, CFA | James Serhant, CFA | |
Managing Director | Senior Vice President, Senior Investment Analyst |
2
Table of Contents
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
A | 0.2 | % | ||
BBB | 5.5 | |||
BB | 32.3 | |||
B | 43.4 | |||
CCC | 15.6 | |||
CC | 0.1 | |||
D | 2.6 | |||
Not Rated | 0.3 | |||
Total | 100.0 | % | ||
Percentage of | ||||
Industry | Net Assets | |||
Basic Materials | 6.6 | % | ||
Capital Goods | 1.3 | |||
Consumer Cyclical | 10.4 | |||
Consumer Staples | 4.7 | |||
Energy | 8.9 | |||
Finance | 6.1 | |||
Health Care | 10.8 | |||
Services | 13.5 | |||
Technology | 23.4 | |||
Transportation | 2.0 | |||
Utilities | 6.5 | |||
Short-Term Investments | 8.3 | |||
Other Assets and Liabilities | (2.5 | ) | ||
Total | 100.0 | % | ||
Percentage of | ||||
Category | Net Assets | |||
Asset & Commercial Mortgage Backed Securities | 0.2 | % | ||
Common Stocks | 0.0 | |||
Corporate Bonds: Investment Grade | 6.4 | |||
Corporate Bonds: Non-Investment Grade | 79.7 | |||
Preferred Stock | 0.0 | |||
Senior Floating Rate Interests: Non-Investment Grade | 7.9 | |||
Warrant | 0.0 | |||
Short-Term Investments | 8.3 | |||
Other Assets and Liabilities | (2.5 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES -0.2% | ||||||||
Finance - 0.2% | ||||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
$ | 5,856 | 9.75%, 01/25/2039 ⌂► | $ | 586 | ||||
Soundview NIM Trust | ||||||||
920 | 8.25%, 12/25/2036 ⌂• | — | ||||||
586 | ||||||||
Total asset & commercial mortgage backed securities (cost $1,429) | $ | 586 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 6.4% | ||||||||
Basic Materials - 1.1% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | ||||||||
$ | 850 | 6.88%, 02/01/2014 ‡ | $ | 841 | ||||
1,020 | 8.25%, 04/01/2015 | 1,005 | ||||||
Rio Tinto Finance USA, Ltd. | ||||||||
1,000 | 8.95%, 05/01/2014 ‡ | 1,035 | ||||||
2,881 | ||||||||
Consumer Cyclical - 0.5% | ||||||||
Phillips Van-Heusen Corp. | ||||||||
1,895 | 7.75%, 11/15/2023 ‡ | 1,294 | ||||||
Consumer Staples - 0.5% | ||||||||
Anheuser-Busch InBev N.V. | ||||||||
1,200 | 7.75%, 01/15/2019 ■‡ | 1,256 | ||||||
Finance - 0.7% | ||||||||
Goldman Sachs Capital Trust II | ||||||||
3,700 | 5.79%, 06/01/2012 ‡♠Δ | 1,830 | ||||||
Services - 1.6% | ||||||||
Allied Waste North America, Inc. | ||||||||
820 | 6.88%, 06/01/2017 ‡ | 796 | ||||||
2,425 | 7.88%, 04/15/2013 ‡ | 2,461 | ||||||
Wynn Las Vegas LLC | ||||||||
1,235 | 6.63%, 12/01/2014 | 1,025 | ||||||
4,282 | ||||||||
Technology - 1.3% | ||||||||
Qwest Corp. | ||||||||
4,980 | 7.25%, 10/15/2035 | 3,548 | ||||||
Transportation - 0.4% | ||||||||
American Airlines, Inc. | ||||||||
1,200 | 7.86%, 10/01/2011 | 996 | ||||||
Utilities - 0.3% | ||||||||
Williams Partners L.P. | ||||||||
805 | 7.25%, 02/01/2017 | 729 | ||||||
Total corporate bonds: investment grade (cost $17,056) | $ | 16,816 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 79.7% | ||||||||
Basic Materials - 5.5% | ||||||||
Cenveo, Inc. | ||||||||
$ | 1,000 | 10.50%, 08/15/2016 ■ | 670 | |||||
Crown Americas, Inc. | ||||||||
850 | 7.63%, 11/15/2013 | 859 | ||||||
Georgia-Pacific Corp. | ||||||||
2,950 | 7.00%, 01/15/2015 ■ | 2,802 | ||||||
Georgia-Pacific LLC | ||||||||
1,130 | 8.25%, 05/01/2016 ■ | 1,130 | ||||||
725 | 9.50%, 12/01/2011 | 738 | ||||||
Goodyear Tire & Rubber Co. | ||||||||
2,000 | 6.32%, 12/01/2009 Δ | 1,973 | ||||||
Graham Packaging Co., Inc. | ||||||||
1,790 | 8.50%, 10/15/2012 | 1,539 | ||||||
Huntsman International LLC | ||||||||
675 | 7.38%, 01/01/2015 | 439 | ||||||
520 | 7.88%, 11/15/2014 | 343 | ||||||
Nalco Co. | ||||||||
925 | 7.75%, 11/15/2011 | 934 | ||||||
Owens-Brockway Glass Container, Inc. | ||||||||
825 | 8.25%, 05/15/2013 | 837 | ||||||
Peabody Energy Corp. | ||||||||
980 | 6.88%, 03/15/2013 | 960 | ||||||
Potlatch Corp. | ||||||||
650 | 13.00%, 12/01/2009 ⌂Δ | 675 | ||||||
Valmont Industries, Inc. | ||||||||
725 | 6.88%, 05/01/2014 | 681 | ||||||
14,580 | ||||||||
Capital Goods - 1.3% | ||||||||
L-3 Communications Corp. | ||||||||
2,300 | 6.13%, 07/15/2013 - 01/15/2014 | 2,192 | ||||||
Transdigm, Inc. | ||||||||
1,290 | 7.75%, 07/15/2014 | 1,261 | ||||||
3,453 | ||||||||
Consumer Cyclical - 8.5% | ||||||||
Albertson’s, Inc. | ||||||||
1,290 | 7.50%, 02/15/2011 | 1,287 | ||||||
Alliance One International, Inc. | ||||||||
905 | 8.50%, 05/15/2012 | 805 | ||||||
Amerigas Partners L.P. | ||||||||
650 | 7.13%, 05/20/2016 | 629 | ||||||
755 | 7.25%, 05/20/2015 | 738 | ||||||
Aramark Corp. | ||||||||
2,730 | 5.00%, 06/01/2012 | 2,423 | ||||||
D.R. Horton, Inc. | ||||||||
2,965 | 4.88%, 01/15/2010 | 2,921 | ||||||
Dollarama Group L.P. | ||||||||
1,540 | 8.88%, 08/15/2012 | 1,463 | ||||||
ESCO Corp. | ||||||||
2,060 | 8.63%, 12/15/2013 ■ | 1,669 | ||||||
Ingles Markets, Inc. | ||||||||
1,100 | 8.88%, 05/15/2017 * | 1,062 | ||||||
KB Home & Broad Home Corp. | ||||||||
1,625 | 6.38%, 08/15/2011 | 1,552 | ||||||
Pulte Homes, Inc. | ||||||||
1,825 | 7.88%, 08/01/2011 | 1,820 | ||||||
SGS International, Inc. | ||||||||
1,825 | 12.00%, 12/15/2013 | 970 | ||||||
Stater Brothers Holdings, Inc. | ||||||||
1,080 | 8.13%, 06/15/2012 | 1,066 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 79.7% — (continued) | ||||||||
Consumer Cyclical — 8.5% — (continued) | ||||||||
Supervalu, Inc. | ||||||||
$ | 3,040 | 7.50%, 11/15/2014 | $ | 2,949 | ||||
665 | 8.00%, 05/01/2016 | 645 | ||||||
United Components, Inc. | ||||||||
985 | 9.38%, 06/15/2013 | 542 | ||||||
22,541 | ||||||||
Consumer Staples — 3.4% | ||||||||
Appleton Papers, Inc. | ||||||||
1,170 | 8.13%, 06/15/2011 | 702 | ||||||
Constellation Brands, Inc. | ||||||||
1,905 | 8.38%, 12/15/2014 | 1,924 | ||||||
Dean Foods Co. | ||||||||
1,025 | 7.00%, 06/01/2016 | 999 | ||||||
Dean Holding Co. | ||||||||
950 | 6.63%, 05/15/2009 | 950 | ||||||
Dole Food Co., Inc. | ||||||||
1,145 | 13.88%, 03/15/2014 ■ | 1,205 | ||||||
SPX Corp. | ||||||||
950 | 7.63%, 12/15/2014 | 938 | ||||||
Tyson Foods, Inc. | ||||||||
2,225 | 10.50%, 03/01/2014 ■ | 2,325 | ||||||
9,043 | ||||||||
Energy — 8.4% | ||||||||
Chesapeake Energy Corp. | ||||||||
2,350 | 7.00%, 08/15/2014 | 2,168 | ||||||
1,590 | 7.63%, 07/15/2013 | 1,518 | ||||||
Encore Acquisition Co. | ||||||||
1,250 | 7.25%, 12/01/2017 | 1,038 | ||||||
Ferrellgas Partners L.P. | ||||||||
1,235 | 6.75%, 05/01/2014 ■ | 1,115 | ||||||
1,700 | 8.75%, 06/15/2012 | 1,556 | ||||||
Inergy L.P. | ||||||||
2,240 | 8.25%, 03/01/2016 | 2,223 | ||||||
810 | 8.75%, 03/01/2015 ■ | 814 | ||||||
Newfield Exploration Co. | ||||||||
1,300 | 6.63%, 09/01/2014 | 1,196 | ||||||
Petrohawk Energy Corp. | ||||||||
1,700 | 9.13%, 07/15/2013 | 1,666 | ||||||
Plains Exploration & Production Co. | ||||||||
850 | 7.63%, 06/01/2018 | 737 | ||||||
840 | 7.75%, 06/15/2015 | 769 | ||||||
Sonat, Inc. | ||||||||
4,340 | 7.63%, 07/15/2011 | 4,296 | ||||||
Targa Resources Partners | ||||||||
1,300 | 8.25%, 07/01/2016 ■ | 1,027 | ||||||
Tesoro Corp. | ||||||||
2,550 | 6.63%, 11/01/2015 | 2,142 | ||||||
22,265 | ||||||||
Finance — 5.1% | ||||||||
American Real Estate Partners L.P. | ||||||||
1,230 | 7.13%, 02/15/2013 | 1,033 | ||||||
Ford Motor Credit Co. | ||||||||
4,930 | 5.70%, 01/15/2010 | 4,634 | ||||||
Hub International Holdings, Inc. | ||||||||
1,415 | 9.00%, 12/15/2014 ■ | 984 | ||||||
LPL Holdings, Inc. | ||||||||
4,005 | 10.75%, 12/15/2015 ■ | 3,484 | ||||||
Rent-A-Center, Inc. | ||||||||
1,055 | 7.50%, 05/01/2010 | 1,058 | ||||||
United Rentals North America, Inc. | ||||||||
1,150 | 6.50%, 02/15/2012 | 1,029 | ||||||
Yankee Acquisition Corp. | ||||||||
1,500 | 8.50%, 02/15/2015 | 1,058 | ||||||
13,280 | ||||||||
Health Care — 8.9% | ||||||||
Biomet, Inc. | ||||||||
1,670 | 10.38%, 10/15/2017 | 1,607 | ||||||
HCA, Inc. | ||||||||
3,864 | 7.88%, 02/01/2011 | 3,787 | ||||||
980 | 8.50%, 04/15/2019 ■ | 986 | ||||||
4,380 | 9.25%, 11/15/2016 | 4,336 | ||||||
HealthSouth Corp. | ||||||||
1,300 | 10.75%, 06/15/2016 | 1,326 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
1,995 | 8.75%, 06/15/2014 | 1,960 | ||||||
Invacare Corp. | ||||||||
1,820 | 9.75%, 02/15/2015 | 1,834 | ||||||
Multiplan Corp. | ||||||||
2,005 | 10.38%, 04/15/2016 ■ | 1,764 | ||||||
Psychiatric Solutions, Inc. | ||||||||
2,490 | 7.75%, 07/15/2015 | 2,278 | ||||||
Reable Therapeutics Finance LLC | ||||||||
1,480 | 11.75%, 11/15/2014 | 955 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
840 | 11.00%, 01/15/2014 | 872 | ||||||
Warner Chilcott Corp. | ||||||||
1,930 | 8.75%, 02/01/2015 | 1,896 | ||||||
23,601 | ||||||||
Services — 10.1% | ||||||||
Affinion Group, Inc. | ||||||||
4,510 | 11.50%, 10/15/2015 | 3,247 | ||||||
AMC Entertainment, Inc. | ||||||||
1,235 | 11.00%, 02/01/2016 | 1,210 | ||||||
Corrections Corp. of America | ||||||||
1,165 | 6.25%, 03/15/2013 | 1,121 | ||||||
DirecTV Holdings LLC | ||||||||
775 | 7.63%, 05/15/2016 | 767 | ||||||
1,420 | 8.38%, 03/15/2013 | 1,441 | ||||||
Echostar DBS Corp. | ||||||||
1,380 | 7.75%, 05/31/2015 | 1,311 | ||||||
FireKeepers Development Authority | ||||||||
1,120 | 13.88%, 05/01/2015 ■ | 806 | ||||||
Harland Clarke Holdings | ||||||||
2,020 | 9.50%, 05/15/2015 | 1,212 | ||||||
Iron Mountain, Inc. | ||||||||
2,020 | 8.00%, 06/15/2020 | 1,949 | ||||||
MGM Mirage, Inc. | ||||||||
2,800 | 6.00%, 10/01/2009 | 2,352 | ||||||
Pinnacle Entertainment, Inc. | ||||||||
1,630 | 8.75%, 10/01/2013 | 1,573 | ||||||
Sheridan Group, Inc. | ||||||||
1,600 | 10.25%, 08/15/2011 ⌂ | 992 | ||||||
SunGard Data Systems, Inc. | ||||||||
1,213 | 10.25%, 08/15/2015 | 1,055 | ||||||
TL Acquisitions, Inc. | ||||||||
1,780 | 10.50%, 01/15/2015 ■ | 1,211 | ||||||
US Oncology, Inc. | ||||||||
1,035 | 9.00%, 08/15/2012 | 1,020 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | ||||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 79.7% — (continued) | |||||||||
Services - 10.1% — (continued) | |||||||||
Videotron Ltee | |||||||||
$ | 1,735 | 6.88%, 01/15/2014 | $ | 1,685 | |||||
900 | 9.13%, 04/15/2018 ■ | 935 | |||||||
Virgin Media, Inc. | |||||||||
2,290 | 6.50%, 11/15/2016۞■ | 1,669 | |||||||
West Corp. | |||||||||
1,200 | 9.50%, 10/15/2014 | 1,041 | |||||||
26,597 | |||||||||
Technology - 20.7% | |||||||||
Canwest MediaWorks L.P. | |||||||||
1,800 | 9.25%, 08/01/2015 ■ | 166 | |||||||
Charter Communications Operating LLC | |||||||||
3,755 | 8.00%, 04/30/2012 ■Ψ | 3,530 | |||||||
2,910 | 10.88%, 09/15/2014 ■Ψ | 2,895 | |||||||
Citizens Communications Co. | |||||||||
920 | 7.88%, 01/15/2027 | 717 | |||||||
Cricket Communications, Inc. | |||||||||
2,015 | 9.38%, 11/01/2014 | 1,995 | |||||||
CSC Holdings, Inc. | |||||||||
3,760 | 7.63%, 04/01/2011 | 3,760 | |||||||
2,800 | 8.50%, 04/15/2014 ■ | 2,856 | |||||||
DaVita, Inc. | |||||||||
1,100 | 6.63%, 03/15/2013 | 1,081 | |||||||
Frontier Communications Corp. | |||||||||
2,030 | 8.25%, 05/01/2014 | 1,994 | |||||||
General Cable Corp. | |||||||||
1,350 | 7.13%, 04/01/2017 | 1,175 | |||||||
Intelsat Jackson Holdings Ltd. | |||||||||
3,280 | 11.50%, 06/15/2016 ■ | 3,231 | |||||||
Intelsat Subsidiary Holding Co. | |||||||||
3,405 | 8.50%, 01/15/2013 ■ | 3,371 | |||||||
3,700 | 8.88%, 01/15/2015 ■ | 3,644 | |||||||
Lender Process Services | |||||||||
1,025 | 8.13%, 07/01/2016 | 1,015 | |||||||
Level 3 Financing, Inc. | |||||||||
4,085 | 12.25%, 03/15/2013 | 3,687 | |||||||
Mediacom LLC | |||||||||
3,525 | 7.88%, 02/15/2011 | 3,490 | |||||||
MetroPCS Wireless, Inc. | |||||||||
2,060 | 9.25%, 11/01/2014 | 2,063 | |||||||
Qwest Communications International, Inc. | |||||||||
415 | 7.50%, 02/15/2014 | 385 | |||||||
Sanmina-Sci Corp. | |||||||||
1,430 | 4.07%, 06/15/2014 ■Δ | 987 | |||||||
Seagate Technology International | |||||||||
2,255 | 10.00%, 05/01/2014 *■ | 2,221 | |||||||
Sprint Capital Corp. | |||||||||
2,985 | 8.38%, 03/15/2012 | 2,862 | |||||||
4,200 | 8.75%, 03/15/2032 | 3,192 | |||||||
Wind Acquisition Finance S.A. | |||||||||
1,200 | 10.75%, 12/01/2015 ■ | 1,248 | |||||||
Windstream Corp. | |||||||||
2,995 | 8.63%, 08/01/2016 | 2,980 | |||||||
54,545 | |||||||||
Transportation - 1.6% | |||||||||
Bristow Group, Inc. | |||||||||
1,290 | 7.50%, 09/15/2017 | 1,045 | |||||||
Continental Airlines, Inc. | |||||||||
481 | 6.80%, 08/02/2018 | 327 | |||||||
994 | 7.03%, 06/15/2011 | 815 | |||||||
1,602 | 7.37%, 12/15/2015 | 993 | |||||||
Kansas City Southern De Mexico S.A. | |||||||||
655 | 12.50%, 04/01/2016 ■ | 632 | |||||||
United Air Lines, Inc. | |||||||||
348 | 7.19%, 04/01/2011 | 334 | |||||||
4,146 | |||||||||
Utilities - 6.2% | |||||||||
AES Corp. | |||||||||
1,875 | 8.00%, 10/15/2017 | 1,716 | |||||||
Atlas Pipeline Partners L.P. | |||||||||
1,600 | 8.13%, 12/15/2015 | 968 | |||||||
Copano Energy LLC | |||||||||
1,135 | 8.13%, 03/01/2016 | 1,033 | |||||||
Kinder Morgan, Inc. | |||||||||
1,300 | 6.50%, 09/01/2012 | 1,254 | |||||||
Mirant North America LLC | |||||||||
2,400 | 7.38%, 12/31/2013 | 2,310 | |||||||
NRG Energy, Inc. | |||||||||
4,550 | 7.25%, 02/01/2014 | 4,391 | |||||||
Reliant Energy, Inc. | |||||||||
2,700 | 6.75%, 12/15/2014 | 2,606 | |||||||
451 | 9.24%, 07/02/2017 | 426 | |||||||
Texas Competitive Electric Co. | |||||||||
3,185 | 10.25%, 11/01/2015 | 1,807 | |||||||
16,511 | |||||||||
Total corporate bonds: non-investment grade (cost $211,594) | $ | 210,562 | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE - 7.9% | |||||||||
Consumer Cyclical - 1.4% | |||||||||
Hanesbrands, Inc. | |||||||||
$ | 1,100 | 4.84%, 03/05/2014 ± | $ | 973 | |||||
1,594 | 5.80%, 09/05/2011 *± | 1,555 | |||||||
Lear Corp. | |||||||||
2,792 | 3.21%, 04/25/2012 *± | 1,166 | |||||||
3,694 | |||||||||
Consumer Staples - 0.8% | |||||||||
Dole Food Co., Inc. | |||||||||
86 | 1.14%, 04/12/2013 ± | 81 | |||||||
150 | 7.96%, 04/12/2013 ± | 142 | |||||||
558 | 7.97%, 04/12/2013 ± | 529 | |||||||
WM Wrigley Jr. Co. | |||||||||
1,333 | 6.50%, 10/06/2014 *± | 1,332 | |||||||
2,084 | |||||||||
Energy - 0.5% | |||||||||
Lyondell Chemical Co. | |||||||||
696 | 5.25%, 12/15/2009 *±Ψ | 706 | |||||||
Turbo Beta Ltd. | |||||||||
1,262 | 14.50%, 03/12/2018 ±⌂† | 555 | |||||||
1,261 | |||||||||
Finance - 0.1% | |||||||||
Amerigroup Corp. | |||||||||
355 | 2.44%, 03/26/2012 ± | 342 | |||||||
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ — 7.9% — (continued) | ||||||||||||
Health Care - 1.9% | ||||||||||||
Fresenius SE | ||||||||||||
$ | 1,800 | 6.75%, 10/01/2014 *± | $ | 1,791 | ||||||||
IASIS Healthcare Capital Corp. | ||||||||||||
2,192 | 6.29%, 06/13/2014 *± | 1,132 | ||||||||||
Inverness Medical Innovation, Inc. | ||||||||||||
1,291 | 4.74%, 06/26/2015 *± | 1,123 | ||||||||||
Life Technologies Corp. | ||||||||||||
1,107 | 5.25%, 11/23/2015 ± | 1,102 | ||||||||||
5,148 | ||||||||||||
Services — 1.8% | ||||||||||||
Marquee Holdings, Inc. | ||||||||||||
2,797 | 6.32%, 06/13/2012 *± | 1,721 | ||||||||||
Venetian Macau Ltd. | ||||||||||||
419 | 2.68%, 05/25/2012 ± | 304 | ||||||||||
Venetian Macau Ltd., Incremental Term Loan B | ||||||||||||
297 | 2.68%, 05/25/2013 ± | 215 | ||||||||||
Venetian Macau Ltd., Term Loan | ||||||||||||
726 | 2.68%, 05/25/2013 ± | 526 | ||||||||||
WideOpenWest Finance LLC | ||||||||||||
1,484 | 7.49%, 06/29/2015 ± | 560 | ||||||||||
Yonkers Racing Corp. | ||||||||||||
1,434 | 10.50%, 08/12/2011 *± | 1,394 | ||||||||||
4,720 | ||||||||||||
Technology — 1.4% | ||||||||||||
Freescale Semiconductor, Inc. | ||||||||||||
1,494 | 12.50%, 12/15/2014 *± | 995 | ||||||||||
Infor Lux Bond Co. | ||||||||||||
1,776 | 8.43%, 09/02/2014 ±⌂ | 169 | ||||||||||
Level 3 Communications Corp. | ||||||||||||
700 | 11.50%, 03/13/2014 *± | 711 | ||||||||||
Mediacom Broadband LLC | ||||||||||||
436 | 1.83%, 03/31/2010 ± | 425 | ||||||||||
Wind Acquisitions Holdings Finance S.A. | ||||||||||||
1,750 | 8.36%, 12/12/2011 ± | 1,400 | ||||||||||
3,700 | ||||||||||||
Total senior floating rate interests: non-investment grade (cost $26,151) | $ | 20,949 | ||||||||||
COMMON STOCKS — 0.0% | ||||||||||||
Telecommunication Services — 0.0% | ||||||||||||
1 | AboveNet, Inc. ⌂• | $ | 37 | |||||||||
— | XO Holdings, Inc. • | — | ||||||||||
37 | ||||||||||||
Total common stocks (cost $-) | $ | 37 | ||||||||||
PREFERRED STOCKS — 0.0% | ||||||||||||
Banks — 0.0% | ||||||||||||
52 | Federal National Mortgage Association | $ | 43 | |||||||||
Total preferred stocks (cost $668) | $ | 43 | ||||||||||
WARRANTS — 0.0% | ||||||||||||
Telecommunication Services 0.0% | ||||||||||||
— | AboveNet, Inc. ⌂• | $ | 7 | |||||||||
— | XO Holdings, Inc. ⌂• | — | ||||||||||
7 | ||||||||||||
Total warrants (cost $-) | $ | 7 | ||||||||||
Total long-term investments (cost $256,898) | $ | 249,000 | ||||||||||
SHORT-TERM INVESTMENTS — 8.3% | ||||||||||||
Investment Pools and Funds — 8.2% | ||||||||||||
10,107 | JP Morgan U.S. Government Money Market Fund | $ | 10,107 | |||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
11,553 | Wells Fargo Advantage Government Money Market Fund | 11,553 | ||||||||||
21,660 | ||||||||||||
U.S. Treasury Bills — 0.1% | ||||||||||||
$ | 300 | 0.18%, 07/16/2009 □○ | $ | 300 | ||||||||
Total short-term investments (cost $21,960) | $ | 21,960 | ||||||||||
Total investments (cost $278,858) ▲ | 102.5 | % | $ | 270,960 | ||||||||
Other assets and liabilities | (2.5 | )% | (6,629 | ) | ||||||||
Total net assets | 100.0 | % | $ | 264,331 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 5.05% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $279,930 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 8,656 | ||
Unrealized Depreciation | (17,626 | ) | ||
Net Unrealized Depreciation | $ | (8,970 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $555, which represents 0.21% of total net assets. | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $50,633, which represents 19.16% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. | |
۞ | Convertible security. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at April 30, 2009. | |
○ | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $9,468. | |
± | The interest rate disclosed for these securities represents the average coupon as of April 30, 2009. | |
Ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. | |
□ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
2 Year U.S. Treasury Note | 1 | Long | Jun 2009 | $ | 1 | |||||||||||
5 Year U.S. Treasury Note | 140 | Long | Jun 2009 | (30 | ) | |||||||||||
$ | (29 | ) | ||||||||||||||
* | The number of contracts does not omit 000’s. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
09/2007 - 03/2008 | 1 | AboveNet, Inc. | $ | — | ||||||||
09/2007 - 03/2008 | — | AboveNet, Inc. Warrants | — | |||||||||
11/2006 - 08/2007 | $ | 5,856 | CBA Commercial Small Balance Commercial Mortgage, 9.75%, 01/25/2039 - 144A | 515 | ||||||||
03/2007 - 03/2009 | $ | 1,776 | Infor Lux Bond Co., 8.43%, 09/02/2014 | 1,521 | ||||||||
05/2001 - 11/2001 | $ | 650 | Potlatch Corp., 13.00%, 12/01/2009 | 646 | ||||||||
06/2005 - 04/2009 | $ | 1,600 | Sheridan Group, Inc., 10.25%, 08/15/2011 | 1,474 | ||||||||
02/2007 | $ | 920 | Soundview NIM Trust, 8.25%, 12/25/2036 - 144A | 914 | ||||||||
06/2008 - 11/2008 | $ | 1,262 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 1,262 | ||||||||
05/2006 | — | XO Holdings, Inc. Warrants | — |
♦ | Senior floating rate interests in which the Fund invests generally pay interest rates which are periodically adjusted by reference to a base short-term, floating lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States Banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate is the rate in effect at April 30, 2009. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Euro (Sell) | $ | 835 | $ | 820 | 05/27/09 | $ | (15 | ) | ||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
8
Table of Contents
Assets: | ||||
Investment in securities — Level 1 | $ | 21,740 | ||
Investment in securities — Level 2 | 241,129 | |||
Investment in securities — Level 3 | 8,091 | |||
Total | $ | 270,960 | ||
Other financial instruments — Level 1 * | $ | 1 | ||
Total | $ | 1 | ||
Liabilities: | ||||
Other financial instruments — Level 1 * | $ | 30 | ||
Other financial instruments — Level 2 * | 15 | |||
Total | $ | 45 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 4,738 | ||
Net realized loss | (53 | ) | ||
Change in unrealized appreciation ♦ | 594 | |||
Net purchases | 2,671 | |||
Transfers in and /or out of Level 3 | 141 | |||
Balance as of April 30, 2009 | $ | 8,091 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (6 | ) | |
9
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $278,858) | $ | 270,960 | ||
Foreign currency on deposit with custodian (cost $49) | 48 | |||
Receivables: | ||||
Investment securities sold | 3,095 | |||
Fund shares sold | 2,812 | |||
Dividends and interest | 5,804 | |||
Variation margin | — | |||
Other assets | 100 | |||
Total assets | 282,819 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 15 | |||
Bank overdraft — U.S. Dollars | 1 | |||
Payables: | ||||
Investment securities purchased | 17,678 | |||
Fund shares redeemed | 220 | |||
Investment management fees | 30 | |||
Dividends | 234 | |||
Distribution fees | 16 | |||
Variation margin | 2 | |||
Accrued expenses | 91 | |||
Other liabilities | 201 | |||
Total liabilities | 18,488 | |||
Net assets | $ | 264,331 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 385,931 | |||
Accumulated undistributed net investment income | 407 | |||
Accumulated net realized loss on investments and foreign currency transactions | (114,065 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (7,942 | ) | ||
Net assets | $ | 264,331 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 5.71/$5.97 | ||
Shares outstanding | 30,559 | |||
Net assets | $ | 174,458 | ||
Class B: Net asset value per share | $ | 5.70 | ||
Shares outstanding | 3,351 | |||
Net assets | $ | 19,086 | ||
Class C: Net asset value per share | $ | 5.70 | ||
Shares outstanding | 6,417 | |||
Net assets | $ | 36,570 | ||
Class I: Net asset value per share | $ | 5.72 | ||
Shares outstanding | 196 | |||
Net assets | $ | 1,122 | ||
Class R3: Net asset value per share | $ | 5.71 | ||
Shares outstanding | 10 | |||
Net assets | $ | 57 | ||
Class R4: Net asset value per share | $ | 5.71 | ||
Shares outstanding | 2 | |||
Net assets | $ | 14 | ||
Class R5: Net asset value per share | $ | 5.71 | ||
Shares outstanding | 2 | |||
Net assets | $ | 8 | ||
Class Y: Net asset value per share | $ | 5.71 | ||
Shares outstanding | 5,779 | |||
Net assets | $ | 33,016 | ||
10
Table of Contents
Investment Income: | ||||
Interest | $ | 10,684 | ||
Securities lending | 24 | |||
Total investment income | 10,708 | |||
Expenses: | ||||
Investment management fees | 660 | |||
Transfer agent fees | 249 | |||
Distribution fees | ||||
Class A | 152 | |||
Class B | 85 | |||
Class C | 131 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 4 | |||
Accounting services | 17 | |||
Registration and filing fees | 45 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 4 | |||
Other expenses | 34 | |||
Total expenses (before waivers and fees paid indirectly) | 1,384 | |||
Expense waivers | (171 | ) | ||
Transfer agent fee waivers | (27 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (198 | ) | ||
Total expenses, net | 1,186 | |||
Net investment income | 9,522 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (33,323 | ) | ||
Net realized gain on futures | 1,435 | |||
Net realized loss on foreign currency transactions | (40 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (31,928 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 43,927 | |||
Net unrealized depreciation of futures | (291 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 7 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 43,643 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 11,715 | |||
Net Increase in Net Assets Resulting from Operations | $ | 21,237 | ||
11
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 9,522 | $ | 17,427 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (31,928 | ) | (22,497 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 43,643 | (48,390 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 21,237 | (53,460 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (6,288 | ) | (12,185 | ) | ||||
Class B | (848 | ) | (1,900 | ) | ||||
Class C | (1,263 | ) | (2,233 | ) | ||||
Class I | (43 | ) | (34 | ) | ||||
Class R3 | (1 | ) | (1 | ) | ||||
Class R4 | (1 | ) | (1 | ) | ||||
Class R5 | — | (1 | ) | |||||
Class Y | (1,252 | ) | (770 | ) | ||||
Total distributions | (9,696 | ) | (17,125 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 50,212 | (5,268 | ) | |||||
Class B | 634 | (5,433 | ) | |||||
Class C | 13,338 | (3,638 | ) | |||||
Class I | 305 | 878 | ||||||
Class R3 | 39 | 8 | ||||||
Class R4 | 5 | 1 | ||||||
Class R5 | — | 1 | ||||||
Class Y | 17,241 | 11,813 | ||||||
Net increase (decrease) from capital share transactions | 81,774 | (1,638 | ) | |||||
Net increase (decrease) in net assets | 93,315 | (72,223 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 171,016 | 243,239 | ||||||
End of period | $ | 264,331 | $ | 171,016 | ||||
Accumulated undistributed net investment income | $ | 407 | $ | 581 | ||||
12
Table of Contents
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford High Yield Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Trade date for senior floating rate interests purchased in the primary market is considered the date on which the loan allocations are determined. Trade date for senior floating rate loan interests purchased in the secondary market is the date on which the transaction is entered into. | |||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
13
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. |
14
Table of Contents
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund had no outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the |
15
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $9,468. | ||
k) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
l) | Senior Floating Rate Interests —The Fund, as shown in the Schedule of Investments, may invest in senior floating rate interests. Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the senior floating rate interest. Senior floating rate interests are typically rated below-investment-grade, which suggests they are more likely to default and generally pay higher interest rates than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the Fund and there can be no assurance that the |
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liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated. | |||
m) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
n) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
o) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
p) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
q) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. |
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The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 17,209 | $ | 18,374 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 805 | ||
Accumulated Capital Losses* | $ | (80,815 | ) | |
Unrealized Depreciation† | $ | (52,902 | ) | |
Total Accumulated Deficit | $ | (132,912 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $124, increase accumulated net realized gain by $15,926, and decrease paid in capital by $16,050. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2009 | $ | 1,643 | ||
2010 | 25,246 | |||
2011 | 28,570 | |||
2014 | 3,595 | |||
2016 | 21,761 | |||
Total | $ | 80,815 | ||
Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of the Fund carryforwards may apply. As of October 31, 2008, the Fund had $16,050 in expired capital loss carryforwards. | |||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
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5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.70 | % | ||
On next $500 million | 0.65 | % | ||
On next $4 billion | 0.60 | % | ||
On next $5 billion | 0.58 | % | ||
Over $10 billion | 0.57 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.15% | 1.90% | 1.90% | 0.90% | 1.40% | 1.10% | 0.90% | 0.90% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.14 | % | 1.15 | % | 1.15 | % | 1.20 | % | 1.33 | % | 1.35 | % | ||||||||||||
Class B Shares | 1.75 | 1.87 | 1.90 | 1.94 | 2.10 | 2.07 | ||||||||||||||||||
Class C Shares | 1.90 | 1.90 | 1.83 | 1.89 | 2.00 | 1.98 | ||||||||||||||||||
Class I Shares | 0.89 | 0.82 | 0.75 | * | ||||||||||||||||||||
Class R3 Shares | 1.39 | 1.40 | 1.40 | † | ||||||||||||||||||||
Class R4 Shares | 1.10 | 1.10 | 1.10 | ‡ | ||||||||||||||||||||
Class R5 Shares | 0.90 | 0.90 | 0.85 | § | ||||||||||||||||||||
Class Y Shares | 0.82 | 0.79 | 0.67 | 0.73 | 0.87 | 0.84 |
* | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $235 and contingent deferred sales charges of $23 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $11. These commissions are in turn paid to sales representatives of the broker/dealers. |
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f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $235 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from Payment | ||||||||
from Affiliate for | ||||||||
Transfer Agent | ||||||||
Allocation | Total Return | |||||||
Methodology | Excluding Payment | |||||||
Reimbursements for | from Affiliate for | |||||||
the Year Ended | the Year Ended | |||||||
October 31, 2004 | October 31, 2004 | |||||||
Class A | 0.01 | % | 9.25 | % | ||||
Class B | — | 8.45 | ||||||
Class C | 0.10 | 8.44 |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 1 | |||
Class R4 | 2 | |||
Class R5 | 2 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 207,041 | ||
Sales Proceeds Excluding U.S. Government Obligations | 121,110 |
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April 30, 2009 (Unaudited)
(000’s Omitted)
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 18,415 | 987 | (10,096 | ) | — | 9,306 | 10,759 | 1,429 | (12,581 | ) | — | (393 | ) | |||||||||||||||||||||||||||
Amount | $ | 98,752 | $ | 5,311 | $ | (53,851 | ) | $ | — | $ | 50,212 | $ | 74,918 | $ | 10,120 | $ | (90,306 | ) | $ | — | $ | (5,268 | ) | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 758 | 120 | (763 | ) | — | 115 | 316 | 197 | (1,272 | ) | — | (759 | ) | |||||||||||||||||||||||||||
Amount | $ | 4,062 | $ | 642 | $ | (4,070 | ) | $ | — | $ | 634 | $ | 2,252 | $ | 1,397 | $ | (9,082 | ) | $ | — | $ | (5,433 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,234 | 163 | (1,904 | ) | — | 2,493 | 1,843 | 205 | (2,556 | ) | — | (508 | ) | |||||||||||||||||||||||||||
Amount | $ | 22,685 | $ | 874 | $ | (10,221 | ) | $ | — | $ | 13,338 | $ | 13,308 | $ | 1,452 | $ | (18,398 | ) | $ | — | $ | (3,638 | ) | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 74 | 8 | (27 | ) | — | 55 | 142 | 5 | (25 | ) | — | 122 | ||||||||||||||||||||||||||||
Amount | $ | 392 | $ | 43 | $ | (130 | ) | $ | — | $ | 305 | $ | 1,016 | $ | 31 | $ | (169 | ) | $ | — | $ | 878 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 7 | — | — | — | 7 | 2 | — | — | — | 2 | ||||||||||||||||||||||||||||||
Amount | $ | 38 | $ | 1 | $ | — | $ | — | $ | 39 | $ | 7 | $ | 1 | $ | — | $ | — | $ | 8 | ||||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 5 | $ | — | $ | — | $ | — | $ | 5 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,454 | 231 | (330 | ) | — | 3,355 | 2,333 | 112 | (639 | ) | — | 1,806 | ||||||||||||||||||||||||||||
Amount | $ | 17,772 | $ | 1,244 | $ | (1,775 | ) | $ | — | $ | 17,241 | $ | 15,615 | $ | 778 | $ | (4,580 | ) | $ | — | $ | 11,813 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 141 | $ | 755 | |||||
For the Year Ended October 31, 2008 | 246 | $ | 1,796 |
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
24
Table of Contents
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 5.52 | $ | 0.27 | $ | — | $ | 0.20 | $ | 0.47 | $ | (0.28 | ) | $ | — | $ | — | $ | (0.28 | ) | $ | 0.19 | $ | 5.71 | 8.94 | %(e) | $ | 174,458 | 1.37 | %(f) | 1.14 | %(f) | 1.14 | %(f) | 10.22 | %(f) | 72 | % | |||||||||||||||||||||||||||||||||||
B | 5.51 | 0.25 | — | 0.20 | 0.45 | (0.26 | ) | — | — | (0.26 | ) | 0.19 | 5.70 | 8.63 | (e) | 19,086 | 2.26 | (f) | 1.75 | (f) | 1.75 | (f) | 9.67 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 5.51 | 0.25 | — | 0.20 | 0.45 | (0.26 | ) | — | — | (0.26 | ) | 0.19 | 5.70 | 8.54 | (e) | 36,570 | 2.02 | (f) | 1.90 | (f) | 1.90 | (f) | 9.44 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 5.53 | 0.28 | — | 0.20 | 0.48 | (0.29 | ) | — | — | (0.29 | ) | 0.19 | 5.72 | 9.05 | (e) | 1,122 | 0.89 | (f) | 0.89 | (f) | 0.89 | (f) | 10.50 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 5.52 | 0.26 | — | 0.20 | 0.46 | (0.27 | ) | — | — | (0.27 | ) | 0.19 | 5.71 | 8.80 | (e) | 57 | 1.82 | (f) | 1.39 | (f) | 1.39 | (f) | 9.87 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 5.53 | 0.27 | — | 0.19 | 0.46 | (0.28 | ) | — | — | (0.28 | ) | 0.18 | 5.71 | 8.76 | (e) | 14 | 1.20 | (f) | 1.10 | (f) | 1.10 | (f) | 10.25 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 5.53 | 0.28 | — | 0.19 | 0.47 | (0.29 | ) | — | — | (0.29 | ) | 0.18 | 5.71 | 8.86 | (e) | 8 | 0.90 | (f) | 0.90 | (f) | 0.90 | (f) | 10.52 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 5.53 | 0.28 | — | 0.19 | 0.47 | (0.29 | ) | — | — | (0.29 | ) | 0.18 | 5.71 | 8.90 | (e) | 33,016 | 0.82 | (f) | 0.82 | (f) | 0.82 | (f) | 10.49 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (g) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.92 | 0.58 | — | (2.40 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 5.52 | (24.40 | ) | 117,343 | 1.30 | 1.15 | 1.15 | 8.07 | 111 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 7.91 | 0.53 | — | (2.41 | ) | (1.88 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.40 | ) | 5.51 | (25.00 | ) | 17,838 | 2.13 | 1.87 | 1.87 | 7.34 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.91 | 0.53 | — | (2.41 | ) | (1.88 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.40 | ) | 5.51 | (25.01 | ) | 21,634 | 1.97 | 1.90 | 1.90 | 7.30 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | (24.11 | ) | 777 | 0.82 | 0.82 | 0.82 | 8.82 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.93 | 0.56 | — | (2.41 | ) | (1.85 | ) | (0.56 | ) | — | — | (0.56 | ) | (2.41 | ) | 5.52 | (24.70 | ) | 14 | 1.63 | 1.40 | 1.40 | 7.93 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.93 | 0.59 | — | (2.41 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 5.53 | (24.32 | ) | 8 | 1.19 | 1.10 | 1.10 | 8.15 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | (24.16 | ) | 8 | 0.90 | 0.90 | 0.90 | 8.35 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.93 | 0.60 | — | (2.40 | ) | (1.80 | ) | (0.60 | ) | — | — | (0.60 | ) | (2.40 | ) | 5.53 | (24.09 | ) | 13,394 | 0.79 | 0.79 | 0.79 | 8.57 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.93 | 0.58 | — | (0.01 | ) | 0.57 | (0.58 | ) | — | — | (0.58 | ) | (0.01 | ) | 7.92 | 7.36 | (h) | 171,505 | 1.36 | 1.15 | 1.15 | 7.26 | 145 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 7.92 | 0.52 | — | (0.01 | ) | 0.51 | (0.52 | ) | — | — | (0.52 | ) | (0.01 | ) | 7.91 | 6.56 | (h) | 31,591 | 2.17 | 1.90 | 1.90 | 6.51 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.92 | 0.53 | — | (0.01 | ) | 0.52 | (0.53 | ) | — | — | (0.53 | ) | (0.01 | ) | 7.91 | 6.63 | (h) | 35,066 | 2.03 | 1.83 | 1.83 | 6.58 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I(i) | 8.25 | 0.26 | — | (0.33 | ) | (0.07 | ) | (0.25 | ) | — | — | (0.25 | ) | (0.32 | ) | 7.93 | (0.76 | ) (e) | 149 | 0.95 | (f) | 0.75 | (f) | 0.75 | (f) | 8.07 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3(j) | 8.04 | 0.48 | — | (0.13 | ) | 0.35 | (0.46 | ) | — | — | (0.46 | ) | (0.11 | ) | 7.93 | 4.49 | (e) | 10 | 1.66 | (f) | 1.40 | (f) | 1.40 | (f) | 6.99 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4(k) | 8.04 | 0.50 | — | (0.13 | ) | 0.37 | (0.48 | ) | — | — | (0.48 | ) | (0.11 | ) | 7.93 | 4.75 | (e) | 10 | 1.34 | (f) | 1.10 | (f) | 1.10 | (f) | 7.29 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5(l) | 8.04 | 0.52 | — | (0.13 | ) | 0.39 | (0.50 | ) | — | — | (0.50 | ) | (0.11 | ) | 7.93 | 4.96 | (e) | 11 | 1.06 | (f) | 0.85 | (f) | 0.85 | (f) | 7.54 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.92 | 0.71 | — | (0.09 | ) | 0.62 | (0.61 | ) | — | — | (0.61 | ) | 0.01 | 7.93 | 7.96 | (h) | 4,897 | 0.87 | 0.67 | 0.67 | 7.62 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.76 | 0.54 | — | 0.18 | 0.72 | (0.55 | ) | — | — | (0.55 | ) | 0.17 | 7.93 | 9.57 | 190,479 | 1.36 | 1.20 | 1.20 | 6.87 | 147 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 7.74 | 0.48 | — | 0.19 | 0.67 | (0.49 | ) | — | — | (0.49 | ) | 0.18 | 7.92 | 8.90 | 37,189 | 2.17 | 1.95 | 1.95 | 6.10 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.75 | 0.49 | — | 0.17 | 0.66 | (0.49 | ) | — | — | (0.49 | ) | 0.17 | 7.92 | 8.84 | 39,991 | 2.04 | 1.89 | 1.89 | 6.15 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.75 | 0.58 | — | 0.17 | 0.75 | (0.58 | ) | — | — | (0.58 | ) | 0.17 | 7.92 | 10.11 | 24,374 | 0.88 | 0.73 | 0.73 | 7.33 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 8.18 | 0.48 | — | (0.40 | ) | 0.08 | (0.50 | ) | — | — | (0.50 | ) | (0.42 | ) | 7.76 | 0.97 | 188,599 | 1.33 | 1.33 | 1.33 | 5.86 | 113 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 8.17 | 0.42 | — | (0.41 | ) | 0.01 | (0.44 | ) | — | — | (0.44 | ) | (0.43 | ) | 7.74 | 0.08 | 47,071 | 2.12 | 2.10 | 2.10 | 5.09 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 8.17 | 0.42 | — | (0.39 | ) | 0.03 | (0.45 | ) | — | — | (0.45 | ) | (0.42 | ) | 7.75 | 0.30 | 50,945 | 2.00 | 2.00 | 2.00 | 5.18 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 8.17 | 0.52 | — | (0.40 | ) | 0.12 | (0.54 | ) | — | — | (0.54 | ) | (0.42 | ) | 7.75 | 1.43 | 25,974 | 0.87 | 0.87 | 0.87 | 6.40 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (g) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 7.94 | 0.48 | — | 0.23 | 0.71 | (0.47 | ) | — | — | (0.47 | ) | 0.24 | 8.18 | 9.26 | (h) | 247,364 | 1.35 | 1.35 | 1.35 | 6.03 | 86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 7.93 | 0.43 | — | 0.22 | 0.65 | (0.41 | ) | — | — | (0.41 | ) | 0.24 | 8.17 | 8.45 | (h) | 63,972 | 2.07 | 2.07 | 2.07 | 5.32 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.93 | 0.43 | 0.01 | 0.22 | 0.66 | (0.42 | ) | — | — | (0.42 | ) | 0.24 | 8.17 | 8.54 | (h) | 71,673 | 1.98 | 1.98 | 1.98 | 5.40 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.94 | 0.39 | — | 0.36 | 0.75 | (0.52 | ) | — | — | (0.52 | ) | 0.23 | 8.17 | 9.72 | 16,410 | 0.84 | 0.84 | 0.84 | 6.13 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Per share amounts have been calculated using average shares outstanding method. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on May 31, 2007. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on December 22, 2006. |
25
Table of Contents
26
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
27
Table of Contents
Directors and Officers (Unaudited) — (continued)
28
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,089.40 | $ | 5.90 | $ | 1,000.00 | $ | 1,019.14 | $ | 5.70 | 1.14 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,086.28 | $ | 9.05 | $ | 1,000.00 | $ | 1,016.11 | $ | 8.74 | 1.75 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,085.40 | $ | 9.82 | $ | 1,000.00 | $ | 1,015.37 | $ | 9.49 | 1.90 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,090.50 | $ | 4.61 | $ | 1,000.00 | $ | 1,020.38 | $ | 4.45 | 0.89 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,088.03 | $ | 7.19 | $ | 1,000.00 | $ | 1,017.90 | $ | 6.95 | 1.39 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,087.56 | $ | 5.69 | $ | 1,000.00 | $ | 1,019.33 | $ | 5.50 | 1.10 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,088.63 | $ | 4.66 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,089.01 | $ | 4.24 | $ | 1,000.00 | $ | 1,020.72 | $ | 4.10 | 0.82 | 181 | 365 |
29
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
High Yield Municipal Bond A# | 5/31/07 | -13.31 | % | -11.13 | % | |||||||
High Yield Municipal Bond A## | 5/31/07 | -17.21 | % | -13.24 | % | |||||||
High Yield Municipal Bond B# | 5/31/07 | -14.02 | % | -11.83 | % | |||||||
High Yield Municipal Bond B## | 5/31/07 | -18.10 | % | -13.52 | % | |||||||
High Yield Municipal Bond C# | 5/31/07 | -14.09 | % | -11.82 | % | |||||||
High Yield Municipal Bond C## | 5/31/07 | -14.91 | % | -11.82 | % | |||||||
High Yield Municipal Bond I# | 5/31/07 | -13.12 | % | -10.87 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and I shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Christopher Bade | Charles Grande* | |||
Vice President | Executive Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Long-Term | ||||
Rating | Holdings | |||
AAA | 5.1 | % | ||
AA | 10.5 | |||
A | 26.0 | |||
BBB | 25.6 | |||
BB | 10.6 | |||
B | 5.1 | |||
CCC | 0.6 | |||
Not Rated | 16.5 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Airport Revenues | 4.7 | % | ||
General Obligations | 10.7 | |||
Health Care/Services | 21.0 | |||
Higher Education (Univ., Dorms, etc.) | 16.0 | |||
Housing (HFA’S, etc.) | 1.2 | |||
Industrial | 7.0 | |||
Miscellaneous | 10.1 | |||
Public Facilities | 1.2 | |||
Refunded With U.S. Government Securities | 4.5 | |||
Special Tax Assessment | 5.6 | |||
Tax Allocation | 2.8 | |||
Transportation | 2.2 | |||
Utilities - - Electric | 3.7 | |||
Utilities - Water and Sewer | 0.7 | |||
Short-Term Investments | 7.4 | |||
Other Assets and Liabilities | 1.2 | |||
Total | 100.0 | % | ||
3
Table of Contents
as of April 30, 2009
Percentage of | ||||
State | Net Assets | |||
Alaska | 0.3 | % | ||
Arizona | 2.6 | |||
California | 6.6 | |||
Colorado | 1.6 | |||
Delaware | 0.8 | |||
District of Columbia | 0.8 | |||
Florida | 8.4 | |||
Georgia | 2.2 | |||
Idaho | 0.7 | |||
Illinois | 5.0 | |||
Indiana | 0.8 | |||
Kansas | 0.1 | |||
Louisiana | 2.5 | |||
Maryland | 0.4 | |||
Massachusetts | 1.8 | |||
Michigan | 5.8 | |||
Minnesota | 0.3 | |||
Missouri | 0.4 | |||
Nebraska | 0.8 | |||
Nevada | 0.6 | |||
New Hampshire | 0.1 | |||
New Jersey | 3.1 | |||
New Mexico | 1.4 | |||
New York | 8.1 | |||
North Carolina | 0.4 | |||
Ohio | 3.4 | |||
Oklahoma | 0.1 | |||
Other U.S. Territories | 0.9 | |||
Pennsylvania | 2.2 | |||
Rhode Island | 2.6 | |||
South Carolina | 0.5 | |||
South Dakota | 1.9 | |||
Texas | 12.0 | |||
Utah | 1.6 | |||
Virginia | 1.5 | |||
Washington | 2.5 | |||
West Virginia | 0.8 | |||
Wisconsin | 5.8 | |||
Short-Term Investments | 7.4 | |||
Other Assets and Liabilities | 1.2 | |||
Total | 100.0 | % | ||
4
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS—91.4% | ||||||||
Alaska — 0.3% | ||||||||
Alaska Municipal Bond Bank Auth, | ||||||||
$ | 375 | 5.75%, 09/01/2033 | $ | 381 | ||||
Anchorage Alaska, | ||||||||
605 | 5.25%, 08/01/2028 | 636 | ||||||
1,017 | ||||||||
Arizona — 2.6% | ||||||||
Arizona State Transportation Board Highway Rev, | ||||||||
3,000 | 5.25%, 07/01/2025 | 3,221 | ||||||
Estrella Mountain Ranch Community GO, | ||||||||
265 | 6.20%, 07/15/2032 ⌂ | 176 | ||||||
Mohave County Industrial DA Correctional Fac Contract, | ||||||||
3,000 | 8.00%, 05/01/2025 | 3,171 | ||||||
Pinal County Electric Dist #4, | ||||||||
1,150 | 6.00%, 12/01/2038 | 932 | ||||||
Scottsdale, AZ, IDA, | ||||||||
1,000 | 5.25%, 09/01/2030 | 867 | ||||||
Show Low Bluff, AZ, Community Fac Dist Special Assessment, | ||||||||
200 | 5.60%, 07/01/2031 ⌂ | 125 | ||||||
Tartesso West Community Facilities Dist, | ||||||||
1,000 | 5.90%, 07/15/2032 ⌂ | 632 | ||||||
9,124 | ||||||||
California — 6.6% | ||||||||
California State, | ||||||||
4,985 | 6.50%, 04/01/2033 | 5,361 | ||||||
California State Public Works Board, | ||||||||
2,000 | 6.25%, 04/01/2034 | 2,027 | ||||||
California Statewide Community DA, California Baptist University, | ||||||||
2,800 | 5.50%, 11/01/2038 | 1,692 | ||||||
California Statewide Community DA, Drew School, | ||||||||
250 | 5.30%, 10/01/2037 | 157 | ||||||
California Statewide Community DA, Huntington Park Rev, | ||||||||
200 | 5.15%, 07/01/2030 | 134 | ||||||
California Statewide Community DA, Thomas Jefferson School of Law, | ||||||||
4,100 | 7.25%, 10/01/2032 | 3,186 | ||||||
Morongo Band of Mission Indians Enterprise Rev, | ||||||||
1,595 | 6.50%, 03/01/2028 ■ | 1,153 | ||||||
Perris, CA, Public FA Local Agency Rev, | ||||||||
1,000 | 5.80%, 09/01/2038 ⌂ | 712 | ||||||
Rialto, CA, Redev Agency, | ||||||||
2,000 | 5.88%, 09/01/2033 | 1,701 | ||||||
San Jose Redev Agency, | ||||||||
500 | 6.50%, 08/01/2023 | 525 | ||||||
Santa Cruz County Redev Agency, | ||||||||
1,335 | 6.63%, 09/01/2029 | 1,397 | ||||||
Torrance USD, | ||||||||
500 | 5.38%, 08/01/2024 | 534 | ||||||
1,500 | 5.50%, 08/01/2025 | 1,599 | ||||||
Turlock, CA, Health Facilities Rev, | ||||||||
2,675 | 5.38%, 10/15/2034 | 1,908 | ||||||
22,086 | ||||||||
Colorado — 1.6% | ||||||||
Baptist Road Rural Transportation Auth, Sales & Use Tax Rev, | ||||||||
800 | 5.00%, 12/01/2026 | 454 | ||||||
Colorado E-470 Public Highway Auth Rev, | ||||||||
1,875 | 5.50%, 09/01/2024 | 1,652 | ||||||
Colorado Educational & Cultural FA Rev, Charter School-Windsor Academy Proj, | ||||||||
500 | 5.70%, 05/01/2037 ⌂ | 335 | ||||||
Colorado Health FA Rev, | ||||||||
2,500 | 5.50%, 05/15/2028 | 2,021 | ||||||
Denver, CO, City & County Special Fac Airport AMT, | ||||||||
500 | 5.25%, 10/01/2032 | 257 | ||||||
North Range, CO, Metropolitan Dist #2, | ||||||||
500 | 5.50%, 12/15/2027 ⌂ | 311 | ||||||
Park Meadows, CO, Business Improvement Dist Shared Sales Tax Rev, | ||||||||
360 | 5.35%, 12/01/2031 | 222 | ||||||
5,252 | ||||||||
Delaware — 0.8% | ||||||||
Delaware Transportation Auth, | ||||||||
1,180 | 5.00%, 07/01/2025 | 1,274 | ||||||
Millsboro, DE, Special Obligation Plantation Lakes Special Development, | ||||||||
500 | 5.45%, 07/01/2036 ⌂ | 284 | ||||||
Sussex County, DE, Del Rev, | ||||||||
1,235 | 5.90%, 01/01/2026 | 883 | ||||||
2,441 | ||||||||
District of Columbia — 0.8% | ||||||||
District of Columbia Tobacco Settlement Financing Corp, | ||||||||
3,460 | 6.50%, 05/15/2033 | 2,571 | ||||||
Florida — 8.4% | ||||||||
Beeline Community Development Dist, | ||||||||
1,220 | 7.00%, 05/01/2037 | 902 | ||||||
Colonial Country Club Community Development Dist, Capital Improvement Rev, | ||||||||
2,105 | 6.40%, 05/01/2033 | 2,048 | ||||||
Florida Village Community Development, | ||||||||
1,000 | 6.50%, 05/01/2033 | 932 | ||||||
Florida Village Community Development Dist No 8, | ||||||||
2,855 | 6.38%, 05/01/2038 | 2,087 | ||||||
Highlands County, FL, Adventist Health, | ||||||||
125 | 5.25%, 11/15/2036 | 147 | ||||||
Jacksonville, FL, Econ Development Community Health Care Facilities, | ||||||||
2,000 | 6.25%, 09/01/2027 | 1,626 | ||||||
Lakeland Florida Retirement Community Rev, | ||||||||
1,750 | 6.38%, 01/01/2043 | 1,249 | ||||||
Lee County, FL, Industrial Development Auth, | ||||||||
1,000 | 5.25%, 06/15/2027 | 610 | ||||||
Magnolia Creek, FL, Community Development Dist Capital Improvement, | ||||||||
500 | 5.90%, 05/01/2039 ⌂ | 292 | ||||||
Miami-Dade County Aviation Rev, | ||||||||
2,470 | 5.50%, 10/01/2036 * | 2,375 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS — 91.4% — (continued) | ||||||||
Florida — 8.4% — (continued) | ||||||||
Miami-Dade County, FL, Educational Facilities Auth, | ||||||||
$ | 3,000 | 5.75%, 04/01/2028 | $ | 3,075 | ||||
Orange County, FL, Health Care FA Rev, | ||||||||
200 | 5.50%, 07/01/2038 ⌂ | 119 | ||||||
Palm Beach County, FL, Health FA Rev Waterford Proj, | ||||||||
2,400 | 5.88%, 11/15/2037 | 1,627 | ||||||
Parker Road, FL, Community Development Dist Cap Improvement Ser A, | ||||||||
200 | 5.60%, 05/01/2038 ⌂ | 106 | ||||||
Putnam County, FL, DA, | ||||||||
3,125 | 5.35%, 03/15/2042 | 3,174 | ||||||
River Bend Community Development Dist, Capital Improvement Rev, | ||||||||
1,990 | 7.13%, 11/01/2015 | 1,292 | ||||||
Seminole Tribe of Florida, | ||||||||
4,500 | 5.25%, 10/01/2027 ■ | 3,151 | ||||||
1,000 | 5.50%, 10/01/2024 ■ | 751 | ||||||
Six Mile Creek, FL, Community Development Dist, | ||||||||
1,525 | 5.88%, 05/01/2038 ⌂ | 715 | ||||||
St. Johns County, FL, IDA, | ||||||||
1,765 | 5.00%, 02/15/2027 | 1,151 | ||||||
Sweetwater Creek, FL, Community Development Dist Captial Improvement Rev, | ||||||||
1,000 | 5.50%, 05/01/2038 ⌂ | 543 | ||||||
Tolomato, FL, Community Development Dist, | ||||||||
800 | 6.65%, 05/01/2040 | 536 | ||||||
University Square Community Development, | ||||||||
500 | 5.88%, 05/01/2038 | 286 | ||||||
28,794 | ||||||||
Georgia — 2.2% | ||||||||
Atlanta Airport Revenues, | ||||||||
5,000 | 7.00%, 01/01/2030 Δ | 5,000 | ||||||
Augusta, GA, Airport Rev AMT, | ||||||||
165 | 5.35%, 01/01/2028 | 113 | ||||||
230 | 5.45%, 01/01/2031 | 153 | ||||||
Dekalb County Development, | ||||||||
1,500 | 6.00%, 07/01/2034 | 1,496 | ||||||
Marietta, GA, DA, | ||||||||
1,500 | 7.00%, 06/15/2030 | 1,166 | ||||||
7,928 | ||||||||
Idaho — 0.7% | ||||||||
Idaho Arts Charter School, | ||||||||
1,000 | 6.25%, 12/01/2028 | 768 | ||||||
Idaho Board Bank Auth, | ||||||||
1,465 | 5.63%, 09/15/2026 | 1,619 | ||||||
2,387 | ||||||||
Illinois — 5.0% | ||||||||
Aurora Illinois Tax Increment Rev, | ||||||||
1,000 | 6.75%, 12/30/2027 | 749 | ||||||
Belleville, IL, Tax Increment, | ||||||||
1,000 | 5.70%, 05/01/2036 ⌂ | 692 | ||||||
Chicago, IL, O’Hare International Airport Special Fac Rev, American Airlines Inc., | ||||||||
250 | 5.50%, 12/01/2030 | 94 | ||||||
Chicago, IL, O’Hare Int’l Airport Rev, | ||||||||
2,210 | 6.00%, 01/01/2017 | 2,255 | ||||||
Hampshire, IL, Special Service Area #13, Tuscany Woods Proj, | ||||||||
200 | 5.75%, 03/01/2037 ⌂ | 115 | ||||||
Hampshire, IL, Special Service Area #16, Prairie Ridge Proj, | ||||||||
200 | 6.00%, 03/01/2046 ⌂ | 116 | ||||||
Illinois FA Rev, | ||||||||
1,800 | 5.38%, 08/15/2039 — 11/15/2039 | 1,456 | ||||||
6,000 | 5.50%, 08/15/2030 | 5,077 | ||||||
Illinois FA, Children’s Memorial Hospital Ser B, | ||||||||
1,500 | 5.50%, 08/15/2028 | 1,385 | ||||||
Illinois Financial Auth Rev, | ||||||||
1,200 | 5.25%, 11/01/2039 * | 1,154 | ||||||
1,070 | 5.38%, 07/01/2033 | 994 | ||||||
1,400 | 6.00%, 03/01/2038 | 1,422 | ||||||
190 | 6.25%, 02/01/2033 | 181 | ||||||
Springfield, IL, Water Rev, | ||||||||
500 | 5.25%, 03/01/2026 | 523 | ||||||
University of Illinois Rev, | ||||||||
1,205 | 5.75%, 04/01/2038 | 1,275 | ||||||
17,488 | ||||||||
Indiana — 0.8% | ||||||||
Indiana Municipal Power Agency, | ||||||||
1,000 | 5.75%, 01/01/2034 | 1,008 | ||||||
University of Southern Indiana, | ||||||||
1,065 | 5.00%, 10/01/2022 — 10/01/2023. | 1,105 | ||||||
Vigo County, IN, Union Hospital, | ||||||||
500 | 5.70%, 09/01/2037 ■ | 332 | ||||||
2,445 | ||||||||
Kansas — 0.1% | ||||||||
Olathe, KS, Tax Increment Rev, West Village Center, | ||||||||
500 | 5.50%, 09/01/2026 ⌂ | 341 | ||||||
Louisiana — 2.5% | ||||||||
Colonial Pinnacle Community Development Dist, | ||||||||
2,655 | 6.75%, 05/01/2023 | 1,867 | ||||||
Louisiana Local Government Environmental Facilities & Community Development, | ||||||||
6,000 | 6.75%, 11/01/2032 | 4,155 | ||||||
Louisiana Public Fac Auth, Susla Fac Inc, | ||||||||
500 | 5.75%, 07/01/2039 ⌂ | 343 | ||||||
New Orleans Aviation Board Revenues, | ||||||||
2,500 | 6.00%, 01/01/2023 | 2,557 | ||||||
8,922 | ||||||||
Maryland — 0.4% | ||||||||
Maryland State Community Development Admin, | ||||||||
605 | 4.38%, 09/01/2016 | 627 | ||||||
Maryland State Health & Higher Education FA Rev, | ||||||||
770 | 6.00%, 01/01/2028 | 666 | ||||||
1,293 | ||||||||
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS — 91.4% — (continued) | ||||||||
Massachusetts — 1.8% | ||||||||
Massachusetts State Health & Education Facilities, | ||||||||
$ | 1,000 | 5.13%, 07/01/2033 | $ | 834 | ||||
3,000 | 5.50%, 10/01/2024 | 3,049 | ||||||
2,355 | 8.00%, 10/01/2039 | 2,434 | ||||||
Michigan — 5.8% | ||||||||
Detroit, MI, GO, | ||||||||
12,175 | 5.00%, 04/01/2016 | 9,723 | ||||||
Flint Michigan International Academy, | ||||||||
2,500 | 5.75%, 10/01/2037 | 1,689 | ||||||
Michigan Public Educational Facilities, | ||||||||
5,000 | 6.50%, 09/01/2037 ■ | 3,729 | ||||||
Michigan State Hospital FA, McLaren Health Care, | ||||||||
3,000 | 5.63%, 05/15/2028 | 2,825 | ||||||
Royal Oak Hospital Financial Auth, | ||||||||
2,000 | 8.25%, 09/01/2039 | 2,217 | ||||||
20,183 | ||||||||
Minnesota — 0.3% | ||||||||
Baytown Township, MN, | ||||||||
750 | 7.00%, 08/01/2038 | 587 | ||||||
Falcon Heights, MN, Lease Rev, | ||||||||
525 | 6.00%, 11/01/2037 | 366 | ||||||
Minneapolis, MN, Multifamily Housing Rev AMT, | ||||||||
200 | 5.40%, 04/01/2028 | 143 | ||||||
1,096 | ||||||||
Missouri — 0.4% | ||||||||
Branson Hills, MO, Infrastructure Fac, | ||||||||
100 | 5.50%, 04/01/2027 ⌂ | 65 | ||||||
Branson, MO, Regional Airport Transportation Development AMT, | ||||||||
1,300 | 6.00%, 07/01/2025 | 863 | ||||||
Kansas City, MO, Tax Increment Rev Maincor Proj Ser A, | ||||||||
500 | 5.25%, 03/01/2018 | 398 | ||||||
1,326 | ||||||||
Nebraska — 0.8% | ||||||||
Madison County Hospital Auth, | ||||||||
2,000 | 6.00%, 07/01/2033 | 1,760 | ||||||
Omaha Public Power Dist, | ||||||||
1,000 | 5.50%, 02/01/2033 | 1,055 | ||||||
2,815 | ||||||||
Nevada — 0.6% | ||||||||
Las Vegas, NV, Special Improvement Dist #808 & 810, Summerlin Village, | ||||||||
500 | 6.13%, 06/01/2031 ⌂ | 260 | ||||||
Mesquite Special Improvement Dist #07-01, | ||||||||
500 | 6.00%, 08/01/2027 | 334 | ||||||
Sparks Tourism Improvement, | ||||||||
2,240 | 6.75%, 06/15/2028 | 1,544 | ||||||
2,138 | ||||||||
New Hampshire — 0.1% | ||||||||
New Hampshire State Business Fin Rev AMT, | ||||||||
200 | 5.20%, 05/01/2027 | 164 | ||||||
New Jersey — 3.1% | ||||||||
Burlington County, NJ, Bridge Commission Econ Development Rev, The Evergreen Proj, | ||||||||
1,500 | 5.63%, 01/01/2038 | 944 | ||||||
New Jersey Econ DA, | ||||||||
4,800 | 6.25%, 09/15/2019 | 3,640 | ||||||
New Jersey Health Care Facilities FA, | ||||||||
4,000 | 6.63%, 07/01/2038 | 3,098 | ||||||
New Jersey Health Care Services FA, | ||||||||
800 | 5.50%, 07/01/2030 | 576 | ||||||
New Jersey State Educational FA Rev, | ||||||||
2,000 | 7.50%, 12/01/2032 | 1,967 | ||||||
10,225 | ||||||||
New Mexico — 1.4% | ||||||||
Los Alamos County, NM, | ||||||||
3,000 | 5.88%, 06/01/2027 | 3,203 | ||||||
Montecito Estates Public Improvement Rev, | ||||||||
1,000 | 7.00%, 10/01/2037 ⌂ . | 687 | ||||||
Otero County NM Jail Proj Rev, | ||||||||
1,370 | 6.00%, 04/01/2028 | 981 | ||||||
4,871 | ||||||||
New York — 8.1% | ||||||||
Erie County, NY, IDA Global Concepts Charter School Proj, | ||||||||
2,100 | 6.25%, 10/01/2037 | 1,521 | ||||||
Genesee County, NY, IDA Civic Fac Rev, United Memorial Medical Center, | ||||||||
500 | 5.00%, 12/01/2027 | 330 | ||||||
Long Island Power Auth, | ||||||||
3,000 | 6.25%, 04/01/2033 | 3,249 | ||||||
Nassau County, NY, IDA Continuing Care Retirement, | ||||||||
2,500 | 6.70%, 01/01/2043 | 1,857 | ||||||
Nassau County, NY, IDA Continuing Care Retirement, Amsterdam at Harborside, Ser A, | ||||||||
1,000 | 6.50%, 01/01/2027 | 793 | ||||||
New York State Dormitory Auth Non State Supported Debt, NYU Hospital Center Ser B, | ||||||||
750 | 5.63%, 07/01/2037 | 572 | ||||||
New York State Dormitory Auth Non State Supported Debt, Orange Regional Med Center, | ||||||||
3,125 | 6.13%, 12/01/2029 | 2,427 | ||||||
New York State Dormitory Auth Rev Non St Supported Debt, | ||||||||
2,000 | 6.00%, 07/01/2033 | 2,097 | ||||||
New York, NY, GO, | ||||||||
4,000 | 6.25%, 10/15/2028 | 4,379 | ||||||
New York, NY, IDA American Airlines JFK International Airport AMT, | ||||||||
515 | 7.13%, 08/01/2011 | 480 | ||||||
9,000 | 7.63%, 08/01/2025 | 6,859 | ||||||
1,725 | 8.00%, 08/01/2012 | 1,568 | ||||||
Ulster County, NY, IDA, | ||||||||
3,250 | 6.00%, 09/15/2037 — 09/15/2042 | 2,139 | ||||||
28,271 | ||||||||
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS — 91.4% — (continued) | ||||||||
North Carolina — 0.4% | ||||||||
Albemarle, NC, Hospital Auth Healthcare, | ||||||||
$ | 1,000 | 5.25%, 10/01/2038 | $ | 717 | ||||
Mecklenburg County, NC, | ||||||||
790 | 5.00%, 02/01/2024 | 832 | ||||||
1,549 | ||||||||
Ohio — 3.4% | ||||||||
Buckeye Tobacco Settlement FA, | ||||||||
5,000 | 5.88%, 06/01/2047 | 2,794 | ||||||
9,500 | 6.50%, 06/01/2047 | 5,860 | ||||||
Ohio State Higher Educational Facilities Rev, | ||||||||
3,000 | 5.50%, 12/01/2036 | 3,018 | ||||||
11,672 | ||||||||
Oklahoma — 0.1% | ||||||||
Oklahoma Development FA, Hospital Rev Great Plains Regional Medical Center, | ||||||||
500 | 5.13%, 12/01/2036 | 348 | ||||||
Other U. S. Territories — 0.9% | ||||||||
Puerto Rico Commonwealth, | ||||||||
3,570 | 5.50%, 07/01/2032 | 3,143 | ||||||
Pennsylvania — 2.2% | ||||||||
Allegheny County, PA, Higher Education Building Auth, | ||||||||
1,150 | 5.00%, 03/01/2033 | 1,093 | ||||||
Erie Higher Educational Building Auth, | ||||||||
1,000 | 5.50%, 03/15/2038 | 807 | ||||||
Northampton County, PA, | ||||||||
3,000 | 5.50%, 08/15/2035 | 2,484 | ||||||
Pennsylvania State Higher Educational FA Rev, | ||||||||
855 | 5.75%, 07/01/2028 | 697 | ||||||
Pennsylvania Turnpike Commission, | ||||||||
1,335 | 6.00%, 06/01/2028 | 1,450 | ||||||
Philadelphia GO, | ||||||||
1,000 | 7.00%, 07/15/2028 | 1,088 | ||||||
Philadelphia, PA, IDA, | ||||||||
500 | 5.25%, 05/01/2037 | 313 | ||||||
7,932 | ||||||||
Rhode Island — 2.6% | ||||||||
Rhode Island Health & Educational Building Corp, | ||||||||
2,000 | 7.00%, 05/15/2039 | 2,026 | ||||||
Rhode Island Tobacco Settlement Funding Corp, | ||||||||
945 | 6.00%, 06/01/2023 | 855 | ||||||
Tobacco Settlement Financing Corp, | ||||||||
8,000 | 6.25%, 06/01/2042 | 5,902 | ||||||
8,783 | ||||||||
South Carolina — 0.5% | ||||||||
Lancaster County, SC, Sun City Assessment, | ||||||||
1,987 | 7.70%, 11/01/2017 | 1,640 | ||||||
South Dakota — 1.9% | ||||||||
South Dakota Educational Enhancement Funding Corp, | ||||||||
6,030 | 6.50%, 06/01/2032 | 4,502 | ||||||
South Dakota Housing DA, | ||||||||
1,985 | 6.13%, 05/01/2033 | 2,091 | ||||||
6,593 | ||||||||
Texas — 12.0% | ||||||||
Brazos County Health Facilities Development Corp, | ||||||||
3,260 | 5.50%, 01/01/2038 | 2,543 | ||||||
Brazos County, TX, Health Facilities Development Corp, | ||||||||
3,310 | 5.50%, 01/01/2033 | 2,647 | ||||||
Burnet County, TX, Public Fac Proj Rev, | ||||||||
4,000 | 7.75%, 08/01/2029 | 3,715 | ||||||
Clifton Higher Education Fin Corp, | ||||||||
2,000 | 8.75%, 02/15/2028 | 1,965 | ||||||
Corpus Christi, TX, Independent School Dist, | ||||||||
2,665 | 5.00%, 08/15/2026 | 2,732 | ||||||
Dallas County Utility & Reclamation Dist, | ||||||||
5,000 | 5.38%, 02/15/2029 | 4,532 | ||||||
Dallas Fort Worth, TX, International Airport, | ||||||||
3,000 | 6.00%, 11/01/2032 | 2,922 | ||||||
Dallas-Fort Worth, TX, International Airport AMT, | ||||||||
2,000 | 6.15%, 01/01/2016 | 1,731 | ||||||
Garza County, TX, Public Fac Corp Rev, | ||||||||
350 | 5.75%, 10/01/2025 | 333 | ||||||
Guadalupe County, TX, Board Managers Joint Rev , | ||||||||
2,000 | 5.50%, 08/15/2036 | 1,902 | ||||||
Harris County, TX, Cultural Education Fac Baylor CLG Medicine, | ||||||||
2,855 | 5.63%, 11/15/2032 | 2,853 | ||||||
Houston, TX, Airport System Rev, | ||||||||
6,500 | 6.75%, 07/01/2021 | 4,929 | ||||||
La Vernia Texas Higher Education, | ||||||||
2,105 | 9.00%, 08/15/2038 | 2,119 | ||||||
Lower Colorado River Auth Rev, | ||||||||
3,000 | 7.25%, 05/15/2037 | 3,263 | ||||||
Maverick County, TX, Public Fac Corp Proj Rev, | ||||||||
1,495 | 6.25%, 02/01/2024 | 1,138 | ||||||
Travis County, TX, Health Fac, Querencia | ||||||||
Barton Creek Project, | ||||||||
600 | 5.65%, 11/15/2035 | 359 | ||||||
Willacy County, TX, GO, | ||||||||
2,500 | 6.88%, 09/01/2028 | 1,832 | ||||||
41,515 | ||||||||
Utah — 1.6% | ||||||||
Provo, UT, Lakeview Charter School, | ||||||||
1,300 | 5.63%, 07/15/2037 | 878 | ||||||
Provo, UT, Renaissance Charter School, | ||||||||
200 | 5.63%, 07/15/2037 | 131 | ||||||
Utah County, UT, Charter School Rev, | ||||||||
1,000 | 6.00%, 02/15/2038 | 705 | ||||||
Utah State Charter School FA Charter School Rev, | ||||||||
2,000 | 6.75%, 08/15/2028 | 1,611 |
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS — 91.4% — (continued) | ||||||||
Utah — 1.6% — (continued) | ||||||||
Utah State Charter School Financing Auth, Channing Hall Ser A, | ||||||||
$ | 750 | 5.88%, 07/15/2027 ■ | $ | 523 | ||||
700 | 6.00%, 07/15/2037 ■ | 465 | ||||||
Utah State Charter School Financing Auth, Summit Academy Ser A, | ||||||||
1,500 | 5.80%, 06/15/2038 | 1,019 | ||||||
5,332 | ||||||||
Virginia — 1.5% | ||||||||
James City County, VA, Econ DA Residential Care Fac, | ||||||||
675 | 5.40%, 07/01/2027 | 416 | ||||||
Lexington, VA, IDA Residential Care Fac Rev, | ||||||||
1,050 | 5.50%, 01/01/2037 | 686 | ||||||
Norfolk, VA, Redev & Housing Auth Rev, | ||||||||
2,005 | 6.13%, 01/01/2035 | 1,450 | ||||||
Peninsula, VA, Turn Center Community Dev DA, | ||||||||
300 | 6.45%, 09/01/2037 | 200 | ||||||
Virginia State Residential Auth, | ||||||||
500 | 5.00%, 11/01/2024 | 545 | ||||||
Washington County Hospital Fac Revenues, | ||||||||
1,750 | 7.75%, 07/01/2038 | 1,789 | ||||||
5,086 | ||||||||
Washington — 2.5% | ||||||||
Skagit County, WA, Public Hospital Rev, | ||||||||
2,000 | 5.75%, 12/01/2032 | 1,531 | ||||||
Washington Health Care Facilities Auth, | ||||||||
4,000 | 6.25%, 10/01/2028 | 4,342 | ||||||
Washington State Health Care FA Rev, | ||||||||
3,600 | 6.13%, 08/15/2037 | 2,841 | ||||||
8,714 | ||||||||
West Virginia — 0.8% | ||||||||
West Virginia State Hospital FA Rev Thomas Health Systems, | ||||||||
3,500 | 6.50%, 10/01/2028 — 10/01/2038 | 2,726 | ||||||
Wisconsin — 5.8% | ||||||||
Badger Tobacco Asset Securitization Corp of WI, | ||||||||
13,565 | 6.13%, 06/01/2027 ‡ | 14,490 | ||||||
1,000 | 6.38%, 06/01/2032 | 1,123 | ||||||
Wisconsin State General Fund, | ||||||||
185 | 5.75%, 05/01/2033 | 192 | ||||||
1,295 | 6.00%, 05/01/2036 | 1,363 | ||||||
Wisconsin State Health & Educational FA Rev, | ||||||||
2,500 | 5.50%, 08/15/2023 | 2,270 | ||||||
Wisconsin State Health & Educational Fac Auth, Wellington Homes Wis LLC, | ||||||||
600 | 6.75%, 09/01/2037 | 427 | ||||||
19,865 | ||||||||
Total municipal bonds (cost $363,529) | $ | 314,393 | ||||||
Total long-term investments (cost $363,529) | $ | 314,393 | ||||||
SHORT-TERM INVESTMENTS — 7.4% | ||||||||||||
Investment Pools and Funds — 7.4% | ||||||||||||
25,427 | State Street Bank Tax Free Money Market Fund | $ | 25,427 | |||||||||
Total short-term investments (cost $25,427) | $ | 25,427 | ||||||||||
Total investments (cost $388,956) ▲ | 98.8 | % | $ | 339,820 | ||||||||
Other assets and liabilities | 1.2 | % | 4,033 | |||||||||
Total net assets | 100.0 | % | $ | 343,853 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $388,956 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 5,709 | ||
Unrealized Depreciation | (54,845 | ) | ||
Net Unrealized Depreciation | $ | (49,136 | ) | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $10,104, which represents 2.94% of total net assets. |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $3,568. |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
09/2007 | $ | 1,000 | Belleville, IL, Tax Increment, 5.70%, 05/01/2036 | $ | 994 | |||||||
05/2007 | $ | 100 | Branson Hills, MO, Infrastructure Fac, 5.50%, 04/01/2027 | 100 | ||||||||
06/2007 | $ | 500 | Colorado Educational & Cultural FA Rev, Charter School-Windsor Academy Proj, 5.70%, 05/01/2037 — 144A | 500 |
9
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Schedule of Investments – (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
11/2007 | $ | 265 | Estrella Mountain Ranch Community GO, 6.20%, 07/15/2032 | $ | 265 | |||||||
05/2007 | $ | 200 | Hampshire, IL, Special Service Area #13, Tuscany Woods Proj, 5.75%, 03/01/2037 | 200 | ||||||||
07/2007 | $ | 200 | Hampshire, IL, Special Service Area #16, Prairie Ridge Proj, 6.00%, 03/01/2046 | 201 | ||||||||
08/2007 | $ | 500 | Las Vegas, NV, Special Improvement Dist #808 & 810, Summerlin Village, 6.13%, 06/01/2031 | 498 | ||||||||
07/2007 | $ | 500 | Louisiana Public Fac Auth, Susla Fac Inc, 5.75%, 07/01/2039 — 144A | 503 | ||||||||
06/2007 | $ | 500 | Magnolia Creek, FL, Community Development Dist Capital Improvement, 5.90%, 05/01/2039 | 496 | ||||||||
06/2007 | $ | 500 | Millsboro, DE, Special Obligation Plantation Lakes Special Development, 5.45%, 07/01/2036 | 500 | ||||||||
12/2007 | $ | 1,000 | Montecito Estates Public Improvement Rev, 7.00%, 10/01/2037 | 1,000 | ||||||||
06/2007 | $ | 500 | North Range, CO, Metropolitan Dist #2, 5.50%, 12/15/2027 | 499 | ||||||||
06/2007 | $ | 500 | Olathe, KS, Tax Increment Rev, West Village Center, 5.50%, 09/01/2026 | 498 | ||||||||
06/2007 | $ | 200 | Orange County, FL, Health Care FA Rev, 5.50%, 07/01/2038 | 195 | ||||||||
05/2007 | $ | 200 | Parker Road, FL, Community Development Dist Cap Improvement Ser A, 5.60%, 05/01/2038 | 199 | ||||||||
11/2007 | $ | 1,000 | Perris, CA, Public FA Local Agency Rev, 5.80%, 09/01/2038 | 1,000 | ||||||||
05/2007 | $ | 200 | Show Low Bluff, AZ, Community Fac Dist Special Assessment, 5.60%, 07/01/2031 — 144A | 200 | ||||||||
06/2007 — 10/2007 | $ | 1,525 | Six Mile Creek, FL, Community Development Dist, 5.88%, 05/01/2038 | 1,450 | ||||||||
06/2007 | $ | 1,000 | Sweetwater Creek, FL, Community Development Dist Captial Improvement Rev, 5.50%, 05/01/2038 | 1,000 | ||||||||
09/2007 | $ | 1,000 | Tartesso West Community Facilities Dist, 5.90%, 07/15/2032 | 1,000 |
AMT | — | Alternative Minimum Tax | ||
DA | — | Development Authority | ||
FA | — | Finance Authority | ||
GO | — | General Obligations | ||
IDA | — | Industrial Development Authority Bond | ||
USD | — | United School District |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 25,427 | ||
Investment in securities — Level 2 | 314,393 | |||
Total | $ | 339,820 | ||
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Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $388,956) | $ | 339,820 | ||
Cash | — | |||
Receivables: | ||||
Investment securities sold | 4,996 | |||
Fund shares sold | 3,169 | |||
Dividends and interest | 6,509 | |||
Other assets | 80 | |||
Total assets | 354,574 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 9,516 | |||
Fund shares redeemed | 308 | |||
Investment management fees | 31 | |||
Dividends | 606 | |||
Distribution fees | 23 | |||
Accrued expenses | 23 | |||
Other liabilities | 214 | |||
Total liabilities | 10,721 | |||
Net assets | $ | 343,853 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 418,608 | |||
Accumulated undistributed net investment income | 93 | |||
Accumulated net realized loss on investments | (25,712 | ) | ||
Unrealized depreciation of investments | (49,136 | ) | ||
Net assets | $ | 343,853 | ||
Shares authorized | 650,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.15/$7.48 | ||
Shares outstanding | 27,646 | |||
Net assets | $ | 197,684 | ||
Class B: Net asset value per share | $ | 7.15 | ||
Shares outstanding | 873 | |||
Net assets | $ | 6,241 | ||
Class C: Net asset value per share | $ | 7.15 | ||
Shares outstanding | 12,320 | |||
Net assets | $ | 88,144 | ||
Class I: Net asset value per share | $ | 7.16 | ||
Shares outstanding | 7,233 | |||
Net assets | $ | 51,784 | ||
11
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 10,434 | ||
Total investment income | 10,434 | |||
Expenses: | ||||
Investment management fees | 831 | |||
Transfer agent fees | 80 | |||
Distribution fees | ||||
Class A | 213 | |||
Class B | 25 | |||
Class C | 392 | |||
Custodian fees | 2 | |||
Accounting services | 27 | |||
Registration and filing fees | 48 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 25 | |||
Total expenses (before waivers and fees paid indirectly) | 1,647 | |||
Expense waivers | (245 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (246 | ) | ||
Total expenses, net | 1,401 | |||
Net investment income | 9,033 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (12,506 | ) | ||
Net Realized Loss on Investments | (12,506 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 8,194 | |||
Net Changes in Unrealized Appreciation of Investments | 8,194 | |||
Net Loss on Investments | (4,312 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 4,721 | ||
12
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 9,033 | $ | 11,520 | ||||
Net realized loss on investments | (12,506 | ) | (12,685 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 8,194 | (56,281 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 4,721 | (57,446 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (5,322 | ) | (6,892 | ) | ||||
Class B | (135 | ) | (156 | ) | ||||
Class C | (2,142 | ) | (2,367 | ) | ||||
Class I | (1,564 | ) | (2,152 | ) | ||||
Total distributions | (9,163 | ) | (11,567 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 28,715 | 164,319 | ||||||
Class B | 1,607 | 4,369 | ||||||
Class C | 12,587 | 81,960 | ||||||
Class I | (1,238 | ) | 59,280 | |||||
Net increase from capital share transactions | 41,671 | 309,928 | ||||||
Net increase in net assets | 37,229 | 240,915 | ||||||
Net Assets: | ||||||||
Beginning of period | 306,624 | 65,709 | ||||||
End of period | $ | 343,853 | $ | 306,624 | ||||
Accumulated undistributed net investment income | $ | 93 | $ | 223 | ||||
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford High Yield Municipal Bond Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. |
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. |
14
Table of Contents
Debt securities (other than short-term obligations) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | ||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | ||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | ||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
c) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | ||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | ||
d) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of |
15
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
e) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $3,568. | |
f) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | |
g) | Prepayment Risks — Certain debt securities allow for prepayment of principal without penalty. Securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. The potential for the value of a debt security to increase in response to interest rate declines is limited. For certain securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | |
h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. |
16
Table of Contents
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. |
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the |
17
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 * | |||||||
Tax Exempt Income † | $ | 10,972 | $ | 584 |
† | The Fund designates these distributions as exempt interest pursuant to IRC Sec. 852(b)(5). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 917 | ||
Accumulated Capital Losses* | $ | (13,206 | ) | |
Unrealized Depreciation† | $ | (57,329 | ) | |
Total Accumulated Deficit | $ | (69,618 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $231, decrease accumulated net realized loss by $237, and increase paid in capital by $6. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2015 | $ | 284 | ||
2016 | 12,922 | |||
Total | $ | 13,206 | ||
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e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.5500 | % | ||
On next $500 million | 0.5000 | % | ||
On next $4 billion | 0.4750 | % | ||
On next $5 billion | 0.4550 | % | ||
Over $10 billion | 0.4450 | % |
HIFSCO had voluntarily agreed to waive 0.20% of the management fees until February 28, 2009. |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | |||
1.00% | 1.75% | 1.75% | 0.75% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Annualized | ||||||||||||
Six-Month | ||||||||||||
Period | Year Ended | Year Ended | ||||||||||
Ended April | October 31, | October 31, | ||||||||||
30, 2009 | 2008 | 2007 | ||||||||||
Class A Shares | 0.75 | % | 0.40 | % | 0.25 | %* | ||||||
Class B Shares | 1.57 | 1.19 | 1.00 | † | ||||||||
Class C Shares | 1.52 | 1.17 | 1.01 | ‡ | ||||||||
Class I Shares | 0.51 | 0.17 | 0.00 | § |
* | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
† | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
‡ | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
§ | From May 31, 2007 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $796 and contingent deferred sales charges of $97 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $15. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $79 for providing such services. These fees are accrued daily and paid monthly. |
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For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 91,846 | ||
Sales Proceeds Excluding U.S. Government Obligations | 43,755 |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 9,579 | 439 | (5,944 | ) | — | 4,074 | 25,895 | 436 | (7,649 | ) | — | 18,682 | ||||||||||||||||||||||||||||
Amount | $ | 66,559 | $ | 3,045 | $ | (40,889 | ) | $ | — | $ | 28,715 | $ | 225,224 | $ | 3,641 | $ | (64,546 | ) | $ | — | $ | 164,319 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 301 | 11 | (81 | ) | — | 231 | 575 | 10 | (84 | ) | — | 501 | ||||||||||||||||||||||||||||
Amount | $ | 2,086 | $ | 74 | $ | (553 | ) | $ | — | $ | 1,607 | $ | 5,013 | $ | 83 | $ | (727 | ) | $ | — | $ | 4,369 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,092 | 154 | (1,469 | ) | — | 1,777 | 10,561 | 131 | (1,336 | ) | — | 9,356 | ||||||||||||||||||||||||||||
Amount | $ | 21,635 | $ | 1,068 | $ | (10,116 | ) | $ | — | $ | 12,587 | $ | 91,857 | $ | 1,083 | $ | (10,980 | ) | $ | — | $ | 81,960 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,850 | 163 | (2,208 | ) | — | (195 | ) | 8,828 | 182 | (2,309 | ) | — | 6,701 | |||||||||||||||||||||||||||
Amount | $ | 12,921 | $ | 1,134 | $ | (15,293 | ) | $ | — | $ | (1,238 | ) | $ | 76,859 | $ | 1,510 | $ | (19,089 | ) | $ | — | $ | 59,280 |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.27 | $ | 0.21 | $ | — | $ | (0.12 | ) | $ | 0.09 | $ | (0.21 | ) | $ | — | $ | — | $ | (0.21 | ) | $ | (0.12 | ) | $ | 7.15 | 1 .42 | %(e) | $ | 197,684 | 0 .91 | %(f) | 0 .75 | %(f) | 0 .75 | %(f) | 6 .15 | %(f) | 16 | % | ||||||||||||||||||||||||||||||||
B | 7.26 | 0.18 | — | (0.10 | ) | 0.08 | (0.19 | ) | — | — | (0.19 | ) | (0.11 | ) | 7.15 | 1 .15 | (e) | 6,241 | 1 .73 | (f) | 1 .57 | (f) | 1 .57 | (f) | 5 .33 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 7.27 | 0.18 | — | (0.11 | ) | 0.07 | (0.19 | ) | — | — | (0.19 | ) | (0.12 | ) | 7.15 | 1 .03 | (e) | 88,144 | 1 .68 | (f) | 1 .52 | (f) | 1 .52 | (f) | 5 .38 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
I | 7.27 | 0.22 | — | (0.11 | ) | 0.11 | (0.22 | ) | — | — | (0.22 | ) | (0.11 | ) | 7.16 | 1 .65 | (e) | 51,784 | 0 .67 | (f) | 0 .51 | (f) | 0 .51 | (f) | 6 .38 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.46 | 0.49 | — | (2.19 | ) | (1.70 | ) | (0.49 | ) | — | — | (0.49 | ) | (2.19 | ) | 7.27 | (18.60 | ) | 171,281 | 0.92 | 0.40 | 0.40 | 5.61 | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.46 | 0.42 | — | (2.19 | ) | (1.77 | ) | (0.43 | ) | — | — | (0.43 | ) | (2.20 | ) | 7.26 | (19.36 | ) | 4,664 | 1.73 | 1.19 | 1.19 | 4.81 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.46 | 0.42 | — | (2.18 | ) | (1.76 | ) | (0.43 | ) | — | — | (0.43 | ) | (2.19 | ) | 7.27 | (19.24 | ) | 76,650 | 1.70 | 1.17 | 1.17 | 4.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 9.47 | 0.51 | — | (2.19 | ) | (1.68 | ) | (0.52 | ) | — | — | (0.52 | ) | (2.20 | ) | 7.27 | (18.50 | ) | 54,029 | 0.69 | 0.17 | 0.17 | 5.84 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) May 31, 2007, through October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | 0.20 | — | (0.54 | ) | (0.34 | ) | (0.20 | ) | — | — | (0.20 | ) | (0.54 | ) | 9.46 | (3 .41 | ) (e) | 46,261 | 1 .03 | (f) | 0 .25 | (f) | 0 .25 | (f) | 4 .83 | (f) | 23 | ||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | 0.17 | — | (0.54 | ) | (0.37 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.54 | ) | 9.46 | (3 .71 | ) (e) | 1,333 | 1 .82 | (f) | 1 .00 | (f) | 1 .00 | (f) | 4 .05 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | 0.17 | — | (0.54 | ) | (0.37 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.54 | ) | 9.46 | (3 .71 | ) (e) | 11,236 | 1 .81 | (f) | 1 .00 | (f) | 1 .00 | (f) | 4 .19 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
I(j) | 10.00 | 0.21 | — | (0.53 | ) | (0.32 | ) | (0.21 | ) | — | — | (0.21 | ) | (0.53 | ) | 9.47 | (3 .21 | ) (e) | 6,879 | 0 .80 | (f) | – | (f) | – | (f) | 5 .22 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on May 31, 2007. | |
(h) | Commenced operations on May 31, 2007. | |
(i) | Commenced operations on May 31, 2007. | |
(j) | Commenced operations on May 31, 2007. |
22
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23
Table of Contents
Directors and Officers (Unaudited) — (continued)
24
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25
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,014.22 | $ | 3.74 | $ | 1,000.00 | $ | 1,021.07 | $ | 3.75 | 0.75 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,011.53 | $ | 7.83 | $ | 1,000.00 | $ | 1,017.00 | $ | 7.85 | 1.57 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,010.30 | $ | 7.57 | $ | 1,000.00 | $ | 1,017.25 | $ | 7.60 | 1.52 | 181 | 365 | ||||||||||||||||||||||
Class I . | $ | 1,000.00 | $ | 1,016.45 | $ | 2.54 | $ | 1,000.00 | $ | 1,022.26 | $ | 2.55 | 0.51 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
13 | ||||
14 | ||||
15 | ||||
16 | ||||
27 | ||||
28 | ||||
30 | ||||
30 | ||||
31 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Income A# | 10/31/02 | -7.56 | % | 1.46 | % | 3.03 | % | |||||||||
Income A## | 10/31/02 | -11.72 | % | 0.53 | % | 2.31 | % | |||||||||
Income B# | 10/31/02 | -8.35 | % | 0.67 | % | 2.26 | % | |||||||||
Income B## | 10/31/02 | -12.70 | % | 0.34 | % | 2.26 | % | |||||||||
Income C# | 10/31/02 | -8.35 | % | 0.67 | % | 2.29 | % | |||||||||
Income C## | 10/31/02 | -9.22 | % | 0.67 | % | 2.29 | % | |||||||||
Income Y# | 11/28/03 | -7.31 | % | 1.68 | % | 1.85 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
William H. Davison, Jr. | Michael Gray, CFA | Christopher J. Zeppieri, CFA | ||
Managing Director | Managing Director | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 48.2 | % | ||
AA | 5.2 | |||
A | 15.1 | |||
BBB | 16.3 | |||
BB | 9.1 | |||
B | 5.6 | |||
CCC | 0.3 | |||
D | 0.2 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Basic Materials | 3.3 | % | ||
Capital Goods | 1.9 | |||
Consumer Cyclical | 2.1 | |||
Consumer Staples | 2.1 | |||
Energy | 4.3 | |||
Finance | 20.0 | |||
Foreign Governments | 1.5 | |||
Health Care | 4.6 | |||
Services | 3.7 | |||
Technology | 9.5 | |||
Transportation | 0.4 | |||
U.S. Government Agencies | 28.2 | |||
U.S. Government Securities | 5.9 | |||
Utilities | 4.8 | |||
Short-Term Investments | 6.9 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 8.2% | ||||||||
Finance - 8.2% | ||||||||
Banc of America Commercial Mortgage, Inc. | ||||||||
$ | 2,557 | 5.50%, 11/10/2039 ⌂► | $ | 43 | ||||
6,646 | 5.75%, 06/10/2039 ⌂► | 31 | ||||||
Bayview Commercial Asset Trust | ||||||||
200 | 0.81%, 04/25/2036 ⌂ Δ | 80 | ||||||
5,420 | 7.00%, 07/25/2037 ⌂► | 298 | ||||||
9,917 | 7.50%, 09/25/2037 ⌂► | 883 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
540 | 5.12%, 02/11/2041 Δ | 465 | ||||||
1,650 | 5.15%, 10/12/2042 Δ | 1,437 | ||||||
1,700 | 5.33%, 02/11/2044 | 1,384 | ||||||
530 | 5.41%, 12/11/2040 | 471 | ||||||
600 | 5.72%, 09/11/2038 Δ | 517 | ||||||
Capital Automotive Receivables Asset Trust | ||||||||
50 | 5.77%, 05/20/2010 ⌂ | 49 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
4,976 | 7.00%, 07/25/2035 - 06/25/2038 ⌂► † | 355 | ||||||
6,177 | 9.75%, 01/25/2039 ⌂► | 618 | ||||||
Chase Issuance Trust | ||||||||
360 | 5.12%, 10/15/2014 | 366 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
510 | 5.43%, 10/15/2049 | 419 | ||||||
Citigroup Mortgage Loan Trust, Inc. | ||||||||
200 | 3.02%, 01/25/2037 ⌂ Δ | 2 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
4,989 | 5.50%, 03/10/2039 ⌂► | 79 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
43 | 5.46%, 07/25/2035 | 17 | ||||||
Credit-Based Asset Servicing and Securitization | ||||||||
197 | 0.71%, 05/25/2036 ⌂ Δ | 86 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
290 | 5.23%, 12/15/2040 | 248 | ||||||
Equity One ABS, Inc. | ||||||||
3 | 2.94%, 07/25/2034 ⌂ Δ | — | ||||||
27 | 5.46%, 12/25/2033 | 9 | ||||||
Ford Credit Automotive Owner Trust | ||||||||
600 | 4.28%, 05/15/2012 | 599 | ||||||
GE Business Loan Trust | ||||||||
8,112 | 6.14%, 05/15/2034 ⌂► | 21 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
330 | 5.05%, 07/10/2045 Δ | 311 | ||||||
54,202 | 6.35%, 11/10/2045 ⌂► | 45 | ||||||
GMAC Commercial Mortgage Securities, Inc. | ||||||||
200 | 5.30%, 08/10/2038 | 179 | ||||||
GMAC Mortgage Corp. Loan Trust | ||||||||
270 | 5.75%, 10/25/2036 ⌂ | 156 | ||||||
Green Tree Financial Corp. | ||||||||
3 | 7.30%, 01/15/2026 | 3 | ||||||
8 | 7.35%, 05/15/2027 | 8 | ||||||
Greenwich Capital Commercial Funding Corp. | ||||||||
198 | 1.69%, 11/05/2021 ⌂• Δ | 1 | ||||||
189 | 1.89%, 11/05/2021 ⌂• Δ | 1 | ||||||
510 | 4.80%, 08/10/2042 | 425 | ||||||
390 | 5.92%, 07/10/2038 Δ | 326 | ||||||
JP Morgan Automotive Receivable Trust | ||||||||
75 | 12.85%, 03/15/2012 ⌂† | 21 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
1,550 | 5.18%, 12/15/2044 Δ | 1,337 | ||||||
550 | 5.34%, 05/15/2047 | 425 | ||||||
240 | 5.40%, 05/15/2045 | 186 | ||||||
502 | 5.47%, 04/15/2043 Δ | 386 | ||||||
2,088 | 5.50%, 01/15/2038 ⌂► | 41 | ||||||
190 | 6.16%, 05/12/2034 | 190 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
20,961 | 5.26%, 06/15/2036 ⌂► | 30 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
120 | 5.62%, 09/25/2036 ⌂ | 100 | ||||||
Long Beach Asset Holdings Corp. | ||||||||
45 | 5.78%, 04/25/2046 ⌂ • | — | ||||||
Marlin Leasing Receivables LLC | ||||||||
440 | 5.33%, 09/16/2013 ■ | 433 | ||||||
Morgan Stanley Capital I | ||||||||
560 | 4.70%, 07/15/2056 | 491 | ||||||
540 | 5.01%, 01/14/2042 | 495 | ||||||
700 | 5.65%, 12/15/2044 | 578 | ||||||
Nationstar Home Equity Loan Trust | ||||||||
22 | 9.97%, 03/25/2037 ⌂Δ | 1 | ||||||
Option One Mortgage Loan Trust, Class M6 | ||||||||
725 | 6.99%, 03/25/2037 ⌂ | 45 | ||||||
Option One Mortgage Loan Trust, Class M7 | ||||||||
500 | 6.99%, 03/25/2037 ⌂ | 25 | ||||||
Option One Mortgage Loan Trust, Class M8 | ||||||||
475 | 6.99%, 03/25/2037 ⌂ | 19 | ||||||
PSE&G Transition Funding LLC | ||||||||
70 | 6.61%, 06/15/2015 | 77 | ||||||
Renaissance Home Equity Loan Trust | ||||||||
80 | 5.75%, 05/25/2036 ⌂Δ | 59 | ||||||
200 | 6.16%, 05/25/2036 ⌂ | 36 | ||||||
Renaissance Home Equity Loan Trust, Class M5 | ||||||||
600 | 7.00%, 09/25/2037 ⌂ | 33 | ||||||
Renaissance Home Equity Loan Trust, Class M8 | ||||||||
750 | 7.00%, 09/25/2037 ⌂ | 25 | ||||||
USAA Automotive Owner Trust | ||||||||
845 | 5.36%, 06/15/2012 | 865 | ||||||
Wachovia Automotive Loan Owner Trust | ||||||||
250 | 5.15%, 07/20/2012 ⌂ | 229 | ||||||
260 | 5.29%, 06/20/2012 ⌂ | 241 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
505 | 5.31%, 11/15/2048 | 397 | ||||||
6,117 | 5.50%, 02/15/2041 ⌂► | 99 | ||||||
Wamu Commercial Mortgage Securities Trust | ||||||||
1,220 | 6.31%, 03/23/2045 ⌂Δ | 305 | ||||||
Wells Fargo Alternative Loan Trust | ||||||||
942 | 6.25%, 11/25/2037 ⌂ | 508 | ||||||
17,609 | ||||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES — 8.2% — (continued) | ||||||||
Utilities — 0.0% | ||||||||
Detroit Edison Securitization | ||||||||
$ | 52 | 6.19%, 03/01/2013 | $ | 54 | ||||
Total asset & commercial mortgage backed securities (cost $23,158) | $ | 17,663 | ||||||
CORPORATE BONDS: INVESTMENT GRADE — 35.0% | ||||||||
Basic Materials — 1.8% | ||||||||
Alcan, Inc. | ||||||||
$ | 240 | 6.13%, 12/15/2033 | $ | 163 | ||||
Anglo American Capital plc | ||||||||
1,138 | 9.38%, 04/08/2014 - 04/08/2019 ■ | 1,175 | ||||||
Barrick Gold Corp. | ||||||||
170 | 6.95%, 04/01/2019 | 180 | ||||||
Kimberly-Clark Corp. | ||||||||
925 | 7.50%, 11/01/2018 | 1,081 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
1,115 | 5.88%, 07/15/2013 | 1,051 | ||||||
265 | 9.00%, 05/01/2019 | 273 | ||||||
3,923 | ||||||||
Capital Goods — 1.6% | ||||||||
Hutchison Whampoa International Ltd. | ||||||||
200 | 6.25%, 01/24/2014 ■ | 205 | ||||||
400 | 7.63%, 04/09/2019 ■ | 393 | ||||||
Tyco Electronics Group S.A. | ||||||||
428 | 6.00%, 10/01/2012 | 390 | ||||||
763 | 6.55%, 10/01/2017 | 587 | ||||||
Tyco International Ltd. | ||||||||
792 | 8.50%, 01/15/2019 | 848 | ||||||
United Technologies Corp. | ||||||||
656 | 6.13%, 02/01/2019 | 707 | ||||||
Xerox Corp. | ||||||||
205 | 6.35%, 05/15/2018 | 166 | ||||||
3,296 | ||||||||
Consumer Cyclical — 0.9% | ||||||||
CRH America, Inc. | ||||||||
1,000 | 5.63%, 09/30/2011 | 901 | ||||||
330 | 8.13%, 07/15/2018 | 275 | ||||||
Safeway, Inc. | ||||||||
445 | 5.80%, 08/15/2012 | 461 | ||||||
270 | 6.25%, 03/15/2014 | 287 | ||||||
1,924 | ||||||||
Consumer Staples — 1.7% | ||||||||
Altria Group, Inc. | ||||||||
790 | 10.20%, 02/06/2039 | 870 | ||||||
Anheuser-Busch Cos., Inc. | ||||||||
280 | 8.20%, 01/15/2039 ■ | 280 | ||||||
Anheuser-Busch InBev N.V. | ||||||||
955 | 7.75%, 01/15/2019 ■ | 1,000 | ||||||
General Mills, Inc. | ||||||||
1,010 | 5.70%, 02/15/2017 | 1,037 | ||||||
Unilever Capital Corp. | ||||||||
500 | 4.80%, 02/15/2019 | 505 | ||||||
3,692 | ||||||||
Energy — 3.9% | ||||||||
Chevron Corp. | ||||||||
535 | 4.95%, 03/03/2019 | 546 | ||||||
ConocoPhillips | ||||||||
875 | 6.50%, 02/01/2039 | 867 | ||||||
Consumers Energy Co. | ||||||||
725 | 6.70%, 09/15/2019 | 765 | ||||||
Diamond Offshore Drilling, Inc. | ||||||||
156 | 5.88%, 05/01/2019 | 156 | ||||||
EnCana Corp. | ||||||||
110 | 6.50%, 05/15/2019 | 110 | ||||||
Gazprom International S.A. | ||||||||
113 | 7.20%, 02/01/2020 § | 102 | ||||||
Marathon Oil Corp. | ||||||||
285 | 6.50%, 02/15/2014 | 296 | ||||||
Nabors Industries, Inc. | ||||||||
537 | 9.25%, 01/15/2019 ■ | 507 | ||||||
Ras Laffan Liquefied Natural Gas Co., Ltd. | ||||||||
1,500 | 5.30%, 09/30/2020 ■ | 1,299 | ||||||
Sempra Energy | ||||||||
588 | 9.80%, 02/15/2019 | 671 | ||||||
Shell International Finance B.V. | ||||||||
570 | 6.38%, 12/15/2038 | 607 | ||||||
Statoilhydro ASA | ||||||||
998 | 5.25%, 04/15/2019 | 1,021 | ||||||
TNK-BP Finance S.A. | ||||||||
200 | 7.50%, 03/13/2013 ■ | 166 | ||||||
Valero Energy Corp. | ||||||||
1,120 | 6.63%, 06/15/2037 | 887 | ||||||
385 | 9.38%, 03/15/2019 | 430 | ||||||
8,430 | ||||||||
Finance — 11.1% | ||||||||
ABX Financing Co. | ||||||||
365 | 6.35%, 10/15/2036 ■ | 290 | ||||||
American Real Estate Partners L.P. | ||||||||
390 | 7.13%, 02/15/2013 | 328 | ||||||
Arden Realty L.P. | ||||||||
150 | 5.20%, 09/01/2011 | 149 | ||||||
BAE Systems Holdings, Inc. | ||||||||
1,443 | 6.40%, 12/15/2011 ■ | 1,519 | ||||||
Bank of America Corp. | ||||||||
2,000 | 2.10%, 04/30/2012 | 2,013 | ||||||
BP Capital Markets plc | ||||||||
609 | 5.25%, 11/07/2013 | 657 | ||||||
Citigroup, Inc. | ||||||||
550 | 2.13%, 04/30/2012 | 553 | ||||||
647 | 8.30%, 12/21/2057 Δ | 394 | ||||||
Comerica Capital Trust II | ||||||||
1,066 | 6.58%, 02/20/2037 ‡Δ | 388 | ||||||
Corpoacion Andina De Fomento | ||||||||
65 | 5.20%, 05/21/2013 | 62 | ||||||
77 | 5.75%, 01/12/2017 | 64 | ||||||
COX Communications, Inc. | ||||||||
350 | 6.25%, 06/01/2018 ■ | 322 | ||||||
300 | 8.38%, 03/01/2039 ■ | 291 | ||||||
Credit Agricole S.A. | ||||||||
1,115 | 6.64%, 05/31/2017 ■ª Δ | 534 | ||||||
Deutsche Bank Capital Funding Trust | ||||||||
90 | 5.63%, 01/19/2016 ■ª | 42 | ||||||
ERAC USA Finance Co. | ||||||||
946 | 5.60%, 05/01/2015 ■ | 730 | ||||||
Goldman Sachs Capital Trust II | ||||||||
2,007 | 5.79%, 06/01/2012 ªΔ | 993 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 35.0% — (continued) | ||||||||
Finance — 11.1% — (continued) | ||||||||
Goldman Sachs Group, Inc. | ||||||||
$ | 125 | 5.15%, 01/15/2014 | $ | 122 | ||||
238 | 6.00%, 05/01/2014 | 238 | ||||||
ILFC E-Capital Trust II | ||||||||
4,410 | 6.25%, 12/21/2065■Δ | 662 | ||||||
International Lease Finance Corp. | ||||||||
669 | 6.38%, 03/25/2013 | 409 | ||||||
Jackson National Life Global Funding | ||||||||
980 | 5.38%, 05/08/2013■ | 868 | ||||||
JP Morgan Chase & Co. | ||||||||
850 | 5.13%, 09/15/2014 | 787 | ||||||
640 | 6.30%, 04/23/2019 | 630 | ||||||
710 | 7.90%, 04/30/2018ª | 540 | ||||||
JP Morgan Chase Capital II | ||||||||
210 | 1.67%, 02/01/2027Δ | 86 | ||||||
Lincoln National Corp. | ||||||||
530 | 6.05%, 04/20/2067 | 154 | ||||||
Lloyds Banking Group plc | ||||||||
500 | 5.92%, 10/01/2015 ■ª | 138 | ||||||
MBNA America Bank N.A. | ||||||||
1,005 | 7.13%, 11/15/2012 ■ | 916 | ||||||
Mellon Capital IV | ||||||||
764 | 6.24%, 06/20/2012ªΔ | 424 | ||||||
National City Corp. | ||||||||
912 | 12.00%, 12/10/2012 ª | 789 | ||||||
Northgroup Preferred Capital Corp. | ||||||||
638 | 6.38%, 10/15/2017 ⌂ª Δ | 373 | ||||||
PNC Preferred Funding Trust II | ||||||||
1,600 | 6.11%, 03/15/2012 ■ª Δ | 531 | ||||||
Pricoa Global Funding I | ||||||||
490 | 1.14%, 01/30/2012 ■Δ | 367 | ||||||
Progressive Corp. | ||||||||
225 | 6.70%, 06/15/2037Δ | 111 | ||||||
Prudential Financial, Inc. | ||||||||
905 | 8.88%, 06/15/2038 Δ | 489 | ||||||
Shurgard Storage Centers, Inc. | ||||||||
75 | 5.88%, 03/15/2013 | 68 | ||||||
State Street Capital Trust III | ||||||||
560 | 8.25%, 03/15/2042 Δ | 381 | ||||||
State Street Capital Trust IV | ||||||||
735 | 2.32%, 06/15/2037 Δ | 297 | ||||||
Transcapitalinvest Ltd. | ||||||||
400 | 5.67%, 03/05/2014 § | 317 | ||||||
UBS Preferred Funding Trust I | ||||||||
1,920 | 8.62%, 10/01/2010ª | 962 | ||||||
Unicredito Italiano Capital Trust | ||||||||
920 | 9.20%, 10/05/2010 ■ª | 432 | ||||||
UnitedHealth Group, Inc. | ||||||||
1,038 | 4.88%, 02/15/2013 | 1,012 | ||||||
US Bank Realty Corp. | ||||||||
725 | 6.09%, 01/15/2012 ■ªΔ | 326 | ||||||
USB Capital IX | ||||||||
1,300 | 6.19%, 04/15/2011 ªΔ | 721 | ||||||
Wells Fargo Bank NA | ||||||||
555 | 1.45%, 05/16/2016 Δ | 378 | ||||||
Wells Fargo Capital XIII | ||||||||
272 | 7.70%, 03/26/2013 ªΔ | 174 | ||||||
Westfield Group | ||||||||
500 | 5.70%, 10/01/2016 ■ | 403 | ||||||
Westpac Capital Trust IV | ||||||||
100 | 5.26%, 03/31/2016 ª■ | 51 | ||||||
ZFS Finance USA Trust I | ||||||||
721 | 6.50%, 05/09/2037 ■Δ | 389 | ||||||
23,874 | ||||||||
Foreign Governments — 0.8% | ||||||||
Brazil (Republic of) | ||||||||
808 | 8.00%, 01/15/2018 | 873 | ||||||
El Salvador (Republic of) | ||||||||
282 | 7.65%, 06/15/2035 § | 225 | ||||||
Malaysian Government | ||||||||
150 | 7.50%, 07/15/2011 | 164 | ||||||
Russian Federation Government | ||||||||
271 | 7.50%, 03/31/2030 § | 263 | ||||||
United Mexican States | ||||||||
120 | 6.05%, 01/11/2040 | 105 | ||||||
1,630 | ||||||||
Health Care — 2.6% | ||||||||
Abbott Laboratories | ||||||||
494 | 5.13%, 04/01/2019 | 506 | ||||||
Amgen, Inc. | ||||||||
236 | 6.40%, 02/01/2039 | 238 | ||||||
Covidien International Finance S.A. | ||||||||
394 | 5.45%, 10/15/2012 | 409 | ||||||
CVS Caremark Corp. | ||||||||
1,125 | 6.30%, 06/01/2037 Δ | 731 | ||||||
207 | 6.60%, 03/15/2019 | 219 | ||||||
Eli Lilly & Co. | ||||||||
445 | 4.20%, 03/06/2014 | 462 | ||||||
208 | 5.95%, 11/15/2037 | 203 | ||||||
Pfizer, Inc. | ||||||||
560 | 5.35%, 03/15/2015 | 602 | ||||||
515 | 6.20%, 03/15/2019 | 553 | ||||||
535 | 7.20%, 03/15/2039 | 588 | ||||||
Roche Holdings, Inc. | ||||||||
530 | 5.00%, 03/01/2014 ■ | 556 | ||||||
155 | 6.00%, 03/01/2019 ■ | 161 | ||||||
255 | 7.00%, 03/01/2039 ■ | 277 | ||||||
5,505 | ||||||||
Services — 1.8% | ||||||||
Allied Waste North America, Inc. | ||||||||
385 | 6.88%, 06/01/2017 | 374 | ||||||
Comcast Corp. | ||||||||
516 | 6.30%, 11/15/2017 | 525 | ||||||
President & Fellows of Harvard | ||||||||
368 | 6.00%, 01/15/2019 ■ | 395 | ||||||
Time Warner Entertainment Co., L.P. | ||||||||
1,210 | 8.38%, 07/15/2033 | 1,258 | ||||||
Waste Management, Inc. | ||||||||
1,343 | 6.10%, 03/15/2018 | 1,233 | ||||||
3,785 | ||||||||
Technology — 4.7% | ||||||||
AT&T, Inc. | ||||||||
1,060 | 6.55%, 02/15/2039 | 1,019 | ||||||
Cingular Wireless Services, Inc. | ||||||||
210 | 8.13%, 05/01/2012 | 232 | ||||||
455 | 8.75%, 03/01/2031 | 521 | ||||||
Cisco Systems, Inc. | ||||||||
1,010 | 5.90%, 02/15/2039 | 956 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE — 35.0% — (continued) | ||||||||
Technology — 4.7% — (continued) | ||||||||
France Telecom S.A. | ||||||||
$ | 150 | 7.75%, 03/01/2011Δ | $ | 163 | ||||
Hanaro Telecom, Inc. | ||||||||
140 | 7.00%, 02/01/2012 ■ | 135 | ||||||
Nokia Corp. | ||||||||
196 | 5.38%, 05/15/2019 | 190 | ||||||
178 | 6.63%, 05/15/2039 | 177 | ||||||
Oracle Corp. | ||||||||
506 | 6.50%, 04/15/2038 | 516 | ||||||
Rogers Cable, Inc. | ||||||||
205 | 8.75%, 05/01/2032 | 220 | ||||||
Rogers Communications, Inc. | ||||||||
931 | 7.50%, 03/15/2015 | 984 | ||||||
Telecom Italia Capital | ||||||||
797 | 7.72%, 06/04/2038 | 696 | ||||||
Time Warner Cable, Inc. | ||||||||
52 | 8.25%, 04/01/2019 | 57 | ||||||
Verizon Wireless | ||||||||
1,417 | 5.55%, 02/01/2014 ■ | 1,486 | ||||||
1,467 | 8.50%, 11/15/2018 ■ | 1,757 | ||||||
Vodafone Group plc | ||||||||
1,166 | 6.15%, 02/27/2037 | 1,128 | ||||||
10,237 | ||||||||
Transportation — 0.2% | ||||||||
Canadian Pacific Railway Co. | ||||||||
385 | 5.95%, 05/15/2037 | 259 | ||||||
Carnival Corp. | ||||||||
110 | 6.65%, 01/15/2028 | 89 | ||||||
Continental Airlines, Inc. | ||||||||
100 | 6.56%, 02/15/2012 | 86 | ||||||
72 | 6.80%, 08/02/2018 | 49 | ||||||
483 | ||||||||
Utilities — 3.9% | ||||||||
Alabama Power Co. | ||||||||
342 | 6.00%, 03/01/2039 | 340 | ||||||
CenterPoint Energy Resources Corp. | ||||||||
207 | 6.63%, 11/01/2037 | 141 | ||||||
Commonwealth Edison Co. | ||||||||
1,405 | 5.80%, 03/15/2018 | 1,337 | ||||||
Duke Energy Corp. | ||||||||
441 | 6.35%, 08/15/2038 | 468 | ||||||
250 | 7.00%, 11/15/2018 | 286 | ||||||
Electricite de France | ||||||||
560 | 6.95%, 01/26/2039 ■ | 590 | ||||||
Florida Power Corp. | ||||||||
296 | 5.80%, 09/15/2017 | 318 | ||||||
Kinder Morgan Energy Partners L.P. | ||||||||
230 | 6.50%, 02/01/2037 | 189 | ||||||
Northern States Power Co. | ||||||||
400 | 6.25%, 06/01/2036 | 413 | ||||||
Pacific Gas & Electric Energy Recovery Funding LLC | ||||||||
701 | 8.25%, 10/15/2018 | 837 | ||||||
Public Service Co. of Colorado | ||||||||
874 | 6.50%, 08/01/2038 | 934 | ||||||
Southern California Edison Co. | ||||||||
964 | 5.75%, 03/15/2014 | 1,049 | ||||||
Spectra Energy Corp. | ||||||||
915 | 5.90%, 09/15/2013 | 881 | ||||||
TransCanada Pipelines Ltd. | ||||||||
705 | 7.25%, 08/15/2038 | 735 | ||||||
8,518 | ||||||||
Total corporate bonds: investment grade (cost $87,228) | $ | 75,297 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 8.2% | ||||||||
Basic Materials — 0.4% | ||||||||
Georgia-Pacific LLC | ||||||||
$ | 245 | 8.25%, 05/01/2016 ■ | 245 | |||||
Graham Packaging Co., Inc. | ||||||||
650 | 8.50%, 10/15/2012 | 559 | ||||||
804 | ||||||||
Capital Goods — 0.2% | ||||||||
L-3 Communications Corp. | ||||||||
340 | 5.88%, 01/15/2015 | 311 | ||||||
Consumer Cyclical — 0.6% | ||||||||
Desarrolladora Homes S.A. | ||||||||
147 | 7.50%, 09/28/2015 | 111 | ||||||
KB Home & Broad Home Corp. | ||||||||
200 | 6.38%, 08/15/2011 | 191 | ||||||
Parkson Retail Group Ltd. | ||||||||
460 | 7.88%, 11/14/2011 | 435 | ||||||
SGS International, Inc. | ||||||||
150 | 12.00%, 12/15/2013 | 80 | ||||||
Supervalu, Inc. | ||||||||
420 | 7.50%, 11/15/2014 | 407 | ||||||
140 | 8.00%, 05/01/2016 | 136 | ||||||
1,360 | ||||||||
Energy — 0.4% | ||||||||
Chesapeake Energy Corp. | ||||||||
800 | 7.00%, 08/15/2014 | 738 | ||||||
Inergy L.P. | ||||||||
150 | 8.25%, 03/01/2016 | 149 | ||||||
887 | ||||||||
Finance — 0.7% | ||||||||
Drummond Co., Inc. | ||||||||
390 | 7.38%, 02/15/2016 ■ | 283 | ||||||
LPL Holdings, Inc. | ||||||||
1,380 | 10.75%, 12/15/2015 ■ | 1,200 | ||||||
1,483 | ||||||||
Foreign Governments — 0.7% | ||||||||
Argentina (Republic of) | ||||||||
745 | 7.00%, 10/03/2015 | 208 | ||||||
Indonesia (Republic of) | ||||||||
255 | 6.88%, 01/17/2018 § | 229 | ||||||
Philippines (Republic of) | ||||||||
300 | 8.38%, 06/17/2019 | 332 | ||||||
Turkey (Republic of) | ||||||||
340 | 7.25%, 03/15/2015 | 347 | ||||||
Venezuela (Republic of) | ||||||||
785 | 5.75%, 02/26/2016 | 447 | ||||||
1,563 | ||||||||
Health Care — 0.7% | ||||||||
HCA, Inc. | ||||||||
255 | 8.50%, 04/15/2019 ■ | 257 | ||||||
165 | 9.25%, 11/15/2016 | 163 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
490 | 8.75%, 06/15/2014 | 482 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE — 8.2% — (continued) | ||||||||
Health Care — 0.7% — (continued) | ||||||||
Psychiatric Solutions, Inc. | ||||||||
$ | 45 | 7.75%, 07/15/2015 | $ | 41 | ||||
Warner Chilcott Corp. | ||||||||
500 | 8.75%, 02/01/2015 | 491 | ||||||
1,434 | ||||||||
Services — 0.8% | ||||||||
Affinion Group, Inc. | ||||||||
1,200 | 11.50%, 10/15/2015 | 864 | ||||||
AMC Entertainment, Inc. | ||||||||
500 | 11.00%, 02/01/2016 | 490 | ||||||
Belo Corp. | ||||||||
175 | 7.25%, 09/15/2027 | 85 | ||||||
Sheridan Group, Inc. | ||||||||
150 | 10.25%, 08/15/2011 ⌂ | 93 | ||||||
Virgin Media, Inc. | ||||||||
340 | 6.50%, 11/15/2016 ۞■ | 248 | ||||||
1,780 | ||||||||
Technology — 3.1% | ||||||||
Canwest MediaWorks L.P. | ||||||||
400 | 9.25%, 08/01/2015 ■ | 37 | ||||||
Charter Communications Operating LLC | ||||||||
415 | 8.00%, 04/30/2012 ■Y | 390 | ||||||
Citizens Communications Co. | ||||||||
440 | 9.00%, 08/15/2031 | 350 | ||||||
Cricket Communications, Inc. | ||||||||
310 | 9.38%, 11/01/2014 | 307 | ||||||
CSC Holdings, Inc. | ||||||||
320 | 7.63%, 04/01/2011 | 320 | ||||||
425 | 8.50%, 04/15/2014 ■ | 434 | ||||||
Frontier Communications Corp. | ||||||||
225 | 8.25%, 05/01/2014 | 221 | ||||||
Intelsat Bermuda Ltd. | ||||||||
730 | 9.25%, 06/15/2016 ⌂ | 642 | ||||||
Intelsat Corp. | ||||||||
600 | 9.25%, 06/15/2016 ■ | 579 | ||||||
Mediacom LLC | ||||||||
750 | 7.88%, 02/15/2011 | 742 | ||||||
MetroPCS Wireless, Inc. | ||||||||
720 | 9.25%, 11/01/2014 | 721 | ||||||
Qwest Communications International, Inc. | ||||||||
820 | 7.50%, 02/15/2014 | 760 | ||||||
Seagate Technology International | ||||||||
345 | 10.00%, 05/01/2014 ■ | 340 | ||||||
Windstream Corp. | ||||||||
685 | 8.63%, 08/01/2016 | 682 | ||||||
6,525 | ||||||||
Transportation — 0.2% | ||||||||
Grupo Senda Autotransporte | ||||||||
410 | 10.50%, 10/03/2015 ⌂ | 234 | ||||||
United Air Lines, Inc. | ||||||||
313 | 7.19%, 04/01/2011 | 300 | ||||||
534 | ||||||||
Utilities — 0.4% | ||||||||
AES El Salvador Trust | ||||||||
200 | 6.75%, 02/01/2016 ⌂ | 97 | ||||||
Copano Energy LLC | ||||||||
315 | 8.13%, 03/01/2016 | 287 | ||||||
NRG Energy, Inc. | ||||||||
440 | 7.25%, 02/01/2014 | 424 | ||||||
Tennessee Gas Pipeline Co. | ||||||||
100 | 8.38%, 06/15/2032 | 97 | ||||||
905 | ||||||||
Total corporate bonds: non-investment grade (cost $18,998) | $ | 17,586 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE ¨ — 0.2% | ||||||||
Health Care — 0.2% | ||||||||
Pfizer, Inc. | ||||||||
$ | 484 | 0.38%, 12/31/2009 ± | $ | 479 | ||||
Total senior floating rate interests: investment grade (cost $484) | $ | 479 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ¨ — 6.6% | ||||||||
Basic Materials — 1.1% | ||||||||
Cenveo, Inc., Delayed Draw Term Loan | ||||||||
$ | 1 | 5.73%, 06/21/2013 ± | $ | 1 | ||||
Cenveo, Inc., Term Loan C | ||||||||
51 | 5.73%, 06/21/2013 ± | 46 | ||||||
Georgia-Pacific Corp. | ||||||||
615 | 3.24%, 12/20/2012 ± | 571 | ||||||
Huntsman International LLC | ||||||||
288 | 2.18%, 04/19/2014 ± | 238 | ||||||
Jarden Corp. | ||||||||
404 | 2.97%, 01/24/2012 ± | 387 | ||||||
1,193 | 3.72%, 01/24/2012 ± | 1,152 | ||||||
2,395 | ||||||||
Capital Goods — 0.1% | ||||||||
Yankee Candle Co. | ||||||||
180 | 7.35%, 02/06/2014 ± | 147 | ||||||
Consumer Cyclical — 0.6% | ||||||||
AM General LLC | ||||||||
65 | 3.84%, 09/30/2013 ± | 59 | ||||||
American General Finance Corp. | ||||||||
3 | 0.44%, 09/30/2012 ± | 3 | ||||||
Aramark Corp., Letter of Credit | ||||||||
29 | 2.03%, 01/26/2014 ± | 27 | ||||||
Aramark Corp., Term Loan B | ||||||||
460 | 3.10%, 01/26/2014 ± | 418 | ||||||
Lear Corp. | ||||||||
161 | 3.21%, 04/25/2012 ± | 67 | ||||||
Michaels Stores, Inc. | ||||||||
185 | 2.70%, 10/31/2013 ± | 129 | ||||||
Roundy’s Supermarkets, Inc. | ||||||||
110 | 3.20%, 11/03/2011 ± | 100 | ||||||
William Carter Co. | ||||||||
428 | 6.87%, 07/14/2012 ± | 404 | ||||||
1,207 | ||||||||
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT | ||||||||
GRADE ♦ — 6.6% — (continued) | ||||||||
Consumer Staples — 0.4% | ||||||||
Dole Food Co., Inc. | ||||||||
$ | 94 | 1.14%, 04/12/2013 ± | $ | 89 | ||||
165 | 7.96%, 04/12/2013 ± | 156 | ||||||
613 | 7.97%, 04/12/2013 ± | 580 | ||||||
825 | ||||||||
Finance — 0.0% | ||||||||
Amerigroup Corp. | ||||||||
50 | 2.44%, 03/26/2012 ± | 48 | ||||||
Health Care — 1.1% | ||||||||
Carestream Health, Inc. | ||||||||
873 | 2.43%, 04/30/2013 ± | 756 | ||||||
HCA, Inc. | ||||||||
361 | 2.72%, 11/17/2012 ± | 327 | ||||||
293 | 3.47%, 11/17/2013 ± | 264 | ||||||
HealthSouth Corp. | ||||||||
35 | 2.96%, 03/10/2013 ± | 31 | ||||||
Life Technologies Corp. | ||||||||
848 | 5.25%, 11/23/2015 ± | 844 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
74 | 2.67%, 06/15/2012 ± | 63 | ||||||
Vanguard Health Holdings Co. II LLC | ||||||||
74 | 7.87%, 09/23/2011 ± | 70 | ||||||
2,355 | ||||||||
Services — 1.1% | ||||||||
Affinion Group, Inc. | ||||||||
183 | 3.73%, 10/17/2012 ± | 160 | ||||||
Cedar Fair L.P. | ||||||||
338 | 2.43%, 08/30/2012 ± | 308 | ||||||
Las Vegas Sands Corp., Delayed Draw Term Loan 1 | ||||||||
17 | 2.18%, 05/23/2014 ± | 10 | ||||||
Las Vegas Sands Corp., Term Loan B | ||||||||
82 | 2.18%, 05/23/2014 ± | 51 | ||||||
R.H. Donnelley, Inc. | ||||||||
659 | 6.75%, 06/30/2011 ± | 439 | ||||||
Regal Cinemas, Inc. | ||||||||
414 | 4.97%, 10/27/2013 ± | 399 | ||||||
UPC Financing Partnership | ||||||||
500 | 2.32%, 12/31/2014 ± | 451 | ||||||
West Corp. | ||||||||
495 | 8.00%, 10/24/2013 ± | 468 | ||||||
WideOpenWest Finance LLC | ||||||||
550 | 11.61%, 06/29/2015 ± | 208 | ||||||
2,494 | ||||||||
Technology — 1.7% | ||||||||
Charter Communications Operating LLC | ||||||||
1,064 | 4.69%, 03/06/2014 * ± Y | 901 | ||||||
CSC Holdings, Inc. | ||||||||
491 | 2.20%, 03/29/2013 ± | 453 | ||||||
DaVita, Inc. | ||||||||
400 | 2.20%, 10/05/2012 ± | 374 | ||||||
Fleetcor Technologies Operating Co. LLC, Delayed Draw Term Loan | ||||||||
156 | 2.77%, 04/30/2013 ± | 139 | ||||||
Fleetcor Technologies Operating Co. LLC, Term Loan B | ||||||||
772 | 2.76%, 04/30/2013 ± | 687 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2A | ||||||||
62 | 2.99%, 01/03/2014 ± | 57 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2B | ||||||||
62 | 2.99%, 01/03/2014 ± | 57 | ||||||
Intelsat Bermuda Ltd., Term Loan B 2C | ||||||||
62 | 2.99%, 01/03/2014 ± | 57 | ||||||
MetroPCS Wireless, Inc. | ||||||||
173 | 3.17%, 11/04/2013 ± | 161 | ||||||
RCN Corp. | ||||||||
983 | 3.50%, 04/19/2014 ± | 886 | ||||||
Time Warner Telecom Holdings, Inc. | ||||||||
45 | 2.43%, 01/07/2013 ± | 41 | ||||||
3,813 | ||||||||
Utilities — 0.5% | ||||||||
NRG Energy, Inc. | ||||||||
97 | 1.12%, 02/01/2013 ± | 90 | ||||||
181 | 2.72%, 02/01/2013 ± | 168 | ||||||
Texas Competitive Electric Holdings Co. LLC | ||||||||
1,096 | 3.97%, 10/12/2014 ± | 741 | ||||||
999 | ||||||||
Total senior floating rate interests: non-investment grade (cost $16,019) | $ | 14,283 | ||||||
U.S. GOVERNMENT AGENCIES — 28.2% | ||||||||
Federal Home Loan Mortgage Corporation — 13.3% | ||||||||
$ | 280 | 5.50%, 10/01/2032 | $ | 291 | ||||
21,329 | 6.00%, 01/15/2032 — 11/01/2037 | 22,204 | ||||||
6,037 | 6.50%, 05/01/2037 — 05/01/2038 □ | 6,403 | ||||||
28,898 | ||||||||
Federal National Mortgage Association — 14.5% | ||||||||
518 | 5.00%, 11/01/2017 — 01/01/2022 | 539 | ||||||
177 | 5.21%, 12/01/2035 Δ | 183 | ||||||
2,467 | 5.50%, 12/01/2032 — 10/01/2034 | 2,566 | ||||||
705 | 5.96%, 01/01/2037 Δ | 732 | ||||||
4,597 | 6.00%, 07/01/2036 — 07/01/2037 | 4,812 | ||||||
16,158 | 6.50%, 03/01/2036 — 08/01/2038 | 17,143 | ||||||
4,741 | 7.00%, 09/01/2038 | 5,077 | ||||||
31,052 | ||||||||
Other Government Agencies — 0.4% Small Business Administration Participation Certificates: | ||||||||
$ | 689 | 4.92%, 10/01/2023 | 714 | |||||
Total U.S. government agencies (cost $58,546) | $ | 60,664 | ||||||
U.S. GOVERNMENT SECURITIES — 5.9% | ||||||||
U.S. Treasury Bonds — 0.1% | ||||||||
$ | 103 | 3.50%, 02/15/2039 | $ | 94 |
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
U.S. GOVERNMENT SECURITIES — 5.9% — (continued) | ||||||||
U.S. Treasury Notes — 5.8% | ||||||||
$ | 10,380 | 0.88%, 03/31/2011 | $ | 10,380 | ||||
1,577 | 1.75%, 01/31/2014 | 1,562 | ||||||
197 | 1.88%, 04/30/2014 | 196 | ||||||
434 | 2.75%, 02/15/2019 | 420 | ||||||
12,652 | ||||||||
Total U.S. government securities (cost $12,691) | $ | 12,652 | ||||||
Total long-term investments (cost $217,124) | $ | 198,624 | ||||||
SHORT-TERM INVESTMENTS — 6.9% | ||||||||
Investment Pools and Funds — 1.8% | ||||||||
4,001 | JP Morgan U.S. Government Money Market Fund | $ | 4,001 | |||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||
— | Wells Fargo Advantage Government Money Market Fund | — | ||||||
4,001 | ||||||||
Repurchase Agreements — 5.1% | ||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $8,537, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $8,698) | ||||||||
$ | 8,537 | 0.15%, 04/30/2009 | $ | 8,537 | ||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,388, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $2,442) | ||||||||
2,388 | 0.13%, 04/30/2009 | 2,388 | ||||||
10,925 | ||||||||
Total short-term investments (cost $14,926) | $ | 14,926 | ||||||
Total investments (cost $232,050)▲ | 99.2 | % | $ | 213,550 | ||||||||
Other assets and liabilities | 0.8 | % | 1,796 | |||||||||
Total net assets | 100.0 | % | $ | 215,346 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 8.76% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $232,198 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 5,990 | ||
Unrealized Depreciation | (24,638 | ) | ||
Net Unrealized Depreciation | $ | (18,648 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $376, which represents 0.17% of total net assets. | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $23,639, which represents 10.98% of total net assets. | |
§ | Securities contain some restrictions as to public resale. These securities comply with Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933, and are determined to be liquid. At April 30, 2009, the market value of these securities amounted to $1,136 or 0.53% of total net assets. | |
ª | Perpetual maturity security. Maturity date shown is the first call date. | |
۞ | Convertible security. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at April 30, 2009. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $838. | |
± | The interest rate disclosed for these securities represents the average coupon as of April 30, 2009. | |
Y | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. |
10
Table of Contents
o | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
2 Year U.S. Treasury Note | 46 | Long | Jun 2009 | $ | 43 | |||||||||||
5 Year U.S. Treasury Note | 2 | Long | Jun 2009 | $ | (3 | ) | ||||||||||
U.S. Long Bond | 36 | Long | Jun 2009 | $ | (197 | ) | ||||||||||
$ | (157 | ) | ||||||||||||||
* | The number of contracts does not omit 000’s. |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||
Acquired | Par | Security | Cost Basis | |||||||
03/2009 | $ | 200 | AES El Salvador Trust, 6.75%, 02/01/2016 - Reg S | $ | 107 | |||||
03/2004 | $ | 2,557 | Banc of America Commercial Mortgage, Inc., 5.50%, 11/10/2039 - 144A | 55 | ||||||
07/2004 | $ | 6,646 | Banc of America Commercial Mortgage, Inc., 5.75%, 06/10/2039 - 144A | 37 | ||||||
03/2006 | $ | 200 | Bayview Commercial Asset Trust, 0.81%, 04/25/2036 - 144A | 200 | ||||||
05/2007 — 02/2009 | $ | 5,420 | Bayview Commercial Asset Trust, 7.00%, 07/25/2037 - 144A | 761 | ||||||
08/2007 | $ | 9,917 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | 1,369 | ||||||
08/2006 | $ | 50 | Capital Automotive Receivables Asset Trust, 5.77%, 05/20/2010 - 144A | 50 | ||||||
04/2006 | $ | 4,976 | CBA Commercial Small Balance Commercial Mortgage, 7.00%, 07/25/2035 - 06/25/2038 - 144A | 101 | ||||||
11/2006 — 08/2007 | $ | 6,177 | CBA Commercial Small Balance Commercial Mortgage, 9.75%, 01/25/2039 - 144A | 547 | ||||||
01/2007 | $ | 200 | Citigroup Mortgage Loan Trust, Inc., 3.02%, 01/25/2037 - 144A | 175 | ||||||
03/2004 | $ | 4,989 | Commercial Mortgage Pass-Through Certificates, 5.50%, 03/10/2039 - 144A | 128 | ||||||
07/2007 | $ | 197 | Credit-Based Asset Servicing and Securitization, 0.71%, 05/25/2036 - 144A | 193 | ||||||
07/2004 | $ | 3 | Equity One ABS, Inc., 2.94%, 07/25/2034 | 3 | ||||||
06/2006 | $ | 8,112 | GE Business Loan Trust, 6.14%, 05/15/2034 - 144A | 22 | ||||||
12/2005 | $ | 54,202 | GE Capital Commercial Mortgage Corp., 6.35%, 11/10/2045 - 144A | 47 | ||||||
08/2006 | $ | 270 | GMAC Mortgage Corp. Loan Trust, 5.75%, 10/25/2036 | 270 | ||||||
05/2007 | $ | 198 | Greenwich Capital Commercial Funding Corp., 1.69%, 11/05/2021 - 144A | 192 | ||||||
05/2007 | $ | 189 | Greenwich Capital Commercial Funding Corp., 1.89%, 11/05/2021 - 144A | 183 | ||||||
05/2008 — 11/2008 | $ | 410 | Grupo Senda Autotransporte, 10.50%, 10/03/2015 - 144A | 379 | ||||||
06/2006 — 06/2007 | $ | 730 | Intelsat Bermuda Ltd., 9.25%, 06/15/2016 | 769 | ||||||
03/2007 | $ | 75 | JP Morgan Automotive Receivable Trust, 12.85%, 03/15/2012 | 75 | ||||||
03/2004 — 08/2006 | $ | 2,088 | JP Morgan Chase Commercial Mortgage Securities Corp., 5.50%, 01/15/2038 - 144A | 55 | ||||||
04/2005 — 10/2007 | $ | 20,961 | LB-UBS Commercial Mortgage Trust, 5.26%, 06/15/2036 - 144A | 27 | ||||||
09/2006 | $ | 120 | Lehman Brothers Small Balance Commercial, 5.62%, 09/25/2036 - 144A | 120 | ||||||
03/2006 | $ | 45 | Long Beach Asset Holdings Corp., 5.78%, 04/25/2046 - 144A | 45 | ||||||
04/2007 | $ | 22 | Nationstar Home Equity Loan Trust, 9.97%, 03/25/2037 - 144A | 22 | ||||||
05/2007 | $ | 638 | Northgroup Preferred Capital Corp., 6.38%, 10/15/2017 - 144A | 638 | ||||||
03/2007 | $ | 725 | Option One Mortgage Loan Trust, Class M6, 6.99%, 03/25/2037 | 703 | ||||||
03/2007 | $ | 500 | Option One Mortgage Loan Trust, Class M7, 6.99%, 03/25/2037 | 440 | ||||||
03/2007 | $ | 475 | Option One Mortgage Loan Trust, Class M8, 6.99%, 03/25/2037 | 382 | ||||||
03/2006 | $ | 80 | Renaissance Home Equity Loan Trust, 5.75%, 05/25/2036 | 80 | ||||||
03/2006 | $ | 200 | Renaissance Home Equity Loan Trust, 6.16%, 05/25/2036 | 200 | ||||||
08/2007 | $ | 600 | Renaissance Home Equity Loan Trust, Class M5, 7.00%, 09/25/2037 | 455 | ||||||
08/2007 | $ | 750 | Renaissance Home Equity Loan Trust, Class M8, 7.00%, 09/25/2037 | 420 | ||||||
07/2005 — 02/2006 | $ | 150 | Sheridan Group, Inc., 10.25%, 08/15/2011 | 154 | ||||||
09/2006 | $ | 250 | Wachovia Automotive Loan Owner Trust, 5.15%, 07/20/2012 - 144A | 250 | ||||||
10/2006 | $ | 260 | Wachovia Automotive Loan Owner Trust, 5.29%, 06/20/2012 - 144A | 260 | ||||||
02/2004 | $ | 6,117 | Wachovia Bank Commercial Mortgage Trust, 5.50%, 02/15/2041 - 144A | 118 | ||||||
06/2007 | $ | 1,220 | Wamu Commercial Mortgage Securities Trust, 6.31%, 03/23/2045 - 144A | 1,215 | ||||||
03/2008 | $ | 942 | Wells Fargo Alternative Loan Trust, 6.25%, 11/25/2037 | 760 |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
♦ | Senior floating rate interests in which the Fund invests generally pay interest rates which are periodically adjusted by reference to a base short-term, floating lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States Banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate is the rate in effect at April 30, 2009. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 4,711 | ||
Investment in securities — Level 2 | 203,387 | |||
Investment in securities — Level 3 | 5,452 | |||
Total | $ | 213,550 | ||
Other financial instruments — Level 1 * | $ | 43 | ||
Total | $ | 43 | ||
Liabilities: | ||||
Other financial instruments — Level 1 * | $ | 200 | ||
Total | $ | 200 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 8,974 | ||
Net realized loss | (2,698 | ) | ||
Change in unrealized appreciation | 981 | |||
Net sales | (1,135 | ) | ||
Transfers in and /or out of Level 3 | (670 | ) | ||
Balance as of April 30, 2009 | $ | 5,452 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (958 | ) | |
12
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $232,050) | $ | 213,550 | ||
Foreign currency on deposit with custodian (cost $1) | 1 | |||
Receivables: | ||||
Investment securities sold | 2,261 | |||
Fund shares sold | 660 | |||
Dividends and interest | 2,346 | |||
Variation margin | 6 | |||
Other assets | 60 | |||
Total assets | 218,884 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 3,091 | |||
Fund shares redeemed | 279 | |||
Investment management fees | 19 | |||
Dividends | 51 | |||
Distribution fees | 8 | |||
Variation margin | 7 | |||
Accrued expenses | 69 | |||
Other liabilities | 14 | |||
Total liabilities | 3,538 | |||
Net assets | $ | 215,346 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 276,104 | |||
Accumulated distribution in excess of net investment income | (24 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (42,078 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (18,656 | ) | ||
Net assets | $ | 215,346 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.60/$9.00 | ||
Shares outstanding | 10,284 | |||
Net assets | $ | 88,392 | ||
Class B: Net asset value per share | $ | 8.59 | ||
Shares outstanding | 962 | |||
Net assets | $ | 8,263 | ||
Class C: Net asset value per share | $ | 8.61 | ||
Shares outstanding | 1,947 | |||
Net assets | $ | 16,771 | ||
Class Y: Net asset value per share | $ | 8.58 | ||
Shares outstanding | 11,877 | |||
Net assets | $ | 101,920 | ||
13
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 7,475 | ||
Securities lending | 44 | |||
Total investment income | 7,519 | |||
Expenses: | ||||
Investment management fees | 587 | |||
Transfer agent fees | 106 | |||
Distribution fees | ||||
Class A | 100 | |||
Class B | 38 | |||
Class C | 72 | |||
Custodian fees | 5 | |||
Accounting services | 19 | |||
Registration and filing fees | 30 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 53 | |||
Total expenses (before waivers and fees paid indirectly) | 1,019 | |||
Expense waivers | (83 | ) | ||
Transfer agent fee waivers | (2 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (85 | ) | ||
Total expenses, net | 934 | |||
Net investment income | 6,585 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (26,234 | ) | ||
Net realized gain on futures and swap contracts | 1,752 | |||
Net realized loss on foreign currency transactions | (2 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (24,484 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 32,245 | |||
Net unrealized depreciation of futures | (210 | ) | ||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 3 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 32,038 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 7,554 | |||
Net Increase in Net Assets Resulting from Operations | $ | 14,139 | ||
14
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 6,585 | $ | 18,842 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (24,484 | ) | (16,896 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 32,038 | (46,211 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 14,139 | (44,265 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (2,505 | ) | (5,406 | ) | ||||
Class B | (212 | ) | (446 | ) | ||||
Class C | (392 | ) | (699 | ) | ||||
Class Y | (3,672 | ) | (11,948 | ) | ||||
Total distributions | (6,781 | ) | (18,499 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 3,648 | 2,065 | ||||||
Class B | 180 | (252 | ) | |||||
Class C | 3,182 | 1,637 | ||||||
Class Y | (41,312 | ) | (33,960 | ) | ||||
Net decrease from capital share transactions | (34,302 | ) | (30,510 | ) | ||||
Net decrease in net assets | (26,944 | ) | (93,274 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 242,290 | 335,564 | ||||||
End of period | $ | 215,346 | $ | 242,290 | ||||
Accumulated undistributed (distribution in excess of) net investment income | $ | (24 | ) | $ | 172 | |||
15
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Income Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Trade date for senior floating rate interests purchased in the primary market is considered the date on which the loan allocations are determined. Trade date for senior floating rate loan interests purchased in the secondary market is the date on which the transaction is entered into. | |||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. |
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | |||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. |
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h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $838. | ||
k) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
l) | Senior Floating Rate Interests — The Fund, as shown in the Schedule of Investments, may invest in senior floating rate interests. Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the senior floating rate interest. Senior floating rate interests are typically rated below-investment-grade, which suggests they |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
are more likely to default and generally pay higher interest rates than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the Fund and there can be no assurance that the liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated. | |||
m) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
n) | Swaps — The Fund may enter into event linked swaps, including credit default swaps. The credit default swap market allows the Fund to manage credit risk through buying and selling credit protection on a specific issuer, an index, or a basket of issuers. A “buyer” of credit protection agrees to pay a counterparty to assume the credit risk of an issuer upon the occurrence of certain events. The “seller” of the protection receives periodic payments and agrees to assume the credit risk of an issuer upon the occurrence of certain events. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. A Fund will generally not buy protection on issuers that are not currently held by such Fund. | ||
The Fund may enter into interest rate swaps. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate multiplied by a “notional principal amount,” in return for payments equal to a fixed rate multiplied by the same amount, for a specific period of time. If a swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The Fund had no outstanding swaps as of April 30, 2009. | |||
o) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
p) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions |
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about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
q) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
r) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to- market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 18,595 | $ | 13,076 |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 274 | ||
Accumulated Capital Losses* | $ | (17,396 | ) | |
Unrealized Depreciation† | $ | (50,899 | ) | |
Total Accumulated Deficit | $ | (68,021 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $266 and increase accumulated net realized gain by $266. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2013 | $ | 311 | ||
2014 | 262 | |||
2015 | 161 | |||
2016 | 16,662 | |||
Total | $ | 17,396 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.55 | % | ||
On next $4.5 billion | 0.50 | % | ||
On next $5 billion | 0.48 | % | ||
Over $10 billion | 0.47 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
0.95% | 1.70 | % | 1.70 | % | 0.70 | % |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. |
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The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | 0.95 | % | 1.00 | % | ||||||||||||
Class B Shares | 1.65 | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | ||||||||||||||||||
Class C Shares | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | ||||||||||||||||||
Class Y Shares | 0.66 | 0.63 | 0.68 | 0.70 | 0.70 | 0.70 | * |
* | From November 28, 2003 (commencement of operations), through October 31, 2004 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $342 and contingent deferred sales charges of $8 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $4. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $104 for providing such services. These fees are accrued daily and paid monthly. |
25
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 141,207 | ||
Sales Proceeds Excluding U.S. Government Obligations | 186,779 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,985 | 268 | (2,821 | ) | — | 432 | 5,059 | 410 | (5,290 | ) | — | 179 | ||||||||||||||||||||||||||||
Amount | $ | 24,862 | $ | 2,233 | $ | (23,447 | ) | $ | — | $ | 3,648 | $ | 49,096 | $ | 3,912 | $ | (50,943 | ) | $ | — | $ | 2,065 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 228 | 21 | (227 | ) | — | 22 | 343 | 38 | (412 | ) | — | (31 | ) | |||||||||||||||||||||||||||
Amount | $ | 1,893 | $ | 176 | $ | (1,889 | ) | $ | — | $ | 180 | $ | 3,347 | $ | 368 | $ | (3,967 | ) | $ | — | $ | (252 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 583 | 27 | (231 | ) | — | 379 | 1,001 | 44 | (881 | ) | — | 164 | ||||||||||||||||||||||||||||
Amount | $ | 4,877 | $ | 232 | $ | (1,927 | ) | $ | — | $ | 3,182 | $ | 9,674 | $ | 423 | $ | (8,460 | ) | $ | — | $ | 1,637 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 67 | 435 | (5,551 | ) | — | (5,049 | ) | 2,605 | 1,250 | (8,011 | ) | — | (4,156 | ) | ||||||||||||||||||||||||||
Amount | $ | 559 | $ | 3,621 | $ | (45,492 | ) | $ | — | $ | (41,312 | ) | $ | 25,488 | $ | 11,985 | $ | (71,433 | ) | $ | — | $ | (33,960 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 31 | $ | 261 | |||||
For the Year Ended October 31, 2008 | 35 | $ | 336 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
26
Table of Contents
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000's) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.28 | $ | 0.25 | $ | — | $ | 0.33 | $ | 0.58 | $ | (0.26 | ) | $ | — | $ | — | $ | (0.26 | ) | $ | 0.32 | $ | 8.60 | 7.09 | %(e) | $ | 88,392 | 1.11 | %(f) | 0.95 | %(f) | 0.95 | %(f) | 6.06 | %(f) | 69 | % | ||||||||||||||||||||||||||||||||||
B | 8.28 | 0.22 | — | 0.32 | 0.54 | (0.23 | ) | — | — | (0.23 | ) | 0.31 | 8.59 | 6.59 | (e) | 8,263 | 2.00 | (f) | 1.65 | (f) | 1.65 | (f) | 5.35 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 8.30 | 0.22 | — | 0.31 | 0.53 | (0.22 | ) | — | — | (0.22 | ) | 0.31 | 8.61 | 6.56 | (e) | 16,771 | 1.81 | (f) | 1.70 | (f) | 1.70 | (f) | 5.28 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 8.27 | 0.26 | — | 0.32 | 0.58 | (0.27 | ) | — | — | (0.27 | ) | 0.31 | 8.58 | 7.12 | (e) | 101,920 | 0.66 | (f) | 0.66 | (f) | 0.66 | (f) | 6.41 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.14 | 0.54 | — | (1.87 | ) | (1.33 | ) | (0.53 | ) | — | — | (0.53 | ) | (1.86 | ) | 8.28 | (13.71 | ) | 81,569 | 1.02 | 0.95 | 0.95 | 5.53 | 177 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.14 | 0.47 | — | (1.87 | ) | (1.40 | ) | (0.46 | ) | — | — | (0.46 | ) | (1.86 | ) | 8.28 | (14.36 | ) | 7,779 | 1.91 | 1.70 | 1.70 | 4.79 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.16 | 0.47 | — | (1.87 | ) | (1.40 | ) | (0.46 | ) | — | — | (0.46 | ) | (1.86 | ) | 8.30 | (14.34 | ) | 13,007 | 1.76 | 1.70 | 1.70 | 4.79 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.12 | 0.57 | — | (1.86 | ) | (1.29 | ) | (0.56 | ) | — | — | (0.56 | ) | (1.85 | ) | 8.27 | (13.37 | ) | 139,935 | 0.63 | 0.63 | 0.63 | 5.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.33 | 0.57 | — | (0.19 | ) | 0.38 | (0.57 | ) | — | — | (0.57 | ) | (0.19 | ) | 10.14 | 3.77 | 98,047 | 1.08 | 0.95 | 0.95 | 5.72 | 147 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.33 | 0.50 | — | (0.20 | ) | 0.30 | (0.49 | ) | — | — | (0.49 | ) | (0.19 | ) | 10.14 | 3.00 | 9,837 | 1.95 | 1.70 | 1.70 | 4.92 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.35 | 0.50 | — | (0.19 | ) | 0.31 | (0.50 | ) | — | — | (0.50 | ) | (0.19 | ) | 10.16 | 3.01 | 14,263 | 1.82 | 1.70 | 1.70 | 4.92 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.32 | 0.60 | — | (0.20 | ) | 0.40 | (0.60 | ) | — | — | (0.60 | ) | (0.20 | ) | 10.12 | 3.97 | 213,417 | 0.68 | 0.68 | 0.68 | 5.95 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.24 | 0.54 | — | 0.08 | 0.62 | (0.53 | ) | — | — | (0.53 | ) | 0.09 | 10.33 | 6.24 | 37,168 | 1.21 | 0.95 | 0.95 | 5.35 | 175 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.24 | 0.46 | — | 0.08 | 0.54 | (0.45 | ) | — | — | (0.45 | ) | 0.09 | 10.33 | 5.45 | 7,224 | 2.06 | 1.70 | 1.70 | 4.60 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.26 | 0.46 | — | 0.08 | 0.54 | (0.45 | ) | — | — | (0.45 | ) | 0.09 | 10.35 | 5.44 | 8,101 | 1.96 | 1.70 | 1.70 | 4.61 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.24 | 0.56 | — | 0.08 | 0.64 | (0.56 | ) | — | — | (0.56 | ) | 0.08 | 10.32 | 6.41 | 60,690 | 0.78 | 0.70 | 0.70 | 5.63 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.72 | 0.51 | — | (0.44 | ) | 0.07 | (0.51 | ) | (0.04 | ) | — | (0.55 | ) | (0.48 | ) | 10.24 | 0.70 | 28,942 | 1.20 | 0.95 | 0.95 | 4.80 | 188 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.72 | 0.43 | — | (0.43 | ) | — | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (0.48 | ) | 10.24 | (0.04 | ) | 5,973 | 2.06 | 1.70 | 1.70 | 4.05 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.74 | 0.43 | — | (0.43 | ) | — | (0.44 | ) | (0.04 | ) | — | (0.48 | ) | (0.48 | ) | 10.26 | (0.03 | ) | 5,142 | 1.96 | 1.70 | 1.70 | 4.05 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.72 | 0.52 | — | (0.42 | ) | 0.10 | (0.54 | ) | (0.04 | ) | — | (0.58 | ) | (0.48 | ) | 10.24 | 0.98 | 16,431 | 0.79 | 0.70 | 0.70 | 5.16 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.53 | 0.48 | — | 0.22 | 0.70 | (0.51 | ) | — | — | (0.51 | ) | 0.19 | 10.72 | 6.85 | 29,580 | 1.14 | 1.00 | 1.00 | 4.60 | 167 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.53 | 0.42 | — | 0.21 | 0.63 | (0.44 | ) | — | — | (0.44 | ) | 0.19 | 10.72 | 6.10 | 5,541 | 1.95 | 1.70 | 1.70 | 3.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.55 | 0.41 | — | 0.22 | 0.63 | (0.44 | ) | — | — | (0.44 | ) | 0.19 | 10.74 | 6.09 | 5,562 | 1.88 | 1.70 | 1.70 | 3.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y(g) | 10.54 | 0.48 | — | 0.20 | 0.68 | (0.50 | ) | — | — | (0.50 | ) | 0.18 | 10.72 | 6.57 | (e) | 10 | 0.73 | (f) | 0.70 | (f) | 0.70 | (f) | 4.89 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on November 28, 2003. |
27
Table of Contents
28
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
29
Table of Contents
Directors and Officers (Unaudited) — (continued)
888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.
30
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,070.86 | $ | 4.87 | $ | 1,000.00 | $ | 1,020.08 | $ | 4.75 | 0.95 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,065.89 | $ | 8.45 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,065.57 | $ | 8.70 | $ | 1,000.00 | $ | 1,016.36 | $ | 8.49 | 1.70 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,071.19 | $ | 3.39 | $ | 1,000.00 | $ | 1,021.52 | $ | 3.31 | 0.66 | 181 | 365 |
31
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Inflation Plus A# | 10/31/02 | -0.95 | % | 4.40 | % | 4.87 | % | |||||||||
Inflation Plus A## | 10/31/02 | -5.41 | % | 3.45 | % | 4.13 | % | |||||||||
Inflation Plus B# | 10/31/02 | -1.64 | % | 3.65 | % | 4.13 | % | |||||||||
Inflation Plus B## | 10/31/02 | -6.40 | % | 3.31 | % | 4.13 | % | |||||||||
Inflation Plus C# | 10/31/02 | -1.64 | % | 3.64 | % | 4.12 | % | |||||||||
Inflation Plus C## | 10/31/02 | -2.59 | % | 3.64 | % | 4.12 | % | |||||||||
Inflation Plus I# | 10/31/02 | -0.60 | % | 4.60 | % | 5.02 | % | |||||||||
Inflation Plus R3# | 11/28/03 | -1.40 | % | 4.38 | % | 4.20 | % | |||||||||
Inflation Plus R4# | 11/28/03 | -0.97 | % | 4.53 | % | 4.33 | % | |||||||||
Inflation Plus R5# | 11/28/03 | -0.76 | % | 4.65 | % | 4.45 | % | |||||||||
Inflation Plus Y# | 11/28/03 | -0.69 | % | 4.72 | % | 4.51 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
John Hendricks | Timothy Wilhide* | |
Senior Vice President | Senior Vice President |
2
Table of Contents
* | As disclosed in a supplement to the Fund’s prospectus, effective June 1, 2009, Timothy Wilhide will no longer serve as a portfolio manager of the Fund. |
as of April 30, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 99.4 | % | ||
BBB | 0.3 | |||
BB | 0.2 | |||
Not Rated | 0.1 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Consumer Cyclical | 0.1 | % | ||
Health Care | 0.1 | |||
Long Put Index Option Contract | 0.1 | |||
Services | 0.1 | |||
Technology | 0.1 | |||
U.S. Government Securities | 90.6 | |||
Short-Term Investments | 3.7 | |||
Other Assets and Liabilities | 5.2 | |||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT | ||||||||
GRADE ♦ — 0.4% | ||||||||
Consumer Cyclical — 0.1% | ||||||||
William Carter Co. | ||||||||
$ | 1,474 | 2.01%, 07/14/2012 ± | $ | 1,389 | ||||
Health Care — 0.1% | ||||||||
Fresenius Medical Care AG | ||||||||
992 | 2.61%, 03/31/2013 ± | 935 | ||||||
Orthofix Holdings, Inc. | ||||||||
646 | 7.17%, 09/22/2013 ± | 606 | ||||||
1,541 | ||||||||
Services — 0.1% | ||||||||
Regal Cinemas, Inc. | ||||||||
938 | 4.97%, 10/27/2013 ± | 904 | ||||||
Technology — 0.1% | ||||||||
Windstream Corp. | ||||||||
982 | 2.50%, 07/17/2013 ± | 913 | ||||||
Total senior floating rate interests: non-investment grade (cost $4,978) | $ | 4,747 | ||||||
U.S. GOVERNMENT SECURITIES — 90.6% | ||||||||
U.S. Treasury Securities — 90.6% | ||||||||
$ | 7,137 | 1.63%, 01/15/2015 ◄ | $ | 7,891 | ||||
37,580 | 1.75%, 01/15/2028 ◄ | 34,246 | ||||||
42,575 | 1.88%, 07/15/2013 — 2015◄ | 47,727 | ||||||
353,204 | 2.00%, 04/15/2012 — 2026◄ | 387,675 | ||||||
35,000 | 2.38%, 03/31/2016 | 34,377 | ||||||
213,863 | 2.38%, 01/15/2017 — 2027 ◄ | 229,281 | ||||||
98,610 | 2.50%, 07/15/2016 — 2029 ◄ | 103,771 | ||||||
12,585 | 2.63%, 07/15/2017 ◄ | 13,803 | ||||||
61,432 | 3.00%, 07/15/2012 ◄ | 76,532 | ||||||
1,715 | 3.38%, 01/15/2012 ◄ | 2,172 | ||||||
5,000 | 3.63%, 04/15/2028 ◄ | 7,572 | ||||||
945,047 | ||||||||
Total U.S. government securities (cost $929,590) | $ | 945,047 | ||||||
Contracts | Market Value╪ | |||||||
PUT OPTIONS PURCHASED — 0.1% | ||||||||
Long Put Future Option Contract — 0.0% | ||||||||
10 Year U.S. Treasury Note | ||||||||
1 | Expiration: May, 2009, Exercise Price: | |||||||
$117.00 | $ | 78 | ||||||
U.S. Bond Future | ||||||||
1 | Expiration: May, 2009, Exercise Price: | |||||||
$113.00 Ø | 73 | |||||||
151 | ||||||||
Long Put Index Option Contract — 0.1% | ||||||||
5 Year U.S. Treasury Note | ||||||||
1 | Expiration: June, 2009, Exercise Price: | |||||||
$116.00 Ø | 497 | |||||||
Total put options purchased (cost $1,649) | $ | 648 | ||||||
Total long-term investments (cost $936,217) | $ | 950,442 | ||||||
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS — 3.7% | ||||||||||||
Investment Pools and Funds — 2.1% | ||||||||||||
10,992 | JP Morgan U.S. Government Money Market Fund | $ | 10,992 | |||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
11,008 | Wells Fargo Advantage Government Money Market Fund | 11,008 | ||||||||||
22,000 | ||||||||||||
Repurchase Agreements — 1.2% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $9,443, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $9,621) | ||||||||||||
$ | 9,443 | 0.15%, 04/30/2009 | $ | 9,443 | ||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,641, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $2,701) | ||||||||||||
2,641 | 0.13%, 04/30/2009 | 2,641 | ||||||||||
12,084 | ||||||||||||
U.S. Treasury Bills — 0.4% | ||||||||||||
$ | 3,400 | 0.12%, 07/16/2009 □ ○ | 3,399 | |||||||||
1,225 | 0.18%, 05/21/2009 ○ Ø | 1,225 | ||||||||||
4,624 | ||||||||||||
Total short-term investments (cost $38,708) | $ | 38,708 | ||||||||||
Total investments (cost $974,925) ▲ | 94.8 | % | $ | 989,150 | ||||||||
Other assets and liabilities | 5.2 | % | 54,148 | |||||||||
Total net assets | 100.0 | % | $ | 1,043,298 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $993,755 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 23,307 | ||
Unrealized Depreciation | (27,912 | ) | ||
Net Unrealized Depreciation | $ | (4,605 | ) | |
◄ | U.S. Treasury inflation-protected securities (TIPS) are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. | |
○ | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
± | The interest rate disclosed for these securities represents the average coupon as of April 30, 2009. |
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□ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||
U.S. Long Bond | 50 | Short | Jun 2009 | $ | 5 | |||||||
* | The number of contracts does not omit 000’s. | |
Ø | At April 30, 2009, securities valued at $180,336 were designated to cover open put options written as follows: |
Market | ||||||||||||||||||||
Number of | Exercise | Exercise | Value | Premiums | ||||||||||||||||
Issuer | Contracts* | Price | Date | ╪ | Received | |||||||||||||||
5 Year U.S. Treasury Note | 624 | $ | 115.00 | Jun 2009 | $ | 297 | $ | 222 | ||||||||||||
U.S. Bond Future | 936 | 116.00 | May 2009 | 220 | 1,455 | |||||||||||||||
$ | 517 | $ | 1,677 | |||||||||||||||||
* | The number of contracts does not omit 000’s. | |
♦ | Senior floating rate interests in which the Fund invests generally pay interest rates which are periodically adjusted by reference to a base short-term, floating lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States Banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate is the rate in effect at April 30, 2009. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Australian Dollar (Buy) | $ | 5,071 | $ | 5,085 | 05/04/09 | $ | (14 | ) | ||||||||
Euro (Sell) | 10,305 | 10,106 | 05/20/09 | (199 | ) | |||||||||||
Euro (Buy) | 10,305 | 10,171 | 05/20/09 | 134 | ||||||||||||
Euro (Buy) | 5,377 | 5,376 | 05/27/09 | 1 | ||||||||||||
Japanese Yen (Sell) | 4,979 | 5,018 | 05/11/09 | 39 | ||||||||||||
Japanese Yen (Buy) | 4,982 | 5,000 | 05/11/09 | (18 | ) | |||||||||||
Japanese Yen (Buy) | 2,486 | 2,540 | 05/11/09 | (54 | ) | |||||||||||
Japanese Yen (Sell) | 4,971 | 5,016 | 05/11/09 | 45 | ||||||||||||
Japanese Yen (Sell) | 7,207 | 7,140 | 05/11/09 | (67 | ) | |||||||||||
Japanese Yen (Buy) | 442 | 433 | 05/11/09 | 9 | ||||||||||||
Japanese Yen (Buy) | 5,039 | 4,960 | 05/11/09 | 79 | ||||||||||||
Japanese Yen (Buy) | 2,169 | 2,122 | 05/11/09 | 47 | ||||||||||||
Japanese Yen (Buy) | 2,493 | 2,540 | 05/11/09 | (47 | ) | |||||||||||
Japanese Yen (Buy) | 8,814 | 8,809 | 05/12/09 | 5 | ||||||||||||
Japanese Yen (Sell) | 5,022 | 5,054 | 05/12/09 | 32 | ||||||||||||
Japanese Yen (Sell) | 5,013 | 5,028 | 05/12/09 | 15 | ||||||||||||
Japanese Yen (Buy) | 5,022 | 4,993 | 05/12/09 | 29 | ||||||||||||
Japanese Yen (Buy) | 5,013 | 4,993 | 05/12/09 | 20 | ||||||||||||
Japanese Yen (Sell) | 8,813 | 8,693 | 05/12/09 | (120 | ) | |||||||||||
$ | (64 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 76,672 | ||
Investment in securities — Level 2 | 912,478 | |||
Total | $ | 989,150 | ||
Other financial instruments — Level 1 * | $ | 1,240 | ||
Other financial instruments — Level 2 * | 455 | |||
Total | $ | 1,695 | ||
Liabilities: | ||||
Other financial instruments — Level 1 * | $ | 75 | ||
Other financial instruments — Level 2 * | 519 | |||
Total | $ | 594 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
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Assets: | ||||
Investments in securities, at fair value (cost $974,925) | $ | 989,150 | ||
Foreign currency on deposit with custodian (cost $14) | 13 | |||
Unrealized appreciation on forward foreign currency contracts | 455 | |||
Receivables: | ||||
Investment securities sold | 34,211 | |||
Fund shares sold | 17,130 | |||
Dividends and interest | 5,511 | |||
Variation margin | 74 | |||
Other assets | 202 | |||
Total assets | 1,046,746 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 519 | |||
Bank overdraft — U.S. Dollars | 12 | |||
Payables: | ||||
Fund shares redeemed | 2,095 | |||
Investment management fees | 90 | |||
Distribution fees | 85 | |||
Variation margin | 4 | |||
Accrued expenses | 126 | |||
Written options | 517 | |||
Total liabilities | 3,448 | |||
Net assets | $ | 1,043,298 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,075,593 | |||
Accumulated distribution in excess of net investment income | (20,979 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (26,642 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 15,326 | |||
Net assets | $ | 1,043,298 | ||
Shares authorized | 600,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 10.67/$11.17 | ||
Shares outstanding | 42,852 | |||
Net assets | $ | 457,443 | ||
Class B: Net asset value per share | $ | 10.63 | ||
Shares outstanding | 8,106 | |||
Net assets | $ | 86,139 | ||
Class C: Net asset value per share | $ | 10.62 | ||
Shares outstanding | 29,683 | |||
Net assets | $ | 315,246 | ||
Class I: Net asset value per share | $ | 10.72 | ||
Shares outstanding | 3,944 | |||
Net assets | $ | 42,282 | ||
Class R3: Net asset value per share | $ | 10.66 | ||
Shares outstanding | 99 | |||
Net assets | $ | 1,059 | ||
Class R4: Net asset value per share | $ | 10.69 | ||
Shares outstanding | 119 | |||
Net assets | $ | 1,269 | ||
Class R5: Net asset value per share | $ | 10.70 | ||
Shares outstanding | 9 | |||
Net assets | $ | 96 | ||
Class Y: Net asset value per share | $ | 10.71 | ||
Shares outstanding | 13,052 | |||
Net assets | $ | 139,764 | ||
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Investment Income: | ||||
Interest | $ | (15,397 | ) | |
Total investment income | (15,397 | ) | ||
Expenses: | ||||
Investment management fees | 2,299 | |||
Transfer agent fees | 450 | |||
Distribution fees | ||||
Class A | 446 | |||
Class B | 397 | |||
Class C | 1,330 | |||
Class R3 | 1 | |||
Class R4 | 1 | |||
Custodian fees | 3 | |||
Accounting services | 78 | |||
Registration and filing fees | 74 | |||
Board of Directors’ fees | 5 | |||
Audit fees | 8 | |||
Other expenses | 95 | |||
Total expenses (before waivers and fees paid indirectly) | 5,187 | |||
Expense waivers | (406 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (406 | ) | ||
Total expenses, net | 4,781 | |||
Net investment loss | (20,178 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (4,890 | ) | ||
Net realized loss on futures and written options | (3,375 | ) * | ||
Net realized gain on foreign currency transactions | 377 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (7,888 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | ||||
Net unrealized appreciation of investments | 102,717 | |||
Net unrealized appreciation of futures and written options | 1,114 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (193 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions. | 103,638 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 95,750 | |||
Net Increase in Net Assets Resulting from Operations | $ | 75,572 | ||
* | Realized losses on written options were $4,584. |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (20,178 | ) | $ | 40,628 | |||
Net realized gain (loss) on investments, other financial instruments and foreign currency transactions | (7,888 | ) | 2,090 | |||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 103,638 | (90,885 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 75,572 | (48,167 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (1,515 | ) | (14,746 | ) | ||||
Class B | (271 | ) | (3,680 | ) | ||||
Class C | (878 | ) | (10,507 | ) | ||||
Class I | (143 | ) | (791 | ) | ||||
Class R3 | (1 | ) | (6 | ) | ||||
Class R4 | — | (1 | ) | |||||
Class R5 | — | (1 | ) | |||||
Class Y | (708 | ) | (10,227 | ) | ||||
Total distributions | (3,516 | ) | (39,959 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 120,670 | 159,030 | ||||||
Class B | 3,665 | 14,863 | ||||||
Class C | 52,349 | 109,914 | ||||||
Class I | 12,561 | 28,077 | ||||||
Class R3 | 818 | 237 | ||||||
Class R4 | 1,222 | 8 | ||||||
Class R5 | 64 | 19 | ||||||
Class Y | (10,752 | ) | (13,282 | ) | ||||
Net increase from capital share transactions | 180,597 | 298,866 | ||||||
Net increase in net assets | 252,653 | 210,740 | ||||||
Net Assets: | ||||||||
Beginning of period | 790,645 | 579,905 | ||||||
End of period | $ | 1,043,298 | $ | 790,645 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (20,979 | ) | $ | 2,715 | |||
8
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Inflation Plus Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Trade date for senior floating rate interests purchased in the primary market is considered the date on which the loan allocations are determined. Trade date for senior floating rate loan interests purchased in the secondary market is the date on which the transaction is entered into. | |||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the |
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security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. |
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Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | |||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in |
11
Table of Contents
reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had no outstanding when-issued or forward commitments. | ||
i) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
j) | Senior Floating Rate Interests -The Fund, as shown in the Schedule of Investments, may invest in senior floating rate interests. Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the senior floating rate interest. Senior floating rate interests are typically rated below-investment-grade, which suggests they are more likely to default and generally pay higher interest rates than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the Fund and there can be no assurance that the liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated. | ||
k) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, |
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establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions - The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. Transactions involving written option contracts for the Fund during the six-month period ended April 30, 2009, are summarized below: |
Call Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | 1,000 | $ | 216 | |||||
Written | 14,843 | 15,014 | ||||||
Expired | — | — | ||||||
Closed | (15,843 | ) | (15,230 | ) | ||||
Exercised | — | — | ||||||
End of Period | — | $ | — | |||||
Put Options Written During the Period | Number of Contracts* | Premium Amounts | ||||||
Beginning of the period | — | $ | — | |||||
Written | 20,861 | 18,478 | ||||||
Expired | (1,248 | ) | (74 | ) | ||||
Closed | (18,053 | ) | (16,727 | ) | ||||
Exercised | — | — | ||||||
End of Period | 1,560 | $ | 1,677 | |||||
* | The number of contracts does not omit 000’s. |
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4. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 40,029 | $ | 18,827 |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 3,607 | ||
Unrealized Depreciation* | $ | (107,811 | ) | |
Total Accumulated Deficit | $ | (104,204 | ) | |
* | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $56, decrease accumulated net realized loss by $1,644, and increase paid in capital by $1,588. | ||
d) | Capital Loss Carryforward - The Fund had no capital loss carryforwards for U.S. federal income tax purposes as of October 31, 2008. | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
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5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.55 | % | ||
On next $4.5 billion | 0.50 | % | ||
On next $5 billion | 0.48 | % | ||
Over $10 billion | 0.47 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
0.85% | 1.60% | 1.60% | 0.60% | 1.25% | 1.00% | 0.76% | 0.60% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. |
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The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.85 | % | 0.85 | % | 0.85 | % | 0.95 | % | 0.95 | % | 1.00 | % | ||||||||||||
Class B Shares | 1.60 | 1.60 | 1.60 | 1.70 | 1.70 | 1.70 | ||||||||||||||||||
Class C Shares | 1.60 | 1.60 | 1.60 | 1.70 | 1.70 | 1.70 | ||||||||||||||||||
Class I Shares | 0.60 | 0.60 | 0.58 | 0.70 | * | |||||||||||||||||||
Class R3 Shares | 1.25 | 1.25 | 1.24 | † | ||||||||||||||||||||
Class R4 Shares | 1.00 | 1.00 | 0.99 | ‡ | ||||||||||||||||||||
Class R5 Shares | 0.76 | 0.70 | 0.75 | § | ||||||||||||||||||||
Class Y Shares | 0.59 | 0.60 | 0.56 | 0.68 | 0.68 | 0.65 | ** |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
** | From November 28, 2003 (commencement of operations), through October 31, 2004 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $1,852 and contingent deferred sales charges of $261 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $38. These commissions are in turn paid to sales representatives of the broker/dealers. |
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f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $2. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $441 for providing such services. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R4 | 1 | |||
Class R5 | 1 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 935,196 | ||
Sales Proceeds Excluding U.S. Government Obligations | 824,697 |
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 19,211 | 117 | (7,964 | ) | — | 11,364 | 25,993 | 1,034 | (12,853 | ) | — | 14,174 | ||||||||||||||||||||||||||||
Amount | $ | 202,066 | $ | 1,181 | $ | (82,577 | ) | $ | — | $ | 120,670 | $ | 288,295 | $ | 11,450 | $ | (140,715 | ) | $ | — | $ | 159,030 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,440 | 21 | (1,123 | ) | — | 338 | 2,544 | 258 | (1,479 | ) | — | 1,323 | ||||||||||||||||||||||||||||
Amount | $ | 15,018 | $ | 211 | $ | (11,564 | ) | $ | — | $ | 3,665 | $ | 28,133 | $ | 2,852 | $ | (16,122 | ) | $ | — | $ | 14,863 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 8,408 | 59 | (3,529 | ) | — | 4,938 | 14,894 | 669 | (5,776 | ) | — | 9,787 | ||||||||||||||||||||||||||||
Amount | $ | 88,013 | $ | 597 | $ | (36,261 | ) | $ | — | $ | 52,349 | $ | 165,357 | $ | 7,411 | $ | (62,854 | ) | $ | — | $ | 109,914 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,585 | 12 | (1,419 | ) | — | 1,178 | 4,848 | 56 | (2,466 | ) | — | 2,438 | ||||||||||||||||||||||||||||
Amount | $ | 27,177 | $ | 121 | $ | (14,737 | ) | $ | — | $ | 12,561 | $ | 53,494 | $ | 615 | $ | (26,032 | ) | $ | — | $ | 28,077 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 79 | — | (2 | ) | — | 77 | 38 | 1 | (18 | ) | — | 21 | ||||||||||||||||||||||||||||
Amount | $ | 842 | $ | 1 | $ | (25 | ) | $ | — | $ | 818 | $ | 424 | $ | 6 | $ | (193 | ) | $ | — | $ | 237 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 120 | — | (3 | ) | — | 117 | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||
Amount | $ | 1,252 | $ | — | $ | (30 | ) | $ | — | $ | 1,222 | $ | 7 | $ | 1 | $ | — | $ | — | $ | 8 | |||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 6 | — | — | — | 6 | 2 | — | — | — | 2 | ||||||||||||||||||||||||||||||
Amount | $ | 68 | $ | — | $ | (4 | ) | $ | — | $ | 64 | $ | 18 | $ | 1 | $ | — | $ | — | $ | 19 | |||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,334 | 69 | (2,462 | ) | — | (1,059 | ) | 3,285 | 920 | (5,452 | ) | — | (1,247 | ) | ||||||||||||||||||||||||||
Amount | $ | 14,028 | $ | 695 | $ | (25,475 | ) | $ | — | $ | (10,752 | ) | $ | 36,316 | $ | 10,241 | $ | (59,839 | ) | $ | — | $ | (13,282 | ) |
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The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 50 | $ | 530 | |||||
For the Year Ended October 31, 2008 | 56 | $ | 621 |
9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
realized | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | Gain | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Ratio of Net | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | (Loss) | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | Invest-ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average Net | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.78 | $ | (0.21 | ) | $ | — | $ | 1.15 | $ | 0.94 | $ | (0.05 | ) | $ | — | $ | — | $ | (0.05 | ) | $ | 0.89 | $ | 10.67 | 9.61 | %(f) | $ | 457,443 | 0.96 | %(g) | 0.85 | %(g) | 0.85 | %(g) | (4.13 | )%(g) | 95 | % | |||||||||||||||||||||||||||||||||
B | 9.76 | (0.28 | ) | — | 1.19 | 0.91 | (0.04 | ) | — | — | (0.04 | ) | 0.87 | 10.63 | 9.30 | (f) | 86,139 | 1.75 | (g) | 1.60 | (g) | 1.60 | (g) | (5.42 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 9.75 | (0.26 | ) | — | 1.17 | 0.91 | (0.04 | ) | — | — | (0.04 | ) | 0.87 | 10.62 | 9.31 | (f) | 315,246 | 1.69 | (g) | 1.60 | (g) | 1.60 | (g) | (5.18 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 9.81 | (0.20 | ) | — | 1.16 | 0.96 | (0.05 | ) | — | — | (0.05 | ) | 0.91 | 10.72 | 9.83 | (f) | 42,282 | 0.70 | (g) | 0.60 | (g) | 0.60 | (g) | (4.03 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 9.78 | (0.06 | ) | — | 0.98 | 0.92 | (0.04 | ) | — | — | (0.04 | ) | 0.88 | 10.66 | 9.44 | (f) | 1,059 | 1.42 | (g) | 1.25 | (g) | 1.25 | (g) | (1.31 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 9.79 | (0.01 | ) | — | 0.95 | 0.94 | (0.04 | ) | — | — | (0.04 | ) | 0.90 | 10.69 | 9.68 | (f) | 1,269 | 1.01 | (g) | 1.00 | (g) | 1.00 | (g) | (0.24 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 9.80 | (0.11 | ) | — | 1.06 | 0.95 | (0.05 | ) | — | — | (0.05 | ) | 0.90 | 10.70 | 9.72 | (f) | 96 | 0.81 | (g) | 0.76 | (g) | 0.76 | (g) | (2.09 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.80 | (0.24 | ) | — | 1.20 | 0.96 | (0.05 | ) | — | — | (0.05 | ) | 0.91 | 10.71 | 9.84 | (f) | 139,764 | 0.59 | (g) | 0.59 | (g) | 0.59 | (g) | (4.61 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.66 | 0.60 | — | (0.87 | ) | (0.27 | ) | (0.61 | ) | — | — | (0.61 | ) | (0.88 | ) | 9.78 | (3.08 | ) | 307,863 | 1.01 | 0.91 | 0.85 | 5.60 | 437 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.64 | 0.53 | — | (0.88 | ) | (0.35 | ) | (0.53 | ) | — | — | (0.53 | ) | (0.88 | ) | 9.76 | (3.81 | ) | 75,789 | 1.80 | 1.66 | 1.60 | 4.82 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.63 | 0.52 | — | (0.87 | ) | (0.35 | ) | (0.53 | ) | — | — | (0.53 | ) | (0.88 | ) | 9.75 | (3.82 | ) | 241,305 | 1.75 | 1.66 | 1.60 | 4.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 10.68 | 0.62 | — | (0.85 | ) | (0.23 | ) | (0.64 | ) | — | — | (0.64 | ) | (0.87 | ) | 9.81 | (2.74 | ) | 27,135 | 0.75 | 0.65 | 0.60 | 5.28 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.67 | 0.53 | — | (0.85 | ) | (0.32 | ) | (0.57 | ) | — | — | (0.57 | ) | (0.89 | ) | 9.78 | (3.56 | ) | 216 | 1.43 | 1.30 | 1.25 | 5.63 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.67 | 0.57 | — | (0.86 | ) | (0.29 | ) | (0.59 | ) | — | — | (0.59 | ) | (0.88 | ) | 9.79 | (3.23 | ) | 17 | 1.12 | 1.06 | 1.00 | 5.29 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.68 | 0.58 | — | (0.83 | ) | (0.25 | ) | (0.63 | ) | — | — | (0.63 | ) | (0.88 | ) | 9.80 | (2.94 | ) | 28 | 0.75 | 0.75 | 0.70 | 4.92 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.69 | 0.66 | — | (0.91 | ) | (0.25 | ) | (0.64 | ) | — | — | (0.64 | ) | (0.89 | ) | 9.80 | (2.90 | ) | 138,292 | 0.65 | 0.65 | 0.60 | 5.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.44 | 0.39 | — | 0.21 | 0.60 | (0.38 | ) | — | — | (0.38 | ) | 0.22 | 10.66 | 5.86 | 184,558 | 1.22 | 1.03 | 0.85 | 3.09 | 608 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.45 | 0.29 | — | 0.23 | 0.52 | (0.33 | ) | — | — | (0.33 | ) | 0.19 | 10.64 | 5.05 | 68,593 | 2.01 | 1.78 | 1.60 | 2.51 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.44 | 0.29 | — | 0.23 | 0.52 | (0.33 | ) | — | — | (0.33 | ) | 0.19 | 10.63 | 5.05 | 159,067 | 1.97 | 1.78 | 1.60 | 2.31 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I | 10.44 | 0.31 | — | 0.32 | 0.63 | (0.39 | ) | — | — | (0.39 | ) | 0.24 | 10.68 | 6.22 | 3,501 | 0.71 | 0.61 | 0.58 | 2.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 10.41 | 0.39 | — | 0.22 | 0.61 | (0.35 | ) | — | — | (0.35 | ) | 0.26 | 10.67 | 5.98 | (f) | 10 | 1.59 | (g) | 1.40 | (g) | 1.23 | (g) | 4.36 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 10.41 | 0.41 | — | 0.22 | 0.63 | (0.37 | ) | — | — | (0.37 | ) | 0.26 | 10.67 | 6.15 | (f) | 10 | 1.28 | (g) | 1.15 | (g) | 0.99 | (g) | 4.61 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 10.41 | 0.43 | — | 0.22 | 0.65 | (0.38 | ) | — | — | (0.38 | ) | 0.27 | 10.68 | 6.42 | (f) | 11 | 0.99 | (g) | 0.89 | (g) | 0.72 | (g) | 4.86 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.45 | 0.38 | — | 0.26 | 0.64 | (0.40 | ) | — | — | (0.40 | ) | 0.24 | 10.69 | 6.23 | 164,155 | 0.82 | 0.72 | 0.56 | 3.71 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.67 | 0.49 | — | (0.26 | ) | 0.23 | (0.43 | ) | (0.03 | ) | — | (0.46 | ) | (0.23 | ) | 10.44 | 2.29 | 282,362 | 1.02 | 0.95 | 0.95 | 4.50 | 193 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.68 | 0.40 | — | (0.25 | ) | 0.15 | (0.35 | ) | (0.03 | ) | — | (0.38 | ) | (0.23 | ) | 10.45 | 1.51 | 92,340 | 1.82 | 1.70 | 1.70 | 3.76 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.67 | 0.40 | — | (0.25 | ) | 0.15 | (0.35 | ) | (0.03 | ) | — | (0.38 | ) | (0.23 | ) | 10.44 | 1.51 | 247,091 | 1.78 | 1.70 | 1.70 | 3.72 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I(k) | 10.48 | 0.05 | — | (0.05 | ) | — | (0.04 | ) | — | — | (0.04 | ) | (0.04 | ) | 10.44 | 0.04 | (f) | 18 | 0.98 | (g) | 0.70 | (g) | 0.70 | (g) | 4.43 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 10.68 | 0.51 | — | (0.25 | ) | 0.26 | (0.46 | ) | (0.03 | ) | — | (0.49 | ) | (0.23 | ) | 10.45 | 2.58 | 140,796 | 0.68 | 0.68 | 0.68 | 5.05 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.95 | 0.41 | — | (0.18 | ) | 0.23 | (0.42 | ) | (0.09 | ) | — | (0.51 | ) | (0.28 | ) | 10.67 | 2.10 | 414,778 | 1.00 | 0.95 | 0.95 | 3.88 | 71 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.96 | 0.33 | — | (0.18 | ) | 0.15 | (0.34 | ) | (0.09 | ) | — | (0.43 | ) | (0.28 | ) | 10.68 | 1.33 | 119,302 | 1.81 | 1.70 | 1.70 | 3.09 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.96 | 0.33 | — | (0.19 | ) | 0.14 | (0.34 | ) | (0.09 | ) | — | (0.43 | ) | (0.29 | ) | 10.67 | 1.24 | 373,750 | 1.76 | 1.70 | 1.70 | 3.12 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.97 | 0.47 | — | (0.22 | ) | 0.25 | (0.45 | ) | (0.09 | ) | — | (0.54 | ) | (0.29 | ) | 10.68 | 2.29 | 95,947 | 0.68 | 0.68 | 0.68 | 4.42 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.63 | 0.30 | — | 0.37 | 0.67 | (0.31 | ) | (0.04 | ) | — | (0.35 | ) | 0.32 | 10.95 | 6.39 | 313,961 | 1.04 | 1.00 | 1.00 | 3.04 | 81 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.64 | 0.22 | — | 0.37 | 0.59 | (0.23 | ) | (0.04 | ) | — | (0.27 | ) | 0.32 | 10.96 | 5.65 | 107,964 | 1.81 | 1.70 | 1.70 | 2.21 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.63 | 0.23 | — | 0.37 | 0.60 | (0.23 | ) | (0.04 | ) | — | (0.27 | ) | 0.33 | 10.96 | 5.74 | 319,990 | 1.76 | 1.70 | 1.70 | 2.33 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y(l) | 10.57 | 0.28 | — | 0.44 | 0.72 | (0.32 | ) | — | — | (0.32 | ) | 0.40 | 10.97 | 6.89 | (f) | 23,045 | 0.65 | (g) | 0.65 | (g) | 0.65 | (g) | 1.55 | (g) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. | |
(l) | Commenced operations on November 28, 2003. |
20
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21
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,096.13 | $ | 4.41 | $ | 1,000.00 | $ | 1,020.57 | $ | 4.25 | 0.85 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,092.95 | $ | 8.30 | $ | 1,000.00 | $ | 1,016.86 | $ | 8.00 | 1.60 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,093.05 | $ | 8.30 | $ | 1,000.00 | $ | 1,016.86 | $ | 8.00 | 1.60 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,098.33 | $ | 3.12 | $ | 1,000.00 | $ | 1,021.81 | $ | 3.00 | 0.60 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,094.39 | $ | 6.49 | $ | 1,000.00 | $ | 1,018.60 | $ | 6.26 | 1.25 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,096.77 | $ | 5.19 | $ | 1,000.00 | $ | 1,019.83 | $ | 5.00 | 1.00 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,097.18 | $ | 3.95 | $ | 1,000.00 | $ | 1,021.02 | $ | 3.80 | 0.76 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,098.39 | $ | 3.06 | $ | 1,000.00 | $ | 1,021.86 | $ | 2.95 | 0.59 | 181 | 365 |
24
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
�� | ||||||||||||||||
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
International Growth A# | 4/30/01 | -52.61 | % | -5.16 | % | -2.23 | % | |||||||||
International Growth A## | 4/30/01 | -55.21 | % | -6.22 | % | -2.92 | % | |||||||||
International Growth B# | 4/30/01 | -52.84 | % | -5.83 | % | -2.92 | % | |||||||||
International Growth B## | 4/30/01 | -55.20 | % | -6.12 | % | -2.92 | % | |||||||||
International Growth C# | 4/30/01 | -52.99 | % | -5.88 | % | -2.94 | % | |||||||||
International Growth C## | 4/30/01 | -53.46 | % | -5.88 | % | -2.94 | % | |||||||||
International Growth I# | 4/30/01 | -52.38 | % | -4.96 | % | -2.10 | % | |||||||||
International Growth R3# | 4/30/01 | -52.82 | % | -5.12 | % | -2.04 | % | |||||||||
International Growth R4# | 4/30/01 | -52.61 | % | -4.95 | % | -1.93 | % | |||||||||
International Growth R5# | 4/30/01 | -52.50 | % | -4.82 | % | -1.84 | % | |||||||||
International Growth Y# | 4/30/01 | -52.41 | % | -4.74 | % | -1.80 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Andrew S. Offit, CPA | Jean-Marc Berteaux | Matthew D. Hudson, CFA | ||
Senior Vice President, Partner | Senior Vice President, Partner | Vice President |
2
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as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 3.1 | % | ||
Banks | 5.7 | |||
Capital Goods | 7.9 | |||
Commercial & Professional Services | 1.3 | |||
Consumer Durables & Apparel | 2.3 | |||
Diversified Financials | 4.3 | |||
Energy | 8.7 | |||
Food & Staples Retailing | 6.0 | |||
Food, Beverage & Tobacco | 6.4 | |||
Health Care Equipment & Services | 1.8 | |||
Insurance | 1.2 | |||
Materials | 10.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.5 | |||
Retailing | 7.1 | |||
Semiconductors & Semiconductor Equipment | 6.5 | |||
Software & Services | 1.7 | |||
Technology Hardware & Equipment | 5.4 | |||
Telecommunication Services | 6.4 | |||
Transportation | 1.6 | |||
Utilities | 1.0 | |||
Short-Term Investments | 1.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.3 | % | ||
Belgium | 1.2 | |||
Brazil | 1.6 | |||
Canada | 5.5 | |||
China | 1.2 | |||
Denmark | 0.7 | |||
Finland | 1.7 | |||
France | 9.1 | |||
Germany | 8.7 | |||
Hong Kong | 2.1 | |||
Israel | 1.9 | |||
Japan | 9.9 | |||
Luxembourg | 1.4 | |||
Netherlands | 8.1 | |||
Russia | 2.4 | |||
South Korea | 1.8 | |||
Spain | 1.9 | |||
Sweden | 1.9 | |||
Switzerland | 9.7 | |||
Taiwan | 1.0 | |||
United Kingdom | 24.8 | |||
Short-Term Investments | 1.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 97.9% | ||||||||
Australia — 1.3% | ||||||||
144 | CSL Ltd. | $ | 3,580 | |||||
Belgium — 1.2% | ||||||||
1,419 | Hansen Transmissions • | 3,090 | ||||||
Brazil — 1.6% | ||||||||
148 | Companhia Vale do Rio Doce ADR | 2,445 | ||||||
55 | Petroleo Brasileiro S.A. ADR | 1,853 | ||||||
4,298 | ||||||||
Canada — 5.5% | ||||||||
66 | Canadian Natural Resources Ltd. | 3,056 | ||||||
55 | EnCana Corp. | 2,530 | ||||||
60 | Potash Corp. of Saskatchewan, Inc. | 5,207 | ||||||
61 | Research In Motion Ltd. • | 4,233 | ||||||
15,026 | ||||||||
China — 1.2% | ||||||||
517 | China Life Insurance Co., Ltd. | 1,816 | ||||||
85 | Suntech Power Holdings Co., Ltd. ADR • | 1,275 | ||||||
3,091 | ||||||||
Denmark — 0.7% | ||||||||
28 | Vestas Wind Systems A/S • | 1,809 | ||||||
Finland — 1.7% | ||||||||
324 | Nokia Oyj | 4,595 | ||||||
France — 9.1% | ||||||||
44 | Alstom RGPT | 2,728 | ||||||
55 | BNP Paribas | 2,896 | ||||||
116 | Sanofi-Aventis S.A. | 6,729 | ||||||
88 | Technip S.A. | 3,772 | ||||||
78 | Total S.A. | 3,903 | ||||||
43 | Vallourec | 4,710 | ||||||
24,738 | ||||||||
Germany — 8.7% | ||||||||
120 | Daimler AG | 4,310 | ||||||
53 | K+S AG | 3,188 | ||||||
28 | Merck KGaA | 2,508 | ||||||
110 | Metro AG | 4,696 | ||||||
10 | Muenchener Rueckversicherungs NPV | 1,362 | ||||||
76 | Siemens AG | 5,079 | ||||||
90 | Solarworld AG | 2,559 | ||||||
23,702 | ||||||||
Hong Kong — 2.1% | ||||||||
320 | Esprit Holdings Ltd. | 1,957 | ||||||
1,396 | Li & Fung Ltd. | 3,922 | ||||||
5,879 | ||||||||
Israel — 1.9% | ||||||||
118 | Teva Pharmaceutical Industries Ltd. ADR | 5,162 | ||||||
Japan — 9.9% | ||||||||
68 | Denso Corp. | 1,600 | ||||||
85 | Honda Motor Co., Ltd. * | 2,503 | ||||||
698 | Mitsubishi UFJ Financial Group, Inc. * | 3,806 | ||||||
372 | Nippon Electric Glass Co., Ltd. | 3,027 | ||||||
219 | Panasonic Corp. | 3,204 | ||||||
7 | Rakuten, Inc. | 3,577 | ||||||
45 | Shin-Etsu Chemical Co., Ltd. | 2,192 | ||||||
96 | Softbank Corp. | 1,514 | ||||||
121 | Sony Corp. | 3,141 | ||||||
63 | Tokyo Electron Ltd. | 2,894 | ||||||
27,458 | ||||||||
Luxembourg — 1.4% | ||||||||
155 | ArcelorMittal ADR | 3,650 | ||||||
Netherlands — 8.1% | ||||||||
203 | ASML Holding N.V. | 4,259 | ||||||
583 | Koninklijke (Royal) KPN N.V. | 7,010 | ||||||
623 | Koninklijke Ahold N.V. | 6,828 | ||||||
230 | Qiagen N.V. • | 3,787 | ||||||
21,884 | ||||||||
Russia — 2.4% | ||||||||
235 | OAO Gazprom Class S ADR | 4,196 | ||||||
280 | Vimpel-Communications ADR ‡ | 2,636 | ||||||
6,832 | ||||||||
South Korea — 1.8% | ||||||||
10 | Samsung Electronics Co., Ltd. | 4,767 | ||||||
Spain — 1.9% | ||||||||
61 | Industria de Diseno Textil S.A. | 2,581 | ||||||
69 | Red Electrica Corporacion S.A. | 2,882 | ||||||
5,463 | ||||||||
Sweden — 1.9% | ||||||||
182 | Swedish Match Ab | 2,591 | ||||||
337 | Telefonaktiebolaget LM Ericsson | 2,863 | ||||||
5,454 | ||||||||
Switzerland — 9.7% | ||||||||
123 | Credit Suisse Group AG | 4,824 | ||||||
30 | Julius Baer Holding Ltd. | 997 | ||||||
195 | Nestle S.A. | 6,362 | ||||||
168 | Nobel Biocare Holding AG | 3,425 | ||||||
33 | Roche Holding AG | 4,216 | ||||||
24 | Sonova Holding AG | 1,568 | ||||||
381 | UBS AG • | 5,233 | ||||||
26,625 | ||||||||
Taiwan — 1.0% | ||||||||
246 | Taiwan Semiconductor Manufacturing Co., Ltd. ADR ‡ | 2,596 | ||||||
United Kingdom — 24.8% | ||||||||
123 | 3I Group plc | 578 | ||||||
1,768 | Arm Holdings plc | 3,104 | ||||||
216 | Autonomy Corp. plc • | 4,537 | ||||||
719 | Barclays Bank plc | 2,920 | ||||||
283 | BG Group plc | 4,512 | ||||||
67 | BHP Billiton plc | 1,391 | ||||||
138 | British American Tobacco plc | 3,324 | ||||||
968 | easyJet plc • | 4,499 | ||||||
235 | Imperial Tobacco Group plc | 5,353 | ||||||
495 | J. Sainsbury plc | 2,399 | ||||||
1,886 | Kingfisher plc | 5,135 | ||||||
877 | Michael Page International plc | 3,559 | ||||||
103 | Next plc | 2,473 | ||||||
143 | Rio Tinto plc | 5,799 | ||||||
379 | Standard Chartered plc | 5,866 | ||||||
3,530 | Vodafone Group plc | 6,488 | ||||||
659 | Wm Morrison Supermarkets | 2,387 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 97.9% — (continued) | ||||||||||||
United Kingdom — 24.8% — (continued) | ||||||||||||
368 | Xstrata plc | $ | 3,243 | |||||||||
67,567 | ||||||||||||
Total common stocks (cost $253,511) | $ | 267,266 | ||||||||||
Total long-term investments (cost $253,511) | $ | 267,266 | ||||||||||
SHORT-TERM INVESTMENTS — 1.6% | ||||||||||||
Repurchase Agreements — 1.6% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,035, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $1,056) | ||||||||||||
$ | 1,035 | 0.18%, 04/30/2009 | $ | 1,035 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,239, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 — 2047, value of $1,264) | ||||||||||||
1,239 | 0.17%, 04/30/2009 | 1,239 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,731, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 — 2038, GNMA 4.50% — 7.00%, 2024 — 2039, value of $1,766) | ||||||||||||
1,731 | 0.17%, 04/30/2009 | 1,731 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $6, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $6) | ||||||||||||
6 | 0.14%, 04/30/2009 | 6 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $374, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 — 2039, value of $381) | ||||||||||||
374 | 0.16%, 04/30/2009 | 374 | ||||||||||
4,385 | ||||||||||||
Total short-term investments (cost $4,385) | $ | 4,385 | ||||||||||
Total investments (cost $257,896) ▲ | 99.5 | % | $ | 271,651 | ||||||||
Other assets and liabilities | 0.5 | % | 1,230 | |||||||||
Total net assets | 100.0 | % | $ | 272,881 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 96.40% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $320,895 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 25,110 | ||
Unrealized Depreciation | (74,354 | ) | ||
Net Unrealized Depreciation | $ | (49,244 | ) | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $3,728. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Sell) | $ | 391 | $ | 392 | 05/01/09 | $ | 1 | |||||||||
British Pound (Buy) | 3,175 | 3,142 | 05/01/09 | 33 | ||||||||||||
British Pound (Buy) | 1,644 | 1,644 | 05/05/09 | — | ||||||||||||
Canadian Dollar (Sell) | 1,066 | 1,065 | 05/01/09 | (1 | ) | |||||||||||
Danish Krone (Buy) | 147 | 148 | 05/04/09 | (1 | ) | |||||||||||
Euro (Sell) | 3,218 | 3,225 | 05/04/09 | 7 | ||||||||||||
Euro (Buy) | 862 | 868 | 05/04/09 | (6 | ) | |||||||||||
Euro (Sell) | 589 | 583 | 05/04/09 | (6 | ) | |||||||||||
Euro (Sell) | 652 | 657 | 05/05/09 | 5 | ||||||||||||
Euro (Buy) | 1,984 | 1,988 | 05/05/09 | (4 | ) | |||||||||||
Hong Kong Dollar (Sell) | 1,039 | 1,039 | 05/04/09 | — | ||||||||||||
Hong Kong Dollar (Buy) | 797 | 797 | 05/05/09 | — | ||||||||||||
Japanese Yen (Sell) | 848 | 852 | 05/01/09 | 4 | ||||||||||||
Japanese Yen (Buy) | 1,320 | 1,346 | 05/01/09 | (26 | ) | |||||||||||
Japanese Yen (Buy) | 1,304 | 1,335 | 05/07/09 | (31 | ) | |||||||||||
Japanese Yen (Buy) | 2,424 | 2,437 | 05/08/09 | (13 | ) | |||||||||||
Swedish Krona (Sell) | 921 | 919 | 05/06/09 | (2 | ) | |||||||||||
Swiss Franc (Sell) | 814 | 814 | 05/04/09 | — | ||||||||||||
Swiss Franc (Sell) | 2,244 | 2,236 | 05/04/09 | (8 | ) | |||||||||||
Swiss Franc (Sell) | 291 | 293 | 05/05/09 | 2 | ||||||||||||
$ | (46 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 3.1 | % | ||
Banks | 5.7 | |||
Capital Goods | 7.9 | |||
Commercial & Professional Services | 1.3 | |||
Consumer Durables & Apparel | 2.3 | |||
Diversified Financials | 4.3 | |||
Energy | 8.7 | |||
Food & Staples Retailing | 6.0 | |||
Food, Beverage & Tobacco | 6.4 | |||
Health Care Equipment & Services | 1.8 | |||
Insurance | 1.2 | |||
Materials | 10.0 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.5 | |||
Retailing | 7.1 | |||
Semiconductors & Semiconductor Equipment | 6.5 | |||
Software & Services | 1.7 | |||
Technology Hardware & Equipment | 5.4 | |||
Telecommunication Services | 6.4 | |||
Transportation | 1.6 | |||
Utilities | 1.0 | |||
Short-Term Investments | 1.6 | |||
Other Assets and Liabilities | 0.5 | |||
Total | 100.0 | % | ||
Assets: | |||
Investment in securities — Level 1 | $ | 50,391 | |
Investment in securities — Level 2 | 221,260 | ||
Total | $ | 271,651 | |
Other financial instruments — Level 2 * | 52 | ||
Total | $ | 52 | |
Liabilities: | |||
Other financial instruments — Level 2 * | 98 | ||
Total | $ | 98 | |
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
6
Table of Contents
April 30, 2009 (Unaudited)
Assets: | ||||
Investments in securities, at fair value (cost $257,896) | $ | 271,651 | ||
Cash | 2,134 | |||
Foreign currency on deposit with custodian (cost $2) | 2 | |||
Unrealized appreciation on forward foreign currency contracts | 52 | |||
Receivables: | ||||
Investment securities sold | 14,660 | |||
Fund shares sold | 614 | |||
Dividends and interest | 1,543 | |||
Other assets | 257 | |||
Total assets | 290,913 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 98 | |||
Payables: | ||||
Investment securities purchased | 17,146 | |||
Fund shares redeemed | 524 | |||
Investment management fees | 40 | |||
Distribution fees | 12 | |||
Accrued expenses | 212 | |||
Total liabilities | 18,032 | |||
Net assets | $ | 272,881 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 627,905 | |||
Accumulated undistributed net investment income | 2,164 | |||
Accumulated net realized loss on investments and foreign currency transactions | (370,936 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 13,748 | |||
Net assets | $ | 272,881 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.45/$6.82 | ||
Shares outstanding | 22,872 | |||
Net assets | $ | 147,460 | ||
Class B: Net asset value per share | $ | 6.06 | ||
Shares outstanding | 2,603 | |||
Net assets | $ | 15,769 | ||
Class C: Net asset value per share | $ | 6.05 | ||
Shares outstanding | 3,015 | |||
Net assets | $ | 18,243 | ||
Class I: Net asset value per share | $ | 6.40 | ||
Shares outstanding | 12,867 | |||
Net assets | $ | 82,355 | ||
Class R3: Net asset value per share | $ | 6.53 | ||
Shares outstanding | 36 | |||
Net assets | $ | 236 | ||
Class R4: Net asset value per share | $ | 6.57 | ||
Shares outstanding | 31 | |||
Net assets | $ | 202 | ||
Class R5: Net asset value per share | $ | 6.61 | ||
Shares outstanding | 1 | |||
Net assets | $ | 6 | ||
Class Y: Net asset value per share | $ | 6.63 | ||
Shares outstanding | 1,298 | |||
Net assets | $ | 8,610 | ||
7
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For the Six Month Period Ended April 30, 2009 (Unaudited)
Investment Income: | ||||
Dividends | $ | 4,447 | ||
Interest | 11 | |||
Securities lending | 13 | |||
Less: Foreign tax withheld | (551 | ) | ||
Total investment income | 3,920 | |||
Expenses: | ||||
Investment management fees | 1,247 | |||
Transfer agent fees | 830 | |||
Distribution fees | ||||
Class A | 185 | |||
Class B | 79 | |||
Class C | 97 | |||
Class R3 | 1 | |||
Class R4 | — | |||
Custodian fees | 33 | |||
Accounting services | 25 | |||
Registration and filing fees | 55 | |||
Board of Directors’ fees | 4 | |||
Audit fees | 9 | |||
Other expenses | 90 | |||
Total expenses (before waivers and fees paid indirectly) | 2,655 | |||
Expense waivers | (439 | ) | ||
Transfer agent fee waivers | (437 | ) | ||
Commission recapture | (16 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (892 | ) | ||
Total expenses, net | 1,763 | |||
Net investment income | 2,157 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (113,653 | ) | ||
Net realized loss on foreign currency transactions | (103 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (113,756 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 76,403 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (94 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 76,309 | |||
Net Loss on Investments and Foreign Currency Transactions | (37,447 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (35,290 | ) | |
8
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,157 | $ | 1,647 | ||||
Net realized loss on investments and foreign currency transactions | (113,756 | ) | (257,465 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 76,309 | (180,270 | ) | |||||
Net decrease in net assets resulting from operations | (35,290 | ) | (436,088 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class I | (457 | ) | — | |||||
Class R4 | (1 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (47 | ) | — | |||||
From net realized gain on investments | ||||||||
Class A | — | (55,090 | ) | |||||
Class B | — | (6,887 | ) | |||||
Class C | — | (8,792 | ) | |||||
Class I | — | (462 | ) | |||||
Class R3 | — | (2 | ) | |||||
Class R4 | — | (2 | ) | |||||
Class R5 | — | (2 | ) | |||||
Class Y | — | (9,495 | ) | |||||
Total distributions | (505 | ) | (80,732 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (17,329 | ) | 60,051 | |||||
Class B | (1,622 | ) | 2,861 | |||||
Class C | (3,902 | ) | 4,415 | |||||
Class I | 3,931 | 141,027 | ||||||
Class R3 | (25 | ) | 472 | |||||
Class R4 | 79 | 254 | ||||||
Class R5 | 1 | 2 | ||||||
Class Y | (39,175 | ) | 45,691 | |||||
Net increase (decrease) from capital share transactions | (58,042 | ) | 254,773 | |||||
Net decrease in net assets | (93,837 | ) | (262,047 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 366,718 | 628,765 | ||||||
End of period | $ | 272,881 | $ | 366,718 | ||||
Accumulated undistributed net investment income | $ | 2,164 | $ | 512 | ||||
9
Table of Contents
April 30, 2009 (Unaudited)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford International Growth Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
10
Table of Contents
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the |
12
Table of Contents
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund had no illiquid or restricted securities as of April 30, 2009. | ||
k) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund entered into outstanding when-issued or forward commitments with a cost of $3,728. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions |
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. |
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3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 46,092 | $ | 20,540 | ||||
Long-Term Capital Gains * | 34,640 | 10,237 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 505 | ||
Accumulated Capital Losses* | $ | (194,181 | ) | |
Unrealized Depreciation† | $ | (125,553 | ) | |
Total Accumulated Deficit | $ | (319,229 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $1,135, increase accumulated net realized gain by $1,075, and increase paid in capital by $60. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 194,181 | ||
Total | $ | 194,181 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.60% | 2.35% | 2.35% | 1.35% | 1.85% | 1.55% | 1.25% | 1.20% |
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d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April 30, | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.35 | % | 1.47 | % | 1.48 | % | 1.56 | % | 1.53 | % | 1.59 | % | ||||||||||||
Class B Shares | 1.74 | 2.24 | 2.32 | 2.26 | 2.28 | 2.29 | ||||||||||||||||||
Class C Shares | 2.14 | 2.20 | 2.19 | 2.31 | 2.28 | 2.28 | ||||||||||||||||||
Class I Shares | 0.87 | 1.02 | 1.09 | 1.35 | * | |||||||||||||||||||
Class R3 Shares | 1.78 | 1.85 | 1.83 | † | ||||||||||||||||||||
Class R4 Shares | 1.52 | 1.46 | 1.45 | ‡ | ||||||||||||||||||||
Class R5 Shares | 1.24 | 1.08 | 1.16 | § | ||||||||||||||||||||
Class Y Shares | 1.02 | 0.98 | 1.01 | 1.12 | 1.13 | 1.05 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $303 and contingent deferred sales charges of $26 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $448 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Total Return | ||||
Excluding | ||||
Payment from | ||||
Affiliate for the | ||||
Year Ended | ||||
October 31, 2007 | ||||
Class A | 39.31 | % | ||
Class B | 38.11 | |||
Class C | 38.27 | |||
Class I | 39.73 | |||
Class Y | 40.01 |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R5 | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 530,704 | ||
Sales Proceeds Excluding U.S. Government Obligations | 585,484 |
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Table of Contents
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,662 | — | (5,514 | ) | — | (2,852 | ) | 7,582 | 3,405 | (8,039 | ) | — | 2,948 | |||||||||||||||||||||||||||
Amount | $ | 16,461 | $ | — | $ | (33,790 | ) | $ | — | $ | (17,329 | ) | $ | 101,116 | $ | 53,556 | $ | (94,621 | ) | $ | — | $ | 60,051 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 197 | — | (481 | ) | — | (284 | ) | 472 | 432 | (869 | ) | — | 35 | |||||||||||||||||||||||||||
Amount | $ | 1,135 | $ | — | $ | (2,757 | ) | $ | — | $ | (1,622 | ) | $ | 6,061 | $ | 6,447 | $ | (9,647 | ) | $ | — | $ | 2,861 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 306 | — | (994 | ) | — | (688 | ) | 795 | 539 | (1,277 | ) | — | 57 | |||||||||||||||||||||||||||
Amount | $ | 1,804 | $ | — | $ | (5,706 | ) | $ | — | $ | (3,902 | ) | $ | 10,626 | $ | 8,047 | $ | (14,258 | ) | $ | — | $ | 4,415 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,977 | 72 | (2,444 | ) | — | 605 | 13,176 | 22 | (1,124 | ) | — | 12,074 | ||||||||||||||||||||||||||||
Amount | $ | 18,087 | $ | 458 | $ | (14,614 | ) | $ | — | $ | 3,931 | $ | 150,705 | $ | 344 | $ | (10,022 | ) | $ | — | $ | 141,027 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 12 | — | (17 | ) | — | (5 | ) | 45 | — | (5 | ) | — | 40 | |||||||||||||||||||||||||||
Amount | $ | 79 | $ | — | $ | (104 | ) | $ | — | $ | (25 | ) | $ | 526 | $ | 2 | $ | (56 | ) | $ | — | $ | 472 | |||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 28 | — | (16 | ) | — | 12 | 19 | — | (1 | ) | — | 18 | ||||||||||||||||||||||||||||
Amount | $ | 170 | $ | 1 | $ | (92 | ) | $ | — | $ | 79 | $ | 261 | $ | 2 | $ | (9 | ) | $ | — | $ | 254 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 470 | 7 | (6,614 | ) | — | (6,137 | ) | 3,697 | 588 | (794 | ) | — | 3,491 | |||||||||||||||||||||||||||
Amount | $ | 3,047 | $ | 47 | $ | (42,269 | ) | $ | — | $ | (39,175 | ) | $ | 46,346 | $ | 9,496 | $ | (10,151 | ) | $ | — | $ | 45,691 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 40 | $ | 244 | |||||
For the Year Ended October 31, 2008 | 81 | $ | 997 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
19
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.07 | $ | 0.05 | $ | — | $ | (0.67 | ) | $ | (0.62 | ) | $ | — | $ | — | $ | — | $ | — | $ | (0.62 | ) | $ | 6.45 | (8.77 | )%(e) | $ | 147,460 | 1.85 | %(f) | 1.36 | %(f) | 1.36 | %(f) | 1.49 | %(f) | 190 | % | |||||||||||||||||||||||||||||||||
B | 6.65 | 0.03 | — | (0.62 | ) | (0.59 | ) | — | — | — | — | (0.59 | ) | 6.06 | (9.01 | ) (e) | 15,769 | 2.97 | (f) | 1.75 | (f) | 1.75 | (f) | 1.10 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 6.66 | 0.02 | — | (0.63 | ) | (0.61 | ) | — | — | — | — | (0.61 | ) | 6.05 | (9.16 | ) (e) | 18,243 | 2.57 | (f) | 2.14 | (f) | 2.14 | (f) | 0.65 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 7.04 | 0.06 | — | (0.66 | ) | (0.60 | ) | (0.04 | ) | — | — | (0.04 | ) | (0.64 | ) | 6.40 | (8.69 | ) (e) | 82,355 | 1.84 | (f) | 0.87 | (f) | 0.87 | (f) | 2.07 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.18 | 0.03 | — | (0.68 | ) | (0.65 | ) | — | — | — | — | (0.65 | ) | 6.53 | (9.05 | ) (e) | 236 | 2.13 | (f) | 1.78 | (f) | 1.78 | (f) | 0.99 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.23 | 0.04 | — | (0.68 | ) | (0.64 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.66 | ) | 6.57 | (8.83 | ) (e) | 202 | 1.52 | (f) | 1.52 | (f) | 1.52 | (f) | 1.41 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.28 | 0.05 | — | (0.69 | ) | (0.64 | ) | (0.03 | ) | — | — | (0.03 | ) | (0.67 | ) | 6.61 | (8.79 | ) (e) | 6 | 1.45 | (f) | 1.25 | (f) | 1.25 | (f) | 1.66 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 7.30 | 0.11 | — | (0.74 | ) | (0.63 | ) | (0.04 | ) | — | — | (0.04 | ) | (0.67 | ) | 6.63 | (8.66 | ) (e) | 8,610 | 1.04 | (f) | 1.04 | (f) | 1.04 | (f) | 1.32 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (g) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 18.93 | 0.05 | — | (9.50 | ) | (9.45 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.86 | ) | 7.07 | (56.94 | ) | 181,826 | 1.48 | 1.48 | 1.48 | 0.36 | 359 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 18.08 | (0.05 | ) | — | (8.97 | ) | (9.02 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.43 | ) | 6.65 | (57.28 | ) | 19,208 | 2.39 | 2.25 | 2.25 | (0.40 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 18.10 | (0.05 | ) | — | (8.98 | ) | (9.03 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.44 | ) | 6.66 | (57.27 | ) | 24,658 | 2.21 | 2.21 | 2.21 | (0.37 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 18.79 | 0.01 | — | (9.35 | ) | (9.34 | ) | — | (2.41 | ) | — | (2.41 | ) | (11.75 | ) | 7.04 | (56.75 | ) | 86,331 | 1.03 | 1.03 | 1.03 | 0.13 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 19.24 | 0.01 | — | (9.66 | ) | (9.65 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.06 | ) | 7.18 | (57.08 | ) | 293 | 1.89 | 1.85 | 1.85 | 0.09 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 19.30 | 0.02 | — | (9.68 | ) | (9.66 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.07 | ) | 7.23 | (56.94 | ) | 139 | 1.47 | 1.47 | 1.47 | 0.15 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 19.35 | 0.10 | — | (9.76 | ) | (9.66 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.07 | ) | 7.28 | (56.77 | ) | 6 | 1.08 | 1.08 | 1.08 | 0.76 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 19.38 | 0.12 | — | (9.79 | ) | (9.67 | ) | — | (2.41 | ) | — | (2.41 | ) | (12.08 | ) | 7.30 | (56.72 | ) | 54,257 | 0.99 | 0.99 | 0.99 | 0.92 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 (g) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.93 | 0.02 | — | 5.35 | 5.37 | (0.01 | ) | (1.36 | ) | — | (1.37 | ) | 4.00 | 18.93 | 39.31 | (h) | 431,193 | 1.49 | 1.49 | 1.49 | 0.14 | 242 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.42 | (0.11 | ) | — | 5.13 | �� | 5.02 | — | (1.36 | ) | — | (1.36 | ) | 3.66 | 18.08 | 38.11 | (h) | 51,577 | 2.36 | 2.33 | 2.33 | (0.73 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.42 | (0.09 | ) | — | 5.13 | 5.04 | — | (1.36 | ) | — | (1.36 | ) | 3.68 | 18.10 | 38.27 | (h) | 65,982 | 2.20 | 2.20 | 2.20 | (0.61 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 14.94 | (0.01 | ) | — | 5.40 | 5.39 | (0.18 | ) | (1.36 | ) | — | (1.54 | ) | 3.85 | 18.79 | 39.73 | (h) | 3,543 | 1.12 | 1.12 | 1.12 | (0.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3(i) | 14.79 | (0.02 | ) | — | 4.47 | 4.45 | — | — | — | — | 4.45 | 19.24 | 30.09 | (e) | 15 | 1.83 | (f) | 1.83 | (f) | 1.83 | (f) | (0.15 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(j) | 14.79 | 0.03 | — | 4.48 | 4.51 | — | — | — | — | 4.51 | 19.30 | 30.49 | (e) | 13 | 1.46 | (f) | 1.46 | (f) | 1.46 | (f) | 0.25 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(k) | 14.79 | 0.07 | — | 4.49 | 4.56 | — | — | — | — | 4.56 | 19.35 | 30.83 | (e) | 13 | 1.17 | (f) | 1.17 | (f) | 1.17 | (f) | 0.51 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.17 | 0.02 | — | 5.55 | 5.57 | — | (1.36 | ) | — | (1.36 | ) | 4.21 | 19.38 | 40.01 | (h) | 76,429 | 1.03 | 1.03 | 1.03 | 0.17 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (g) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.14 | 0.02 | — | 2.96 | 2.98 | (0.05 | ) | (0.14 | ) | — | (0.19 | ) | 2.79 | 14.93 | 24.85 | 213,186 | 1.70 | 1.60 | 1.60 | 0.12 | 165 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.77 | (0.08 | ) | — | 2.87 | 2.79 | — | (0.14 | ) | — | (0.14 | ) | 2.65 | 14.42 | 23.95 | 33,252 | 2.56 | 2.30 | 2.30 | (0.59 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.77 | (0.09 | ) | — | 2.88 | 2.79 | — | (0.14 | ) | — | (0.14 | ) | 2.65 | 14.42 | 23.95 | 43,336 | 2.40 | 2.35 | 2.35 | (0.65 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
I(l) | 14.34 | (0.02 | ) | — | 0.62 | 0.60 | — | — | — | — | 0.60 | 14.94 | 4.18 | (e) | 10 | 1.53 | (f) | 1.35 | (f) | 1.35 | (f) | (0.49 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.33 | 0.06 | — | 3.02 | 3.08 | (0.10 | ) | (0.14 | ) | — | (0.24 | ) | 2.84 | 15.17 | 25.38 | 70,777 | 1.16 | 1.16 | 1.16 | 0.42 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.59 | 0.07 | — | 0.48 | 0.55 | — | — | — | — | 0.55 | 12.14 | 4.74 | 131,430 | 1.77 | 1.60 | 1.60 | 0.66 | 183 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.32 | (0.01 | ) | — | 0.46 | 0.45 | — | — | — | — | 0.45 | 11.77 | 3.98 | 22,304 | 2.66 | 2.35 | 2.35 | (0.09 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.32 | (0.01 | ) | — | 0.46 | 0.45 | — | — | — | — | 0.45 | 11.77 | 3.98 | 29,486 | 2.49 | 2.35 | 2.35 | (0.07 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.72 | 0.08 | — | 0.53 | 0.61 | — | — | — | — | 0.61 | 12.33 | 5.20 | 74,651 | 1.22 | 1.20 | 1.20 | 0.98 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (g) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.62 | (0.01 | ) | — | 2.03 | 2.02 | — | (0.05 | ) | — | (0.05 | ) | 1.97 | 11.59 | 21.14 | 50,051 | 1.91 | 1.65 | 1.65 | (0.10 | ) | 200 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.46 | (0.08 | ) | — | 1.99 | 1.91 | — | (0.05 | ) | — | (0.05 | ) | 1.86 | 11.32 | 20.33 | 8,968 | 2.83 | 2.35 | 2.35 | (0.80 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.46 | (0.08 | ) | — | 1.99 | 1.91 | — | (0.05 | ) | — | (0.05 | ) | 1.86 | 11.32 | 20.33 | 12,906 | 2.63 | 2.35 | 2.35 | (0.79 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.69 | (0.01 | ) | — | 2.09 | 2.08 | — | (0.05 | ) | — | (0.05 | ) | 2.03 | 11.72 | 21.61 | 28,775 | 1.31 | 1.20 | 1.20 | (0.09 | ) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Per share amounts have been calculated using average shares outstanding method. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on August 31, 2006. |
20
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21
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | 2008 through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 912.30 | $ | 6.44 | $ | 1,000.00 | $ | 1,018.05 | $ | 6.80 | 1.36 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 909.90 | $ | 8.28 | $ | 1,000.00 | $ | 1,016.11 | $ | 8.74 | 1.75 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 908.40 | $ | 10.12 | $ | 1,000.00 | $ | 1,014.18 | $ | 10.68 | 2.14 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 913.13 | $ | 4.12 | $ | 1,000.00 | $ | 1,020.48 | $ | 4.35 | 0.87 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 909.47 | $ | 8.42 | $ | 1,000.00 | $ | 1,015.96 | $ | 8.89 | 1.78 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 911.70 | $ | 7.20 | $ | 1,000.00 | $ | 1,017.25 | $ | 7.60 | 1.52 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 912.14 | $ | 5.93 | $ | 1,000.00 | $ | 1,018.60 | $ | 6.26 | 1.25 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 913.36 | $ | 4.93 | $ | 1,000.00 | $ | 1,019.84 | $ | 5.21 | 1.04 | 181 | 365 |
24
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
5 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 | ||||
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
International Opp A# | 7/22/96 | -40.73 | % | 2.86 | % | 0.61 | % | 2.86 | % | |||||||||||
International Opp A## | 7/22/96 | -43.99 | % | 1.70 | % | 0.04 | % | 2.40 | % | |||||||||||
International Opp B# | 7/22/96 | -40.98 | % | 2.22 | % | NA | * | NA | * | |||||||||||
International Opp B## | 7/22/96 | -43.89 | % | 1.89 | % | NA | * | NA | * | |||||||||||
International Opp C# | 7/22/96 | -41.17 | % | 2.08 | % | -0.15 | % | 2.09 | % | |||||||||||
International Opp C## | 7/22/96 | -41.75 | % | 2.08 | % | -0.15 | % | 2.09 | % | |||||||||||
International Opp I# | 5/30/08 | -40.50 | % | 2.94 | % | 0.65 | % | 2.89 | % | |||||||||||
International Opp R3# | 7/22/96 | -40.94 | % | 3.01 | % | 0.89 | % | 3.19 | % | |||||||||||
International Opp R4# | 7/22/96 | -40.70 | % | 3.22 | % | 1.00 | % | 3.27 | % | |||||||||||
International Opp R5# | 7/22/96 | -40.60 | % | 3.31 | % | 1.04 | % | 3.31 | % | |||||||||||
International Opp Y# | 7/22/96 | -40.41 | % | 3.41 | % | 1.09 | % | 3.35 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. | |
(4) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. Class I shares commenced operations on 5/30/08. Performance prior to 5/30/08 reflects Class A performance. |
Nicolas M. Choumenkovitch
Senior Vice President, Partner
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 4.0 | % | ||
Banks | 11.9 | |||
Capital Goods | 5.0 | |||
Commercial & Professional Services | 0.6 | |||
Consumer Durables & Apparel | 1.6 | |||
Consumer Services | 1.4 | |||
Diversified Financials | 6.4 | |||
Energy | 8.5 | |||
Food, Beverage & Tobacco | 7.5 | |||
Health Care Equipment & Services | 1.2 | |||
Household & Personal Products | 1.3 | |||
Insurance | 2.7 | |||
Materials | 8.8 | |||
Media | 1.2 | |||
Other Investment Pools and Funds | 2.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 5.9 | |||
Real Estate | 1.1 | |||
Retailing | 3.2 | |||
Semiconductors & Semiconductor Equipment | 1.0 | |||
Software & Services | 1.3 | |||
Technology Hardware & Equipment | 4.4 | |||
Telecommunication Services | 7.4 | |||
Transportation | 3.2 | |||
Utilities | 4.3 | |||
Short-Term Investments | 2.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
3
Table of Contents
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 1.1 | % | ||
Canada | 6.2 | |||
China | 0.4 | |||
Finland | 2.2 | |||
France | 8.7 | |||
Germany | 9.2 | |||
Greece | 1.1 | |||
Hong Kong | 3.3 | |||
Ireland | 4.0 | |||
Israel | 1.7 | |||
Japan | 11.0 | |||
Mexico | 1.7 | |||
Netherlands | 1.7 | |||
Russia | 1.2 | |||
South Africa | 1.7 | |||
South Korea | 1.0 | |||
Spain | 3.8 | |||
Sweden | 1.6 | |||
Switzerland | 7.7 | |||
Taiwan | 0.9 | |||
Turkey | 0.8 | |||
United Kingdom | 22.0 | |||
United States | 3.8 | |||
Short-Term Investments | 2.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
4
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 93.2% | ||||||||
Australia — 1.1% | ||||||||
383 | Westfield Group | $ | 2,991 | |||||
Canada — 6.2% | ||||||||
286 | Brookfield Asset Management, Inc. | 4,380 | ||||||
99 | Canadian Natural Resources Ltd. | 4,559 | ||||||
65 | EnCana Corp. | 2,975 | ||||||
123 | Toronto-Dominion Bank | 4,835 | ||||||
16,749 | ||||||||
China — 0.4% | ||||||||
1,784 | Industrial and Commercial Bank of China | 1,015 | ||||||
Finland — 2.2% | ||||||||
414 | Nokia Oyj | 5,886 | ||||||
France — 8.7% | ||||||||
30 | BNP Paribas | 1,566 | ||||||
99 | France Telecom S.A. | 2,197 | ||||||
107 | Groupe Danone ⌂ | 5,067 | ||||||
48 | L’Oreal S.A. | 3,408 | ||||||
85 | Michelin (C.G.D.E.) Class B | 4,350 | ||||||
30 | Sanofi-Aventis S.A. | 1,721 | ||||||
99 | Total S.A. | 4,935 | ||||||
23,244 | ||||||||
Germany — 9.2% | ||||||||
35 | Allianz SE | 3,228 | ||||||
153 | Daimler AG | 5,487 | ||||||
69 | Deutsche Boerse AG | 5,112 | ||||||
29 | Muenchener Rueckversicherungs NPV | 4,006 | ||||||
54 | S.p.A. | 2,086 | ||||||
74 | Siemens AG | 4,996 | ||||||
24,915 | ||||||||
Greece — 1.1% | ||||||||
151 | National Bank of Greece | 3,136 | ||||||
Hong Kong — 3.3% | ||||||||
982 | Cathay Pacific Airways Ltd. | 1,136 | ||||||
270 | China Merchants Holdings International Co., Ltd. | 635 | ||||||
568 | Esprit Holdings Ltd. | 3,477 | ||||||
2,658 | Shangri-La Asia Ltd. | 3,909 | ||||||
9,157 | ||||||||
Ireland — 4.0% | ||||||||
293 | CRH plc | 7,554 | ||||||
144 | Ryanair Holdings plc • | 617 | ||||||
93 | Ryanair Holdings plc ADR •‡ | 2,553 | ||||||
10,724 | ||||||||
Israel — 1.7% | ||||||||
104 | Teva Pharmaceutical Industries Ltd. ADR | 4,564 | ||||||
Japan — 11.0% | ||||||||
25 | Astellas Pharma, Inc. | 800 | ||||||
67 | East Japan Railway Co. | 3,798 | ||||||
72 | Eisai Co., Ltd. | 1,927 | ||||||
46 | Ibiden Co., Ltd. | 1,357 | ||||||
— | KDDI Corp. * | 1,282 | ||||||
316 | Mitsubishi Electric Corp. | 1,683 | ||||||
791 | Mitsubishi UFJ Financial Group, Inc. * | 4,314 | ||||||
123 | NGK Spark Plug Co., Ltd. | 1,187 | ||||||
38 | Nidec Corp. | 2,133 | ||||||
5 | Nintendo Co., Ltd. | 1,344 | ||||||
212 | Nippon Steel Corp. | 713 | ||||||
42 | Nippon Telegraph & Telephone Corp. | 1,564 | ||||||
62 | Olympus Corp. | 1,016 | ||||||
44 | Secom Co., Ltd. * | 1,629 | ||||||
112 | Softbank Corp. | 1,777 | ||||||
103 | Sumitomo Mitsui Financial Group, Inc. * | 3,565 | ||||||
30,089 | ||||||||
Mexico — 1.7% | ||||||||
98 | America Movil S.A.B. de C.V. ADR | 3,232 | ||||||
172 | Cemex S.A. de C.V. ADR •‡ | 1,283 | ||||||
4,515 | ||||||||
Netherlands — 1.7% | ||||||||
147 | ING Groep N.V. | 1,343 | ||||||
280 | Koninklijke (Royal) KPN N.V. | 3,367 | ||||||
4,710 | ||||||||
Russia — 1.2% | ||||||||
216 | Mining and Metallurgical Co. Norilsk Nickel ADR | 1,779 | ||||||
38 | Mobile Telesystems OJSC ADR | 1,256 | ||||||
3,035 | ||||||||
South Africa — 1.7% | ||||||||
237 | Impala Platinum Holdings Ltd. | 4,537 | ||||||
South Korea — 1.0% | ||||||||
6 | Samsung Electronics Co., Ltd. | 2,631 | ||||||
Spain — 3.8% | ||||||||
180 | Enagas | 3,133 | ||||||
80 | Industria de Diseno Textil S.A. | 3,427 | ||||||
87 | Red Electrica Corporacion S.A. | 3,629 | ||||||
10,189 | ||||||||
Sweden — 1.6% | ||||||||
224 | Assa Abloy Ab | 2,638 | ||||||
38 | Hennes & Mauritz Ab | 1,700 | ||||||
4,338 | ||||||||
Switzerland — 7.7% | ||||||||
96 | Julius Baer Holding Ltd. | 3,139 | ||||||
175 | Nestle S.A. | 5,702 | ||||||
18 | Roche Holding AG | 2,259 | ||||||
23 | Synthes, Inc. | 2,337 | ||||||
553 | UBS AG • | 7,595 | ||||||
21,032 | ||||||||
Taiwan — 0.9% | ||||||||
878 | Hon Hai Precision Industry Co., Ltd. | 2,535 | ||||||
Turkey — 0.8% | ||||||||
992 | Turkiye Garanti Bankasi A.S. • | 2,080 | ||||||
United Kingdom — 22.0% | ||||||||
133 | AstraZeneca plc | 4,642 | ||||||
571 | BAE Systems plc | 3,001 | ||||||
320 | BG Group plc | 5,104 | ||||||
701 | BP plc | 4,953 | ||||||
1,392 | HSBC Holding plc | 9,900 | ||||||
211 | Imperial Tobacco Group plc | 4,804 | ||||||
584 | National Grid plc | 4,854 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 93.2% — (continued) | ||||||||||||
United Kingdom — 22.0% — (continued) | ||||||||||||
146 | Rio Tinto plc | $ | 5,923 | |||||||||
271 | SABMiller plc | 4,551 | ||||||||||
3,001 | Vodafone Group plc | 5,515 | ||||||||||
73 | Wolseley plc ⌂ | 1,307 | ||||||||||
458 | WPP plc | 3,130 | ||||||||||
222 | Xstrata plc | 1,955 | ||||||||||
59,639 | ||||||||||||
United States — 0.2% | ||||||||||||
26 | Frontline Ltd | 515 | ||||||||||
Total common stocks (cost $266,767) | $ | 252,226 | ||||||||||
EXCHANGE TRADED FUNDS — 3.6% | ||||||||||||
United States — 3.6% | ||||||||||||
688 | iShares MSCI EAFE Index Fund | $ | 9,731 | |||||||||
Total exchange traded funds (cost $9,578) | $ | 9,731 | ||||||||||
Total long-term investments (cost $276,345) | $ | 261,957 | ||||||||||
SHORT-TERM INVESTMENTS — 2.6% | ||||||||||||
Repurchase Agreements — 2.6% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,679, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $1,713) | ||||||||||||
$ | 1,679 | 0.18%, 04/30/2009 | $ | 1,679 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,010, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 — 2047, value of $2,050) | ||||||||||||
2,010 | 0.17%, 04/30/2009 | 2,010 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,808, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 — 2038, GNMA 4.50% — 7.00%, 2024-2039, value of $2,864) | ||||||||||||
2,808 | 0.17%, 04/30/2009 | 2,808 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $9, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $10) | ||||||||||||
9 | 0.14%, 04/30/2009 | 9 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $606, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 — 2039, value of $618) | ||||||||||||
606 | 0.16%, 04/30/2009 | $ | 606 | |||||||||
7,112 | ||||||||||||
Total short-term investments (cost $7,112) | $ | 7,112 | ||||||||||
Total investments (cost $283,457) ▲ | 99.4 | % | $ | 269,069 | ||||||||
Other assets and liabilities | 0.6 | % | 1,622 | |||||||||
Total net assets | 100.0 | % | $ | 270,691 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 92.99% of total net assets at April 30, 2009. Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $293,015 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 16,935 | ||
Unrealized Depreciation | (40,881 | ) | ||
Net Unrealized Depreciation | $ | (23,946 | ) | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $2,899. |
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⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
09/2008 — 04/2009 | 107 | Groupe Danone | $6,280 | |||||||||
06/2008 — 04/2009 | 73 | Wolseley plc | 1,968 |
The aggregate value of these securities at April 30, 2009 was $6,374 which represents 2.35% of total net assets. |
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
British Pound (Buy) | $ | 2,010 | $ | 1,989 | 05/01/09 | $ | 21 | |||||||||
British Pound (Buy) | 378 | 379 | 05/06/09 | (1 | ) | |||||||||||
Canadian Dollar (Sell) | 316 | 309 | 05/01/09 | (7 | ) | |||||||||||
Canadian Dollar (Sell) | 651 | 646 | 05/04/09 | (5 | ) | |||||||||||
Euro (Sell) | 948 | 938 | 05/04/09 | (10 | ) | |||||||||||
Hong Kong Dollar (Sell) | 358 | 358 | 05/04/09 | — | ||||||||||||
Japanese Yen (Sell) | 262 | 267 | 05/01/09 | 5 | ||||||||||||
Japanese Yen (Buy) | 599 | 602 | 05/08/09 | (3 | ) | |||||||||||
Swiss Franc (Sell) | 253 | 252 | 05/04/09 | (1 | ) | |||||||||||
Swiss Franc (Sell) | 222 | 224 | 05/05/09 | 2 | ||||||||||||
Swiss Franc (Sell) | 208 | 208 | 05/06/09 | — | ||||||||||||
Turkish New Lira (Sell) | 532 | 534 | 05/05/09 | 2 | ||||||||||||
$ | 3 | |||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 4.0 | % | ||
Banks | 11.9 | |||
Capital Goods | 5.0 | |||
Commercial & Professional Services | 0.6 | |||
Consumer Durables & Apparel | 1.6 | |||
Consumer Services | 1.4 | |||
Diversified Financials | 6.4 | |||
Energy | 8.5 | |||
Food, Beverage & Tobacco | 7.5 | |||
Health Care Equipment & Services | 1.2 | |||
Household & Personal Products | 1.3 | |||
Insurance | 2.7 | |||
Materials | 8.8 | |||
Media | 1.2 | |||
Other Investment Pools and Funds | 2.9 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 5.9 | |||
Real Estate | 1.1 | |||
Retailing | 3.2 | |||
Semiconductors & Semiconductor Equipment | 1.0 | |||
Software & Services | 1.3 | |||
Technology Hardware & Equipment | 4.4 | |||
Telecommunication Services | 7.4 | |||
Transportation | 3.2 | |||
Utilities | 4.3 | |||
Short-Term Investments | 2.6 | |||
Other Assets and Liabilities | 0.6 | |||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 46,613 | ||
Investment in securities — Level 2 | 222,456 | |||
Total | $ | 269,069 | ||
Other financial instruments — Level 2 * | 30 | |||
Total | $ | 30 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 27 | |||
Total | $ | 27 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $283,457) | $ | 269,069 | ||
Cash | 135 | |||
Foreign currency on deposit with custodian (cost $13) | 14 | |||
Unrealized appreciation on forward foreign currency contracts | 30 | |||
Receivables: | ||||
Investment securities sold | 7,413 | |||
Fund shares sold | 191 | |||
Dividends and interest | 1,398 | |||
Other assets | 112 | |||
Total assets | 278,362 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 27 | |||
Payables: | ||||
Investment securities purchased | 7,269 | |||
Fund shares redeemed | 189 | |||
Investment management fees | 37 | |||
Distribution fees | 11 | |||
Accrued expenses | 138 | |||
Total liabilities | 7,671 | |||
Net assets | $ | 270,691 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 418,195 | |||
Accumulated undistributed net investment income | 1,539 | |||
Accumulated net realized loss on investments and foreign currency transactions | (134,646 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (14,397 | ) | ||
Net assets | $ | 270,691 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.82/$10.39 | ||
Shares outstanding | 13,533 | |||
Net assets | $ | 132,921 | ||
Class B: Net asset value per share | $ | 9.09 | ||
Shares outstanding | 1,572 | |||
Net assets | $ | 14,285 | ||
Class C: Net asset value per share | $ | 8.96 | ||
Shares outstanding | 2,451 | |||
Net assets | $ | 21,954 | ||
Class I: Net asset value per share | $ | 9.78 | ||
Shares outstanding | 20 | |||
Net assets | $ | 196 | ||
Class R3: Net asset value per share | $ | 10.04 | ||
Shares outstanding | 22 | |||
Net assets | $ | 217 | ||
Class R4: Net asset value per share | $ | 10.10 | ||
Shares outstanding | 123 | |||
Net assets | $ | 1,243 | ||
Class R5: Net asset value per share | $ | 10.13 | ||
Shares outstanding | 1 | |||
Net assets | $ | 15 | ||
Class Y: Net asset value per share | $ | 10.15 | ||
Shares outstanding | 9,841 | |||
Net assets | $ | 99,860 | ||
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 4,858 | ||
Interest | 12 | |||
Securities lending | 49 | |||
Less: Foreign tax withheld | (533 | ) | ||
Total investment income | 4,386 | |||
Expenses: | ||||
Investment management fees | 1,052 | |||
Transfer agent fees | 440 | |||
Distribution fees | ||||
Class A | 162 | |||
Class B | 72 | |||
Class C | 104 | |||
Class R3 | — | |||
Class R4 | 1 | |||
Custodian fees | 22 | |||
Accounting services | 22 | |||
Registration and filing fees | 57 | |||
Board of Directors’ fees | 4 | |||
Audit fees | 9 | |||
Other expenses | 70 | |||
Total expenses (before waivers and fees paid indirectly) | 2,015 | |||
Expense waivers | (167 | ) | ||
Transfer agent fee waivers | (193 | ) | ||
Commission recapture | (3 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (363 | ) | ||
Total expenses, net | 1,652 | |||
Net investment income | 2,734 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (82,140 | ) | ||
Net realized loss on foreign currency transactions | (23 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (82,163 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 75,801 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (64 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 75,737 | |||
Net Loss on Investments and Foreign Currency Transactions | (6,426 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (3,692 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,734 | $ | 5,223 | ||||
Net realized loss on investments and foreign currency transactions | (82,163 | ) | (50,877 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 75,737 | (172,731 | ) | |||||
Net decrease in net assets resulting from operations | (3,692 | ) | (218,385 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (3,361 | ) | (816 | ) | ||||
Class B | (240 | ) | — | |||||
Class C | (354 | ) | — | |||||
Class I | (6 | ) | — | |||||
Class R3 | (4 | ) | — | |||||
Class R4 | (29 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (2,686 | ) | (994 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (35,677 | ) | |||||
Class B | — | (5,943 | ) | |||||
Class C | — | (4,984 | ) | |||||
Class R3 | — | (4 | ) | |||||
Class R4 | — | (2 | ) | |||||
Class R5 | — | (2 | ) | |||||
Class Y | — | (18,133 | ) | |||||
Total distributions | (6,680 | ) | (66,555 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (10,649 | ) | 69,602 | |||||
Class B | (1,982 | ) | 987 | |||||
Class C | (766 | ) | 16,805 | |||||
Class I | 63 | 207 | ||||||
Class R3 | 142 | 89 | ||||||
Class R4 | 299 | 975 | ||||||
Class R5 | 5 | 7 | ||||||
Class Y | 29,208 | 23,783 | ||||||
Net increase from capital share transactions | 16,320 | 112,455 | ||||||
Net increase (decrease) in net assets | 5,948 | (172,485 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 264,743 | 437,228 | ||||||
End of period | $ | 270,691 | $ | 264,743 | ||||
Accumulated undistributed net investment income | $ | 1,539 | $ | 5,485 | ||||
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford International Opportunities Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
12
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Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the |
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
k) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $2,899. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions |
14
Table of Contents
about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 37,332 | $ | 1,675 | ||||
Long-Term Capital Gains * | 29,223 | 7,575 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 5,534 | ||
Accumulated Capital Losses* | $ | (42,925 | ) | |
Unrealized Depreciation† | $ | (99,741 | ) | |
Total Accumulated Deficit | $ | (137,132 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $754, increase accumulated net realized gain by $207, and decrease paid in capital by $961. |
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d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2009 | $ | 511 | ||
2016 | 42,414 | |||
Total | $ | 42,925 | ||
Based on certain provisions in the Internal Revenue Code, various limitations regarding the future utilization of the Fund carryforwards may apply. As of October 31, 2008, the Fund had $959 in expired capital loss carryforwards. | |||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8500 | % | ||
On next $500 million | 0.7500 | % | ||
On next $4 billion | 0.7000 | % | ||
On next $5 billion | 0.6975 | % | ||
Over $10 billion | 0.6950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
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April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.57% | 2.32% | 2.32% | 1.32% | 1.82% | 1.52% | 1.22% | 1.22% |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April 30, | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.36 | % | 1.47 | % | 1.49 | % | 1.54 | % | 1.52 | % | 1.60 | % | ||||||||||||
Class B Shares | 1.72 | 2.11 | 2.18 | 2.12 | 2.30 | 2.30 | ||||||||||||||||||
Class C Shares | 2.18 | 2.20 | 2.21 | 2.30 | 2.30 | 2.30 | ||||||||||||||||||
Class I Shares | 1.11 | 1.00 | * | |||||||||||||||||||||
Class R3 Shares | 1.82 | 1.79 | 1.71 | † | ||||||||||||||||||||
Class R4 Shares | 1.41 | �� | 1.51 | 1.40 | ‡ | |||||||||||||||||||
Class R5 Shares | 1.22 | 1.10 | 1.11 | § | ||||||||||||||||||||
Class Y Shares | 1.00 | 0.94 | 0.95 | 0.99 | 1.01 | 1.03 |
* | From May 30, 2008 (commencement of operations), through October 31, 2008 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $191 and contingent deferred sales charges of $29 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B |
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Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $18. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $280 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.01 | % | 39.14 | % | ||||
Class B | 0.01 | 38.16 | ||||||
Class C | 0.01 | 38.16 | ||||||
Class Y | 0.01 | 39.90 |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class I | 6 | |||
Class R3 | 1 | |||
Class R5 | 1 |
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April 30, 2009 (Unaudited)
(000’s Omitted)
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 242,900 | ||
Sales Proceeds Excluding U.S. Government Obligations | 223,963 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,604 | 330 | (3,182 | ) | — | (1,248 | ) | 6,013 | 1,986 | (4,290 | ) | — | 3,709 | |||||||||||||||||||||||||||
Amount | $ | 15,072 | $ | 3,193 | $ | (28,914 | ) | $ | — | $ | (10,649 | ) | $ | 95,937 | $ | 35,697 | $ | (62,032 | ) | $ | — | $ | 69,602 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 134 | 26 | (404 | ) | — | (244 | ) | 565 | 345 | (940 | ) | — | (30 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,143 | $ | 232 | $ | (3,357 | ) | $ | — | $ | (1,982 | ) | $ | 8,474 | $ | 5,720 | $ | (13,207 | ) | $ | — | $ | 987 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 398 | 37 | (540 | ) | — | (105 | ) | 1,390 | 283 | (658 | ) | — | 1,015 | |||||||||||||||||||||||||||
Amount | $ | 3,374 | $ | 326 | $ | (4,466 | ) | $ | — | $ | (766 | ) | $ | 20,809 | $ | 4,645 | $ | (8,649 | ) | $ | — | $ | 16,805 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 8 | 1 | (3 | ) | — | 6 | 14 | — | — | — | 14 | |||||||||||||||||||||||||||||
Amount | $ | 81 | $ | 6 | $ | (24 | ) | $ | — | $ | 63 | $ | 207 | $ | — | $ | — | $ | — | $ | 207 | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 16 | 1 | (2 | ) | — | 15 | 6 | — | — | — | 6 | |||||||||||||||||||||||||||||
Amount | $ | 160 | $ | 4 | $ | (22 | ) | $ | — | $ | 142 | $ | 85 | $ | 4 | $ | — | $ | — | $ | 89 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 40 | 3 | (15 | ) | — | 28 | 96 | — | (2 | ) | — | 94 | ||||||||||||||||||||||||||||
Amount | $ | 401 | $ | 29 | $ | (131 | ) | $ | — | $ | 299 | $ | 994 | $ | 2 | $ | (21 | ) | $ | — | $ | 975 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 5 | $ | — | $ | — | $ | — | $ | 5 | $ | 5 | $ | 2 | $ | — | $ | — | $ | 7 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 2,994 | 269 | (160 | ) | — | 3,103 | 1,549 | 1,024 | (1,498 | ) | — | 1,075 | ||||||||||||||||||||||||||||
Amount | $ | 28,112 | $ | 2,686 | $ | (1,590 | ) | $ | — | $ | 29,208 | $ | 23,674 | $ | 19,072 | $ | (18,963 | ) | $ | — | $ | 23,783 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 98 | $ | 886 | |||||
For the Year Ended October 31, 2008 | 327 | $ | 5,270 |
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8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 10.23 | $ | 0.10 | $ | — | $ | (0.27 | ) | $ | (0.17 | ) | $ | (0.24 | ) | $ | — | $ | — | $ | (0.24 | ) | $ | (0.41 | ) | $ | 9.82 | (1.68) | %(f) | $ | 132,921 | 1.75 | %(g) | 1.37 | %(g) | 1.37 | %(g) | 2.11 | %(g) | 93 | % | |||||||||||||||||||||||||||||||
B | 9.40 | 0.07 | — | (0.24 | ) | (0.17 | ) | (0.14 | ) | — | — | (0.14 | ) | (0.31 | ) | 9.09 | (1.81 | ) (f) | 14,285 | 2.88 | (g) | 1.72 | (g) | 1.72 | (g) | 1.71 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 9.29 | 0.06 | — | (0.24 | ) | (0.18 | ) | (0.15 | ) | — | — | (0.15 | ) | (0.33 | ) | 8.96 | (1.97 | ) (f) | 21,954 | 2.43 | (g) | 2.18 | (g) | 2.18 | (g) | 1.33 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 10.25 | 0.12 | — | (0.28 | ) | (0.16 | ) | (0.31 | ) | — | — | (0.31 | ) | (0.47 | ) | 9.78 | (1.49 | ) (f) | 196 | 1.11 | (g) | 1.11 | (g) | 1.11 | (g) | 2.54 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.51 | 0.10 | — | (0.30 | ) | (0.20 | ) | (0.27 | ) | — | — | (0.27 | ) | (0.47 | ) | 10.04 | (1.83 | ) (f) | 217 | 2.00 | (g) | 1.82 | (g) | 1.82 | (g) | 2.16 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.58 | 0.11 | — | (0.29 | ) | (0.18 | ) | (0.30 | ) | — | — | (0.30 | ) | (0.48 | ) | 10.10 | (1.63 | ) (f) | 1,243 | 1.41 | (g) | 1.41 | (g) | 1.41 | (g) | 2.22 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.60 | 0.12 | — | (0.29 | ) | (0.17 | ) | (0.30 | ) | — | — | (0.30 | ) | (0.47 | ) | 10.13 | (1.60 | ) (f) | 15 | 1.39 | (g) | 1.23 | (g) | 1.23 | (g) | 2.57 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 10.62 | 0.13 | — | (0.29 | ) | (0.16 | ) | (0.31 | ) | — | — | (0.31 | ) | (0.47 | ) | 10.15 | (1.42 | ) (f) | 99,860 | 1.00 | (g) | 1.00 | (g) | 1.00 | (g) | 2.68 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 21.79 | 0.19 | — | (8.49 | ) | (8.30 | ) | (0.06 | ) | (3.20 | ) | — | (3.26 | ) | (11.56 | ) | 10.23 | (44.50 | ) | 151,147 | 1.47 | 1.47 | 1.47 | 1.23 | 150 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 20.34 | 0.07 | — | (7.81 | ) | (7.74 | ) | — | (3.20 | ) | — | (3.20 | ) | (10.94 | ) | 9.40 | (44.86 | ) | 17,068 | 2.45 | 2.11 | 2.11 | 0.50 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 20.16 | 0.08 | — | (7.75 | ) | (7.67 | ) | — | (3.20 | ) | — | (3.20 | ) | (10.87 | ) | 9.29 | (44.92 | ) | 23,743 | 2.20 | 2.20 | 2.20 | 0.54 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I(h) | 17.53 | 0.06 | — | (7.34 | ) | (7.28 | ) | — | — | — | — | (7.28 | ) | 10.25 | (41.53 | ) (f) | 143 | 1.00 | (g) | 1.00 | (g) | 1.00 | (g) | 1.19 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 22.33 | 0.18 | — | (8.77 | ) | (8.59 | ) | (0.03 | ) | (3.20 | ) | — | (3.23 | ) | (11.82 | ) | 10.51 | (44.70 | ) | 74 | 1.99 | 1.79 | 1.79 | 1.13 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 22.39 | 0.05 | — | (8.59 | ) | (8.54 | ) | (0.07 | ) | (3.20 | ) | — | (3.27 | ) | (11.81 | ) | 10.58 | (44.39 | ) | 1,003 | 1.52 | 1.52 | 1.52 | 0.54 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 22.45 | 0.25 | — | (8.78 | ) | (8.53 | ) | (0.12 | ) | (3.20 | ) | — | (3.32 | ) | (11.85 | ) | 10.60 | (44.32 | ) | 10 | 1.10 | 1.10 | 1.10 | 1.57 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 22.48 | 0.29 | — | (8.81 | ) | (8.52 | ) | (0.14 | ) | (3.20 | ) | — | (3.34 | ) | (11.86 | ) | 10.62 | (44.22 | ) | 71,555 | 0.94 | 0.94 | 0.94 | 1.74 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.13 | 0.05 | — | 6.10 | 6.15 | (0.06 | ) | (0.43 | ) | — | (0.49 | ) | 5.66 | 21.79 | 39.15 | (i) | 241,239 | 1.49 | 1.49 | 1.49 | 0.31 | 147 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.14 | (0.07 | ) | — | 5.70 | 5.63 | — | (0.43 | ) | — | (0.43 | ) | 5.20 | 20.34 | 38.17 | (i) | 37,545 | 2.46 | 2.18 | 2.18 | (0.39 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.01 | (0.07 | ) | — | 5.65 | 5.58 | — | (0.43 | ) | — | (0.43 | ) | 5.15 | 20.16 | 38.17 | (i) | 31,076 | 2.21 | 2.21 | 2.21 | (0.42 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3(j) | 17.07 | 0.06 | — | 5.20 | 5.26 | — | — | — | — | 5.26 | 22.33 | 30.81 | (f) | 28 | 1.71 | (g) | 1.71 | (g) | 1.71 | (g) | 0.40 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(k) | 17.07 | 0.09 | — | 5.23 | 5.32 | — | — | — | — | 5.32 | 22.39 | 31.17 | (f) | 13 | 1.41 | (g) | 1.41 | (g) | 1.41 | (g) | 0.53 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(l) | 17.07 | 0.13 | — | 5.25 | 5.38 | — | — | — | — | 5.38 | 22.45 | 31.52 | (f) | 13 | 1.11 | (g) | 1.11 | (g) | 1.11 | (g) | 0.83 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 16.67 | 0.05 | — | 6.39 | 6.44 | (0.20 | ) | (0.43 | ) | — | (0.63 | ) | 5.81 | 22.48 | 39.91 | (i) | 127,314 | 0.95 | 0.95 | 0.95 | 0.84 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.13 | 0.13 | — | 2.92 | 3.05 | (0.05 | ) | — | — | (0.05 | ) | 3.00 | 16.13 | 23.25 | 159,087 | 1.61 | 1.57 | 1.57 | 0.84 | 102 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.35 | 0.03 | — | 2.76 | 2.79 | — | — | — | — | 2.79 | 15.14 | 22.59 | 29,125 | 2.56 | 2.15 | 2.15 | 0.24 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.27 | 0.01 | — | 2.73 | 2.74 | — | — | — | — | 2.74 | 15.01 | 22.33 | 20,782 | 2.33 | 2.33 | 2.33 | 0.06 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.55 | 0.25 | — | 2.98 | 3.23 | (0.11 | ) | — | — | (0.11 | ) | 3.12 | 16.67 | 24.00 | 43,994 | 1.02 | 1.02 | 1.02 | 1.56 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.22 | 0.05 | — | 1.86 | 1.91 | — | — | — | — | 1.91 | 13.13 | 17.02 | 102,393 | 1.72 | 1.57 | 1.57 | 0.42 | 119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.64 | (0.04 | ) | — | 1.75 | 1.71 | — | — | — | — | 1.71 | 12.35 | 16.07 | 23,940 | 2.68 | 2.35 | 2.35 | (0.36 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.57 | (0.04 | ) | — | 1.74 | 1.70 | — | — | — | — | 1.70 | 12.27 | 16.08 | 16,896 | 2.42 | 2.35 | 2.35 | (0.37 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.53 | 0.12 | — | 1.90 | 2.02 | — | — | — | — | 2.02 | 13.55 | 17.52 | 5,612 | 1.05 | 1.05 | 1.05 | 0.94 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.66 | 0.03 | — | 1.54 | 1.57 | (0.01 | ) | — | — | (0.01 | ) | 1.56 | 11.22 | 16.20 | 87,348 | 1.83 | 1.65 | 1.65 | 0.33 | 143 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.22 | (0.05 | ) | — | 1.47 | 1.42 | — | — | — | — | 1.42 | 10.64 | 15.40 | 23,301 | 2.77 | 2.35 | 2.35 | (0.39 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.16 | (0.05 | ) | — | 1.46 | 1.41 | — | — | — | — | 1.41 | 10.57 | 15.39 | 15,749 | 2.48 | 2.35 | 2.35 | (0.38 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.91 | 0.11 | — | 1.56 | 1.67 | (0.05 | ) | — | — | (0.05 | ) | 1.62 | 11.53 | 16.87 | 4,288 | 1.09 | 1.08 | 1.08 | 0.82 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on May 30, 2008. | |
(i) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on December 22, 2006. |
22
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23
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
24
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25
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | 2008 through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 983.23 | $ | 6.73 | $ | 1,000.00 | $ | 1,018.00 | $ | 6.85 | 1.37 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 981.93 | $ | 8.45 | $ | 1,000.00 | $ | 1,016.26 | $ | 8.59 | 1.72 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 980.25 | $ | 10.70 | $ | 1,000.00 | $ | 1,013.98 | $ | 10.88 | 2.18 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 985.09 | $ | 5.46 | $ | 1,000.00 | $ | 1,019.29 | $ | 5.55 | 1.11 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 981.67 | $ | 8.94 | $ | 1,000.00 | $ | 1,015.76 | $ | 9.09 | 1.82 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 983.66 | $ | 6.93 | $ | 1,000.00 | $ | 1,017.80 | $ | 7.05 | 1.41 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 983.99 | $ | 6.05 | $ | 1,000.00 | $ | 1,018.69 | $ | 6.15 | 1.23 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 985.80 | $ | 4.92 | $ | 1,000.00 | $ | 1,019.83 | $ | 5.00 | 1.00 | 181 | 365 |
26
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
International Small Co. A# | 4/30/01 | -44.38 | % | -0.89 | % | 4.22 | % | |||||||||
International Small Co. A## | 4/30/01 | -47.44 | % | -2.01 | % | 3.48 | % | |||||||||
International Small Co. B# | 4/30/01 | -44.58 | % | -1.54 | % | 3.62 | % | |||||||||
International Small Co. B## | 4/30/01 | -47.35 | % | -1.78 | % | 3.62 | % | |||||||||
International Small Co. C# | 4/30/01 | -44.77 | % | -1.62 | % | 3.46 | % | |||||||||
International Small Co. C## | 4/30/01 | -45.33 | % | -1.62 | % | 3.46 | % | |||||||||
International Small Co. I# | 4/30/01 | -44.21 | % | -0.76 | % | 4.30 | % | |||||||||
International Small Co. Y# | 4/30/01 | -44.11 | % | -0.46 | % | 4.68 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. | |
(4) | Class I shares commenced operations on 5/31/07. Performance prior to 5/31/07 reflects Class A performance. |
Portfolio Managers | ||
Simon H. Thomas | Daniel Maguire, CFA | |
Vice President | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 2.4 | % | ||
Banks | 1.9 | |||
Capital Goods | 14.7 | |||
Commercial & Professional Services | 8.7 | |||
Consumer Durables & Apparel | 2.4 | |||
Consumer Services | 2.3 | |||
Diversified Financials | 3.2 | |||
Energy | 7.9 | |||
Food & Staples Retailing | 1.5 | |||
Food, Beverage & Tobacco | 4.0 | |||
Health Care Equipment & Services | 6.5 | |||
Household & Personal Products | 1.8 | |||
Insurance | 3.8 | |||
Materials | 6.6 | |||
Media | 1.8 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 7.1 | |||
Real Estate | 0.9 | |||
Retailing | 6.6 | |||
Semiconductors & Semiconductor Equipment | 3.1 | |||
Software & Services | 5.0 | |||
Technology Hardware & Equipment | 2.3 | |||
Transportation | 3.3 | |||
Utilities | 2.2 | |||
Short-Term Investments | 0.4 | |||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Country | Net Assets | |||
Australia | 6.4 | % | ||
Belgium | 1.0 | |||
Brazil | 1.5 | |||
Cayman Islands | 1.1 | |||
China | 1.3 | |||
Denmark | 1.4 | |||
Finland | 1.0 | |||
France | 14.5 | |||
Germany | 5.1 | |||
Guernsey Channel Isle | 0.4 | |||
Hong Kong | 2.2 | |||
Italy | 3.0 | |||
Japan | 26.2 | |||
Luxembourg | 0.3 | |||
Netherlands | 0.6 | |||
Norway | 2.6 | |||
Singapore | 1.3 | |||
South Korea | 2.6 | |||
Spain | 0.9 | |||
Sweden | 3.1 | |||
Switzerland | 8.7 | |||
United Kingdom | 14.3 | |||
United States | 0.5 | |||
Short-Term Investments | 0.4 | |||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 100.0% | ||||||||||||
Australia - 6.4% | ||||||||||||
305 | AJ Lucas Group Ltd. | $ | 570 | |||||||||
198 | Ausenco Ltd. | 502 | ||||||||||
237 | Brambles Ltd. | 1,015 | ||||||||||
63 | Campbell Brothers | 726 | ||||||||||
621 | Incitec Pivot Ltd. | 944 | ||||||||||
245 | Karoon Gas Australia Ltd. • | 977 | ||||||||||
76 | Sims Metal Management Ltd. | 1,099 | ||||||||||
582 | Whitehaven Coal Ltd. | 840 | ||||||||||
89 | Worleyparsons Ltd. | 1,177 | ||||||||||
7,850 | ||||||||||||
Belgium - 1.0% | ||||||||||||
4 | D’ieteren S.A. | 762 | ||||||||||
24 | Umicore | 463 | ||||||||||
1,225 | ||||||||||||
Brazil - 1.5% | ||||||||||||
72 | Hypermarcas S.A. • | 612 | ||||||||||
88 | Lojas Americanas S.A. | 367 | ||||||||||
63 | Lupatech S.A. • | 791 | ||||||||||
1,770 | ||||||||||||
Cayman Islands - 1.1% | ||||||||||||
187 | China High Speed Transmission | 338 | ||||||||||
477 | Li Ning Co., Ltd. | 976 | ||||||||||
1,314 | ||||||||||||
China - 1.3% | ||||||||||||
24 | Mindray Medical International Ltd. | 552 | ||||||||||
25 | Perfect World Co., Ltd. ADR • | 447 | ||||||||||
304 | Shandong Weigao Group Medical Polymer Co., Ltd. | 572 | ||||||||||
1,571 | ||||||||||||
Denmark - 1.4% | ||||||||||||
22 | Carlsberg A/S Class B | 1,045 | ||||||||||
30 | H. Lundbeck A/S | 549 | ||||||||||
1,594 | ||||||||||||
Finland - 1.0% | ||||||||||||
20 | Kone Oyj Class B | 541 | ||||||||||
41 | Nokian Rendaat Oyj | 648 | ||||||||||
1,189 | ||||||||||||
France - 14.5% | ||||||||||||
18 | April Group | 545 | ||||||||||
22 | BioMerieux S.A. | 1,667 | ||||||||||
32 | Bureau Veritas S.A. | 1,286 | ||||||||||
26 | Eurofins Scientific | 1,454 | ||||||||||
15 | Imerys S.A. | 641 | ||||||||||
58 | Korian | 1,319 | ||||||||||
55 | Maurel ET Prom | 810 | ||||||||||
17 | Orpea • | 679 | ||||||||||
88 | Rhodia S.A. | 504 | ||||||||||
51 | Scor SE | 1,069 | ||||||||||
21 | Seche Environment | 1,234 | ||||||||||
55 | Sechilienne S.A. | 1,881 | ||||||||||
15 | Vallourec | 1,633 | ||||||||||
18 | Vilmorin & Cie | 1,717 | ||||||||||
13 | Virbac S.A. | 871 | ||||||||||
17,310 | ||||||||||||
Germany - 5.1% | ||||||||||||
87 | ElringKlinger AG | 1,266 | ||||||||||
14 | Hochtief AG | 675 | ||||||||||
161 | Kontron AG | 1,762 | ||||||||||
124 | Praktiker Bau-Und Heimwerkermaerkte Holding AG | 897 | ||||||||||
13 | Salzgitter AG | 928 | ||||||||||
5 | Vossloh AG | 549 | ||||||||||
6,077 | ||||||||||||
Guernsey Channel Isle - 0.4% | ||||||||||||
259 | London & Stamford Property Ltd. | 463 | ||||||||||
Hong Kong - 2.2% | ||||||||||||
273 | ASM Pacific Technology | 1,219 | ||||||||||
905 | Huabao International Holdings Ltd. | 640 | ||||||||||
931 | Noble Group Ltd. | 807 | ||||||||||
2,666 | ||||||||||||
Italy - 3.0% | ||||||||||||
155 | Antichi Pellettieri S.p.A. | 288 | ||||||||||
87 | DiaSorin S.p.A. | 1,923 | ||||||||||
96 | Geox S.p.A. • | 808 | ||||||||||
441 | Immobiliare Grande Distribuzione • | 589 | ||||||||||
3,608 | ||||||||||||
Japan - 26.2% | ||||||||||||
69 | Aeon Delight Co., Ltd. | 877 | ||||||||||
131 | Asics Corp. | 851 | ||||||||||
19 | Benesse Corp. | 719 | ||||||||||
48 | Capcom Co., Ltd. | 841 | ||||||||||
78 | Chiyoda Corp. | 469 | ||||||||||
— | EPS Co., Ltd. | 1,286 | ||||||||||
20 | FamilyMart Co., Ltd. * | 539 | ||||||||||
35 | Ibiden Co., Ltd. | 1,035 | ||||||||||
2 | Jupiter Telecommunications Co., Ltd. | 1,645 | ||||||||||
29 | Kobayashi Pharmaceutical Co., Ltd. | 953 | ||||||||||
37 | Mandom Corp. * | 666 | ||||||||||
161 | Mitsui O.S.K. Lines Ltd. | 920 | ||||||||||
36 | Miura Co., Ltd. | 781 | ||||||||||
65 | Modec, Inc. | 937 | ||||||||||
41 | Moshi Moshi Hotline, Inc. | 706 | ||||||||||
118 | Nabtesco Corp. | 959 | ||||||||||
8 | Nidec Corp. | 433 | ||||||||||
134 | Nippon Carbon Co., Ltd. | 319 | ||||||||||
72 | Nippon Denko Co., Ltd. | 307 | ||||||||||
108 | Nippon Electric Glass Co., Ltd. | 879 | ||||||||||
6 | OBIC Co., Ltd. | 850 | ||||||||||
— | Osaka Securities Exchange Co., Ltd. | 950 | ||||||||||
22 | Point, Inc. | 988 | ||||||||||
2 | Rakuten, Inc. | 1,125 | ||||||||||
133 | Securities Carbon Ltd. | 482 | ||||||||||
— | Seven Bank Ltd. | 439 | ||||||||||
252 | Shinko Plantech Co., Ltd. | 1,677 | ||||||||||
152 | Shionogi & Co., Ltd. | 2,617 | ||||||||||
86 | Square Enix Holdings Co., Ltd. * | 1,538 | ||||||||||
33 | Sugi Holdings Co., Ltd. | 620 | ||||||||||
51 | Sumco Corp. | 749 | ||||||||||
38 | Sundrug Co., Ltd. | 588 | ||||||||||
60 | Taiyo Nippon Sanso Corp. | 420 | ||||||||||
50 | Tokyo Ohka Kogyo Co., Ltd. * | 849 | ||||||||||
198 | Toyo Engineering Corp. | 630 | ||||||||||
73 | Toyota Boshoku Corp. | 928 | ||||||||||
31,572 | ||||||||||||
Luxembourg - 0.3% | ||||||||||||
45 | Acergy S.A. | 344 | ||||||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 100.0% — (continued) | ||||||||||||
Netherlands - 0.6% | ||||||||||||
14 | Smit International N.V. | $ | 774 | |||||||||
Norway - 2.6% | ||||||||||||
966 | DNO International ASA • | 816 | ||||||||||
50 | Kongsberg Gruppen ASA • | 2,318 | ||||||||||
3,134 | ||||||||||||
Singapore - 1.3% | ||||||||||||
1,473 | Goodpack Ltd. | 806 | ||||||||||
575 | Hyflux Ltd. | 702 | ||||||||||
1,508 | ||||||||||||
South Korea - 2.6% | ||||||||||||
39 | Korea Plant Service & Engineering Co., Ltd. • | 983 | ||||||||||
5 | Megastudy Co., Ltd. | 783 | ||||||||||
10 | Mirae Asset Securities Co., Ltd. • | 608 | ||||||||||
5 | OCI Co., Ltd. | 805 | ||||||||||
3,179 | ||||||||||||
Spain - 0.9% | ||||||||||||
62 | Grifols S.A. | 1,082 | ||||||||||
Sweden - 3.1% | ||||||||||||
169 | Lundin Petroleum Ab • | 1,096 | ||||||||||
122 | Sweco Ab | 561 | ||||||||||
143 | Swedish Match Ab | 2,040 | ||||||||||
3,697 | ||||||||||||
Switzerland - 8.7% | ||||||||||||
10 | Bachem Holding AG Class B | 592 | ||||||||||
113 | Dufry Group | 3,022 | ||||||||||
12 | Kuehne & Nagel International AG | . | 886 | |||||||||
12 | Panalpina Welttransport Holding AG | 641 | ||||||||||
93 | Paris RE Holdings Ltd. | 1,776 | ||||||||||
130 | Temenos Group AG • | 1,805 | ||||||||||
10 | Valiant Holding AG | 1,803 | ||||||||||
10,525 | ||||||||||||
United Kingdom - 14.3% | ||||||||||||
217 | Babcock International Group plc | 1,393 | ||||||||||
218 | Brown (N) Group plc | 755 | ||||||||||
126 | Catlin Group Ltd. | 650 | ||||||||||
34 | Chemring Group plc | 1,066 | ||||||||||
321 | Clapham House Group plc • | 352 | ||||||||||
47 | Close Brothers Group plc | 430 | ||||||||||
166 | Connaught plc | 874 | ||||||||||
308 | Domino’s Pizza UK & IRL plc | 928 | ||||||||||
831 | Hampson Industries plc | 1,211 | ||||||||||
246 | ICAP plc | 1,347 | ||||||||||
151 | IG Group Holdings plc | 488 | ||||||||||
60 | James Fisher & Sons plc | 397 | ||||||||||
23 | Johnson Matthey plc | 409 | ||||||||||
68 | Lancashire Holdings Ltd. • | 480 | ||||||||||
351 | Mears Group plc | 1,348 | ||||||||||
120 | Rightmove | 572 | ||||||||||
38 | Rotork plc | 457 | ||||||||||
143 | SSL International plc | 1,006 | ||||||||||
87 | Ultra Electronics Holdings plc ‡ | 1,531 | ||||||||||
145 | VT Group plc | 987 | ||||||||||
60 | Wellstream Holdings plc | 458 | ||||||||||
17,139 | ||||||||||||
United States - 0.5% | ||||||||||||
20 | Netease.com, Inc. • | 588 | ||||||||||
Total common stocks (cost $135,810) | $ | 120,179 | ||||||||||
Total long-term investments (cost $135,810) | $ | 120,179 | ||||||||||
SHORT-TERM INVESTMENTS - 0.4% | ||||||||||||
Repurchase Agreements - 0.4% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $99, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $101) | ||||||||||||
$ | 99 | 0.18%, 04/30/2009 | $ | 99 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $119, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $121) | ||||||||||||
119 | 0.17%, 04/30/2009 | 119 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $166, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $170) | ||||||||||||
166 | 0.17%, 04/30/2009 | 166 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1) | ||||||||||||
1 | 0.14%, 04/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $36, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $37) | ||||||||||||
36 | 0.16%, 04/30/2009 | 36 | ||||||||||
421 | ||||||||||||
Total short-term investments (cost $421) | $ | 421 | ||||||||||
Total investments (cost $136,231) ▲ | 100.4 | % | $ | 120,600 | ||||||||
Other assets and liabilities | (0.4 | )% | (431 | ) | ||||||||
Total net assets | 100.0 | % | $ | 120,169 | ||||||||
5
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April 30, 2009 (Unaudited)
(000’s Omitted)
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 99.52% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $152,277 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 7,501 | ||
Unrealized Depreciation | (39,178 | ) | ||
Net Unrealized Depreciation | $ | (31,677 | ) | |
• | Currently non-income producing. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $340. |
Unrealized | ||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||
Australian Dollar (Buy) | $ | 120 | $ | 116 | 05/01/09 | $ | 4 | |||||||
British Pound (Buy) | 215 | 213 | 05/01/09 | 2 | ||||||||||
British Pound (Buy) | 207 | 207 | 05/05/09 | — | ||||||||||
Danish Krone (Sell) | 396 | 392 | 05/01/09 | (4 | ) | |||||||||
Euro (Sell) | 481 | 476 | 05/04/09 | (5 | ) | |||||||||
Hong Kong Dollar (Buy) | 327 | 327 | 05/05/09 | — | ||||||||||
Japanese Yen (Buy) | 680 | 693 | 05/01/09 | (13 | ) | |||||||||
Japanese Yen (Buy) | 340 | 348 | 05/07/09 | (8 | ) | |||||||||
Swiss Franc (Sell) | 223 | 222 | 05/04/09 | (1 | ) | |||||||||
$ | (25 | ) | ||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 2.4 | % | ||
Banks | 1.9 | |||
Capital Goods | 14.7 | |||
Commercial & Professional Services | 8.7 | |||
Consumer Durables & Apparel | 2.4 | |||
Consumer Services | 2.3 | |||
Diversified Financials | 3.2 | |||
Energy | 7.9 | |||
Food & Staples Retailing | 1.5 | |||
Food, Beverage & Tobacco | 4.0 | |||
Health Care Equipment & Services | 6.5 | |||
Household & Personal Products | 1.8 | |||
Insurance | 3.8 | |||
Materials | 6.6 | |||
Media | 1.8 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 7.1 | |||
Real Estate | 0.9 | |||
Retailing | 6.6 | |||
Semiconductors & Semiconductor Equipment | 3.1 | |||
Software & Services | 5.0 | |||
Technology Hardware & Equipment | 2.3 | |||
Transportation | 3.3 | |||
Utilities | 2.2 | |||
Short-Term Investments | 0.4 | |||
Other Assets and Liabilities | (0.4 | ) | ||
Total | 100.0 | % | ||
Assets: | ||||
Investment in securities — Level 1 | $ | 3,694 | ||
Investment in securities — Level 2 | 116,906 | |||
Total | $ | 120,600 | ||
Other financial instruments — Level 2 * | 6 | |||
Total | $ | 6 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 31 | |||
Total | $ | 31 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $136,231) | $ | 120,600 | ||
Cash | 344 | |||
Foreign currency on deposit with custodian (cost $71) | 72 | |||
Unrealized appreciation on forward foreign currency contracts | 6 | |||
Receivables: | ||||
Investment securities sold | 1,666 | |||
Fund shares sold | 18 | |||
Dividends and interest | 555 | |||
Other assets | 103 | |||
Total assets | 123,364 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 31 | |||
Payables: | ||||
Investment securities purchased | 2,852 | |||
Fund shares redeemed | 204 | |||
Investment management fees | 18 | |||
Distribution fees | 4 | |||
Accrued expenses | 86 | |||
Total liabilities | 3,195 | |||
Net assets | $ | 120,169 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 242,523 | |||
Accumulated undistributed net investment income | 704 | |||
Accumulated net realized loss on investments and foreign currency transactions | (107,421 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (15,637 | ) | ||
Net assets | $ | 120,169 | ||
Shares authorized | 350,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.72/$8.16 | ||
Shares outstanding | 5,345 | |||
Net assets | $ | 41,279 | ||
Class B: Net asset value per share | $ | 7.41 | ||
Shares outstanding | 912 | |||
Net assets | $ | 6,754 | ||
Class C: Net asset value per share | $ | 7.29 | ||
Shares outstanding | 1,215 | |||
Net assets | $ | 8,854 | ||
Class I: Net asset value per share | $ | 7.68 | ||
Shares outstanding | 149 | |||
Net assets | $ | 1,146 | ||
Class Y: Net asset value per share | $ | 7.81 | ||
Shares outstanding | 7,955 | |||
Net assets | $ | 62,136 | ||
7
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 1,053 | ||
Interest | 5 | |||
Securities lending | 56 | |||
Less: Foreign tax withheld | (99 | ) | ||
Total investment income | 1,015 | |||
Expenses: | ||||
Investment management fees | 521 | |||
Transfer agent fees | 187 | |||
Distribution fees | ||||
Class A | 54 | |||
Class B | 34 | |||
Class C | 45 | |||
Custodian fees | 30 | |||
Accounting services | 10 | |||
Registration and filing fees | 35 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 7 | |||
Other expenses | 48 | |||
Total expenses (before waivers and fees paid indirectly) | 973 | |||
Expense waivers | (118 | ) | ||
Transfer agent fee waivers | (94 | ) | ||
Commission recapture | (3 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (215 | ) | ||
Total expenses, net | 758 | |||
Net investment income | 257 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (42,862 | ) | ||
Net realized loss on foreign currency transactions | (569 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (43,431 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 46,950 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 441 | |||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 47,391 | |||
Net Gain on Investments and Foreign Currency Transactions | 3,960 | |||
Net Increase in Net Assets Resulting from Operations | $ | 4,217 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 257 | $ | 2,445 | ||||
Net realized loss on investments and foreign currency transactions | (43,431 | ) | (63,277 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 47,391 | (104,723 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 4,217 | (165,555 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | — | (1,501 | ) | |||||
Class B | — | (75 | ) | |||||
Class C | — | (139 | ) | |||||
Class I | (11 | ) | (5 | ) | ||||
Class Y | (479 | ) | (1,960 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (16,627 | ) | |||||
Class B | — | (2,221 | ) | |||||
Class C | — | (3,750 | ) | |||||
Class I | — | (26 | ) | |||||
Class Y | — | (14,283 | ) | |||||
Total distributions | (490 | ) | (40,587 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (8,596 | ) | (17,854 | ) | ||||
Class B | (823 | ) | (505 | ) | ||||
Class C | (1,918 | ) | (4,298 | ) | ||||
Class I | (370 | ) | 2,136 | |||||
Class Y | 4,938 | 11,404 | ||||||
Net decrease from capital share transactions | (6,769 | ) | (9,117 | ) | ||||
Net decrease in net assets | (3,042 | ) | (215,259 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 123,211 | 338,470 | ||||||
End of period | $ | 120,169 | $ | 123,211 | ||||
Accumulated undistributed net investment income | $ | 704 | $ | 937 | ||||
9
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford International Small Company Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on |
10
Table of Contents
days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | |||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
12
Table of Contents
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund had no illiquid or restricted securities as of April 30, 2009. | ||
k) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $340. | ||
l) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined |
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April 30, 2009 (Unaudited)
(000’s Omitted)
using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | |||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
n) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
o) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 25,072 | $ | 16,470 | ||||
Long-Term Capital Gains * | 15,515 | 9,615 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 479 | ||
Accumulated Capital Losses* | $ | (47,944 | ) | |
Unrealized Depreciation† | $ | (78,616 | ) | |
Total Accumulated Deficit | $ | (126,081 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $265, decrease accumulated net realized loss by $241, and decrease paid in capital by $24. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 47,944 | ||
Total | $ | 47,944 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
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April 30, 2009 (Unaudited)
(000’s Omitted)
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.9000 | % | ||
On next $500 million | 0.8500 | % | ||
On next $4 billion | 0.8000 | % | ||
On next $5 billion | 0.7975 | % | ||
Over $10 billion | 0.7950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class Y | ||||||||||||
1.60% | 2.35 | % | 2.35 | % | 1.35 | % | 1.20 | % |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.32 | % | 1.52 | % | 1.49 | % | 1.58 | % | 1.55 | % | 1.60 | % | ||||||||||||
Class B Shares | 1.68 | 2.13 | 2.25 | 2.22 | 2.30 | 2.30 | ||||||||||||||||||
Class C Shares | 2.07 | 2.28 | 2.23 | 2.33 | 2.30 | 2.29 | ||||||||||||||||||
Class I Shares | 1.31 | 1.16 | 1.18 | * | ||||||||||||||||||||
Class Y Shares | 1.13 | 1.01 | 1.01 | 1.18 | 1.15 | 1.15 |
* | From May 31, 2007 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $40 and contingent deferred sales charges of $15 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $12. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $122 for providing such services. These fees are accrued daily and paid monthly. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 80,742 | ||
Sales Proceeds Excluding U.S. Government Obligations | 87,579 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 403 | — | (1,596 | ) | — | (1,193 | ) | 2,993 | 1,057 | (6,034 | ) | — | (1,984 | ) | ||||||||||||||||||||||||||
Amount | $ | 2,992 | $ | — | $ | (11,588 | ) | $ | — | $ | (8,596 | ) | $ | 39,053 | $ | 15,812 | $ | (72,719 | ) | $ | — | $ | (17,854 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 37 | — | (157 | ) | — | (120 | ) | 156 | 150 | (402 | ) | — | (96 | ) | ||||||||||||||||||||||||||
Amount | $ | 259 | $ | — | $ | (1,082 | ) | $ | — | $ | (823 | ) | $ | 2,020 | $ | 2,156 | $ | (4,681 | ) | $ | — | $ | (505 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 141 | — | (422 | ) | — | (281 | ) | 304 | 230 | (963 | ) | — | (429 | ) | ||||||||||||||||||||||||||
Amount | $ | 994 | $ | — | $ | (2,912 | ) | $ | — | $ | (1,918 | ) | $ | 3,886 | $ | 3,279 | $ | (11,463 | ) | $ | — | $ | (4,298 | ) | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 3 | 1 | (56 | ) | — | (52 | ) | 265 | 2 | (76 | ) | — | 191 | |||||||||||||||||||||||||||
Amount | $ | 22 | $ | 10 | $ | (402 | ) | $ | — | $ | (370 | ) | $ | 2,796 | $ | 29 | $ | (689 | ) | $ | — | $ | 2,136 | |||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,028 | 61 | (378 | ) | — | 711 | 1,470 | 1,072 | (2,550 | ) | — | (8 | ) | |||||||||||||||||||||||||||
Amount | $ | 7,194 | $ | 479 | $ | (2,735 | ) | $ | — | $ | 4,938 | $ | 19,741 | $ | 16,242 | $ | (24,579 | ) | $ | — | $ | 11,404 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 9 | $ | 66 | |||||
For the Year Ended October 31, 2008 | 31 | $ | 393 |
7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.45 | $ | 0.01 | $ | — | $ | 0.26 | $ | 0.27 | $ | — | $ | — | $ | — | $ | — | $ | 0.27 | $ | 7.72 | 3.49 | %(f) | $ | 41,279 | 1.96 | %(g) | 1.33 | %(g) | 1.33 | %(g) | 0.36 | %(g) | 70 | % | ||||||||||||||||||||||||||||||||||||
B | 7.16 | — | — | 0.25 | 0.25 | — | — | — | — | 0.25 | 7.41 | 3.35 | (f) | 6,754 | 3.10 | (g) | 1.68 | (g) | 1.68 | (g) | 0.04 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.06 | (0.01 | ) | — | 0.24 | 0.23 | — | — | — | — | 0.23 | 7.29 | 3.11 | (f) | 8,854 | 2.70 | (g) | 2.08 | (g) | 2.08 | (g) | (0.37 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 7.47 | 0.01 | — | 0.26 | 0.27 | (0.06 | ) | — | — | (0.06 | ) | 0.21 | 7.68 | 3.59 | (f) | 1,146 | 1.31 | (g) | 1.31 | (g) | 1.31 | (g) | 0.35 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.60 | 0.03 | — | 0.25 | 0.28 | (0.07 | ) | — | — | (0.07 | ) | 0.21 | 7.81 | 3.62 | (f) | 62,136 | 1.13 | (g) | 1.13 | (g) | 1.13 | (g) | 0.69 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 17.99 | 0.10 | — | (8.53 | ) | (8.43 | ) | (0.16 | ) | (1.95 | ) | — | (2.11 | ) | (10.54 | ) | 7.45 | (52.67 | ) | 48,739 | 1.52 | 1.52 | 1.52 | 0.79 | 121 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 17.35 | 0.02 | — | (8.20 | ) | (8.18 | ) | (0.06 | ) | (1.95 | ) | — | (2.01 | ) | (10.19 | ) | 7.16 | (52.96 | ) | 7,392 | 2.53 | 2.13 | 2.13 | 0.18 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 17.16 | — | — | (8.08 | ) | (8.08 | ) | (0.07 | ) | (1.95 | ) | — | (2.02 | ) | (10.10 | ) | 7.06 | (53.00 | ) | 10,563 | 2.28 | 2.28 | 2.28 | 0.02 | — | |||||||||||||||||||||||||||||||||||||||||||||||
I | 18.02 | 0.11 | — | (8.48 | ) | (8.37 | ) | (0.23 | ) | (1.95 | ) | — | (2.18 | ) | (10.55 | ) | 7.47 | (52.43 | ) | 1,497 | 1.16 | 1.16 | 1.16 | 1.23 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 18.26 | 0.18 | — | (8.66 | ) | (8.48 | ) | (0.23 | ) | (1.95 | ) | — | (2.18 | ) | (10.66 | ) | 7.60 | (52.32 | ) | 55,020 | 1.01 | 1.01 | 1.01 | 1.36 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.19 | 0.03 | — | 3.92 | 3.95 | (0.15 | ) | (2.00 | ) | — | (2.15 | ) | 1.80 | 17.99 | 27.90 | 153,290 | 1.49 | 1.49 | 1.49 | 0.33 | 96 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.72 | (0.05 | ) | — | 3.76 | 3.71 | (0.08 | ) | (2.00 | ) | — | (2.08 | ) | 1.63 | 17.35 | 26.97 | 19,562 | 2.44 | 2.26 | 2.26 | (0.47 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.55 | (0.02 | ) | — | 3.69 | 3.67 | (0.06 | ) | (2.00 | ) | — | (2.06 | ) | 1.61 | 17.16 | 26.98 | 33,033 | 2.23 | 2.23 | 2.23 | (0.43 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I(h) | 17.10 | 0.02 | — | 0.90 | 0.92 | — | — | — | — | 0.92 | 18.02 | 5.38 | (f) | 174 | 1.19 | (g) | 1.19 | (g) | 1.19 | (g) | 0.77 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 16.37 | 0.02 | — | 4.06 | 4.08 | (0.19 | ) | (2.00 | ) | — | (2.19 | ) | 1.89 | 18.26 | 28.48 | 132,411 | 1.01 | 1.01 | 1.01 | 0.75 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.27 | 0.08 | — | 3.62 | 3.70 | (0.25 | ) | (1.53 | ) | — | (1.78 | ) | 1.92 | 16.19 | 29.36 | 69,998 | 1.74 | 1.60 | 1.60 | 0.56 | 107 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.91 | (0.01 | ) | — | 3.51 | 3.50 | (0.16 | ) | (1.53 | ) | — | (1.69 | ) | 1.81 | 15.72 | 28.51 | 11,960 | 2.66 | 2.24 | 2.24 | (0.08 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.78 | (0.03 | ) | — | 3.48 | 3.45 | (0.15 | ) | (1.53 | ) | — | (1.68 | ) | 1.77 | 15.55 | 28.35 | 18,486 | 2.43 | 2.35 | 2.35 | (0.22 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.41 | 0.15 | — | 3.64 | 3.79 | (0.30 | ) | (1.53 | ) | — | (1.83 | ) | 1.96 | 16.37 | 29.89 | 86,707 | 1.20 | 1.20 | 1.20 | 0.97 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.44 | 0.06 | — | 2.25 | 2.31 | — | (1.48 | ) | — | (1.48 | ) | 0.83 | 14.27 | 18.90 | 34,896 | 1.82 | 1.60 | 1.60 | 0.71 | 112 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.23 | — | — | 2.16 | 2.16 | — | (1.48 | ) | — | (1.48 | ) | 0.68 | 13.91 | 17.96 | 6,101 | 2.78 | 2.35 | 2.35 | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.12 | (0.01 | ) | — | 2.15 | 2.14 | — | (1.48 | ) | — | (1.48 | ) | 0.66 | 13.78 | 17.96 | 12,614 | 2.46 | 2.35 | 2.35 | (0.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.54 | 0.12 | — | 2.27 | 2.39 | (0.04 | ) | (1.48 | ) | — | (1.52 | ) | 0.87 | 14.41 | 19.40 | 65,828 | 1.28 | 1.20 | 1.20 | 1.13 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.93 | 0.07 | — | 1.31 | 1.38 | — | (0.87 | ) | — | (0.87 | ) | 0.51 | 13.44 | 11.39 | 23,934 | 1.99 | 1.65 | 1.65 | 0.90 | 119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.82 | 0.02 | — | 1.26 | 1.28 | — | (0.87 | ) | — | (0.87 | ) | 0.41 | 13.23 | 10.62 | 3,726 | 2.89 | 2.35 | 2.35 | 0.15 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.72 | 0.03 | — | 1.24 | 1.27 | — | (0.87 | ) | — | (0.87 | ) | 0.40 | 13.12 | 10.63 | 10,072 | 2.60 | 2.35 | 2.35 | 0.27 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.02 | 0.14 | — | 1.30 | 1.44 | (0.05 | ) | (0.87 | ) | — | (0.92 | ) | 0.52 | 13.54 | 11.80 | 42,449 | 1.41 | 1.20 | 1.20 | 1.26 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on May 31, 2007. |
19
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20
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
21
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22
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,034.85 | $ | 6.71 | $ | 1,000.00 | $ | 1,018.19 | $ | 6.65 | 1.33 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,033.47 | $ | 8.47 | $ | 1,000.00 | $ | 1,016.46 | $ | 8.39 | 1.68 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,031.11 | $ | 10.47 | $ | 1,000.00 | $ | 1,014.48 | $ | 10.38 | 2.08 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,035.89 | $ | 6.61 | $ | 1,000.00 | $ | 1,018.29 | $ | 6.55 | 1.31 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,036.17 | $ | 5.70 | $ | 1,000.00 | $ | 1,019.19 | $ | 5.65 | 1.13 | 181 | 365 |
23
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 | ||||
24 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
MidCap A# | 12/31/97 | -31.95 | % | 2.77 | % | 7.53 | % | 9.87 | % | |||||||||||
MidCap A## | 12/31/97 | -35.70 | % | 1.61 | % | 6.92 | % | 9.33 | % | |||||||||||
MidCap B# | 12/31/97 | -32.49 | % | 1.98 | % | NA* | NA* | |||||||||||||
MidCap B## | 12/31/97 | -35.87 | % | 1.75 | % | NA* | NA* | |||||||||||||
MidCap C# | 12/31/97 | -32.43 | % | 2.06 | % | 6.81 | % | 9.13 | % | |||||||||||
MidCap C## | 12/31/97 | -33.10 | % | 2.06 | % | 6.81 | % | 9.13 | % | |||||||||||
MidCap I# | 12/31/97 | -31.86 | % | 2.80 | % | 7.54 | % | 9.89 | % | |||||||||||
MidCap Y# | 12/31/97 | -31.65 | % | 3.23 | % | 8.05 | % | 10.39 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. | |
(4) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class I shares commenced operations on 2/27/09. Performance prior to 2/27/09 reflects Class A performance. |
Phillip H. Perelmuter
Senior Vice President, Partner
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 2.6 | % | ||
Capital Goods | 7.5 | |||
Commercial & Professional Services | 2.5 | |||
Consumer Durables & Apparel | 2.2 | |||
Consumer Services | 4.2 | |||
Diversified Financials | 0.7 | |||
Energy | 7.4 | |||
Food & Staples Retailing | 2.4 | |||
Food, Beverage & Tobacco | 2.1 | |||
Health Care Equipment & Services | 8.4 | |||
Household & Personal Products | 0.9 | |||
Insurance | 8.1 | |||
Materials | 3.9 | |||
Media | 2.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 4.3 | |||
Real Estate | 3.8 | |||
Retailing | 8.6 | |||
Semiconductors & Semiconductor Equipment | 2.2 | |||
Software & Services | 8.4 | |||
Technology Hardware & Equipment | 5.7 | |||
Telecommunication Services | 1.0 | |||
Transportation | 1.1 | |||
Utilities | 5.1 | |||
Short-Term Investments | 5.1 | |||
Other Assets and Liabilities | (0.5 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.4% | ||||||||
Banks - 2.6% | ||||||||
280 | M&T Bank Corp. | $ | 14,679 | |||||
270 | People’s United Financial, Inc. | 4,224 | ||||||
861 | PNC Financial Services Group, Inc. | 34,178 | ||||||
53,081 | ||||||||
Capital Goods - 7.5% | ||||||||
687 | AMETEK, Inc. | 22,119 | ||||||
440 | Illinois Tool Works, Inc. | 14,443 | ||||||
493 | Kennametal, Inc. | 10,076 | ||||||
971 | Lennox International, Inc. | 30,978 | ||||||
1,094 | PACCAR, Inc. | 38,778 | ||||||
387 | Parker-Hannifin Corp. | 17,555 | ||||||
243 | Precision Castparts Corp. | 18,153 | ||||||
152,102 | ||||||||
Commercial & Professional Services - 2.5% | ||||||||
200 | Dun & Bradstreet Corp. | 16,296 | ||||||
577 | Equifax, Inc.• | 16,817 | ||||||
901 | Republic Services, Inc. | 18,928 | ||||||
52,041 | ||||||||
Consumer Durables & Apparel - 2.2% | ||||||||
1,817 | Mattel, Inc. | 27,181 | ||||||
37 | NVR, Inc. • | 18,547 | ||||||
45,728 | ||||||||
Consumer Services - 4.2% | ||||||||
324 | Apollo Group, Inc. Class A • | 20,369 | ||||||
647 | Corinthian Colleges, Inc. • | 9,961 | ||||||
256 | DeVry, Inc. | 10,878 | ||||||
205 | ITT Educational Services, Inc. • | 20,617 | ||||||
649 | Scientific Games Corp. Class A • | 11,358 | ||||||
56 | Strayer Education, Inc. | 10,645 | ||||||
83,828 | ||||||||
Diversified Financials - 0.7% | ||||||||
56 | BlackRock, Inc. | 8,176 | ||||||
325 | Jefferies Group, Inc. | 6,356 | ||||||
14,532 | ||||||||
Energy - 7.4% | ||||||||
1,064 | Denbury Resources, Inc. • | 17,328 | ||||||
740 | Forest Oil Corp. • | 11,840 | ||||||
319 | Helmerich & Payne, Inc. | 9,844 | ||||||
699 | Nabors Industries Ltd. • | 10,626 | ||||||
608 | Noble Energy, Inc. | 34,510 | ||||||
833 | Smith International, Inc. | 21,533 | ||||||
717 | St. Mary Land & Exploration Co. | 12,809 | ||||||
711 | Ultra Petroleum Corp.• | 30,414 | ||||||
148,904 | ||||||||
Food & Staples Retailing - 2.4% | ||||||||
125 | BJ’s Wholesale Club, Inc. • | 4,158 | ||||||
978 | Kroger Co. | 21,153 | ||||||
1,404 | Supervalu, Inc. | 22,947 | ||||||
48,258 | ||||||||
Food, Beverage & Tobacco - 2.1% | ||||||||
1,529 | Coca-Cola Enterprises, Inc. | 26,086 | ||||||
517 | Pepsi Bottling Group, Inc. | 16,156 | ||||||
42,242 | ||||||||
Health Care Equipment & Services - 8.4% | ||||||||
658 | Beckman Coulter, Inc. | 34,579 | ||||||
249 | Cerner Corp. • | 13,391 | ||||||
141 | Edwards Lifesciences Corp. • | 8,905 | ||||||
283 | Humana, Inc. • | 8,136 | ||||||
424 | Omnicare, Inc. | 10,896 | ||||||
1,437 | Patterson Cos., Inc. • | 29,409 | ||||||
857 | St. Jude Medical, Inc. • | 28,720 | ||||||
279 | Universal Health Services, Inc. Class B | 14,062 | ||||||
209 | Varian Medical Systems, Inc. • | 6,964 | ||||||
323 | Zimmer Holdings, Inc. • | 14,205 | ||||||
169,267 | ||||||||
Household & Personal Products - 0.9% | ||||||||
332 | Clorox Co. | 18,586 | ||||||
Insurance - 8.1% | ||||||||
460 | Aflac, Inc. | 13,290 | ||||||
556 | AON Corp. | 23,463 | ||||||
264 | Axis Capital Holdings Ltd. | 6,515 | ||||||
340 | Everest Re Group Ltd. | 25,340 | ||||||
449 | Fidelity National Financial, Inc. | 8,140 | ||||||
163 | First American Financial Corp. | 4,574 | ||||||
523 | Marsh & McLennan Cos., Inc. | 11,033 | ||||||
143 | PartnerRe Ltd. | 9,772 | ||||||
2,016 | Unum Group | 32,943 | ||||||
1,164 | W.R. Berkley Corp. | 27,839 | ||||||
6 | White Mountains Insurance Group Ltd. | 1,210 | ||||||
164,119 | ||||||||
Materials - 3.9% | ||||||||
621 | Ball Corp. | 23,428 | ||||||
308 | Cliff’s Natural Resources, Inc. | 7,111 | ||||||
286 | FMC Corp. | 13,912 | ||||||
278 | Mosaic Co. | 11,241 | ||||||
577 | Nucor Corp. | 23,458 | ||||||
79,150 | ||||||||
Media - 2.3% | ||||||||
1,350 | DreamWorks Animation SKG, Inc. • | 32,405 | ||||||
530 | Scripps Networks Interactive Class A | 14,551 | ||||||
46,956 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 4.3% | ||||||||
1,310 | Amylin Pharmaceuticals, Inc. • | 14,336 | ||||||
646 | Life Technologies Corp. • | 24,096 | ||||||
251 | Myriad Genetics, Inc. • | 9,755 | ||||||
184 | OSI Pharmaceuticals, Inc. • | 6,170 | ||||||
275 | Perrigo Co. | 7,125 | ||||||
500 | Pharmaceutical Product Development, Inc. | 9,795 | ||||||
555 | Regeneron Pharmaceuticals, Inc. • | 7,358 | ||||||
290 | Vertex Pharmaceuticals, Inc. • | 8,938 | ||||||
87,573 | ||||||||
Real Estate - 3.8% | ||||||||
251 | CB Richard Ellis Group, Inc. Class A • | 1,884 | ||||||
1,181 | Host Hotels & Resorts, Inc. | 9,083 | ||||||
844 | Kimco Realty Corp. | 10,145 | ||||||
356 | Liberty Property Trust | 8,658 | ||||||
109 | Mack-Cali Realty Corp. | 2,936 | ||||||
189 | Public Storage | 12,659 | ||||||
116 | Regency Centers Corp. | 4,361 | ||||||
547 | Simon Property Group, Inc. | 28,230 | ||||||
77,956 | ||||||||
Retailing - 8.6% | ||||||||
632 | Advance Automotive Parts, Inc. | 27,628 | ||||||
148 | AutoZone, Inc. • | 24,593 | ||||||
715 | Best Buy Co., Inc. | 27,453 | ||||||
1,008 | O’Reilly Automotive, Inc. • | 39,161 | ||||||
365 | Sherwin-Williams Co. | 20,668 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 95.4% — (continued) | ||||||||
Retailing - 8.6% — (continued) | ||||||||
1,652 | Staples, Inc. | $ | 34,066 | |||||
173,569 | ||||||||
Semiconductors & Semiconductor Equipment - 2.2% | ||||||||
778 | Altera Corp. | 12,683 | ||||||
1,125 | Lam Research Corp. • | 31,371 | ||||||
44,054 | ||||||||
Software & Services - 8.4% | ||||||||
544 | Adobe Systems, Inc. • | 14,886 | ||||||
419 | BMC Software, Inc. • | 14,520 | ||||||
238 | Factset Research Systems, Inc. | 12,733 | ||||||
329 | Global Payments, Inc. | 10,541 | ||||||
835 | Micros Systems. • | 17,508 | ||||||
1,670 | Red Hat, Inc. • | 28,832 | ||||||
1,011 | VeriSign, Inc. • | 20,798 | ||||||
2,997 | Western Union Co. | 50,192 | ||||||
170,010 | ||||||||
Technology Hardware & Equipment - 5.7% | ||||||||
827 | Diebold, Inc. | 21,858 | ||||||
148 | Itron, Inc. • | 6,790 | ||||||
526 | Juniper Networks, Inc. • | 11,390 | ||||||
1,647 | NCR Corp. • | 16,714 | ||||||
2,012 | NetApp, Inc. • | 36,825 | ||||||
1,318 | Teradata Corp. • | 22,032 | ||||||
115,609 | ||||||||
Telecommunication Services - 1.0% | ||||||||
637 | American Tower Corp. Class A • | 20,225 | ||||||
Transportation - 1.1% | ||||||||
465 | J.B. Hunt Transport Services, Inc. | 13,075 | ||||||
288 | Landstar System, Inc. | 10,252 | ||||||
23,327 | ||||||||
Utilities - 5.1% | ||||||||
1,508 | Northeast Utilities | 31,692 | ||||||
1,479 | UGI Corp. | 33,917 | ||||||
460 | Wisconsin Energy Corp. | 18,394 | ||||||
952 | Xcel Energy, Inc. | 17,558 | ||||||
101,561 | ||||||||
Total common stocks (cost $2,087,136) | $ | 1,932,678 | ||||||
Total long-term investments (cost $2,087,136) | $ | 1,932,678 | ||||||
SHORT-TERM INVESTMENTS - 5.1% | ||||||||
Repurchase Agreements - 5.1% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $24,362, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $24,849) | ||||||||
$ | 24,362 | 0.18%, 04/30/2009 | $ | 24,362 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $29,154, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $29,737) | ||||||||
29,154 | 0.17%, 04/30/2009 | 29,154 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $40,736, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $41,551) | ||||||||
40,736 | 0.17%, 04/30/2009 | 40,736 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $137, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $141) | ||||||||
137 | 0.14%, 04/30/2009 | 137 | ||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $8,786, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $8,962) | ||||||||
8,786 | 0.16%, 04/30/2009 | 8,786 | ||||||
103,175 | ||||||||
Total short-term investments (cost $103,175) | $ | 103,175 | ||||||
Total investments (cost $2,190,311) ▲ | 100.5 | % | $ | 2,035,853 | ||||||||
Other assets and liabilities | (0 .5 | )% | (9,477 | ) | ||||||||
Total net assets | 100.0 | % | $ | 2,026,376 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,202,918 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 138,629 | ||
Unrealized Depreciation | (305,694 | ) | ||
Net Unrealized Depreciation | $ | (167,065 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 1,932,678 | ||
Investment in securities — Level 2 | 103,175 | |||
Total | $ | 2,035,853 | ||
5
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $2,190,311) | $ | 2,035,853 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 15,929 | |||
Fund shares sold | 11,810 | |||
Dividends and interest | 832 | |||
Other assets | 308 | |||
Total assets | 2,064,733 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 33,630 | |||
Fund shares redeemed | 3,527 | |||
Investment management fees | 245 | |||
Distribution fees | 126 | |||
Accrued expenses | 829 | |||
Total liabilities | 38,357 | |||
Net assets | $ | 2,026,376 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 2,609,764 | |||
Accumulated distribution in excess of net investment income | (834 | ) | ||
Accumulated net realized loss on investments | (428,096 | ) | ||
Unrealized depreciation of investments | (154,458 | ) | ||
Net assets | $ | 2,026,376 | ||
Shares authorized | 510,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 14.31/$15.14 | ||
Shares outstanding | 97,798 | |||
Net assets | $ | 1,399,350 | ||
Class B: Net asset value per share | $ | 12.55 | ||
Shares outstanding | 11,560 | |||
Net assets | $ | 145,070 | ||
Class C: Net asset value per share | $ | 12.67 | ||
Shares outstanding | 22,361 | |||
Net assets | $ | 283,420 | ||
Class I: Net asset value per share | $ | 14.33 | ||
Shares outstanding | 997 | |||
Net assets | $ | 14,290 | ||
Class Y: Net asset value per share | $ | 15.53 | ||
Shares outstanding | 11,863 | |||
Net assets | $ | 184,246 | ||
6
Table of Contents
Investment Income: | ||||
Dividends | $ | 11,798 | ||
Interest | 81 | |||
Securities lending | 114 | |||
Total investment income | 11,993 | |||
Expenses: | ||||
Investment management fees | 6,620 | |||
Transfer agent fees | 2,479 | |||
Distribution fees | ||||
Class A | 1,504 | |||
Class B | 766 | |||
Class C | 1,227 | |||
Custodian fees | 13 | |||
Accounting services | 122 | |||
Registration and filing fees | 67 | |||
Board of Directors’ fees | 21 | |||
Audit fees | 29 | |||
Other expenses | 480 | |||
Total expenses (before waivers and fees paid indirectly) | 13,328 | |||
Expense waivers | (209 | ) | ||
Transfer agent fee waivers | (199 | ) | ||
Commission recapture | (92 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (501 | ) | ||
Total expenses, net | 12,827 | |||
Net investment loss | (834 | ) | ||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (370,859 | ) | ||
Net Realized Loss on Investments | (370,859 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 338,571 | |||
Net Changes in Unrealized Appreciation of Investments | 338,571 | |||
Net Loss on Investments | (32,288 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (33,122 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (834 | ) | $ | (7,180 | ) | ||
Net realized loss on investments | (370,859 | ) | (56,994 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 338,571 | (1,062,998 | ) | |||||
Net decrease in net assets resulting from operations | (33,122 | ) | (1,127,172 | ) | ||||
Distributions to Shareholders: | ||||||||
Class A | — | (10,673 | ) | |||||
Class Y | — | (1,203 | ) | |||||
From net realized gain on investments | ||||||||
Class A | — | (324,294 | ) | |||||
Class B | — | (73,929 | ) | |||||
Class C | — | (85,395 | ) | |||||
Class Y | — | (18,628 | ) | |||||
Total distributions | — | (514,122 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | 109,063 | 193,914 | ||||||
Class B | (42,285 | ) | (54,633 | ) | ||||
Class C | 14,616 | 412 | ||||||
Class I | 12,822 | — | ||||||
Class Y | 21,537 | 122,137 | ||||||
Net increase from capital share transactions | 115,753 | 261,830 | ||||||
Net increase (decrease) in net assets | 82,631 | (1,379,464 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 1,943,745 | 3,323,209 | ||||||
End of period | $ | 2,026,376 | $ | 1,943,745 | ||||
Accumulated distribution in excess of net investment loss | $ | (834 | ) | $ | — | |||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford MidCap Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading |
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restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
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Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders - Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the |
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Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund had no illiquid or restricted securities as of April 30, 2009. | ||
k) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
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• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
m) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
n) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
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3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 151,000 | $ | 42,383 | ||||
Long-Term Capital Gains * | 363,122 | 439,002 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses* | $ | (44,630 | ) | |
Unrealized Depreciation† | $ | (505,636 | ) | |
Total Accumulated Deficit | $ | (550,266 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $7,193, increase accumulated net realized gain by $662, and decrease paid in capital by $7,855. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
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Year | Amount | |||
2016 | $ | 44,630 | ||
Total | $ | 44,630 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8500 | % | ||
On next $500 million | 0.7500 | % | ||
On next $4 billion | 0.7000 | % | ||
On next $5 billion | 0.6975 | % | ||
Over $10 billion | 0.6950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class Y | ||||||||||||
1.37% | NA | NA | 1.12 | % | NA |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund |
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maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | |||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.34 | % | 1.23 | % | 1.21 | % | 1.25 | % | 1.28 | % | 1.36 | % | ||||||||||||
Class B Shares | 2.14 | 2.00 | 1.98 | 2.01 | 2.06 | 2.10 | ||||||||||||||||||
Class C Shares | 2.05 | 1.91 | 1.90 | 1.93 | 1.97 | 2.00 | ||||||||||||||||||
Class I Shares | 1.09 | * | ||||||||||||||||||||||
Class Y Shares | 0.84 | 0.79 | 0.78 | 0.78 | �� | 0.81 | 0.84 |
* | From February 27, 2009 (commencement of operations), through April 30, 2009 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $3,270 and contingent deferred sales charges of $47 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $55. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $3. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $2,318 for providing such services. These fees are accrued daily and paid monthly. |
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g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.08 | % | 25.86 | % | ||||
Class B | 0.09 | 24.87 | ||||||
Class C | 0.09 | 24.97 | ||||||
Class Y | 0.08 | 26.40 |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class I | 8 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 942,271 | ||
Sales Proceeds Excluding U.S. Government Obligations | 891,615 |
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7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 23,719 | — | (15,964 | ) | — | 7,755 | 11,241 | 15,211 | (18,426 | ) | — | 8,026 | ||||||||||||||||||||||||||||
Amount | $ | 312,963 | $ | — | $ | (203,900 | ) | $ | — | $ | 109,063 | $ | 222,250 | $ | 326,053 | $ | (354,389 | ) | $ | — | $ | 193,914 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,002 | — | (4,720 | ) | — | (3,718 | ) | 174 | 3,713 | (7,388 | ) | — | (3,501 | ) | ||||||||||||||||||||||||||
Amount | $ | 11,658 | $ | — | $ | (53,943 | ) | $ | — | $ | (42,285 | ) | $ | 3,113 | $ | 70,283 | $ | (128,029 | ) | $ | — | $ | (54,633 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,416 | — | (3,286 | ) | — | 1,130 | 258 | 4,118 | (4,803 | ) | — | (427 | ) | |||||||||||||||||||||||||||
Amount | $ | 52,050 | $ | — | $ | (37,434 | ) | $ | — | $ | 14,616 | $ | 4,710 | $ | 78,620 | $ | (82,918 | ) | $ | — | $ | 412 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,047 | — | (50 | ) | — | 997 | — | — | — | — | — | |||||||||||||||||||||||||||||
Amount | $ | 13,512 | $ | — | $ | (690 | ) | $ | — | $ | 12,822 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,224 | — | (2,730 | ) | — | 1,494 | 6,624 | 845 | (1,795 | ) | — | 5,674 | ||||||||||||||||||||||||||||
Amount | $ | 59,789 | $ | — | $ | (38,252 | ) | $ | — | $ | 21,537 | $ | 140,256 | $ | 19,580 | $ | (37,699 | ) | $ | — | $ | 122,137 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 1,791 | $ | 23,406 | |||||
For the Year Ended October 31, 2008 | 2,209 | $ | 43,482 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 14.55 | $ | — | $ | — | $ | (0.24 | ) | $ | (0.24 | ) | $ | — | $ | — | $ | — | $ | — | $ | (0.24 | ) | $ | 14.31 | (1.65) | %(e) | $ | 1,399,350 | 1.41 | %(f) | 1.35 | %(f) | 1.35 | %(f) | 0.03 | %(f) | 51 | % | |||||||||||||||||||||||||||||||||
B | 12.81 | (0.04 | ) | — | (0.22 | ) | (0.26 | ) | — | — | — | — | (0.26 | ) | 12.55 | (2.03 | ) (e) | 145,070 | 2.21 | (f) | 2.14 | (f) | 2.14 | (f) | (0.74 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 12.93 | (0.04 | ) | — | (0.22 | ) | (0.26 | ) | — | — | — | — | (0.26 | ) | 12.67 | (2.01 | ) (e) | 283,420 | 2.05 | (f) | 2.05 | (f) | 2.05 | (f) | (0.67 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
I(g) | 12.12 | — | — | 2.21 | 2.21 | — | — | — | — | 2.21 | 14.33 | 18.23 | (e) | 14,290 | 1.09 | (f) | 1.09 | (f) | 1.09 | (f) | (0.19 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.75 | 0.03 | — | (0.25 | ) | (0.22 | ) | — | — | — | — | (0.22 | ) | 15.53 | (1.40 | ) (e) | 184,246 | 0.84 | (f) | 0.84 | (f) | 0.84 | (f) | 0.53 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 26.89 | (0.02 | ) | — | (8.25 | ) | (8.27 | ) | (0.11 | ) | (3.96 | ) | — | (4.07 | ) | (12.34 | ) | 14.55 | (35.56 | ) | 1,310,085 | 1.23 | 1.23 | 1.23 | (0.09 | ) | 94 | |||||||||||||||||||||||||||||||||||||||||||||
B | 24.23 | (0.16 | ) | — | (7.30 | ) | (7.46 | ) | — | (3.96 | ) | — | (3.96 | ) | (11.42 | ) | 12.81 | (36.07 | ) | 195,738 | 2.01 | 2.01 | 2.01 | (0.86 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 24.40 | (0.14 | ) | — | (7.37 | ) | (7.51 | ) | — | (3.96 | ) | — | (3.96 | ) | (11.47 | ) | 12.93 | (36.01 | ) | 274,583 | 1.92 | 1.92 | 1.92 | (0.77 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 28.74 | 0.08 | — | (8.91 | ) | (8.83 | ) | (0.20 | ) | (3.96 | ) | — | (4.16 | ) | (12.99 | ) | 15.75 | (35.28 | ) | 163,339 | 0.79 | 0.79 | 0.79 | 0.36 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 25.31 | 0.05 | 0.02 | 5.53 | 5.60 | — | (4.02 | ) | — | (4.02 | ) | 1.58 | 26.89 | 25.96 | (i) | 2,205,026 | 1.22 | 1.22 | 1.22 | 0.20 | 76 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 23.35 | (0.13 | ) | 0.02 | 5.01 | 4.90 | — | (4.02 | ) | — | (4.02 | ) | 0.88 | 24.23 | 24.98 | (i) | 454,927 | 1.99 | 1.99 | 1.99 | (0.52 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 23.47 | (0.11 | ) | 0.02 | 5.04 | 4.95 | — | (4.02 | ) | — | (4.02 | ) | 0.93 | 24.40 | 25.08 | (i) | 528,342 | 1.91 | 1.91 | 1.91 | (0.44 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 26.68 | 0.28 | 0.03 | 5.77 | 6.08 | — | (4.02 | ) | — | (4.02 | ) | 2.06 | 28.74 | 26.50 | (i) | 134,914 | 0.79 | 0.79 | 0.79 | 0.73 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 26.32 | (0.03 | ) | — | 3.44 | 3.41 | — | (4.42 | ) | — | (4.42 | ) | (1.01 | ) | 25.31 | 14.84 | 1,837,361 | 1.27 | 1.27 | 1.27 | (0.13 | ) | 84 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 24.77 | (0.22 | ) | — | 3.22 | 3.00 | — | (4.42 | ) | — | (4.42 | ) | (1.42 | ) | 23.35 | 13.97 | 449,488 | 2.04 | 2.04 | 2.04 | (0.90 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 24.86 | (0.20 | ) | — | 3.23 | 3.03 | — | (4.42 | ) | — | (4.42 | ) | (1.39 | ) | 23.47 | 14.06 | 499,039 | 1.96 | 1.96 | 1.96 | (0.82 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 27.42 | 0.08 | — | 3.60 | 3.68 | — | (4.42 | ) | — | (4.42 | ) | (0.74 | ) | 26.68 | 15.31 | 184,149 | 0.81 | 0.81 | 0.81 | 0.33 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 22.61 | (0.05 | ) | — | 4.24 | 4.19 | — | (0.48 | ) | — | (0.48 | ) | 3.71 | 26.32 | 18.85 | 1,677,327 | 1.30 | 1.30 | 1.30 | (0.20 | ) | 74 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 21.47 | (0.24 | ) | — | 4.02 | 3.78 | — | (0.48 | ) | — | (0.48 | ) | 3.30 | 24.77 | 17.92 | 464,175 | 2.08 | 2.08 | 2.08 | (0.98 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 21.52 | (0.22 | ) | — | 4.04 | 3.82 | — | (0.48 | ) | — | (0.48 | ) | 3.34 | 24.86 | 18.07 | 499,502 | 1.99 | 1.99 | 1.99 | (0.89 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 23.43 | 0.07 | — | 4.40 | 4.47 | — | (0.48 | ) | — | (0.48 | ) | 3.99 | 27.42 | 19.40 | 139,273 | 0.83 | 0.83 | 0.83 | 0.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 20.58 | (0.09 | ) | — | 2.12 | 2.03 | — | — | — | — | 2.03 | 22.61 | 9.86 | 1,544,968 | 1.37 | 1.37 | 1.37 | (0.41 | ) | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 19.68 | (0.25 | ) | — | 2.04 | 1.79 | — | — | — | — | 1.79 | 21.47 | 9.10 | 438,658 | 2.11 | 2.11 | 2.11 | (1.15 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 19.71 | (0.23 | ) | — | 2.04 | 1.81 | — | — | — | — | 1.81 | 21.52 | 9.18 | 484,268 | 2.02 | 2.02 | 2.02 | (1.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 21.21 | 0.02 | — | 2.20 | 2.22 | — | — | — | — | 2.22 | 23.43 | 10.47 | 104,534 | 0.85 | 0.85 | 0.85 | 0.11 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on February 27, 2009. | |
(h) | Per share amounts have been calculated using average shares outstanding method. | |
(i) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. |
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Actual return | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | ||||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | |||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | ||||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | ||||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | ||||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 983.50 | $ | 6.63 | $ | 1,000.00 | $ | 1,018.10 | $ | 6.75 | 1.35 | % | 181 | 365 | ||||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 979.70 | $ | 10.50 | $ | 1,000.00 | $ | 1,014.18 | $ | 10.68 | 2.14 | 181 | 365 | |||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 979.89 | $ | 10.06 | $ | 1,000.00 | $ | 1,014.62 | $ | 10.24 | 2.05 | 181 | 365 | |||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 984.87 | $ | 1.83 | $ | 1,000.00 | $ | 1,006.64 | $ | 1.85 | 1.09 | 62 | 365 | |||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 986.03 | $ | 4.13 | $ | 1,000.00 | $ | 1,020.62 | $ | 4.20 | 0.84 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
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Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||
Date | Year | Inception | ||||
MidCap Gro A# | 1/01/05 | -35.49% | -6.26% | |||
MidCap Gro A## | 1/01/05 | -39.04% | -7.48% | |||
MidCap Gro B# | 1/01/05 | -35.72% | -6.78% | |||
MidCap Gro B## | 1/01/05 | -38.94% | -7.13% | |||
MidCap Gro C# | 1/01/05 | -35.81% | -6.90% | |||
MidCap Gro C## | 1/01/05 | -36.45% | -6.90% | |||
MidCap Gro Y# | 1/01/05 | -35.29% | -5.93% |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Paul Bukowski, CFA | |
Managing Director | Vice President |
2
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Percentage of | ||||
Industry | Net Assets | |||
Capital Goods | 12.7 | % | ||
Commercial & Professional Services | 2.0 | |||
Consumer Durables & Apparel | 2.6 | |||
Consumer Services | 7.1 | |||
Diversified Financials | 4.7 | |||
Energy | 9.7 | |||
Food, Beverage & Tobacco | 3.3 | |||
Health Care Equipment & Services | 8.2 | |||
Household & Personal Products | 1.1 | |||
Insurance | 1.1 | |||
Materials | 5.3 | |||
Media | 2.4 | |||
Other Investment Pools and Funds | 0.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 2.5 | |||
Real Estate | 0.6 | |||
Retailing | 6.6 | |||
Semiconductors & Semiconductor Equipment | 8.3 | |||
Software & Services | 8.5 | |||
Technology Hardware & Equipment | 6.7 | |||
Telecommunication Services | 2.3 | |||
Transportation | 1.4 | |||
Utilities | 1.7 | |||
Short-Term Investments | 0.7 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
3
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(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.8% | ||||||||
Capital Goods - 12.7% | ||||||||
1 | Alliant Techsystems, Inc. • | $ | 100 | |||||
2 | AMETEK, Inc. | 71 | ||||||
5 | Carlisle Cos., Inc. | 106 | ||||||
3 | Cooper Industries Ltd. | 87 | ||||||
3 | Donaldson Co., Inc. | 112 | ||||||
2 | Flowserve Corp. | 132 | ||||||
5 | Fluor Corp. | 203 | ||||||
6 | General Cable Corp. • | 161 | ||||||
2 | Goodrich Corp. | 79 | ||||||
3 | Graco, Inc. | 76 | ||||||
2 | Hubbell, Inc. Class B | 71 | ||||||
4 | IDEX Corp. | 105 | ||||||
5 | Jacobs Engineering Group, Inc. • | 184 | ||||||
6 | Joy Global, Inc. | 160 | ||||||
4 | KBR, Inc. | 61 | ||||||
4 | Kennametal, Inc. | 80 | ||||||
1 | L-3 Communications Holdings, Inc. | 68 | ||||||
2 | Lincoln Electric Holdings, Inc. | 98 | ||||||
12 | McDermott International, Inc. • | 194 | ||||||
3 | Precision Castparts Corp. | 192 | ||||||
4 | Quanta Services, Inc. • | 80 | ||||||
6 | Shaw Group, Inc. • | 184 | ||||||
3 | Sunpower Corp. • | 81 | ||||||
3 | Toro Co. | 91 | ||||||
3 | URS Corp. • | 123 | ||||||
1 | W. W. Grainger, Inc. | 70 | ||||||
2,969 | ||||||||
Commercial & Professional Services - 2.0% | ||||||||
2 | Dun & Bradstreet Corp. | 151 | ||||||
1 | FTI Consulting, Inc. • | 54 | ||||||
4 | Iron Mountain, Inc. • | 111 | ||||||
3 | Pitney Bowes, Inc. | 81 | ||||||
1 | Stericycle, Inc. • | 56 | ||||||
453 | ||||||||
Consumer Durables & Apparel - 2.6% | ||||||||
9 | Coach, Inc. • | 223 | ||||||
3 | Hasbro, Inc. | 71 | ||||||
2 | Polo Ralph Lauren Corp. | 101 | ||||||
18 | Pulte Homes, Inc. | 211 | ||||||
606 | ||||||||
Consumer Services - 7.1% | ||||||||
3 | Apollo Group, Inc. Class A • | 217 | ||||||
2 | Burger King Holdings, Inc. | 37 | ||||||
2 | Choice Hotels International, Inc. | 63 | ||||||
3 | Darden Restaurants, Inc. | 94 | ||||||
2 | DeVry, Inc. | 90 | ||||||
8 | H & R Block, Inc. | 118 | ||||||
1 | ITT Educational Services, Inc. • | 145 | ||||||
4 | Marriott International, Inc. Class A | 104 | ||||||
1 | Panera Bread Co. Class A • | 82 | ||||||
12 | Starbucks Corp. • | 178 | ||||||
1 | Strayer Education, Inc. | 129 | ||||||
4 | Tim Hortons, Inc. | 104 | ||||||
9 | Yum! Brands, Inc. | 305 | ||||||
1,666 | ||||||||
Diversified Financials - 4.7% | ||||||||
5 | Eaton Vance Corp. | 130 | ||||||
1 | IntercontinentalExchange, Inc. • | 127 | ||||||
2 | Lazard Ltd. | 57 | ||||||
3 | MSCI, Inc. • | 61 | ||||||
4 | Nasdaq OMX Group, Inc. • | 74 | ||||||
4 | Northern Trust Corp. | 232 | ||||||
10 | SEI Investments Co. | 146 | ||||||
4 | T. Rowe Price Group, Inc. | 154 | ||||||
6 | Waddell and Reed Financial, Inc. Class A | 125 | ||||||
1,106 | ||||||||
Energy - 9.7% | ||||||||
7 | Arch Coal, Inc. | 95 | ||||||
6 | Cameron International Corp. • | 151 | ||||||
8 | Denbury Resources, Inc. • | 135 | ||||||
1 | Diamond Offshore Drilling, Inc. | 84 | ||||||
7 | El Paso Corp. | 46 | ||||||
3 | ENSCO International, Inc. | 77 | ||||||
4 | Frontier Oil Corp. | 52 | ||||||
16 | Helix Energy Solutions Group, Inc. • | 144 | ||||||
3 | Murphy Oil Corp. | 132 | ||||||
5 | Noble Corp. | 146 | ||||||
2 | Noble Energy, Inc. | 102 | ||||||
2 | Oceaneering International, Inc. • | 108 | ||||||
7 | Patterson-UTI Energy, Inc. | 86 | ||||||
5 | Pride International, Inc. • | 108 | ||||||
14 | Quicksilver Resources, Inc. | 113 | ||||||
2 | Range Resources Corp. | 92 | ||||||
4 | Smith International, Inc. | 104 | ||||||
5 | Southwestern Energy Co. • | 172 | ||||||
3 | Sunoco, Inc. | 71 | ||||||
12 | Tesoro Corp. | 178 | ||||||
9 | W&T Offshore, Inc. | 86 | ||||||
2,282 | ||||||||
Food, Beverage & Tobacco - 3.3% | ||||||||
1 | Brown-Forman Corp. | 62 | ||||||
3 | Campbell Soup Co. | 79 | ||||||
5 | Dean Foods Co. • | 98 | ||||||
6 | H. J. Heinz Co. | 223 | ||||||
2 | Hansen National Corp. • | 81 | ||||||
3 | Hershey Co. | 98 | ||||||
2 | Lorillard, Inc. | 148 | ||||||
789 | ||||||||
Health Care Equipment & Services - 8.2% | ||||||||
2 | Bard (C. R.), Inc. | 123 | ||||||
1 | Cerner Corp. • | 56 | ||||||
5 | Cigna Corp. | 93 | ||||||
8 | Coventry Health Care, Inc. • | 132 | ||||||
4 | Dentsply International, Inc. | 106 | ||||||
6 | Express Scripts, Inc. • | 361 | ||||||
2 | Gen-Probe, Inc. • | 82 | ||||||
3 | Henry Schein, Inc. • | 111 | ||||||
6 | Hlth Corp. • | 65 | ||||||
5 | IMS Health, Inc. | 59 | ||||||
3 | Laboratory Corp. of America Holdings • | 214 | ||||||
3 | Lincare Holdings, Inc. • | 68 | ||||||
2 | Omnicare, Inc. | 50 | ||||||
2 | Quest Diagnostics, Inc. | 127 | ||||||
5 | St. Jude Medical, Inc. • | 173 | ||||||
3 | Varian Medical Systems, Inc. • | 92 | ||||||
1,912 | ||||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 98.8% - (continued) | ||||||||
Household & Personal Products - 1.1% | ||||||||
2 | Alberto-Culver Co. | $ | 50 | |||||
7 | Avon Products, Inc. | 160 | ||||||
1 | Church & Dwight Co., Inc. | 56 | ||||||
266 | ||||||||
Insurance - 1.1% | ||||||||
3 | Axis Capital Holdings Ltd. | 74 | ||||||
5 | Brown & Brown, Inc. | 92 | ||||||
4 | W. R. Berkley Corp. | 100 | ||||||
266 | ||||||||
Materials - 5.3% | ||||||||
15 | AK Steel Holding Corp. | 200 | ||||||
10 | Ashland, Inc. | 228 | ||||||
2 | CF Industries Holdings, Inc. | 144 | ||||||
8 | Cliff’s Natural Resources, Inc. | 180 | ||||||
2 | Crown Holdings, Inc. • | 51 | ||||||
4 | Owens-Illinois, Inc. • | 102 | ||||||
2 | Schnitzer Steel Industries, Inc. | 93 | ||||||
9 | Steel Dynamics, Inc. | 114 | ||||||
4 | Terra Industries, Inc. | 117 | ||||||
1,229 | ||||||||
Media - 2.4% | ||||||||
3 | DreamWorks Animation SKG, Inc. • | 66 | ||||||
19 | Interpublic Group of Cos., Inc. • | 116 | ||||||
5 | Liberty Media Corp. — Entertainment • | 133 | ||||||
4 | McGraw-Hill Cos., Inc. | 132 | ||||||
3 | Morningstar, Inc. • | 110 | ||||||
557 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 2.5% | ||||||||
4 | Allergan, Inc. | 185 | ||||||
4 | Forest Laboratories, Inc. • | 77 | ||||||
2 | Life Technologies Corp. • | 58 | ||||||
1 | Millipore Corp. • | 63 | ||||||
2 | Vertex Pharmaceuticals, Inc. • | 70 | ||||||
3 | Waters Corp. • | 141 | ||||||
594 | ||||||||
Real Estate - 0.6% | ||||||||
4 | Plum Creek Timber Co., Inc. | 134 | ||||||
Retailing - 6.6% | ||||||||
2 | Abercrombie & Fitch Co. Class A | 62 | ||||||
1 | Advance Automotive Parts, Inc. | 47 | ||||||
1 | AutoZone, Inc. • | 173 | ||||||
2 | Bed Bath & Beyond, Inc. • | 70 | ||||||
2 | Dollar Tree, Inc. • | 87 | ||||||
7 | Gap, Inc. | 115 | ||||||
4 | Kohl’s Corp. • | 197 | ||||||
18 | Limited Brands, Inc. | 208 | ||||||
2 | Priceline.com, Inc. • | 155 | ||||||
4 | Ross Stores, Inc. | 160 | ||||||
1 | Sherwin-Williams Co. | 83 | ||||||
4 | TJX Cos., Inc. | 122 | ||||||
4 | Urban Outfitters, Inc. • | 72 | ||||||
1,551 | ||||||||
Semiconductors & Semiconductor Equipment - 8.3% | ||||||||
10 | Altera Corp. | 157 | ||||||
10 | Analog Devices, Inc. | 203 | ||||||
15 | Broadcom Corp. Class A • | 347 | ||||||
5 | Intersil Corp. | 58 | ||||||
7 | Linear Technology Corp. | 151 | ||||||
26 | Marvell Technology Group Ltd. • | 282 | ||||||
3 | Microchip Technology, Inc. | 71 | ||||||
17 | National Semiconductor Corp. | 215 | ||||||
9 | NVIDIA Corp. • | 102 | ||||||
3 | Silicon Laboratories, Inc. • | 103 | ||||||
3 | Varian Semiconductor Equipment Associates, Inc. • | 74 | ||||||
9 | Xilinx, Inc. | 181 | ||||||
1,944 | ||||||||
Software & Services - 8.5% | ||||||||
8 | Activision Blizzard, Inc. • | 90 | ||||||
3 | Alliance Data Systems Corp. • | 144 | ||||||
18 | Autodesk, Inc. • | 351 | ||||||
3 | BMC Software, Inc. • | 90 | ||||||
6 | Broadridge Financial Solutions, Inc. | 116 | ||||||
4 | Citrix Systems, Inc. • | 111 | ||||||
9 | Electronic Arts, Inc. • | 179 | ||||||
2 | Factset Research Systems, Inc. | 117 | ||||||
2 | Fiserv, Inc. • | 69 | ||||||
10 | Paychex, Inc. | 259 | ||||||
10 | Red Hat, Inc. • | 168 | ||||||
3 | Salesforce.com, Inc. • | 127 | ||||||
2 | Sohu.com, Inc. • | 82 | ||||||
4 | VeriSign, Inc. • | 81 | ||||||
1,984 | ||||||||
Technology Hardware & Equipment - 6.7% | ||||||||
7 | AVX Corp. | 66 | ||||||
9 | CommScope, Inc. • | 216 | ||||||
2 | Dolby Laboratories, Inc. Class A • | 86 | ||||||
2 | F5 Networks, Inc. • | 62 | ||||||
13 | Juniper Networks, Inc. • | 273 | ||||||
3 | National Instruments Corp. | 64 | ||||||
6 | NCR Corp. • | 63 | ||||||
9 | NetApp, Inc. • | 169 | ||||||
13 | Seagate Technology | 106 | ||||||
5 | Teradata Corp. • | 78 | ||||||
8 | Trimble Navigation Ltd. • | 161 | ||||||
10 | Western Digital Corp. • | 246 | ||||||
1,590 | ||||||||
Telecommunication Services - 2.3% | ||||||||
4 | American Tower Corp. Class A • | 134 | ||||||
2 | Leap Wireless International, Inc. • | 67 | ||||||
10 | SBA Communications Corp. • | 257 | ||||||
2 | Telephone and Data Systems, Inc. | 71 | ||||||
529 | ||||||||
Transportation - 1.4% | ||||||||
3 | C. H. Robinson Worldwide, Inc. | 175 | ||||||
4 | Expeditors International of Washington, Inc. | 155 | ||||||
330 | ||||||||
Utilities - 1.7% | ||||||||
11 | AES Corp. • | 76 | ||||||
9 | CenterPoint Energy, Inc. | 92 | ||||||
7 | NRG Energy, Inc. • | 120 | ||||||
4 | Questar Corp. | 120 | ||||||
408 | ||||||||
Total common stocks (cost $23,071) | $ | 23,165 | ||||||
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
EXCHANGE TRADED FUNDS - 0.3% | ||||||||||||
Other Investment Pools and Funds - 0.3% | ||||||||||||
2 | iShares Russell Midcap Growth | $ | 55 | |||||||||
Total Exchange Traded Funds (cost $48) | $ | 55 | ||||||||||
Total long-term investments (cost $23,119) | $ | 23,220 | ||||||||||
SHORT-TERM INVESTMENTS - 0.7% | ||||||||||||
Repurchase Agreements - 0.2% | ||||||||||||
BNP Paribas Securities Corp. Repurchase | ||||||||||||
Agreement (maturing on 05/01/2009 in the amount of $44, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $45) | ||||||||||||
$ | 44 | 0.15%, 04/30/2009 | $ | 44 | ||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $12, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $13) | ||||||||||||
12 | 0.13%, 04/30/2009 | 12 | ||||||||||
56 | ||||||||||||
U.S. Treasury Bills - 0.5% | ||||||||||||
85 | 0.06%, 05/21/2009 o | 85 | ||||||||||
25 | 0.09%, 07/16/2009 □ o | 25 | ||||||||||
110 | ||||||||||||
Total short-term investments (cost $166) | $ | 166 | ||||||||||
Total investments (cost $23,285)▲ | 99 .8 | % | $ | 23,386 | ||||||||
Other assets and liabilities | 0 .2 | % | 56 | |||||||||
Total net assets | 100.0 | % | $ | 23,442 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 0.79% of total net assets at April 30, 2009. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $25,165 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 2,417 | ||
Unrealized Depreciation | (4,196 | ) | ||
Net Unrealized Depreciation | $ | (1,779 | ) | |
• | Currently non-income producing. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
□ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. | |
Futures Contracts Outstanding at April 30, 2009 |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
S&P Mid 400 Mini | 3 | Long | Jun 2009 | $ | 4 | |||||||||||
* | The number of contracts does not omit 000’s. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 23,220 | ||
Investment in securities — Level 2 | 166 | |||
Total | $ | 23,386 | ||
Other financial instruments — Level 1 * | $ | 4 | ||
Total | $ | 4 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
6
Table of Contents
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $23,285) | $ | 23,386 | ||
Cash | 4 | |||
Receivables: | ||||
Fund shares sold | 174 | |||
Dividends and interest | 12 | |||
Variation margin | — | |||
Other assets | 47 | |||
Total assets | 23,623 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 3 | |||
Fund shares redeemed | 154 | |||
Investment management fees | 3 | |||
Distribution fees | 2 | |||
Variation margin | 1 | |||
Accrued expenses | 18 | |||
Total liabilities | 181 | |||
Net assets | $ | 23,442 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 42,013 | |||
Accumulated undistributed net investment income | 14 | |||
Accumulated net realized loss on investments | (18,690 | ) | ||
Unrealized appreciation of investments | 105 | |||
Net assets | $ | 23,442 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.27/$6.63 | ||
Shares outstanding | 2,636 | |||
Net assets | $ | 16,520 | ||
Class B: Net asset value per share | $ | 6.10 | ||
Shares outstanding | 440 | |||
Net assets | $ | 2,685 | ||
Class C: Net asset value per share | $ | 6.06 | ||
Shares outstanding | 671 | |||
Net assets | $ | 4,067 | ||
Class Y: Net asset value per share | $ | 6.38 | ||
Shares outstanding | 27 | |||
Net assets | $ | 170 | ||
7
Table of Contents
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 135 | ||
Interest | — | |||
Securities lending | 9 | |||
Total investment income | 144 | |||
Expenses: | ||||
Investment management fees | 76 | |||
Transfer agent fees | 58 | |||
Distribution fees | ||||
Class A | 19 | |||
Class B | 12 | |||
Class C | 15 | |||
Custodian fees | 6 | |||
Accounting services | 1 | |||
Registration and filing fees | 25 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 6 | |||
Total expenses (before waivers and fees paid indirectly) | 222 | |||
Expense waivers | (64 | ) | ||
Transfer agent fee waivers | (28 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (92 | ) | ||
Total expenses, net | 130 | |||
Net investment income | 14 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (12,950 | ) | ||
Net realized gain on futures | 669 | |||
Net Realized Loss on Investments and Other Financial Instruments | (12,281 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 12,609 | |||
Net unrealized depreciation of futures | (14 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 12,595 | |||
Net Gain on Investments and Other Finanical Instruments | 314 | |||
Net Increase in Net Assets Resulting from Operations | $ | 328 | ||
8
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 14 | $ | (50 | ) | |||
Net realized loss on investments and other financial instruments | (12,281 | ) | (6,355 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 12,595 | (14,001 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 328 | (20,406 | ) | |||||
Distributions to Shareholders: | ||||||||
From net realized gain on investments | ||||||||
Class A | — | (2,740 | ) | |||||
Class B | — | (571 | ) | |||||
Class C | — | (598 | ) | |||||
Class Y | — | (14 | ) | |||||
Total distributions | — | (3,923 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (4,833 | ) | 17,642 | * | ||||
Class B | 20 | 767 | † | |||||
Class C | 874 | 1,344 | ‡ | |||||
Class Y | 27 | 132 | § | |||||
Net increase (decrease) from capital share transactions | (3,912 | ) | 19,885 | |||||
Net decrease in net assets | (3,584 | ) | (4,444 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 27,026 | 31,470 | ||||||
End of period | $ | 23,442 | $ | 27,026 | ||||
Accumulated undistributed net investment income (loss) | $ | 14 | $ | — | ||||
* | Includes merger activity in the amount of $13,927. | |
† | Includes merger activity in the amount of $592. | |
‡ | Includes merger activity in the amount of $1,147. | |
§ | Includes merger activity in the amount of $118. |
9
Table of Contents
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford MidCap Growth Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
10
Table of Contents
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. |
11
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
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h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, |
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April 30, 2009 (Unaudited)
(000’s Omitted)
management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
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4. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 3,444 | $ | 1,264 | ||||
Long-Term Capital Gains * | 479 | 682 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses* | $ | (4,510 | ) | |
Unrealized Depreciation† | $ | (14,389 | ) | |
Total Accumulated Deficit | $ | (18,899 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $50, increase accumulated net realized gain by $17, and decrease paid in capital by $67. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||||||
2016 | $ | 4,510 | ||||||
Total | $ | 4,510 | ||||||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.75 | % | ||
On next $500 million | 0.70 | % | ||
On next $4 billion | 0.65 | % | ||
On next $5 billion | 0.63 | % | ||
Over $10 billion | 0.62 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.35% | 2.10 | % | 2.10 | % | 0.95 | % |
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d) | Fees Paid Indirectly - The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||
Six-Month | ||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.15 | % | 1.35 | % | 1.36 | % | 1.48 | % | 1.49 | %* | ||||||||||
Class B Shares | 1.44 | 1.82 | 1.95 | 2.09 | 2.24 | † | ||||||||||||||
Class C Shares | 1.78 | 1.99 | 2.11 | 2.23 | 2.24 | ‡ | ||||||||||||||
Class Y Shares | 0.95 | 0.95 | 1.01 | 1.08 | 1.09 | § |
* | From January 1, 2005 (commencement of operations), through October 31, 2005 | |
† | From January 1, 2005 (commencement of operations), through October 31, 2005 | |
‡ | From January 1, 2005 (commencement of operations), through October 31, 2005 | |
§ | From January 1, 2005 (commencement of operations), through October 31, 2005 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $55 and contingent deferred sales charges of $4 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $4. These commissions are in turn paid to sales representatives of the broker/dealers. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $45 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | ||||||||
Payment from | ||||||||
Affiliate for | Total Return | |||||||
Trading | Excluding | |||||||
Reimbursements | Payment from | |||||||
for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.13 | % | 25.00 | % | ||||
Class B | 0.13 | 23.67 | ||||||
Class C | 0.13 | 23.77 | ||||||
Class Y | 0.13 | 23.35 |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 22 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 19,264 | ||
Sales Proceeds Excluding U.S. Government Obligations | 22,424 |
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8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 802 | — | (1,692 | ) | — | (890 | ) | 808 | 248 | (687 | ) | 1,423 | 1,792 | |||||||||||||||||||||||||||
Amount | $ | 4,436 | $ | — | $ | (9,269 | ) | $ | — | $ | (4,833 | ) | $ | 7,212 | $ | 2,583 | $ | (6,080 | ) | $ | 13,927 | $ | 17,642 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 89 | — | (88 | ) | — | 1 | 112 | 53 | (149 | ) | 62 | 78 | ||||||||||||||||||||||||||||
Amount | $ | 481 | $ | — | $ | (461 | ) | $ | — | $ | 20 | $ | 984 | $ | 542 | $ | (1,351 | ) | $ | 592 | $ | 767 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 306 | — | (148 | ) | — | 158 | 173 | 52 | (215 | ) | 120 | 130 | ||||||||||||||||||||||||||||
Amount | $ | 1,632 | $ | — | $ | (758 | ) | $ | — | $ | 874 | $ | 1,566 | $ | 522 | $ | (1,891 | ) | $ | 1,147 | $ | 1,344 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 5 | — | — | — | 5 | — | 1 | — | 12 | 13 | ||||||||||||||||||||||||||||||
Amount | $ | 27 | $ | — | $ | — | $ | — | $ | 27 | $ | — | $ | 14 | $ | — | $ | 118 | $ | 132 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 9 | $ | 50 | |||||
For the Year Ended October 31, 2008 | 11 | $ | 100 |
9. | Line of Credit: |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
10. | Industry Classifications: |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
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– Selected Per-Share Data – (a) | – Ratios and Supplemental Data – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
�� | Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.04 | $ | 0.01 | $ | — | $ | 0.22 | $ | 0.23 | $ | — | $ | — | $ | — | $ | — | $ | 0.23 | $ | 6.27 | 3.81 | %(e) | $ | 16,520 | 1.92 | %(f) | 1.15 | %(f) | 1.15 | %(f) | 0.28 | %(f) | 90 | % | |||||||||||||||||||||||||||||||||||||
B | 5.89 | — | — | 0.21 | 0.21 | — | — | — | — | 0.21 | 6.10 | 3.57 | (e) | 2,685 | 3.12 | (f) | 1.44 | (f) | 1.44 | (f) | (0.07 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 5.86 | (0.01 | ) | — | 0.21 | 0.20 | — | — | — | — | 0.20 | 6.06 | 3.41 | (e) | 4,067 | 2.78 | (f) | 1.78 | (f) | 1.78 | (f) | (0.42 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 6.15 | 0.01 | — | 0.22 | 0.23 | — | — | — | — | 0.23 | 6.38 | 3.74 | (e) | 170 | 1.17 | (f) | 0.95 | (f) | 0.95 | (f) | 0.43 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.73 | — | — | (5.11 | ) | (5.11 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.69 | ) | 6.04 | (45.38 | ) | 21,304 | 1.50 | 1.35 | 1.35 | 0.05 | 292 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.50 | (0.06 | ) | — | (4.97 | ) | (5.03 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.61 | ) | 5.89 | (45.59 | ) | 2,584 | 2.56 | 1.82 | 1.82 | (0.63 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 12.46 | (0.08 | ) | — | (4.94 | ) | (5.02 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.60 | ) | 5.86 | (45.67 | ) | 3,002 | 2.39 | 1.99 | 1.99 | (0.89 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.88 | 0.05 | — | (5.20 | ) | (5.15 | ) | — | (1.58 | ) | — | (1.58 | ) | (6.73 | ) | 6.15 | (45.12 | ) | 136 | 0.98 | 0.95 | 0.95 | 0.67 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.28 | (0.05 | ) | — | 1.98 | 1.93 | — | (0.48 | ) | — | (0.48 | ) | 1.45 | 12.73 | 17.76 | 22,074 | 1.60 | 1.37 | 1.37 | (0.43 | ) | 186 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.14 | (0.11 | ) | — | 1.95 | 1.84 | — | (0.48 | ) | — | (0.48 | ) | 1.36 | 12.50 | 17.15 | 4,509 | 2.55 | 1.96 | 1.96 | (1.01 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.13 | (0.13 | ) | — | 1.94 | 1.81 | — | (0.48 | ) | — | (0.48 | ) | 1.33 | 12.46 | 16.89 | 4,772 | 2.40 | 2.12 | 2.12 | (1.17 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.36 | (0.57 | ) | — | 2.57 | 2.00 | — | (0.48 | ) | — | (0.48 | ) | 1.52 | 12.88 | 18.28 | 115 | 1.11 | 1.03 | 1.03 | (0.44 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.14 | (0.08 | ) | — | 1.32 | 1.24 | — | (0.10 | ) | — | (0.10 | ) | 1.14 | 11.28 | 12.31 | 23,542 | 1.69 | 1.50 | 1.50 | (0.85 | ) | 99 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.08 | (0.15 | ) | — | 1.31 | 1.16 | — | (0.10 | ) | — | (0.10 | ) | 1.06 | 11.14 | 11.58 | 3,725 | 2.67 | 2.11 | 2.11 | (1.46 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.08 | (0.15 | ) | — | 1.30 | 1.15 | — | (0.10 | ) | — | (0.10 | ) | 1.05 | 11.13 | 11.48 | 3,861 | 2.52 | 2.26 | 2.26 | (1.60 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.17 | (0.04 | ) | — | 1.33 | 1.29 | — | (0.10 | ) | — | (0.10 | ) | 1.19 | 11.36 | 12.77 | 28,868 | 1.13 | 1.11 | 1.11 | (0.45 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) January 1, 2005, through October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.06 | (0.06 | ) | — | 0.14 | 0.08 | — | — | — | — | 0.08 | 10.14 | 0.80 | (e) | 14,995 | 2.22 | (f) | 1.50 | (f) | 1.50 | (f) | (0.95 | ) (f) | 97 | |||||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.06 | (0.09 | ) | — | 0.11 | 0.02 | — | — | — | — | 0.02 | 10.08 | 0.20 | (e) | 2,354 | 3.35 | (f) | 2.25 | (f) | 2.25 | (f) | (1.70 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.06 | (0.09 | ) | — | 0.11 | 0.02 | — | — | — | — | 0.02 | 10.08 | 0.20 | (e) | 1,741 | 3.26 | (f) | 2.25 | (f) | 2.25 | (f) | (1.70 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y(j) | 10.06 | (0.05 | ) | — | 0.16 | 0.11 | — | — | — | — | 0.11 | 10.17 | 1.09 | (e) | 210 | 1.66 | (f) | 1.10 | (f) | 1.10 | (f) | (0.55 | ) (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on January 1, 2005. | |
(h) | Commenced operations on January 1, 2005. | |
(i) | Commenced operations on January 1, 2005. | |
(j) | Commenced operations on January 1, 2005. |
20
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21
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22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,038.07 | $ | 5.81 | $ | 1,000.00 | $ | 1,019.09 | $ | 5.75 | 1.15 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,035.65 | $ | 7.26 | $ | 1,000.00 | $ | 1,017.65 | $ | 7.20 | 1.44 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,034.12 | $ | 8.97 | $ | 1,000.00 | $ | 1,015.96 | $ | 8.89 | 1.78 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,037.39 | $ | 4.79 | $ | 1,000.00 | $ | 1,020.08 | $ | 4.75 | 0.95 | 181 | 365 |
24
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
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Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
MidCap Value A# | 4/30/01 | -30.76 | % | -1.05 | % | 1.85 | % | |||||||||
MidCap Value A## | 4/30/01 | -34.56 | % | -2.16 | % | 1.14 | % | |||||||||
MidCap Value B# | 4/30/01 | -31.18 | % | -1.74 | % | 1.14 | % | |||||||||
MidCap Value B## | 4/30/01 | -34.62 | % | -1.97 | % | 1.14 | % | |||||||||
MidCap Value C# | 4/30/01 | -31.28 | % | -1.80 | % | 1.12 | % | |||||||||
MidCap Value C## | 4/30/01 | -31.97 | % | -1.80 | % | 1.12 | % | |||||||||
MidCap Value Y# | 4/30/01 | -30.47 | % | -0.63 | % | 2.32 | % |
# | Without sales charge | |
## | With sales charge | |
* | As of August 16, 2004, the Fund no longer offers Class A, B and C shares except as follows. The Fund will continue to offer and sell shares: (1) through ACH and other similar systematic investment facilities to investors who established plans to invest through such facilities prior to August 16, 2004 and (2) for reinvestment of capital gains distributions and income dividends. | |
As of March 1, 2008, the Fund no longer offers Class Y shares to new investments except as follows. The Fund will continue to offer and sell shares: (1) for accounts established prior to March 1, 2008; (2) for reinvestment of capital gains distributions and income dividends; (3) as an underlying investment of the Smart529 College Savings Plan; and (4) as an underlying investment of a Hartford sponsored mutual fund-of-funds. | ||
The Fund continues to pay 12b-1 fees. These fees are paid for ongoing shareholder services, to compensate brokers for past sales and to reimburse the Fund’s distributor for commissions paid in connection with past sales. |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
James N. Mordy
Senior Vice President, Partner
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 1.1 | % | ||
Banks | 1.9 | |||
Capital Goods | 5.7 | |||
Commercial & Professional Services | 0.8 | |||
Consumer Durables & Apparel | 6.2 | |||
Diversified Financials | 8.9 | |||
Energy | 5.7 | |||
Food, Beverage & Tobacco | 5.2 | |||
Health Care Equipment & Services | 4.6 | |||
Insurance | 9.6 | |||
Materials | 9.0 | |||
Media | 1.8 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 3.9 | |||
Real Estate | 5.0 | |||
Retailing | 5.9 | |||
Semiconductors & Semiconductor Equipment | 3.6 | |||
Software & Services | 2.7 | |||
Technology Hardware & Equipment | 7.5 | |||
Transportation | 2.9 | |||
Utilities | 7.1 | |||
Short-Term Investments | 0.6 | |||
Other Assets and Liabilities | 0.3 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS - 99.1% | ||||||||
Automobiles & Components - 1.1% | ||||||||
209 | TRW Automotive Holdings Corp. • | $ | 1,805 | |||||
Banks - 1.9% | ||||||||
37 | Beneficial Mutual Bancorp, Inc. • | 369 | ||||||
58 | Comerica, Inc. | 1,209 | ||||||
12 | M&T Bank Corp. | 635 | ||||||
12 | PNC Financial Services Group, Inc. | 468 | ||||||
140 | Popular, Inc. | 401 | ||||||
2 | Signature Bank • | 41 | ||||||
3,123 | ||||||||
Capital Goods - 5.7% | ||||||||
14 | AGCO Corp. • | 347 | ||||||
13 | Alliant Techsystems, Inc. • | 1,036 | ||||||
30 | AMETEK, Inc. | 966 | ||||||
16 | Dover Corp. | 505 | ||||||
107 | Pentair, Inc. | 2,837 | ||||||
42 | Teledyne Technologies, Inc. • | 1,347 | ||||||
47 | URS Corp. • | 2,071 | ||||||
9,109 | ||||||||
Commercial & Professional Services - 0.8% | ||||||||
116 | R.R. Donnelley & Sons Co. | 1,356 | ||||||
Consumer Durables & Apparel - 6.2% | ||||||||
72 | Mattel, Inc. | 1,083 | ||||||
123 | MDC Holdings, Inc. | 4,201 | ||||||
104 | Toll Brothers, Inc. • | 2,105 | ||||||
42 | V.F. Corp. | 2,483 | ||||||
9,872 | ||||||||
Diversified Financials - 8.9% | ||||||||
33 | Affiliated Managers Group, Inc. • | 1,859 | ||||||
106 | Ameriprise Financial, Inc. | 2,796 | ||||||
265 | CIT Group, Inc. | 588 | ||||||
112 | Invesco Ltd. | 1,644 | ||||||
296 | PHH Corp. • | 4,960 | ||||||
144 | TD Ameritrade Holding Corp. • | 2,297 | ||||||
14,144 | ||||||||
Energy - 5.7% | ||||||||
82 | Cie Gen Geophysique ADR • | 1,175 | ||||||
93 | Newfield Exploration Co. • | 2,897 | ||||||
25 | Noble Energy, Inc. | 1,390 | ||||||
43 | SBM Offshore N.V. | 700 | ||||||
343 | Uranium One, Inc. • | 947 | ||||||
120 | Weatherford International Ltd. • | 1,999 | ||||||
9,108 | ||||||||
Food, Beverage & Tobacco - 5.2% | ||||||||
6 | Bunge Ltd. Finance Corp. | 307 | ||||||
2,145 | Chaoda Modern Agriculture | 1,220 | ||||||
47 | Dean Foods Co. • | 969 | ||||||
3,038 | First Pacific Co., Ltd. | 1,387 | ||||||
172 | Marfig Frigorificos E Comer • | 858 | ||||||
4,079 | Marine Harvest • | 1,838 | �� | |||||
57 | Perdigao S.A. | 834 | ||||||
97 | Smithfield Foods, Inc. • | 839 | ||||||
8,252 | ||||||||
Health Care Equipment & Services - 4.6% | ||||||||
53 | Amerisource Bergen Corp. | 1,786 | ||||||
142 | CIGNA Corp. | 2,803 | ||||||
24 | Laboratory Corp. of America Holdings • | 1,508 | ||||||
40 | West Pharmaceutical Services | 1,316 | ||||||
7,413 | ||||||||
Insurance - 9.6% | ||||||||
42 | Everest Re Group Ltd. | 3,165 | ||||||
55 | Fidelity National Financial, Inc. | 994 | ||||||
33 | First American Financial Corp. | 929 | ||||||
24 | PartnerRe Ltd. | 1,637 | ||||||
85 | Platinum Underwriters Holdings Ltd. | 2,448 | ||||||
99 | Reinsurance Group of America, Inc. | 3,152 | ||||||
187 | Unum Group | 3,057 | ||||||
15,382 | ||||||||
Materials - 9.0% | ||||||||
43 | Agrium U.S., Inc. | 1,841 | ||||||
82 | Celanese Corp. | 1,698 | ||||||
66 | Cliff’s Natural Resources, Inc. | 1,510 | ||||||
58 | FMC Corp. | 2,841 | ||||||
55 | Greif, Inc. | 2,476 | ||||||
26 | JSR Corp. | 317 | ||||||
87 | Owens-Illinois, Inc. • | 2,129 | ||||||
78 | Pactiv Corp. • | 1,710 | ||||||
14,522 | ||||||||
Media - 1.8% | ||||||||
369 | Virgin Media, Inc. | 2,849 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences - 3.9% | ||||||||
49 | Endo Pharmaceuticals Holdings, Inc. • | 816 | ||||||
26 | H. Lundbeck A/S | 464 | ||||||
427 | Impax Laboratories, Inc. • | 2,256 | ||||||
127 | King Pharmaceuticals, Inc. • | 1,004 | ||||||
124 | Theravance, Inc. • | 1,778 | ||||||
6,318 | ||||||||
Real Estate - 5.0% | ||||||||
95 | Annaly Capital Management, Inc. | 1,338 | ||||||
915 | Chimera Investment Corp. | 3,230 | ||||||
113 | Kimco Realty Corp. | 1,352 | ||||||
9 | Mack-Cali Realty Corp. | 231 | ||||||
312 | MFA Mortgage Investments, Inc. | 1,836 | ||||||
7,987 | ||||||||
Retailing - 5.9% | ||||||||
187 | American Eagle Outfitters, Inc. | 2,777 | ||||||
2,375 | Buck Holdings L.P. ⌂ • † | 4,226 | ||||||
10 | Genuine Parts Co. | 323 | ||||||
77 | TJX Cos., Inc. | 2,143 | ||||||
9,469 | ||||||||
Semiconductors & Semiconductor Equipment - 3.6% | ||||||||
200 | Teradyne, Inc. • | 1,188 | ||||||
176 | Varian Semiconductor Equipment Associates, Inc. • | 4,494 | ||||||
5,682 | ||||||||
Software & Services - 2.7% | ||||||||
15 | CACI International, Inc. Class A • | 597 | ||||||
69 | McAfee, Inc. • | 2,586 | ||||||
71 | Western Union Co. | 1,184 | ||||||
4,367 | ||||||||
Technology Hardware & Equipment - 7.5% | ||||||||
194 | Arrow Electronics, Inc. • | 4,407 | ||||||
447 | Flextronics International Ltd. • | 1,732 | ||||||
182 | JDS Uniphase Corp. • | 839 |
4
Table of Contents
Shares or Principal Amount ╬ | Market Value ╪ | |||||||
COMMON STOCKS - 99.1% — (continued) | ||||||||
Technology Hardware & Equipment - 7.5% — (continued) | ||||||||
4,105 | Kingboard Laminates Holdings | $ | 1,625 | |||||
107 | NetApp, Inc. • | 1,954 | ||||||
182 | Solar Cayman Ltd. ⌂ • † | 1,489 | ||||||
12,046 | ||||||||
Transportation - 2.9% | ||||||||
64 | Con-way, Inc. | 1,581 | ||||||
486 | Delta Air Lines, Inc. • | 2,998 | ||||||
4,579 | ||||||||
Utilities - 7.1% | ||||||||
313 | N.V. Energy, Inc. | 3,206 | ||||||
149 | Northeast Utilities | 3,136 | ||||||
31 | TECO Energy, Inc. | 328 | ||||||
98 | UGI Corp. | 2,244 | ||||||
59 | Wisconsin Energy Corp. | 2,350 | ||||||
11,264 | ||||||||
Total common stocks (cost $195,370) | $ | 158,647 | ||||||
Total long-term investments (cost $195,370) | $ | 158,647 | ||||||
SHORT-TERM INVESTMENTS - 0.6% | ||||||||
Repurchase Agreements - 0.6% | ||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $217, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $221) | ||||||||
$ | 217 | 0.18%, 04/30/2009 | $ | 217 | ||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $260, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $265) | ||||||||
260 | 0.17%, 04/30/2009 | 260 | ||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $363, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $370) | ||||||||
363 | 0.17%, 04/30/2009 | 363 | ||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1, collateralized by U.S. Treasury Bond 7.50%, 2024, value of$1) | ||||||||
1 | 0.14%, 04/30/2009 | 1 | ||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $78, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $80) | ||||||||
78 | 0.16%, 04/30/2009 | 78 | ||||||
919 | ||||||||
Total short-term investments (cost $919) | $ | 919 | ||||||
Total investments (cost $196,289) ▲ | 99.7 | % | $ | 159,566 | ||||||||
Other assets and liabilities | 0.3 | % | 498 | |||||||||
Total net assets | 100.0 | % | $ | 160,064 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 7.33% of total net assets at April 30, 2009. Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $198,738 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 8,569 | ||
Unrealized Depreciation | (47,741 | ) | ||
Net Unrealized Depreciation | $ | (39,172 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009 was $5,715, which represents 3.57% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
06/2007 | 2,375 | Buck Holdings L.P. | $ | 2,378 | ||||||||
03/2007 | 182 | Solar Cayman Ltd. - 144A | 2,543 |
5
Table of Contents
April 30, 2009 (Unaudited)
Unrealized | ||||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||||
Norwegian Krone (Sell) | $ | 27 | $ | 26 | 05/04/09 | $ | (1 | ) | ||||||||
Norwegian Krone (Sell) | 72 | 72 | 05/05/09 | — | ||||||||||||
$ | (1 | ) | ||||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 145,382 | ||
Investment in securities — Level 2 | 8,469 | |||
Investment in securities — Level 3 | 5,715 | |||
Total | $ | 159,566 | ||
Liabilities: | ||||
Other financial instruments — Level 2 * | 1 | |||
Total | $ | 1 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 8,200 | ||
Change in unrealized appreciation ♦ | 1,291 | |||
Net sales | (190 | ) | ||
Transfers in and /or out of Level 3 | (3,586 | ) | ||
Balance as of April 30, 2009 | $ | 5,715 | ||
♦ Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 1,291 | ||
6
Table of Contents
April 30, 2009
(Unaudited)
Assets: | ||||
Investments in securities, at fair value (cost $196,289) | $ | 159,566 | ||
Cash | 1 | |||
Unrealized appreciation on forward foreign currency contracts | — | |||
Receivables: | ||||
Investment securities sold | 2,139 | |||
Fund shares sold | 7 | |||
Dividends and interest | 98 | |||
Other assets | 138 | |||
Total assets | 161,949 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | 1 | |||
Payables: | ||||
Investment securities purchased | 1,500 | |||
Fund shares redeemed | 224 | |||
Investment management fees | 21 | |||
Distribution fees | 11 | |||
Accrued expenses | 128 | |||
Total liabilities | 1,885 | |||
Net assets | $ | 160,064 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 268,729 | |||
Accumulated undistributed net investment income | 117 | |||
Accumulated net realized loss on investments and foreign currency transactions | (72,059 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (36,723 | ) | ||
Net assets | $ | 160,064 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.90/$7.30 | ||
Shares outstanding | 16,309 | |||
Net assets | $ | 112,552 | ||
Class B: Net asset value per share | $ | 6.38 | ||
Shares outstanding | 3,480 | |||
Net assets | $ | 22,207 | ||
Class C: Net asset value per share | $ | 6.37 | ||
Shares outstanding | 3,248 | |||
Net assets | $ | 20,701 | ||
Class Y: Net asset value per share | $ | 7.22 | ||
Shares outstanding | 638 | |||
Net assets | $ | 4,604 | ||
7
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
Investment Income: | ||||
Dividends | $ | 1,627 | ||
Interest | 1 | |||
Securities lending | 7 | |||
Less: Foreign tax withheld | (9 | ) | ||
Total investment income | 1,626 | |||
Expenses: | ||||
Investment management fees | 614 | |||
Transfer agent fees | 383 | |||
Distribution fees | ||||
Class A | 134 | |||
Class B | 104 | |||
Class C | 100 | |||
Custodian fees | 8 | |||
Accounting services | 11 | |||
Registration and filing fees | 24 | |||
Board of Directors’ fees | 3 | |||
Audit fees | 6 | |||
Other expenses | 58 | |||
Total expenses (before waivers and fees paid indirectly) | 1,445 | |||
Expense waivers | (261 | ) | ||
Transfer agent fee waivers | (161 | ) | ||
Commission recapture | (4 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (426 | ) | ||
Total expenses, net | 1,019 | |||
Net investment income | 607 | |||
Net Realized Loss on Investments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (38,196 | ) | ||
Net realized loss on foreign currency transactions | (1 | ) | ||
Net Realized Loss on Investments and Foreign Currency Transactions | (38,197 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 43,424 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments | 43,424 | |||
Net Gain on Investments and Foreign Currency Transactions | 5,227 | |||
Net Increase in Net Assets Resulting from Operations | $ | 5,834 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 607 | $ | (78 | ) | |||
Net realized loss on investments and foreign currency transactions | (38,197 | ) | (33,349 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 43,424 | (146,998 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 5,834 | (180,425 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (406 | ) | — | |||||
Class Y | (84 | ) | — | |||||
From net realized gain on investments | ||||||||
Class A | — | (51,758 | ) | |||||
Class B | — | (10,795 | ) | |||||
Class C | — | (11,178 | ) | |||||
Class Y | — | (318 | ) | |||||
Total distributions | (490 | ) | (74,049 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (19,352 | ) | (5,633 | ) | ||||
Class B | (3,003 | ) | (1,329 | ) | ||||
Class C | (4,364 | ) | (2,633 | ) | ||||
Class Y | (3,290 | ) | 11,361 | |||||
Net increase (decrease) from capital share transactions | (30,009 | ) | 1,766 | |||||
Net decrease in net assets | (24,665 | ) | (252,708 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 184,729 | 437,437 | ||||||
End of period | $ | 160,064 | $ | 184,729 | ||||
Accumulated undistributed net investment income (loss) | $ | 117 | $ | — | ||||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford MidCap Value Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation – The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading |
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restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. |
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Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts – The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid |
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annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
i) | Illiquid and Restricted Securities – The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
j) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, |
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whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | |||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the |
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accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 10,962 | $ | 14,105 | ||||
Long-Term Capital Gains * | 63,087 | 44,861 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses* | $ | (31,413 | ) | |
Unrealized Depreciation† | $ | (82,596 | ) | |
Total Accumulated Deficit | $ | (114,009 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $82, increase accumulated net realized gain by $137, and decrease paid in capital by $219. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 31,413 | ||
Total | $ | 31,413 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN |
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48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8000 | % | ||
On next $500 million | 0.7250 | % | ||
On next $4 billion | 0.6750 | % | ||
On next $5 billion | 0.6725 | % | ||
Over $10 billion | 0.6700 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||
1.35% | 2.10% | 2.10% | 0.95% |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30,2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.16 | % | 1.39 | % | 1.39 | % | 1.39 | % | 1.38 | % | 1.43 | % | ||||||||||||
Class B Shares | 1.70 | 2.05 | 2.15 | 2.14 | 2.13 | 2.13 | ||||||||||||||||||
Class C Shares | 1.98 | 2.14 | 2.09 | 2.14 | 2.13 | 2.13 | ||||||||||||||||||
Class Y Shares | 0.94 | 0.91 | 0.89 | 0.93 | 0.94 | 0.88 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $23 and contingent deferred sales charges of $8 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $2. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $269 for providing such services. These fees are accrued daily and paid monthly. |
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April 30, 2009 (Unaudited)
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.01 | % | 16.71 | % | ||||
Class B | 0.01 | 15.85 | ||||||
Class C | 0.01 | 15.93 | ||||||
Class Y | 0.01 | 17.37 |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 37,751 | ||
Sales Proceeds Excluding U.S. Government Obligations | 67,586 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 182 | 64 | (3,542 | ) | — | (3,296 | ) | 386 | 4,447 | (6,258 | ) | — | (1,425 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,076 | $ | 396 | $ | (20,824 | ) | $ | — | $ | (19,352 | ) | $ | 3,761 | $ | 50,611 | $ | (60,005 | ) | $ | — | $ | (5,633 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 17 | — | (570 | ) | — | (553 | ) | 58 | 975 | (1,371 | ) | — | (338 | ) | ||||||||||||||||||||||||||
Amount | $ | 92 | $ | — | $ | (3,095 | ) | $ | — | $ | (3,003 | ) | $ | 559 | $ | 10,316 | $ | (12,204 | ) | $ | — | $ | (1,329 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 17 | — | (817 | ) | — | (800 | ) | 54 | 979 | (1,519 | ) | — | (486 | ) | ||||||||||||||||||||||||||
Amount | $ | 95 | $ | — | $ | (4,459 | ) | $ | — | $ | (4,364 | ) | $ | 525 | $ | 10,367 | $ | (13,525 | ) | $ | — | $ | (2,633 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 101 | 13 | (637 | ) | — | (523 | ) | 1,236 | 27 | (229 | ) | — | 1,034 | |||||||||||||||||||||||||||
Amount | $ | 632 | $ | 85 | $ | (4,007 | ) | $ | — | $ | (3,290 | ) | $ | 13,312 | $ | 318 | $ | (2,269 | ) | $ | — | $ | 11,361 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 36 | $ | 209 | |||||
For the Year Ended October 31, 2008 | 108 | $ | 1,071 |
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7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
8. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
19
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– Selected Per-Share Data – (a) | – Ratios and Supplemental Data – | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.53 | $ | 0.03 | $ | — | $ | 0.36 | $ | 0.39 | $ | (0.02 | ) | $ | — | $ | — | $ | (0.02 | ) | $ | 0.37 | $ | 6.90 | 6.04 | %(f) | $ | 112,552 | 1.69 | %(g) | 1.16 | %(g) | 1.16 | %(g) | 0.96 | %(g) | 24 | % | ||||||||||||||||||||||||||||||||||
B | 6.03 | 0.01 | — | 0.34 | 0.35 | — | — | — | — | 0.35 | 6.38 | 5.80 | (f) | 22,207 | 2.65 | (g) | 1.70 | (g) | 1.70 | (g) | 0.42 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 6.03 | — | — | 0.34 | 0.34 | — | — | — | — | 0.34 | 6.37 | 5.64 | (f) | 20,701 | 2.37 | (g) | 1.98 | (g) | 1.98 | (g) | 0.14 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 6.88 | 0.04 | — | 0.37 | 0.41 | (0.07 | ) | — | — | (0.07 | ) | 0.34 | 7.22 | 6.27 | (f) | 4,604 | 0.94 | (g) | 0.94 | (g) | 0.94 | (g) | 1.19 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.80 | 0.02 | — | (5.81 | ) | (5.79 | ) | — | (2.48 | ) | — | (2.48 | ) | (8.27 | ) | 6.53 | (46.26 | ) | 127,999 | 1.44 | 1.40 | 1.40 | 0.15 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.95 | (0.05 | ) | — | (5.39 | ) | (5.44 | ) | — | (2.48 | ) | — | (2.48 | ) | (7.92 | ) | 6.03 | (46.64 | ) | 24,329 | 2.31 | 2.06 | 2.06 | (0.50 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 13.96 | (0.06 | ) | — | (5.39 | ) | (5.45 | ) | — | (2.48 | ) | — | (2.48 | ) | (7.93 | ) | 6.03 | (46.68 | ) | 24,418 | 2.15 | 2.15 | 2.15 | (0.59 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.39 | 0.05 | — | (6.08 | ) | (6.03 | ) | — | (2.48 | ) | — | (2.48 | ) | (8.51 | ) | 6.88 | (46.00 | ) | 7,983 | 0.92 | 0.92 | 0.92 | 0.64 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.57 | — | — | 2.14 | 2.14 | — | (1.91 | ) | — | (1.91 | ) | 0.23 | 14.80 | 16.72 | (h) | 311,227 | 1.39 | 1.39 | 1.39 | — | 46 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.93 | (0.11 | ) | — | 2.04 | 1.93 | — | (1.91 | ) | — | (1.91 | ) | 0.02 | 13.95 | 15.86 | (h) | 60,957 | 2.23 | 2.15 | 2.15 | (0.75 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.93 | (0.10 | ) | — | 2.04 | 1.94 | — | (1.91 | ) | — | (1.91 | ) | 0.03 | 13.96 | 15.94 | (h) | 63,292 | 2.10 | 2.10 | 2.10 | (0.70 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.00 | 0.14 | 0.02 | 2.14 | 2.30 | — | (1.91 | ) | — | (1.91 | ) | 0.39 | 15.39 | 17.38 | (h) | 1,961 | 0.89 | 0.89 | 0.89 | 0.70 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 13.29 | 0.01 | — | 2.59 | 2.60 | — | (1.32 | ) | — | (1.32 | ) | 1.28 | 14.57 | 21.37 | 305,002 | 1.45 | 1.40 | 1.40 | 0.06 | 40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.85 | (0.10 | ) | — | 2.50 | 2.40 | — | (1.32 | ) | — | (1.32 | ) | 1.08 | 13.93 | 20.46 | 62,580 | 2.28 | 2.15 | 2.15 | (0.69 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.85 | (0.10 | ) | — | 2.50 | 2.40 | — | (1.32 | ) | — | (1.32 | ) | 1.08 | 13.93 | 20.45 | 63,302 | 2.16 | 2.15 | 2.15 | (0.69 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.59 | 0.08 | — | 2.65 | 2.73 | — | (1.32 | ) | — | (1.32 | ) | 1.41 | 15.00 | 21.90 | 31,100 | 0.94 | 0.94 | 0.94 | 0.48 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.89 | (0.04 | ) | — | 1.41 | 1.37 | — | (0.97 | ) | — | (0.97 | ) | 0.40 | 13.29 | 11.31 | 280,662 | 1.49 | 1.40 | 1.40 | (0.31 | ) | 49 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.59 | (0.14 | ) | — | 1.37 | 1.23 | — | (0.97 | ) | — | (0.97 | ) | 0.26 | 12.85 | 10.40 | 59,350 | 2.33 | 2.15 | 2.15 | (1.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.59 | (0.15 | ) | — | 1.38 | 1.23 | — | (0.97 | ) | — | (0.97 | ) | 0.26 | 12.85 | 10.40 | 61,194 | 2.19 | 2.15 | 2.15 | (1.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 13.11 | 0.01 | — | 1.44 | 1.45 | — | (0.97 | ) | — | (0.97 | ) | 0.48 | 13.59 | 11.76 | 39,965 | 0.96 | 0.96 | 0.96 | 0.13 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.32 | (0.04 | ) | — | 1.61 | 1.57 | — | — | — | — | 1.57 | 12.89 | 13.87 | 280,173 | 1.56 | 1.45 | 1.45 | (0.03 | ) | 46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.12 | (0.13 | ) | — | 1.60 | 1.47 | — | — | — | — | 1.47 | 12.59 | 13.22 | 60,558 | 2.36 | 2.15 | 2.15 | (1.04 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.13 | (0.13 | ) | — | 1.59 | 1.46 | — | — | — | — | 1.46 | 12.59 | 13.12 | 67,132 | 2.20 | 2.15 | 2.15 | (1.04 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.46 | (0.01 | ) | — | 1.66 | 1.65 | — | — | — | — | 1.65 | 13.11 | 14.40 | 2,474 | 0.90 | 0.90 | 0.90 | (0.12 | ) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. |
20
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21
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,060.39 | $ | 5.92 | $ | 1,000.00 | $ | 1,019.04 | $ | 5.80 | 1.16 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,058.04 | $ | 8.67 | $ | 1,000.00 | $ | 1,016.36 | $ | 8.49 | 1.70 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,056.38 | $ | 10.09 | $ | 1,000.00 | $ | 1,014.97 | $ | 9.89 | 1.98 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,062.66 | $ | 4.80 | $ | 1,000.00 | $ | 1,020.13 | $ | 4.70 | 0.94 | 181 | 365 |
24
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Financial Statements | ||||
2 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
18 | ||||
19 | ||||
21 | ||||
21 | ||||
22 |
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CERTIFICATES OF DEPOSIT- 2.7% | ||||||||
Finance - 2.7% | ||||||||
Bank of America Corp. | ||||||||
$ | 5,000 | 0.32%, 06/30/2009 | $ | 5,000 | ||||
7,000 | 0.42%, 05/06/2009 | 7,000 | ||||||
BNP Paribas Finance | ||||||||
4,500 | 0.71% 07/13/2009 | 4,500 | ||||||
6,000 | 0.85% 06/17/2009 | 6,000 | ||||||
Toronto-Dominion Holdings | ||||||||
5,500 | 0.50%, 05/27/2009 | 5,500 | ||||||
28,000 | ||||||||
Total certificates of deposit (cost $28,000) | $ | 28,000 | ||||||
COMMERCIAL PAPER - 28.3% | ||||||||
Basic Materials - 1.9% | ||||||||
Export Development Canada | ||||||||
$ | 5,000 | 0.49%, 06/25/2009 | $ | 4,996 | ||||
5,000 | 1.12%, 05/07/2009 | 4,999 | ||||||
Praxair, Inc. | ||||||||
3,200 | 0.15%, 05/20/2009 | 3,200 | ||||||
3,032 | 0.20%, 05/19/2009 | 3,032 | ||||||
3,500 | 0.35%, 07/16/2009 | 3,497 | ||||||
19,724 | ||||||||
Consumer Staples - 2.8% | ||||||||
Coca Cola Co. | ||||||||
5,250 | 0.22%, 06/02/2009 | 5,249 | ||||||
5,500 | 0.35%, 05/05/2009 | 5,500 | ||||||
Colgate-Palmolive Co. | ||||||||
6,750 | 0.14%, 05/29/2009 ■ | 6,749 | ||||||
Procter & Gamble | ||||||||
3,750 | 0.18%, 05/08/2009 ■ | 3,750 | ||||||
7,000 | 0.38%, 06/12/2009 ■ | 6,997 | ||||||
28,245 | ||||||||
Energy - 0.6% | ||||||||
ConocoPhillips | ||||||||
6,400 | 0.57%, 05/04/2009 ■ | 6,400 | ||||||
Finance - 13.1% | ||||||||
Citigroup Funding, Inc. | ||||||||
11,000 | 0.40%, 05/12/2009 | 10,999 | ||||||
11,000 | 0.45%, 06/15/2009 | 10,994 | ||||||
European Investment Bank | ||||||||
7,500 | 0.26%, 06/23/2009 | 7,497 | ||||||
7,000 | 0.35%, 05/08/2009 | 7,000 | ||||||
5,500 | 0.36%, 05/11/2009 | 5,499 | ||||||
General Electric Capital Corp. | ||||||||
6,750 | 0.23%, 07/30/2009 | 6,746 | ||||||
11,000 | 0.30%, 05/26/2009 | 10,998 | ||||||
JP Morgan Chase Funding, Inc. | ||||||||
5,500 | 0.25%, 06/05/2009 | 5,499 | ||||||
5,000 | 0.45%, 05/15/2009 | 4,999 | ||||||
Kreditanstalt fuer Wiederaufbau | ||||||||
3,500 | 0.33%, 08/12/2009 ■ | 3,497 | ||||||
12,250 | 0.41%, 05/04/2009 - 06/30/2009 ■ | 12,247 | ||||||
4,500 | 0.43%, 05/22/2009 ■ | 4,499 | ||||||
5,750 | 0.45%, 06/19/2009 ■ | 5,746 | ||||||
Queensland Treasury Corp. | ||||||||
8,750 | 0.56%, 05/04/2009 | 8,750 | ||||||
6,250 | 0.58%, 06/17/2009 | 6,245 | ||||||
6,250 | 0.62%. 07/20/2009 | 6,241 | ||||||
Rabobank USA | ||||||||
3,750 | 0.64%, 07/06/2009 | 3,746 | ||||||
4,750 | 0.69%, 05/28/2009 | 4,747 | ||||||
2,000 | 0.74%, 05/19/2009 | 1,999 | ||||||
Royal Bank of Canada | ||||||||
5,750 | 0.42%, 05/18/2009 | 5,749 | ||||||
133,697 | ||||||||
Foreign Governments - 7.4% | ||||||||
British Columbia (Province of) | ||||||||
4,000 | 0.29%, 08/20/2009 | 3,996 | ||||||
4,000 | 0.40%, 06/10/2009 | 3,998 | ||||||
3,750 | 0.42%, 07/14/2009 | 3,747 | ||||||
British Columbia (Province Of) | ||||||||
8,700 | 1.50%, 05/26/2009 - 05/27/2009 | 8,693 | ||||||
Canada (Government of) | ||||||||
4,750 | 0.29%, 06/05/2009 | 4,749 | ||||||
6,000 | 0.38%, 05/05/2009 | 6,000 | ||||||
6,250 | 0.45%, 06/10/2009 | 6,247 | ||||||
5,750 | 0.58%, 08/07/2009 | 5,741 | ||||||
Ontario (Province of) | ||||||||
10,060 | 0.38%, 05/05/2009 - 05/22/2009 | 10,059 | ||||||
Quebec (Province of) | ||||||||
4,000 | 0.24%, 05/19/2009 ■ | 3,999 | ||||||
8,750 | 0.35%, 05/01/2009 | 8,750 | ||||||
3,250 | 0.45%, 06/22/2009 ■ | 3,248 | ||||||
5,250 | 0.45%, 07/20/2009 | 5,245 | ||||||
74,472 | ||||||||
Health Care - 0.5% | ||||||||
Abbott Laboratories | ||||||||
5,250 | 0.18%, 06/29/2009 ■ | 5,248 | ||||||
Technology - 1.0% | ||||||||
Microsoft Corp. | ||||||||
6,400 | 0.23%, 07/07/2009 | 6,397 | ||||||
3,250 | 0.30%, 05/14/2009 ■ | 3,250 | ||||||
9,647 | ||||||||
Utilities - 1.0% | ||||||||
Florida Power And Light Co. | ||||||||
10,250 | 0.15%, 05/13/2009 - 05/15/2009 | 10,249 | ||||||
Total commercial paper (cost $287,682) | $ | 287,682 | ||||||
CORPORATE NOTES - 6.9% | ||||||||
Finance - 6.9% | ||||||||
American Honda Finance Corp. | ||||||||
$ | 4,250 | 1.46%, 09/18/2009 ■ Δ | $ | 4,250 | ||||
Australia & New Zealand Banking Group Ltd. | ||||||||
3,750 | 1.67%, 10/02/2009 ■ Δ Ω | 3,750 | ||||||
Bank of Nova Scotia | ||||||||
4,750 | 1.42%, 08/10/2009 ■ Δ | 4,750 | ||||||
Caterpillar Financial Services Corp. | ||||||||
6,000 | 1.24%, 05/15/2009 Δ | 6,000 | ||||||
General Electric Capital Corp. | ||||||||
2,600 | 0.48%, 06/24/2009 Δ Ω | 2,600 | ||||||
International Bank for Reconstruction & Development | ||||||||
21,750 | 0.35%, 06/22/2009 ○ | 21,739 |
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Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE NOTES - 6.9% - (continued) | ||||||||
Finance - 6.9% - (continued) | ||||||||
John Deere Capital Corp. | ||||||||
$ | 3,877 | 1.30%, 09/01/2009 Δ | $ | 3,876 | ||||
Royal Bank of Canada | ||||||||
3,750 | 0.85%, 10/15/2009 ■ Δ | 3,750 | ||||||
Royal Bank of Scotland Group plc | ||||||||
4,250 | 1.72%, 10/09/2009 ■ Δ Ω | 4,250 | ||||||
Svenska Handelsbanken Ab | ||||||||
3,600 | 1.40%, 05/06/2009 ■ Δ Ω | 3,600 | ||||||
Wachovia Bank NA | ||||||||
6,000 | 1.59%, 08/04/2009 Δ Ω | 6,000 | ||||||
Wells Fargo & Co. | ||||||||
3,000 | 0.60%, 06/18/2009 Δ | 3,000 | ||||||
67,565 | ||||||||
Total corporate notes (cost $67,565) | $ | 67,565 | ||||||
REPURCHASE AGREEMENTS - - 1.2% | ||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $9,097, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $9,268) | ||||||||
$ | 9,097 | 0.15% dated 04/30/2009 | $ | 9,097 | ||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,544, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $2,602) | ||||||||
2,544 | 0.13% dated 04/30/2009 | 2,544 | ||||||
Total repurchase agreements (cost $11,641) | $ | 11,641 | ||||||
TIME DEPOSITS - 6.4% | ||||||||
32,486 | JP Morgan U.S. Government Money Market Fund | $ | 32,486 | |||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||
32,515 | Wells Fargo Advantage Government Money Market Fund | 32,515 | ||||||
Total time deposits (cost $65,001) | $ | 65,001 | ||||||
U.S. GOVERNMENT AGENCIES - 18.8% | ||||||||
Federal Home Loan Bank - 5.0% | ||||||||
$ | 4,500 | 0.22%, 07/10/2009 | $ | 4,498 | ||||
8,230 | 0.28%, 07/22/2009 | 8,225 | ||||||
6,000 | 0.32%, 06/09/2009 | 5,998 | ||||||
6,750 | 0.33%, 06/18/2009 | 6,747 | ||||||
7,250 | 0.34%, 10/21/2009 ○ | 7,238 | ||||||
9,577 | 0.36%, 05/20/2009 - 06/29/2009 | 9,574 | ||||||
4,500 | 0.39%, 05/11/2009 | 4,499 | ||||||
4,100 | 1.04%, 05/20/2009 Δ | 4,100 | ||||||
50,879 | ||||||||
Federal Home Loan Mortgage Corp. - 7.1% | ||||||||
4,000 | 0.24%, 07/06/2009 ○ | 3,998 | ||||||
7,040 | 0.26%, 09/21/2009 | 7,033 | ||||||
14,750 | 0.27%, 06/15/2009 - 07/29/2009 | 14,744 | ||||||
8,000 | 0.28%, 08/24/2009 | 7,993 | ||||||
6,750 | 0.34%, 10/13/2009 | 6,740 | ||||||
3,500 | 0.34%, 10/26/2009 ○ | 3,494 | ||||||
13,750 | 0.35%, 05/29/2009 - 08/03/2009 | 13,741 | ||||||
9,000 | 0.39%, 05/11/2009 | 8,999 | ||||||
4,500 | 0.43%, 06/01/2009 | 4,498 | ||||||
71,240 | ||||||||
Federal National Mortgage Association - 6.7% | ||||||||
7,000 | 0.22%, 05/28/2009 | 6,999 | ||||||
4,500 | 0.23%, 07/06/2009 ○ | 4,498 | ||||||
6,195 | 0.26%, 07/01/2009 | 6,192 | ||||||
18,500 | 0.33%, 06/16/2009 - 07/27/2009 | 18,489 | ||||||
8,250 | 0.34%, 10/21/2009 | 8,237 | ||||||
2,855 | 0.36%, 08/31/2009 ○ | 2,851 | ||||||
3,750 | 0.37%, 05/11/2009 ○ | 3,750 | ||||||
13,000 | 0.39%, 05/19/2009 - 05/27/2009 ○ | 12,997 | ||||||
4,500 | 0.44%, 06/08/2009 | 4,498 | ||||||
68,511 | ||||||||
Total U.S. government agencies (cost $190,630) | $ | 190,630 | ||||||
U.S. TREASURY BILLS - 36.0% | ||||||||
$ | 31,000 | 0.14%, 07/23/2009 ○ | $ | 30,991 | ||||
88,500 | 0.18%, 05/28/2009 - 06/04/2009 ○ | 88,483 | ||||||
55,000 | 0.23%, 06/25/2009 - 12/29/2009 ○ | 54,948 | ||||||
33,000 | 0.24%, 06/11/2009 ○ | 32,991 | ||||||
30,000 | 0.26%, 10/15/2009 ○ | 29,964 | ||||||
37,000 | 0.27%, 05/07/2009 ○ | 36,998 | ||||||
30,000 | 0.30%, 05/21/2009 ○ | 29,995 | ||||||
33,000 | 0.31%, 07/02/2009 ○ | 32,983 | ||||||
27,000 | 0.35%, 05/14/2009 ○ | 26,997 | ||||||
364,350 | ||||||||
Total U.S. treasury bills (cost $364,350) | $ | 364,350 | ||||||
CAPITAL SUPPORT AGREEMENT - 0.0% | ||||||||
— | Hartford Life, Inc. Capital Support Agreement Ω | — | ||||||
Total investments (cost $1,014,869) ▲ | 100.3 | % | $ | 1,014,869 | |||||||
Other assets and liabilities | (0.3 | )% | (3,354 | ) | |||||||
Total net assets | 100.0 | % | $ | 1,011,515 | |||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 14.83% of total net assets at April 30, 2009. |
▲ | Also represents cost for tax purposes. |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. |
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Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $89,980, which represents 8.90% of total net assets. |
○ | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. |
Ω | The Fund has entered into a Capital Support Agreement with Hartford Life, Inc. which provides that Hartford Life, Inc. will contribute capital to the Fund, up to a specified maximum amount, in the event that the Fund realizes a loss on any of these securities and such realized loss causes the Fund’s net asset value as calculated using fair values to drop below $0.9950. These securities are valued at amortized cost, which approximates fair value. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 65,001 | ||
Investment in securities — Level 2 | 949,868 | |||
Total | $ | 1,014,869 | ||
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Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $1,014,869) | $ | 1,014,869 | ||
Receivables: | ||||
Fund shares sold | 1,309 | |||
Dividends and interest | 111 | |||
Other assets | 445 | |||
Total assets | 1,016,734 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 4,899 | |||
Investment management fees | 75 | |||
Distribution fees | 66 | |||
Accrued expenses | 179 | |||
Total liabilities | 5,219 | |||
Net assets | $ | 1,011,515 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 1,012,997 | |||
Accumulated undistributed net investment income | 267 | |||
Accumulated net realized loss on investments | (1,749 | ) | ||
Unrealized appreciation of investments | — | |||
Net assets | $ | 1,011,515 | ||
Shares authorized | 4,400,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 1.00/$1.00 | ||
Shares outstanding | 481,479 | |||
Net assets | $ | 480,583 | ||
Class B: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 74,189 | |||
Net assets | $ | 74,097 | ||
Class C: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 122,886 | |||
Net assets | $ | 122,659 | ||
Class R3: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 1,020 | |||
Net assets | $ | 1,019 | ||
Class R4: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 321,047 | |||
Net assets | $ | 320,804 | ||
Class R5: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 10,775 | |||
Net assets | $ | 10,757 | ||
Class Y: Net asset value per share | $ | 1.00 | ||
Shares outstanding | 1,602 | |||
Net assets | $ | 1,596 | ||
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Table of Contents
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 3,097 | ||
Total investment income | 3,097 | |||
Expenses: | ||||
Investment management fees | 2,103 | |||
Transfer agent fees | 651 | |||
Distribution fees | ||||
Class A | 384 | |||
Class B | 228 | |||
Class C | 440 | |||
Class R3 | 1 | |||
Class R4 | 148 | |||
Custodian fees | 3 | |||
Accounting services | 75 | |||
Registration and filing fees | 101 | |||
Board of Directors’ fees | 10 | |||
Audit fees | 18 | |||
Other expenses | 552 | |||
Total expenses (before waivers and fees paid indirectly) | 4,714 | |||
Expense waivers | (1,632 | ) | ||
Transfer agent fee waivers | (190 | ) | ||
Custodian fee offset | (1 | ) | ||
Total waivers and fees paid indirectly | (1,823 | ) | ||
Total expenses, net | 2,891 | |||
Net investment income | 206 | |||
Net Realized Gain on Investments: | ||||
Net realized gain on investments in securities | 102 | |||
Net Realized Gain on Investments | 102 | |||
Net Gain on Investments | 102 | |||
Net Increase in Net Assets Resulting from Operations | $ | 308 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 206 | $ | 12,312 | ||||
Net realized gain (loss) on investments | 102 | (1,852 | ) | |||||
Net increase in net assets resulting from operations | 308 | 10,460 | ||||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (138 | ) | (8,540 | ) | ||||
Class B | (2 | ) | (536 | ) | ||||
Class C | (4 | ) | (1,498 | ) | ||||
Class R3 | — | (1 | ) | |||||
Class R4 | (52 | ) | (1,267 | ) | ||||
Class R5 | (9 | ) | (119 | ) | ||||
Class Y | (1 | ) | (84 | ) | ||||
Total distributions | (206 | ) | (12,045 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (6,070 | ) | 172,677 | |||||
Class B | 7,508 | 37,462 | ||||||
Class C | (17,532 | ) | 80,843 | |||||
Class R3 | 490 | 520 | ||||||
Class R4 | 172,321 | 131,487 | ||||||
Class R5 | 1,929 | 7,617 | ||||||
Class Y | 1 | (1,106 | ) | |||||
Net increase from capital share transactions | 158,647 | 429,500 | ||||||
Net increase in net assets | 158,749 | 427,915 | ||||||
Net Assets: | ||||||||
Beginning of period | 852,766 | 424,851 | ||||||
End of period | $ | 1,011,515 | $ | 852,766 | ||||
Accumulated undistributed net investment income | $ | 267 | $ | 267 | ||||
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Table of Contents
1. | Organization: |
2. | Significant Accounting Policies: |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. |
b) | Security Valuation - The Fund’s investments are valued using the amortized cost method, which approximates market value. Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
c) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. |
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d) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. |
e) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. |
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
f) | Illiquid and Restricted Securities - The Fund is permitted to invest up to 10% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. |
g) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. |
h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. |
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should |
9
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The |
10
Table of Contents
Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 12,123 | $ | 13,462 |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 280 | ||
Accumulated Capital Losses* | $ | (1,851 | ) | |
Total Accumulated Deficit | $ | (1,571 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase accumulated realized gain by $1 and decrease paid in capital by $1. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 1,851 | ||
Total | $ | 1,851 | ||
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Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $1 billion | 0.45 | % | ||
On next $4 billion | 0.40 | % | ||
On next $5 billion | 0.38 | % | ||
Over $10 billion | 0.37 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
c) | Operating Expenses — Allocable expenses incurred by the Fund are allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||||||||||||||
0.90% | 1.65 | % | 1.65 | % | 1.15 | % | 0.85 | % | 0.65 | % | 0.65 | % |
d) | Fees Paid Indirectly - The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. |
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Table of Contents
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 § | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.62 | % | 0.90 | % | 0.95 | % | 0.95 | % | 0.95 | % | 1.00 | % | ||||||||||||
Class B Shares | 0.67 | 1.65 | 1.70 | 1.70 | 1.70 | 1.25 | ||||||||||||||||||
Class C Shares | 0.68 | 1.59 | 1.69 | 1.70 | 1.70 | 1.27 | ||||||||||||||||||
Class R3 Shares | 0.62 | 1.15 | 1.20 | * | ||||||||||||||||||||
Class R4 Shares | 0.56 | 0.85 | 0.90 | † | ||||||||||||||||||||
Class R5 Shares | 0.55 | 0.63 | 0.60 | ‡ | ||||||||||||||||||||
Class Y Shares | 0.50 | 0.52 | 0.55 | 0.55 | 0.55 | 0.55 |
§ | Includes expenses not subject to cap | |
* | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges in an amount that rounds to zero and contingent deferred sales charges of $380 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $14. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
At a meeting held on February 4, 2009, the Board of Directors approved the temporary reduction of payment of distribution and service fees under the Fund’s 12b-1 Plan of Distribution to zero for Classes A, B, C, R3 and R4 for a |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
period of six months, effective March 1, 2009. The Fund’s actions will result in a corresponding temporary reduction of 12b-1 payments of amounts paid to financial intermediaries by the Fund’s distributor to zero for Classes A, B, C, R3 and R4 during this time period. The Board’s action can be changed at any time. | |||
The Hartford may be required to pay, out of its own resources, the equivalent of 12b-1 fees to financial intermediaries notwithstanding the reduction of 12b-1 fees. Since October 2008, the Fund’s distributor has made payments out of its own resources to financial intermediaries equal to the amount of 12b-1 fees that would have been paid notwithstanding waivers of 12b-1 fees. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $2. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $633 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 1,602 |
6. | Investment Transactions: |
For the six-month period ended April 30, 2009, the cost of purchases and sales of securities for the Fund were $6,767,082 and $6,608,141, respectively. |
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7. | Capital Share Transactions: |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 279,640 | 114 | (285,824 | ) | — | (6,070 | ) | 630,595 | 7,915 | (465,833 | ) | — | 172,677 | |||||||||||||||||||||||||||
Amount | $ | 279,640 | $ | 114 | $ | (285,824 | ) | $ | — | $ | (6,070 | ) | $ | 630,595 | $ | 7,915 | $ | (465,833 | ) | $ | — | $ | 172,677 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 37,505 | 2 | (29,999 | ) | — | 7,508 | 76,206 | 496 | (39,240 | ) | — | 37,462 | ||||||||||||||||||||||||||||
Amount | $ | 37,505 | $ | 2 | $ | (29,999 | ) | $ | — | $ | 7,508 | $ | 76,206 | $ | 496 | $ | (39,240 | ) | $ | — | $ | 37,462 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 80,738 | 4 | (98,274 | ) | — | (17,532 | ) | 238,390 | 1,260 | (158,807 | ) | — | 80,843 | |||||||||||||||||||||||||||
Amount | $ | 80,738 | $ | 4 | $ | (98,274 | ) | $ | — | $ | (17,532 | ) | $ | 238,390 | $ | 1,260 | $ | (158,807 | ) | $ | — | $ | 80,843 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,136 | — | (646 | ) | — | 490 | 554 | 1 | (35 | ) | — | 520 | ||||||||||||||||||||||||||||
Amount | $ | 1,136 | $ | — | $ | (646 | ) | $ | — | $ | 490 | $ | 554 | $ | 1 | $ | (35 | ) | $ | — | $ | 520 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 206,058 | 47 | (33,784 | ) | — | 172,321 | 140,651 | 1,288 | (10,452 | ) | — | 131,487 | ||||||||||||||||||||||||||||
Amount | $ | 206,058 | $ | 47 | $ | (33,784 | ) | $ | — | $ | 172,321 | $ | 140,651 | $ | 1,288 | $ | (10,452 | ) | $ | — | $ | 131,487 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 21,080 | 9 | (19,160 | ) | — | 1,929 | 9,570 | 120 | (2,073 | ) | — | 7,617 | ||||||||||||||||||||||||||||
Amount | $ | 21,080 | $ | 9 | $ | (19,160 | ) | $ | — | $ | 1,929 | $ | 9,570 | $ | 120 | $ | (2,073 | ) | $ | — | $ | 7,617 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | 4,020 | 83 | (5,209 | ) | — | (1,106 | ) | ||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | 4,020 | $ | 83 | $ | (5,209 | ) | $ | — | $ | (1,106 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 2,235 | $ | 2,235 | |||||
For the Year Ended October 31, 2008 | 3,962 | $ | 3,962 |
8. | Participation in the U.S. Department of Treasury Guarantee Program for Money Market Funds: | |
The Board of Directors (“Board”) of The Hartford Mutual Funds, Inc. has approved the participation of Hartford Money Market Fund in the U.S. Treasury Department’s Temporary Guarantee Program (the “Program”) for money market funds. | ||
Subject to certain conditions and limitations, the Program provides that investors in the Fund will receive $1.00 for each Fund share held as of the close of business on September 19, 2008 in the event that the Fund closes at a NAV below $1.00 per share (a “guarantee event”). The Program only covers the amount an investor held in the Fund as of the close of business on September 19, 2008 or the amount an investor holds if and when a guarantee event occurs, whichever is less. Participation in the Program is expected to provide direct benefits to current shareholders that were shareholders as of September 19, 2008 and indirect benefits to all current shareholders by supporting the stability of the Fund’s asset level. | ||
Accordingly, any purchase of shares of the Fund for a new account after the close of business on September 19, 2008 and any increase in the number of shares of the Fund held in an account after the close of business on September 19, 2008 will not be covered by the Program. In the event that shares held as of the close of business on September 19, 2008 are sold prior to the date of a guarantee event, the shares covered by the guarantee will be the lesser of (i) the amounts held in the Fund as of the close of business on September 19, 2008 or (ii) the amounts held in the Fund on the date of a guarantee event. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
The cost to participate in the Program will be borne by the Fund without regard to any fee waiver and/or any expense limitation or reimbursement currently in effect for the Fund and is, therefore, borne by all shareholders of the Fund whether or not their shares are covered by the Program. Currently, assets available to the Program to support all participating money market funds do not exceed $50 billion and the Secretary of the Treasury extended the Program up through the close of business on September 18, 2009. | ||
On November 24, 2008, the U.S. Treasury Department extended the Program until April 30, 2009 and again on March 31, 2009 extended the Program until September 18, 2009. The Program still continues to cover only the amount an investor held in the Fund as of the close of business on September 19, 2008 or the amount an investor holds if and when a guarantee event occurs, whichever is less. The Board has approved the continued participation of the Fund in the Program. The cost to participate in the Program will continue to be borne by the Fund. |
9. | Capital Support Agreement: |
The Money Market Fund has entered into a Capital Support Agreement, dated September 26, 2008, and amended October 8, 2008 (the “CSA”) with HIFSCO and its affiliate Hartford Life, Inc. (“Hartford Life”). Under the terms of the CSA, Hartford Life has agreed to provide support of up to a maximum aggregate amount of $6.4 million for the Money Market Fund’s holdings of certain securities specified in the CSA (the “Notes”). The Notes are identified in the Schedule of Investments. | ||
The CSA provides that Hartford Life will pay a capital contribution to the Money Market Fund if a “Contribution Event” occurs prior to an event terminating the CSA. The contribution amount would be the lesser of: (1) the amount sufficient for the Money Market Fund to maintain its market-based calculation of net asset value (“NAV”) per share at $0.9950 (which rounds to an NAV of $1.00), after giving effect to the contribution and payments received by the Money Market Fund in respect of the Notes; (2) the amount of the loss on the Notes, which is the excess of the amortized cost of the Notes, less deduction of any commissions or similar transaction cost, and any amount received by the Money Market Fund in connection with the Contribution Event; and (3) the maximum contribution amount under the CSA, which is $6.4 million for any and all contributions under the CSA. | ||
The CSA defines a “Contribution Event” as any of the following occurrences: (1) any sale of the Note for cash in an amount, after deduction of any commissions or similar transaction costs, less than the amortized cost value of the Note sold as of the date of the settlement; (2) the receipt of final payment on the Note in an amount less than the amortized cost value of the Note as of the date such payment is received; (3) the issuance of orders by a court having jurisdiction over the matter discharging the issuer from liability for the Note and providing for payments on that Note in an amount less than the amortized cost value of the Note as of the date such payment is received; or (4) the receipt of any security or other instruments in exchange for, or as replacement of, the Note as a result of an exchange offer, debt restructuring, reorganization or similar transaction pursuant to which the Note is exchanged for, or replaced with, new securities of the issuer or third party and such new securities are or become “Eligible Securities,” as defined under Rule 2a-7 under the 1940 Act, and have a value that is less than the amortized cost of the Note on the date that the Money Market Fund receives such new securities. | ||
On February 24, 2009, after the receipt of verbal “no-action” assurance provided by the staff of the SEC, the parties to the CSA have entered into an amendment that permits the CSA to continue despite the fact that Hartford Life’s obligations, effective February 9, 2009, no longer qualify as “First Tier” securities, as defined under Rule 2a-7 under the 1940 Act. The amendment requires that Hartford Life establish an escrow account to support its potential future obligations under the CSA. The minimum balance of the escrow account is $125,000 (which was set equal to the aggregate unrealized loss on the Notes as of February 23, 2009), and the balance may periodically be adjusted based on the fair value of the Notes and the NAV of the Money Market Fund. | ||
The CSA will terminate (unless the parties agree to an extension) on the earliest of the following dates: (1) September 26, 2009; (2) if and when all of the Notes are repaid in full; and (3) if and when Hartford Life has made capital contributions, in the aggregate, equal to the maximum aggregate amount of $6.4 million. Any extension would require approval of the SEC staff. In light of the terms of the CSA, the current and historical market value of the Notes and the net asset value of the Money Market Fund, it is possible that no capital contribution would be required even if the Money Market Fund were to |
16
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realize a loss with respect to the Notes. The CSA applies only with respect to the Notes and does not guarantee that the Money Market Fund will maintain a stable NAV under all conditions. Apart from the CSA, Hartford Life has not undertaken nor is it obligated to provide support with respect to the Money Market Fund’s NAV. | ||
During the six-month period ended April 30, 2009, the Fund did not receive a capital contribution under the terms of the CSA and the Fund did not rely on the CSA to maintain a $1.00 NAV per share. |
17
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
�� | Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
realized | Distrib- | Net | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Gain | utions | Increase | Asset | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | (Loss) | Dividends | from | Distri- | (Decrease) | Value | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | on | Total from | from Net | Realized | butions | in Net | at End | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | Invest- | Investment | Investment | Capital | from | Total Distri- | Asset | of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 1.00 | $ | 0.0003 | $ | — | $ | 0.0003 | $ | (0.0003 | ) | $ | — | $ | — | $ | (0.0003 | ) | $ | — | $ | 1.00 | 0.03 | %(e) | $ | 480,583 | 0.94 | %(f) | 0.62 | %(f) | 0.57 | %(f) | 0.06 | %(f) | N/A | ||||||||||||||||||||||||||||||||||||||
B | 1.00 | — | — | — | — | — | — | — | — | 1.00 | — | (e) | 74,097 | 1.39 | (f) | 0.67 | (f) | 0.62 | (f) | — | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | — | — | — | — | — | — | — | — | 1.00 | — | (e) | 122,659 | 1.32 | (f) | 0.68 | (f) | 0.63 | (f) | 0.01 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 1.00 | 0.0001 | — | 0.0001 | (0.0001 | ) | — | — | (0.0001 | ) | — | 1.00 | 0.01 | (e) | 1,019 | 1.11 | (f) | 0.62 | (f) | 0.59 | (f) | 0.02 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 1.00 | 0.0003 | — | 0.0003 | (0.0003 | ) | — | — | (0.0003 | ) | — | 1.00 | 0.03 | (e) | 320,804 | 0.85 | (f) | 0.56 | (f) | 0.52 | (f) | 0.05 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 1.00 | 0.0007 | — | 0.0007 | (0.0007 | ) | — | — | (0.0007 | ) | — | 1.00 | 0.07 | (e) | 10,757 | 0.67 | (f) | 0.55 | (f) | 0.49 | (f) | 0.16 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.0008 | — | 0.0008 | (0.0008 | ) | — | — | (0.0008 | ) | — | 1.00 | 0.08 | (e) | 1,596 | 0.60 | (f) | 0.50 | (f) | 0.43 | (f) | 0.18 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 2.31 | 486,596 | 0.99 | 0.90 | 0.90 | 2.23 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 1.54 | 66,581 | 1.71 | 1.65 | 1.65 | 1.40 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 1.60 | 140,174 | 1.60 | 1.60 | 1.60 | 1.49 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 2.07 | 529 | 1.35 | 1.15 | 1.15 | 1.33 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 2.37 | 148,465 | 0.94 | 0.85 | 0.85 | 1.91 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 1.00 | 0.03 | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | 2.60 | 8,826 | 0.63 | 0.63 | 0.63 | 2.09 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.03 | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | 2.69 | 1,595 | 0.52 | 0.52 | 0.52 | 2.77 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 4.49 | 314,872 | 1.13 | 0.95 | 0.95 | 4.40 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 3.71 | 29,219 | 1.82 | 1.70 | 1.70 | 3.65 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 3.72 | 59,575 | 1.72 | 1.69 | 1.69 | 3.66 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 3.63 | (e) | 10 | 1.36 | (f) | 1.20 | (f) | 1.20 | (f) | 4.16 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 3.95 | (e) | 17,239 | 1.01 | (f) | 0.90 | (f) | 0.90 | (f) | 4.49 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 4.18 | (e) | 1,229 | 0.72 | (f) | 0.60 | (f) | 0.60 | (f) | 4.79 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.05 | — | 0.05 | (0.05 | ) | — | — | (0.05 | ) | — | 1.00 | 4.90 | 2,707 | 0.58 | 0.55 | 0.55 | 4.77 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 4.00 | 207,592 | 1.14 | 0.95 | 0.95 | 3.95 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 1.00 | 0.03 | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | 3.22 | 27,995 | 1.79 | 1.70 | 1.70 | 3.18 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | 0.03 | — | 0.03 | (0.03 | ) | — | — | (0.03 | ) | — | 1.00 | 3.22 | 16,997 | 1.76 | 1.70 | 1.70 | 3.20 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.04 | — | 0.04 | (0.04 | ) | — | — | (0.04 | ) | — | 1.00 | 4.34 | 13,628 | 0.61 | 0.55 | 0.55 | 4.29 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 1.99 | 182,308 | 1.22 | 0.95 | 0.95 | 1.96 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | — | (0.01 | ) | — | 1.00 | 1.23 | 30,716 | 1.88 | 1.70 | 1.70 | 1.16 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | 0.01 | — | 0.01 | (0.01 | ) | — | — | (0.01 | ) | — | 1.00 | 1.23 | 18,790 | 1.80 | 1.70 | 1.70 | 1.19 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.02 | — | 0.02 | (0.02 | ) | — | — | (0.02 | ) | — | 1.00 | 2.40 | 16,114 | 0.61 | 0.55 | 0.55 | 2.47 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 1.00 | 0.0030 | — | 0.0030 | (0.0030 | ) | — | — | (0.0030 | ) | — | 1.00 | 0.28 | 205,442 | 1.22 | 1.00 | 1.00 | 0.27 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 1.00 | 0.0001 | — | 0.0001 | (0.0001 | ) | — | — | (0.0001 | ) | — | 1.00 | 0.01 | 45,836 | 1.82 | 1.25 | 1.25 | 0.01 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 1.00 | 0.0001 | — | 0.0001 | (0.0001 | ) | — | — | (0.0001 | ) | — | 1.00 | 0.01 | 26,626 | 1.77 | 1.27 | 1.27 | 0.01 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 1.00 | 0.0070 | — | 0.0070 | (0.0070 | ) | — | — | (0.0070 | ) | — | 1.00 | 0.72 | 9,698 | 0.56 | 0.55 | 0.55 | 0.96 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. |
18
Table of Contents
Mr. Birdsong is a private investor. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm. Since 2003, Mr. Birdsong has been an independent director of The Japan Fund. From 2003 to March 2005, Mr. Birdsong was an independent director of the Atlantic Whitehall Funds. From 1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder Investments, an investment management firm. During his employment with Scudder, Mr. Birdsong was an interested director of The Japan Fund.
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was President of Cranbrook Education Community and prior to July 1996, he was President of Macalester College, St. Paul, Minnesota.
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment company. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that serves as sponsor and lead investor in leveraged buyouts of middle market companies.
19
Table of Contents
Directors and Officers (Unaudited) — (continued)
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG LLP (an accounting firm) until July 1999. Mr. Peterson joined William Blair Funds in February 2007 as a member of the Board of Trustees. From January 2004 to April 2005, Mr. Peterson served as Independent President of the Strong Mutual Funds.
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
20
Table of Contents
21
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,000.25 | $ | 3.07 | $ | 1,000.00 | $ | 1,021.72 | $ | 3.11 | 0.62 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,000.04 | $ | 3.32 | $ | 1,000.00 | $ | 1,021.47 | $ | 3.36 | 0.67 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,000.04 | $ | 3.37 | $ | 1,000.00 | $ | 1,021.42 | $ | 3.41 | 0.68 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,000.11 | $ | 3.07 | $ | 1,000.00 | $ | 1,021.72 | $ | 3.11 | 0.62 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,000.30 | $ | 2.78 | $ | 1,000.00 | $ | 1,022.02 | $ | 2.81 | 0.56 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,000.67 | $ | 2.73 | $ | 1,000.00 | $ | 1,022.07 | $ | 2.76 | 0.55 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,000.83 | $ | 2.48 | $ | 1,000.00 | $ | 1,022.32 | $ | 2.51 | 0.50 | 181 | 365 |
22
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
20 | ||||
21 | ||||
23 | ||||
23 | ||||
24 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Select MidCap Value A# | 4/29/05 | -33.02 | % | -6.45 | % | |||||||
Select MidCap Value A## | 4/29/05 | -36.70 | % | -7.76 | % | |||||||
Select MidCap Value B# | 4/29/05 | -33.37 | % | -7.04 | % | |||||||
Select MidCap Value B## | 4/29/05 | -36.67 | % | -7.43 | % | |||||||
Select MidCap Value C# | 4/29/05 | -33.39 | % | -7.10 | % | |||||||
Select MidCap Value C## | 4/29/05 | -34.05 | % | -7.10 | % | |||||||
Select MidCap Value Y# | 4/29/05 | -32.90 | % | -6.19 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Kurt Cubbage, CFA | |
Managing Director | Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.3 | % | ||
Banks | 3.1 | |||
Capital Goods | 4.7 | |||
Commercial & Professional Services | 1.0 | |||
Consumer Durables & Apparel | 3.7 | |||
Consumer Services | 0.4 | |||
Diversified Financials | 2.3 | |||
Energy | 4.9 | |||
Food & Staples Retailing | 0.3 | |||
Food, Beverage & Tobacco | 7.6 | |||
Health Care Equipment & Services | 5.2 | |||
Insurance | 11.2 | |||
Materials | 9.3 | |||
Media | 2.2 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 2.0 | |||
Real Estate | 10.5 | |||
Retailing | 8.2 | |||
Semiconductors & Semiconductor Equipment | 1.3 | |||
Software & Services | 2.6 | |||
Technology Hardware & Equipment | 4.3 | |||
Telecommunication Services | 2.8 | |||
Transportation | 0.6 | |||
Utilities | 9.4 | |||
Short-Term Investments | 2.1 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 97.9% | ||||||||
Automobiles & Components - 0.3% | ||||||||
5 | Autoliv, Inc. | $ | 133 | |||||
Banks - 3.1% | ||||||||
4 | Bank of Hawaii Corp. | 137 | ||||||
3 | BOK Financial Corp. | 117 | ||||||
2 | First Citizens Bancshares Class A | 190 | ||||||
12 | First Horizon National Corp. | 139 | ||||||
11 | Hudson City Bancorp, Inc. | 143 | ||||||
11 | Keycorp | 65 | ||||||
29 | Regions Financial Corp. | 132 | ||||||
10 | Wilmington Trust Corp. | 148 | ||||||
11 | Zion Bancorp | 120 | ||||||
1,191 | ||||||||
Capital Goods - 4.7% | ||||||||
4 | Aecom Technology Corp. • | 106 | ||||||
6 | AGCO Corp. • | 141 | ||||||
4 | Cooper Industries Ltd. | 125 | ||||||
6 | Eaton Corp. | 261 | ||||||
2 | Flowserve Corp. | 149 | ||||||
6 | Gardner Denver Machinery, Inc. • | 154 | ||||||
14 | Ingersoll-Rand Co. Class A | 296 | ||||||
4 | ITT Corp. | 154 | ||||||
1 | L-3 Communications Holdings, Inc. | 99 | ||||||
4 | Quanta Services, Inc. • | 95 | ||||||
8 | Thomas & Betts Corp. • | 258 | ||||||
1,838 | ||||||||
Commercial & Professional Services - 1.0% | ||||||||
6 | Manpower, Inc. | 237 | ||||||
12 | R.R. Donnelley & Sons Co. | 143 | ||||||
380 | ||||||||
Consumer Durables & Apparel - 3.7% | ||||||||
4 | Black & Decker Corp. | 173 | ||||||
7 | Harman International Industries, Inc. | 128 | ||||||
28 | Jones Apparel Group, Inc. | 262 | ||||||
13 | Mattel, Inc. | 197 | ||||||
— | NVR, Inc. • | 240 | ||||||
3 | Stanley Works | 110 | ||||||
4 | V.F. Corp. | 228 | ||||||
2 | Whirlpool Corp. | 111 | ||||||
1,449 | ||||||||
Consumer Services - 0.4% | ||||||||
8 | Career Education Corp. • | 170 | ||||||
Diversified Financials - 2.3% | ||||||||
25 | Discover Financial Services, Inc. | 202 | ||||||
6 | Invesco Ltd. | 85 | ||||||
10 | Leucadia National Corp. | 217 | ||||||
3 | Northern Trust Corp. | 163 | ||||||
15 | Raymond James Financial, Inc. | 231 | ||||||
898 | ||||||||
Energy - 4.9% | ||||||||
7 | Cimarex Energy Co. | 175 | ||||||
7 | Forest Oil Corp. • | 109 | ||||||
4 | Helmerich & Payne, Inc. | 117 | ||||||
13 | Nabors Industries Ltd. • | 198 | ||||||
2 | Noble Energy, Inc. | 116 | ||||||
10 | Oil States International, Inc. • | 183 | ||||||
5 | Plains Exploration & Production Co. • | 89 | ||||||
7 | Southern Union Co. | 110 | ||||||
17 | Spectra Energy Corp. | 252 | ||||||
8 | Sunoco, Inc. | 207 | ||||||
17 | Tesoro Corp. | 256 | ||||||
2 | Tidewater, Inc. | 100 | ||||||
1,912 | ||||||||
Food & Staples Retailing - 0.3% | ||||||||
6 | Safeway, Inc. | 126 | ||||||
Food, Beverage & Tobacco - 7.6% | ||||||||
7 | Brown-Forman Corp. | 338 | ||||||
7 | Bunge Ltd. Finance Corp. | 343 | ||||||
4 | Campbell Soup Co. | 111 | ||||||
11 | Coca-Cola Enterprises, Inc. | 193 | ||||||
13 | Constellation Brands, Inc. Class A • | 148 | ||||||
4 | Corn Products International, Inc. | 96 | ||||||
9 | Dean Foods Co. • | 192 | ||||||
14 | Del Monte Foods Co. | 109 | ||||||
12 | Dr Pepper Snapple Group • | 244 | ||||||
7 | H.J. Heinz Co. | 232 | ||||||
8 | Hershey Co. | 304 | ||||||
4 | Hormel Foods Corp. | 125 | ||||||
4 | Lorillard, Inc. | 268 | ||||||
5 | McCormick & Co., Inc. | 144 | ||||||
15 | Sara Lee Corp. | 121 | ||||||
2,968 | ||||||||
Health Care Equipment & Services - 5.2% | ||||||||
18 | Cigna Corp. | 353 | ||||||
4 | Henry Schein, Inc. • | 166 | ||||||
18 | Hill-Rom Holdings, Inc. | 234 | ||||||
35 | Hlth Corp. • | 382 | ||||||
7 | Hologic, Inc. • | 104 | ||||||
3 | Hospira, Inc. • | 92 | ||||||
5 | Humana, Inc. • | 142 | ||||||
10 | IMS Health, Inc. | 129 | ||||||
5 | Lincare Holdings, Inc. • | 111 | ||||||
3 | MEDNAX, Inc. • | 115 | ||||||
8 | Omnicare, Inc. | 193 | ||||||
2,021 | ||||||||
Insurance - 11.2% | ||||||||
— | Alleghany Corp. • | 111 | ||||||
4 | Allied World Assurance Holdings Ltd. | 130 | ||||||
5 | AON Corp. | 203 | ||||||
2 | Arch Capital Group Ltd. • | 136 | ||||||
4 | Assurant, Inc. | 108 | ||||||
6 | Axis Capital Holdings Ltd. | 135 | ||||||
7 | Cincinnati Financial Corp. | 168 | ||||||
30 | CNA Financial Corp. | 359 | ||||||
4 | Endurance Specialty Holdings Ltd. | 110 | ||||||
4 | Everest Re Group Ltd. | 329 | ||||||
5 | Fidelity National Financial, Inc. | 91 | ||||||
5 | Hanover Insurance Group, Inc. | 135 | ||||||
6 | HCC Insurance Holdings, Inc. | 148 | ||||||
— | Markel Corp. • | 126 | ||||||
21 | MBIA, Inc. • | 101 | ||||||
4 | PartnerRe Ltd. | 256 | ||||||
15 | Principal Financial Group, Inc. | 250 | ||||||
37 | Progressive Corp. | 561 | ||||||
6 | Transatlantic Holdings, Inc. | 231 | ||||||
10 | W.R. Berkley Corp. | 229 | ||||||
1 | White Mountains Insurance Group Ltd. | 159 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS - 97.9% — (continued) | ||||||||
Insurance - 11.2% — (continued) | ||||||||
34 | XL Capital Ltd. Class A | $ | 322 | |||||
4,398 | ||||||||
Materials - 9.3% | ||||||||
2 | Ball Corp. | 85 | ||||||
5 | FMC Corp. | 241 | ||||||
34 | International Paper Co. | 427 | ||||||
11 | Intrepid Potash, Inc. • | 274 | ||||||
3 | Lubrizol Corp. | 138 | ||||||
7 | Nalco Holding Co. | 113 | ||||||
12 | Owens-Illinois, Inc. • | 290 | ||||||
9 | Pactiv Corp. • | 188 | ||||||
6 | PPG Industries, Inc. | 258 | ||||||
4 | Reliance Steel & Aluminum | 145 | ||||||
5 | Schnitzer Steel Industries, Inc. | 235 | ||||||
9 | Scotts Miracle-Gro Co. Class A | 291 | ||||||
6 | Sealed Air Corp. | 115 | ||||||
6 | Sigma-Aldrich Corp. | 265 | ||||||
7 | Sonoco Products Co. | 173 | ||||||
32 | Steel Dynamics, Inc. | 395 | ||||||
3,633 | ||||||||
Media -2.2% | ||||||||
35 | CBS Corp. Class B | 249 | ||||||
12 | Liberty Global, Inc. • | 205 | ||||||
9 | McGraw-Hill Cos., Inc. | 256 | ||||||
— | Washington Post Co. Class B | 136 | ||||||
846 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 2.0% | ||||||||
9 | Endo Pharmaceuticals Holdings, Inc. • | 154 | ||||||
18 | Forest Laboratories, Inc. • | 384 | ||||||
11 | Mylan, Inc. • | 145 | ||||||
9 | PerkinElmer, Inc. | 127 | ||||||
810 | ||||||||
Real Estate - 10.5% | ||||||||
4 | Alexandria Real Estate Equities, Inc. | 155 | ||||||
34 | Annaly Capital Management, Inc. | 476 | ||||||
5 | Boston Properties, Inc. | 235 | ||||||
5 | BRE Properties | 118 | ||||||
8 | Digital Realty Trust, Inc. | 292 | ||||||
35 | Duke Realty, Inc. | 343 | ||||||
2 | Essex Property Trust, Inc. | 115 | ||||||
8 | Federal Realty Investment Trust | 450 | ||||||
7 | HCP, Inc. | 160 | ||||||
7 | Health Care, Inc. | 250 | ||||||
56 | Host Hotels & Resorts, Inc. | 428 | ||||||
11 | Kimco Realty Corp. | 128 | ||||||
9 | Plum Creek Timber Co., Inc. | 321 | ||||||
6 | Public Storage | 424 | ||||||
5 | Rayonier, Inc. | 205 | ||||||
4,100 | ||||||||
Retailing -8.2% | ||||||||
17 | American Eagle Outfitters, Inc. | 258 | ||||||
10 | AutoNation, Inc. • | 173 | ||||||
4 | Barnes & Noble, Inc. | 105 | ||||||
10 | Bed Bath & Beyond, Inc. • | 304 | ||||||
7 | Family Dollar Stores, Inc. | 232 | ||||||
17 | Foot Locker, Inc. | 196 | ||||||
13 | Gap, Inc. | 200 | ||||||
3 | Genuine Parts Co. | 105 | ||||||
10 | J.C. Penney Co., Inc. | 310 | ||||||
7 | Kohl’s Corp. • | 334 | ||||||
20 | Limited Brands, Inc. | 233 | ||||||
31 | Macy’s, Inc. | 417 | ||||||
4 | O’Reilly Automotive, Inc. • | 150 | ||||||
3 | Sears Holdings Corp. • | 184 | ||||||
3,201 | ||||||||
Semiconductors & Semiconductor Equipment - 1.3% | ||||||||
41 | Atmel Corp. • | 159 | ||||||
5 | Cree, Inc. • | 145 | ||||||
41 | Micron Technology, Inc. • | 199 | ||||||
503 | ||||||||
Software & Services - 2.6% | ||||||||
17 | CA, Inc. | 292 | ||||||
35 | Cadence Design Systems, Inc. • | 197 | ||||||
8 | IAC/Interactive Corp. • | 134 | ||||||
5 | McAfee, Inc. • | 180 | ||||||
10 | Synopsys, Inc. • | 222 | ||||||
1,025 | ||||||||
Technology Hardware & Equipment - 4.3% | ||||||||
69 | JDS Uniphase Corp. • | 319 | ||||||
18 | Lexmark International, Inc. ADR • | 344 | ||||||
19 | QLogic Corp. • | 270 | ||||||
10 | SanDisk Corp. • | 159 | ||||||
30 | Sun Microsystems, Inc. • | 275 | ||||||
27 | Tellabs, Inc. • | 142 | ||||||
24 | Xerox Corp. | 148 | ||||||
1,657 | ||||||||
Telecommunication Services - 2.8% | ||||||||
14 | Century Tel, Inc. | 385 | ||||||
3 | Embarq Corp. | 119 | ||||||
4 | Leap Wireless International, Inc. • | 148 | ||||||
26 | Qwest Communications International, Inc. | 101 | ||||||
7 | Telephone and Data Systems, Inc. | 189 | ||||||
19 | Windstream Corp. | 159 | ||||||
1,101 | ||||||||
Transportation - 0.6% | ||||||||
15 | Delta Air Lines, Inc. • | 90 | ||||||
12 | UTI Worldwide, Inc. | 164 | ||||||
254 | ||||||||
Utilities - 9.4% | ||||||||
10 | American Electric Power Co., Inc. | 253 | ||||||
5 | American Water Works Co., Inc. | 86 | ||||||
13 | CenterPoint Energy, Inc. | 138 | ||||||
14 | CMS Energy Corp. | 171 | ||||||
6 | Consolidated Edison, Inc. | 206 | ||||||
5 | Edison International | 154 | ||||||
17 | N.V. Energy, Inc. | 177 | ||||||
7 | National Fuel Gas Co. | 226 | ||||||
7 | Northeast Utilities | 147 | ||||||
7 | NRG Energy, Inc. • | 126 | ||||||
5 | Oneok, Inc. | 136 | ||||||
9 | PG&E Corp. | 315 | ||||||
8 | Progress Energy, Inc. | 277 | ||||||
6 | Questar Corp. | 163 | ||||||
3 | SCANA Corp. | 85 | ||||||
8 | Sempra Energy | 377 | ||||||
15 | TECO Energy, Inc. | 154 | ||||||
6 | UGI Corp. | 147 | ||||||
3 | Wisconsin Energy Corp. | 114 |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 97.9% — (continued) | ||||||||||||
Utilities - 9.4% — (continued) | ||||||||||||
13 | Xcel Energy, Inc. | $ | 242 | |||||||||
3,694 | ||||||||||||
Total common stocks (cost $45,107) | $ | 38,308 | ||||||||||
Total long-term investments (cost $45,107) | $ | 38,308 | ||||||||||
SHORT-TERM INVESTMENTS - 2.1% | ||||||||||||
Repurchase Agreements - 1.6% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $477, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $486) | ||||||||||||
$ | 477 | 0.15%, 04/30/2009 | $ | 477 | ||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $133, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $136) | ||||||||||||
133 | 0.13%, 04/30/2009 | 133 | ||||||||||
610 | ||||||||||||
U.S. Treasury Bills - 0.5% | ||||||||||||
$ | 220 | 0.18%, 07/16/2009 • | $ | 220 | ||||||||
Total short-term investments (cost $830) | $ | 830 | ||||||||||
Total investments (cost $45,937)▲ | 100.0 | % | $ | 39,138 | ||||||||
Other assets and liabilities | — | % | 17 | |||||||||
Total net assets | 100.0 | % | $ | 39,155 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $47,311 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 1,983 | ||
Unrealized Depreciation | (10,156 | ) | ||
Net Unrealized Depreciation | $ | (8,173 | ) | |
• | Currently non-income producing. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
□ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
S&P Mid 400 Mini | 13 | Long | Jun 2009 | $ | 68 | |||||||||||
* | The number of contracts does not omit 000’s. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 38,308 | ||
Investment in securities — Level 2 | 830 | |||
Total | $ | 39,138 | ||
Other financial instruments — Level 1 * | $ | 68 | ||
Total | $ | 68 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
6
Table of Contents
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $45,937) | $ | 39,138 | ||
Cash | — | |||
Receivables: | ||||
Fund shares sold | 32 | |||
Dividends and interest | 24 | |||
Variation margin | 1 | |||
Other assets | 58 | |||
Total assets | 39,253 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 65 | |||
Investment management fees | 5 | |||
Distribution fees | 1 | |||
Accrued expenses | 27 | |||
Total liabilities | 98 | |||
Net assets | $ | 39,155 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 83,958 | |||
Accumulated undistributed net investment income | 183 | |||
Accumulated net realized loss on investments | (38,255 | ) | ||
Unrealized depreciation of investments | (6,731 | ) | ||
Net assets | $ | 39,155 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.31/$6.67 | ||
Shares outstanding | 2,134 | |||
Net assets | $ | 13,458 | ||
Class B: Net asset value per share | $ | 6.19 | ||
Shares outstanding | 291 | |||
Net assets | $ | 1,803 | ||
Class C: Net asset value per share | $ | 6.20 | ||
Shares outstanding | 390 | |||
Net assets | $ | 2,415 | ||
Class Y: Net asset value per share | $ | 6.29 | ||
Shares outstanding | 3,412 | |||
Net assets | $ | 21,479 | ||
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(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 634 | ||
Interest | 1 | |||
Securities lending | 17 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 652 | |||
Expenses: | ||||
Investment management fees | 146 | |||
Transfer agent fees | 53 | |||
Distribution fees | ||||
Class A | 17 | |||
Class B | 9 | |||
Class C | 12 | |||
Custodian fees | 5 | |||
Accounting services | 2 | |||
Registration and filing fees | 23 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 15 | |||
Total expenses (before waivers and fees paid indirectly) | 286 | |||
Expense waivers | (60 | ) | ||
Transfer agent fee waivers | (26 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (86 | ) | ||
Total expenses, net | 200 | |||
Net investment income | 452 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (15,740 | ) | ||
Net realized loss on futures | (230 | ) | ||
Net Realized Loss on Investments and Other Financial Instruments | (15,970 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 12,603 | |||
Net unrealized appreciation of futures | 133 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 12,736 | |||
Net Loss on Investments and Other Financial Instruments | (3,234 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (2,782 | ) | |
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 452 | $ | 907 | ||||
Net realized loss on investments and other financial instruments | (15,970 | ) | (21,827 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 12,736 | (15,059 | ) | |||||
Net decrease in net assets resulting from operations | (2,782 | ) | (35,979 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (228 | ) | (34 | ) | ||||
Class B | (17 | ) | — | |||||
Class C | (11 | ) | — | |||||
Class Y | (524 | ) | (316 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (3,926 | ) | |||||
Class B | — | (445 | ) | |||||
Class C | — | (831 | ) | |||||
Class Y | — | (5,606 | ) | |||||
Total distributions | (780 | ) | (11,158 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (1,424 | ) | (7,322 | ) | ||||
Class B | (198 | ) | (200 | ) | ||||
Class C | (143 | ) | (2,568 | ) | ||||
Class Y | (3,210 | ) | (814 | ) | ||||
Net decrease from capital share transactions | (4,975 | ) | (10,904 | ) | ||||
Net decrease in net assets | (8,537 | ) | (58,041 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 47,692 | 105,733 | ||||||
End of period | $ | 39,155 | $ | 47,692 | ||||
Accumulated undistributed net investment income | $ | 183 | $ | 511 | ||||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Select MidCap Value Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation – The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
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closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
c) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
d) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
i) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
k) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions – The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put |
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option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 6,729 | $ | 2,388 | ||||
Long-Term Capital Gains * | 4,429 | 539 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 511 | ||
Accumulated Capital Losses* | $ | (20,977 | ) | |
Unrealized Depreciation† | $ | (20,775 | ) | |
Total Accumulated Deficit | $ | (41,241 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $209 and increase accumulated net realized gain by $209. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 20,977 | ||
Total | $ | 20,977 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.75 | % | ||
On next $500 million | 0.70 | % | ||
On next $4 billion | 0.65 | % | ||
On next $5 billion | 0.63 | % | ||
Over $10 billion | 0.62 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.30% | 2.05 | % | 2.05 | % | 0.90 | % |
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d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||
Six-Month | ||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | ||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Class A Shares | 1.07 | % | 1.28 | % | 1.32 | % | 1.50 | % | 1.54 | %* | ||||||||||
Class B Shares | 1.44 | 1.79 | 2.00 | 2.25 | 2.29 | † | ||||||||||||||
Class C Shares | 1.62 | 1.97 | 2.07 | 2.25 | 2.29 | ‡ | ||||||||||||||
Class Y Shares | 0.90 | 0.88 | 0.83 | 1.11 | 1.14 | § |
* | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
† | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
‡ | From April 29, 2005 (commencement of operations), through October 31, 2005 | |
§ | From April 29, 2005 (commencement of operations), through October 31, 2005 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $22 and contingent deferred sales charges of $3 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $3. These commissions are in turn paid to sales representatives of the broker/dealers. |
17
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
f) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $41 for providing such services. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 20,244 | ||
Sales Proceeds Excluding U.S. Government Obligations | 25,420 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 263 | 37 | (565 | ) | — | (265 | ) | 673 | 369 | (1,867 | ) | — | (825 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,546 | $ | 223 | $ | (3,193 | ) | $ | — | $ | (1,424 | ) | $ | 6,335 | $ | 3,806 | $ | (17,463 | ) | $ | — | $ | (7,322 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 30 | 3 | (70 | ) | — | (37 | ) | 64 | 42 | (139 | ) | — | (33 | ) | ||||||||||||||||||||||||||
Amount | $ | 177 | $ | 16 | $ | (391 | ) | $ | — | $ | (198 | ) | $ | 589 | $ | 424 | $ | (1,213 | ) | $ | — | $ | (200 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 66 | 2 | (91 | ) | — | (23 | ) | 82 | 80 | (443 | ) | — | (281 | ) | ||||||||||||||||||||||||||
Amount | $ | 371 | $ | 11 | $ | (525 | ) | $ | — | $ | (143 | ) | $ | 751 | $ | 805 | $ | (4,124 | ) | $ | — | $ | (2,568 | ) | ||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 88 | (662 | ) | — | (574 | ) | 431 | 573 | (1,429 | ) | — | (425 | ) | ||||||||||||||||||||||||||
Amount | $ | — | $ | 524 | $ | (3,734 | ) | $ | — | $ | (3,210 | ) | $ | 4,412 | $ | 5,922 | $ | (11,148 | ) | $ | — | $ | (814 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 3 | $ | 19 | |||||
For the Year Ended October 31, 2008 | 3 | $ | 25 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
19
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Net Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s | ) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.70 | $ | 0.07 | $ | — | $ | (0.36 | ) | $ | (0.29 | ) | $ | (0.10 | ) | $ | — | $ | — | $ | (0.10 | ) | $ | (0.39 | ) | $ | 6.31 | (4 .33 | )%(e) | $ | 13,458 | 1.79 | %(f) | 1 .07 | %(f) | 1 .07 | %(f) | 2 .26 | %(f) | 52 | % | |||||||||||||||||||||||||||||||
B | 6.54 | 0.05 | — | (0.35 | ) | (0.30 | ) | (0.05 | ) | — | — | (0.05 | ) | (0.35 | ) | 6.19 | (4 .54 | ) (e) | 1,803 | 2 .91 | (f) | 1 .44 | (f) | 1 .44 | (f) | 1 .89 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 6.53 | 0.05 | — | (0.35 | ) | (0.30 | ) | (0.03 | ) | — | — | (0.03 | ) | (0.33 | ) | 6.20 | (4 .62 | ) (e) | 2,415 | 2 .75 | (f) | 1 .62 | (f) | 1 .62 | (f) | 1 .70 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 6.72 | 0.07 | — | (0.37 | ) | (0.30 | ) | (0.13 | ) | — | — | (0.13 | ) | (0.43 | ) | 6.29 | (4 .34 | ) (e) | 21,479 | 1 .01 | (f) | 0 .90 | (f) | 0 .90 | (f) | 2 .44 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.17 | 0.11 | — | (4.34 | ) | (4.23 | ) | (0.01 | ) | (1.23 | ) | — | (1.24 | ) | (5.47 | ) | 6.70 | (38.30 | ) | 16,071 | 1.44 | 1.28 | 1.28 | 0.95 | 194 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 11.96 | 0.04 | — | (4.23 | ) | (4.19 | ) | — | (1.23 | ) | — | (1.23 | ) | (5.42 | ) | 6.54 | (38.65 | ) | 2,147 | 2.43 | 1.79 | 1.79 | 0.43 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.95 | 0.01 | — | (4.20 | ) | (4.19 | ) | — | (1.23 | ) | — | (1.23 | ) | (5.42 | ) | 6.53 | (38.68 | ) | 2,695 | 2.25 | 1.97 | 1.97 | 0.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.21 | 0.14 | — | (4.34 | ) | (4.20 | ) | (0.06 | ) | (1.23 | ) | — | (1.29 | ) | (5.49 | ) | 6.72 | (38.03 | ) | 26,779 | 0.88 | 0.88 | 0.88 | 1.34 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.41 | 0.05 | — | 0.21 | 0.26 | — | (0.50 | ) | — | (0.50 | ) | (0.24 | ) | 12.17 | 2.16 | 39,238 | 1.42 | 1.33 | 1.33 | 0.38 | 209 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.28 | (0.04 | ) | — | 0.22 | 0.18 | — | (0.50 | ) | — | (0.50 | ) | (0.32 | ) | 11.96 | 1.51 | 4,322 | 2.35 | 2.01 | 2.01 | (0.29 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.28 | (0.04 | ) | — | 0.21 | 0.17 | — | (0.50 | ) | — | (0.50 | ) | (0.33 | ) | 11.95 | 1.42 | 8,300 | 2.17 | 2.07 | 2.07 | (0.36 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.40 | 0.03 | — | 0.28 | 0.31 | — | (0.50 | ) | — | (0.50 | ) | (0.19 | ) | 12.21 | 2.58 | 53,873 | 0.84 | 0.83 | 0.83 | 0.83 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.79 | — | — | 1.87 | 1.87 | (0.01 | ) | (0.24 | ) | — | (0.25 | ) | 1.62 | 12.41 | 17.66 | 47,937 | 1.69 | 1.55 | 1.55 | (0.10 | ) | 63 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.75 | (0.10 | ) | — | 1.87 | 1.77 | — | (0.24 | ) | — | (0.24 | ) | 1.53 | 12.28 | 16.79 | 4,137 | 2.67 | 2.30 | 2.30 | (0.84 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.75 | (0.09 | ) | — | 1.86 | 1.77 | — | (0.24 | ) | — | (0.24 | ) | 1.53 | 12.28 | 16.79 | 7,417 | 2.53 | 2.30 | 2.30 | (0.84 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.81 | 0.07 | — | 1.81 | �� | 1.88 | (0.05 | ) | (0.24 | ) | — | (0.29 | ) | 1.59 | 12.40 | 17.79 | 20,025 | 1.33 | 1.15 | 1.15 | 0.26 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) April 29, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 10.00 | — | — | 0.79 | 0.79 | — | — | — | — | 0.79 | 10.79 | 7 .90 | (e) | 22,423 | 1 .67 | (f) | 1 .55 | (f) | 1 .55 | (f) | (0 .08 | ) (f) | 30 | |||||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 10.00 | (0.03 | ) | — | 0.78 | 0.75 | — | — | — | — | 0.75 | 10.75 | 7 .50 | (e) | 1,714 | 2 .64 | (f) | 2 .30 | (f) | 2 .30 | (f) | (0 .92 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C(i) | 10.00 | (0.03 | ) | — | 0.78 | 0.75 | — | — | — | — | 0.75 | 10.75 | 7 .50 | (e) | 2,885 | 2 .53 | (f) | 2 .30 | (f) | 2 .30 | (f) | (0 .96 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y(j) | 10.00 | 0.02 | — | 0.79 | 0.81 | — | — | — | — | 0.81 | 10.81 | 8 .10 | (e) | 541 | 1 .36 | (f) | 1 .15 | (f) | 1 .15 | (f) | 0 .37 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on April 29, 2005. | |
(h) | Commenced operations on April 29, 2005. | |
(i) | Commenced operations on April 29, 2005. | |
(j) | Commenced operations on April 29, 2005. |
20
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21
Table of Contents
Directors and Officers (Unaudited) — (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
22
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23
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 956.74 | $ | 5.19 | $ | 1,000.00 | $ | 1,019.48 | $ | 5.35 | 1.07 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 954.64 | $ | 6.97 | $ | 1,000.00 | $ | 1,017.65 | $ | 7.20 | 1.44 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 953.81 | $ | 7.84 | $ | 1,000.00 | $ | 1,016.76 | $ | 8.10 | 1.62 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 956.58 | $ | 4.36 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 |
24
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
11 | ||||
12 | ||||
13 | ||||
14 | ||||
24 | ||||
25 | ||||
27 | ||||
27 | ||||
28 | ||||
29 |
Table of Contents
(subadvised by: | Kayne Anderson Rudnick Investment Management, LLC | |||
Metropolitan West Capital Management, LLC | ||||
SSgA Funds Management, Inc. |
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Select SmallCap Value A# | 7/31/06 | -27.31 | % | -11.04 | % | |||||||
Select SmallCap Value A## | 7/31/06 | -31.31 | % | -12.86 | % | |||||||
Select SmallCap Value B# | 7/31/06 | -27.69 | % | -11.73 | % | |||||||
Select SmallCap Value B## | 7/31/06 | -31.29 | % | -12.63 | % | |||||||
Select SmallCap Value C# | 7/31/06 | -27.68 | % | -11.69 | % | |||||||
Select SmallCap Value C## | 7/31/06 | -28.40 | % | -11.69 | % | |||||||
Select SmallCap Value Y# | 7/31/06 | -27.02 | % | -10.73 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Kayne Anderson Rudnick Investment Management, LLC | Metropolitan West Capital Management, LLC | SSgA Funds Management, Inc. | ||
Robert A. Schwarzkopf | Samir Sikka | William H. DeRoche, CFA | ||
Chief Investment Officer | Senior Vice President | Principal | ||
Craig Stone | Chuck Martin | |||
Senior Research Analyst | Principal | |||
Julie Kutasov | ||||
Senior Research Analyst |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.6 | % | ||
Banks | 8.0 | |||
Capital Goods | 9.5 | |||
Commercial & Professional Services | 7.6 | |||
Consumer Durables & Apparel | 4.4 | |||
Consumer Services | 3.6 | |||
Diversified Financials | 4.7 | |||
Energy | 5.3 | |||
Food & Staples Retailing | 0.5 | |||
Food, Beverage & Tobacco | 2.6 | |||
Health Care Equipment & Services | 7.7 | |||
Household & Personal Products | 2.9 | |||
Insurance | 3.2 | |||
Materials | 2.9 | |||
Media | 0.6 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 1.0 | |||
Real Estate | 4.7 | |||
Retailing | 3.8 | |||
Semiconductors & Semiconductor Equipment | 2.0 | |||
Software & Services | 8.0 | |||
Technology Hardware & Equipment | 4.3 | |||
Telecommunication Services | 1.5 | |||
Transportation | 3.7 | |||
Utilities | 2.4 | |||
Short-Term Investments | 3.8 | |||
Other Assets and Liabilities | 0.7 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCK – 95.2% | ||||||
Automobiles & Components - 0.6% | ||||||
14 | Dana Holding Corp. • | $ | 11 | |||
9 | Hayes Lemmerz International | 2 | ||||
3 | Modine Manufacturing Co. | 10 | ||||
2 | Spartan Motors, Inc | 19 | ||||
2 | Tenneco Automotive, Inc. • | 6 | ||||
17 | Thor Industries, Inc. | 379 | ||||
427 | ||||||
Banks - 7.7% | ||||||
— | Ames National Corp. | 7 | ||||
2 | Arrow Financial Corp. | 55 | ||||
5 | Banco Latinoamericano de Exportaciones S.A. ADR Class E | 59 | ||||
1 | Bank of the Ozarks, Inc. | 17 | ||||
5 | Bankfinancial Corp. | 49 | ||||
2 | Berkshire Hills Bancorp, Inc. | 42 | ||||
84 | Boston Private Financial Holdings, Inc. | 386 | ||||
— | Brooklyn Federal Bancorp, Inc. | 5 | ||||
1 | Bryn Mawr Bank Corp. | 20 | ||||
1 | Camden National Corp. | 42 | ||||
77 | Cathay General Bancorp | 863 | ||||
6 | Central Pacific Financial Corp. | 33 | ||||
2 | Citizens & Northern Corp. | 47 | ||||
2 | City Holding Co. | 59 | ||||
1 | Clifton Savings Bancorp, Inc. | 14 | ||||
5 | Colonial BancGroup, Inc. | 4 | ||||
— | Community Bank System, Inc. | 5 | ||||
36 | CVB Financial Corp. | 213 | ||||
4 | Dime Community Bancshares | 31 | ||||
6 | East West Bancorp, Inc. | 44 | ||||
3 | First Bancorp North Carolina | 39 | ||||
8 | First BanCorp Puerto Rico | 43 | ||||
2 | First Bancorp, Inc. | 34 | ||||
7 | First Commonwealth Financial Corp. | 63 | ||||
— | First Financial Bankshares, Inc. | 10 | ||||
— | First Financial Corp. | 11 | ||||
5 | First Financial Northwest | 40 | ||||
2 | First Merchants Corp. | 19 | ||||
1 | First Midwest Bancorp, Inc. | 6 | ||||
9 | First Niagara Financial Group, Inc. | 126 | ||||
1 | First Place Financial Corp. | 4 | ||||
— | First Source Corp. | 4 | ||||
5 | FirstMerit Corp. | 107 | ||||
6 | FNB Corp. | 42 | ||||
4 | Fox Chase Bancorp, Inc. • | 36 | ||||
1 | Glacier BanCorp. | 20 | ||||
6 | Guaranty Bancorp • | 13 | ||||
1 | Hancock Holding Co. | 51 | ||||
9 | Hanmi Financial Corp. | 15 | ||||
— | Harleysville National Corp. | 2 | ||||
— | Iberiabank Corp. | 5 | ||||
3 | Integra Bank Corp. | 6 | ||||
29 | International Bancshares Corp. | 388 | ||||
4 | Kearny Financial Corp. | 45 | ||||
3 | Lakeland Bancorp, Inc. | 21 | ||||
1 | Lakeland Financial Corp. | 15 | ||||
— | MainSource Financial Group, Inc. | 3 | ||||
1 | MB Financial, Inc. | 7 | ||||
— | NASB Financial, Inc. | 4 | ||||
5 | National Penn Bancshares, Inc. | 40 | ||||
3 | NBT Bancorp | 78 | ||||
5 | Newalliance Bancs | 65 | ||||
1 | Oceanfirst Financial Corp. | 17 | ||||
1 | Ocwen Financial Corp. • | 16 | ||||
6 | Old National Bankcorp | 83 | ||||
3 | Oriental Financial Group, Inc. | 25 | ||||
3 | Pacific Capital Bancorp | 19 | ||||
— | Pacific Continental Corp. | 1 | ||||
2 | PacWest Bancorp | 33 | ||||
— | Park National Corp. | 27 | ||||
1 | Peapack-Gladstone Financial | 24 | ||||
1 | Pennsylvania Commerce Bancorp, Inc. • | 15 | ||||
1 | Peoples Bancorp, Inc. | 17 | ||||
1 | Prosperity Bancshares, Inc. | 22 | ||||
4 | Provident Bankshares Corp. | 35 | ||||
6 | Provident Financial Services, Inc. | 69 | ||||
1 | Radian Group, Inc. | 2 | ||||
2 | Renasant Corp. | 23 | ||||
2 | Republic Bancorp, Inc. | 41 | ||||
2 | Rockville Financial, Inc. | 16 | ||||
2 | S&T Bancorp, Inc. | 39 | ||||
— | S.Y. Bancorp, Inc. | 3 | ||||
— | Sandy Spring Bancorp, Inc. | 5 | ||||
4 | Santander Bancorp. | 24 | ||||
2 | Simmons First National Corp. | 57 | ||||
3 | South Financial Group, Inc. | 5 | ||||
3 | Southside Bancshares, Inc. | 55 | ||||
2 | Southwest Bancorp | 12 | ||||
1 | Sterling Bancshares, Inc. | 4 | ||||
3 | Sterling Financial Corp. | 10 | ||||
1 | Suffolk Bancorp | 37 | ||||
1 | Sun Bancorp, Inc. • | 8 | ||||
7 | Susquehanna Bancshares, Inc. | 58 | ||||
58 | Synovus Financial Corp. | 187 | ||||
3 | Towne Bank | 53 | ||||
4 | Trustco Bank Corp. | 23 | ||||
2 | Trustmark Corp. | 53 | ||||
1 | UMB Financial Corp. | 38 | ||||
6 | Umpqua Holdings Corp. | 61 | ||||
1 | United Bankshares, Inc. | 19 | ||||
1 | United Community Banks, Inc. | 9 | ||||
3 | United Community Financial Corp. | 7 | ||||
1 | Univest Corp. | 17 | ||||
1 | W Holding Co, Inc. | 23 | ||||
3 | WesBanco, Inc. | 61 | ||||
— | Westamerica Banco | 5 | ||||
2 | Wilshire Bancorp, Inc. | 10 | ||||
1 | Wintrust Financial Corp. | 24 | ||||
48 | Zion Bancorp | 525 | ||||
5,274 | ||||||
Capital Goods - 9.5% | ||||||
1 | A.O. Smith Corp. | 30 | ||||
— | American Rail Car Industries, Inc. | 2 | ||||
1 | American Woodmark Corp. | 10 | ||||
— | Ameron International Corp. | 6 | ||||
17 | AMETEK, Inc. | 532 | ||||
1 | Ampco-Pittsburgh Corp. | 17 | ||||
3 | Apogee Enterprises | 44 | ||||
1 | Applied Signal Technology | 29 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCKS - 95.2% - (continued) | ||||||
Capital Goods - 9.5% - (continued) | ||||||
1 | Arfon, Inc. • | $ | 19 | |||
1 | Baldor Electric Co. | 30 | ||||
— | Beacon Roofing Supply, Inc. • | 3 | ||||
3 | Brady Corp. Class A | 54 | ||||
3 | Briggs & Stratton Corp. | 39 | ||||
1 | Cascade Bancorp | 20 | ||||
3 | Ceradyne, Inc. • | 46 | ||||
1 | CIRCOR International, Inc. | 23 | ||||
30 | Clarcor, Inc. | 945 | ||||
3 | Columbus McKinnon Corp. • | 32 | ||||
2 | Commercial Vehicles Group, Inc. • | 2 | ||||
1 | Cubic Corp. | 17 | ||||
1 | Ducommun, Inc. | 17 | ||||
3 | Dycom Industries, Inc. • | 24 | ||||
3 | DynCorp International, Inc. • | 52 | ||||
7 | EMCOR Group, Inc. • | 139 | ||||
1 | Encore Wire Corp. | 15 | ||||
1 | EnerSys • | 17 | ||||
5 | Enpro Industries, Inc. • | 75 | ||||
6 | Federal Signal Corp. | 44 | ||||
2 | Force Protection, Inc. • | 12 | ||||
3 | Gibralter Industries, Inc. | 19 | ||||
22 | Graco, Inc. | 524 | ||||
5 | GrafTech International Ltd. • | 45 | ||||
3 | Granite Construction, Inc. | 117 | ||||
1 | Griffon Corp. • | 10 | ||||
4 | GT Solar International, Inc. • | 25 | ||||
4 | H & E Equipment Services, Inc. • | 29 | ||||
38 | Hexcel Corp. • | 365 | ||||
35 | Huttig Building Products, Inc. ⌂• | 23 | ||||
— | Insituform Technologies, Inc. • | 1 | ||||
1 | Insteel Industries, Inc. | 7 | ||||
— | Integrated Electrical Services, Inc. • | 2 | ||||
4 | Kadant, Inc. • | 50 | ||||
— | L.B. Foster Co. Class A• | 3 | ||||
1 | Layne Christensen Co. • | 15 | ||||
23 | Lincoln Electric Holdings, Inc. | 1,038 | ||||
9 | Lydall, Inc. • | 39 | ||||
— | Michael Baker Corp. • | 3 | ||||
2 | Mueller Industries, Inc. | 41 | ||||
6 | Mueller Water Products, Inc. | 24 | ||||
2 | NCI Building Systems, Inc. • | 8 | ||||
6 | NN, Inc. | 7 | ||||
— | Perini Corp. • | 7 | ||||
36 | Pike Electric Corp. • | 374 | ||||
— | Preformed Line Products Co. | 7 | ||||
2 | Quanex Building Products Corp. | 21 | ||||
1 | Regal-Beloit Corp. | 41 | ||||
1 | Robbins & Myers, Inc. | 17 | ||||
20 | Roper Industries, Inc. | 894 | ||||
3 | Rush Enterprises, Inc. • | 33 | ||||
4 | SauerDanfoss, Inc. | 17 | ||||
1 | Standex International | 11 | ||||
— | TAL International Group, Inc. | 3 | ||||
2 | Tecumseh Products Co. Class A • | 22 | ||||
1 | Thermadyne Holdings Corp. • | 2 | ||||
5 | Tredegar Corp. | 89 | ||||
— | Trex Co. Inc. • | 4 | ||||
2 | Trimas Corp. • | 4 | ||||
— | Triumph Group, Inc. | 4 | ||||
2 | Twin Disc, Inc. | 10 | ||||
5 | Wabash National Corp. | 6 | ||||
14 | Watts Water Technologies, Inc. | 307 | ||||
6,563 | ||||||
Commercial & Professional Services - 7.6% | ||||||
66 | ABM Industries, Inc. | 1,156 | ||||
21 | ATC Technology Corp. • | 339 | ||||
— | CDI Corp. | 2 | ||||
9 | Comfort Systems USA, Inc. | 102 | ||||
1 | Consolidated Graphics, Inc. • | 16 | ||||
9 | Copart, Inc. • | 289 | ||||
3 | Courier Corp. | 42 | ||||
2 | Deluxe Corp. | 31 | ||||
3 | G & K Services, Inc. Class A | 82 | ||||
2 | Heidrick & Struggles International, Inc. | 28 | ||||
3 | Herman Miller, Inc. | 39 | ||||
3 | HNI Corp. | 39 | ||||
8 | Hudson Highland Group, Inc. • | 12 | ||||
4 | Kelly Services, Inc. | 51 | ||||
— | Kforce, Inc. • | 1 | ||||
4 | Knoll, Inc. | 25 | ||||
1 | Korn/Ferry International • | 6 | ||||
2 | M & F Worldwide Corp. • | 30 | ||||
56 | McGrath RentCorp | 1,178 | ||||
1 | MPS Group, Inc. • | 11 | ||||
3 | On Assignment, Inc. • | 10 | ||||
25 | Resources Connection, Inc. • | 479 | ||||
17 | School Specialty, Inc. • | 327 | ||||
33 | Schwak, Inc. | 238 | ||||
9 | Spherion Corp. • | 34 | ||||
3 | Standard Register Co. | 15 | ||||
2 | TrueBlue, Inc. • | 15 | ||||
17 | United Stationers, Inc. • | 544 | ||||
2 | Viad Corp. | 45 | ||||
8 | Waste Services, Inc. • | 43 | ||||
5,229 | ||||||
Consumer Durables & Apparel - - 4.4% | ||||||
5 | American Greetings Corp. Class A | 37 | ||||
— | Blyth, Inc. | 9 | ||||
1 | Brunswick Corp. | 7 | ||||
4 | Callaway Golf Co. | 33 | ||||
6 | Carter’s, Inc. • | 134 | ||||
4 | Champion Enterprises, Inc. • | 2 | ||||
31 | Cherokee, Inc. | 565 | ||||
— | CSS Industries, Inc. | 2 | ||||
2 | Hooker Furniture Corp. | 28 | ||||
1 | Jakks Pacific, Inc. • | 15 | ||||
— | M/I Schottenstein Homes, Inc. | 2 | ||||
2 | Maidenform Brands, Inc. • | 23 | ||||
3 | Meritage Homes Corp. • | 56 | ||||
— | National Presto Industries, Inc. | 14 | ||||
3 | Palm Harbor Holmes, Inc. • | 9 | ||||
38 | RC2 Corp. • | 431 | ||||
3 | Ryland Group, Inc. | 57 | ||||
1 | Steven Madden Ltd. • | 41 | ||||
81 | Tempur-Pedic International, Inc. | 1,038 | ||||
5 | Timberland Co. Class A• | 74 | ||||
4 | Unifirst Corp. | 144 | ||||
25 | Volcom, Inc. • | 330 | ||||
3,051 | ||||||
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCKS - 95.2% - (continued) | ||||||
Consumer Services - 3.6% | ||||||
1 | Ameristar Casinos, Inc. | $ | 10 | |||
3 | Bob Evans Farms, Inc. | 72 | ||||
22 | Burger King Holdings, Inc. | 359 | ||||
2 | California Pizza Kitchen, Inc. • | 25 | ||||
2 | CEC Entertainment, Inc. • | 70 | ||||
— | Churchill Downs, Inc. | 14 | ||||
2 | Gaylord Entertainment Co. • | 33 | ||||
1 | Great Wolf Resorts, Inc. • | 3 | ||||
4 | Isle of Capri Casinos, Inc. • | 39 | ||||
2 | Jack in the Box, Inc. • | 38 | ||||
4 | Jackson Hewitt Tax Service, Inc. | 20 | ||||
1 | Lincoln Educational Services Corp. • | 16 | ||||
1 | Marcus Corp. | 18 | ||||
31 | Matthews International Corp. Class A | 959 | ||||
— | Monarch Casino & Resort, Inc. • | 1 | ||||
2 | O’Charley’s, Inc. | 15 | ||||
2 | P. F. Chang’s China Bistro, Inc. • | 66 | ||||
20 | Papa John’s International, Inc. • | 518 | ||||
3 | Pinnacle Entertainment, Inc. • | 35 | ||||
1 | Red Robin Gourmet Burgers, Inc. • | 12 | ||||
1 | Regis Corp. | 27 | ||||
2 | Steiner Leisure Ltd. • | 77 | ||||
9 | Stewart Enterprises, Inc. | 32 | ||||
1 | Vail Resorts, Inc. • | 23 | ||||
2,482 | ||||||
Diversified Financials - 4.7% | ||||||
13 | Advance America Cash Advance Centers, Inc. | 51 | ||||
10 | Apollo Investment Corp. | 47 | ||||
142 | Ares Capital Corp. | 833 | ||||
1 | Blackrock Kelso Capital Corp. | 8 | ||||
5 | Broadpoint Securities Group • | 20 | ||||
1 | Calamos Asset Management, Inc. | 15 | ||||
— | Capital Southwest Corp. | 15 | ||||
2 | Cash America International, Inc. | 36 | ||||
6 | Compass Diversified Holdings | 55 | ||||
4 | Encore Capital Group, Inc. • | 30 | ||||
— | Evercore Partners, Inc. | 4 | ||||
42 | Federated Investors, Inc. | 961 | ||||
3 | Fifth Street Finance Corp. | 19 | ||||
29 | Financial Federal Corp. | 709 | ||||
4 | Hercules Technology Growth | 27 | ||||
7 | Knight Capital Group, Inc. • | 110 | ||||
1 | Kohlberg Capital Corp. | 2 | ||||
5 | LaBranche & Co, Inc. • | 20 | ||||
3 | MCG Capital Corp. | 6 | ||||
7 | Nelnet, Inc. | 41 | ||||
7 | Newstar Financial, Inc. • | 16 | ||||
4 | NGP Capital Resources Co. | 25 | ||||
6 | PennantPark Investment Corp. | 32 | ||||
3 | Penson Worldwide, Inc. • | 29 | ||||
3 | PHH Corp. • | 42 | ||||
1 | Pico Holdings, Inc. • | 23 | ||||
— | Piper Jaffray Cos • | 4 | ||||
— | Prospect Capital Corp. | 1 | ||||
1 | Stifel Financial • | 36 | ||||
1 | SWS Group, Inc. | 7 | ||||
— | Virtus Investment Partners, Inc. • | 5 | ||||
3,229 | ||||||
Energy - 5.3% | ||||||
3 | Bill Barrett Corp. • | 67 | ||||
2 | Brigham Exploration Co. • | 4 | ||||
1 | Bristow Group, Inc. • | 23 | ||||
2 | Cal Dive International, Inc. • | 14 | ||||
3 | Callon Petroleum Corp. • | 5 | ||||
21 | Carbo Ceramics, Inc. | 648 | ||||
4 | Complete Production Services, Inc. • | 25 | ||||
— | Harvest Natural Resources, Inc. • | 2 | ||||
1 | Hornbeck Offshore Services, Inc. • | 23 | ||||
1 | Lufkin Industries, Inc. | 31 | ||||
11 | Meridian Resource Corp. • | 3 | ||||
6 | Newpark Resources, Inc. • | 18 | ||||
8 | Oceaneering International, Inc. • | 378 | ||||
6 | Pioneer Drilling Co • | 29 | ||||
47 | Quicksilver Resources, Inc. • | 378 | ||||
7 | Rosetta Resources, Inc. • | 48 | ||||
2 | Superior Well Services, Inc. • | 25 | ||||
41 | TETRA Technologies, Inc. • | 235 | ||||
1 | Union Drilling, Inc. • | 4 | ||||
4 | Vaalco Energy, Inc. • | 18 | ||||
43 | World Fuel Services Corp. | 1,647 | ||||
3,625 | ||||||
Food & Staples Retailing - 0.5% | ||||||
5 | Casey’s General Stores, Inc. | 123 | ||||
— | Ingles Markets, Inc. | 3 | ||||
2 | Nash Finch Co | 47 | ||||
4 | Pantry, Inc. • | 96 | ||||
1 | Spartan Stores, Inc. | 13 | ||||
1 | Susser Holdings • | 12 | ||||
1 | Village Super Market, Inc. | 32 | ||||
2 | Winn-Dixie Stores, Inc. • | 19 | ||||
345 | ||||||
Food, Beverage & Tobacco - 2.6% | ||||||
1 | Cal-Maine Foods, Inc. | 16 | ||||
4 | Chiquita Brands International, Inc. • | 32 | ||||
18 | Flowers Foods, Inc. | 412 | ||||
— | Hain Celestial Group, Inc. • | 7 | ||||
16 | J&J Snack Foods Corp. | 609 | ||||
— | Lance, Inc. | 5 | ||||
1 | National Beverage Co. • | 13 | ||||
12 | Ralcorp Holdings, Inc. • | 664 | ||||
1 | TreeHouse Foods, Inc. • | 29 | ||||
— | Universal Corp. | 9 | ||||
1,796 | ||||||
Health Care Equipment & Services - 7.7% | ||||||
— | Alliance Healthcare Services, Inc. • | 4 | ||||
9 | Amedisys, Inc. • | 295 | ||||
4 | Amerigroup Corp. • | 133 | ||||
56 | AMN Healthcare Services, Inc. • | 385 | ||||
2 | AmSurg Corp. • | 43 | ||||
1 | Assisted Living Concepts I-A • | 10 | ||||
2 | Cardiac Science Corp. • | 4 | ||||
6 | Centene Corp. • | 104 | ||||
12 | Chemed Corp. | 500 | ||||
11 | Cooper Co., Inc. | 302 | ||||
12 | Emergency Medical Services • | 418 | ||||
1 | Gentiva Health Services, Inc. • | 11 | ||||
2 | Greatbatch, Inc. • | 37 | ||||
1 | HealthSouth Corp. • | 10 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCKS - 95.2% - (continued) | ||||||
Health Care Equipment & Services - 7.7% - (continued) | ||||||
7 | Healthspring, Inc. • | $ | 61 | |||
9 | ICU Medical, Inc. • | 331 | ||||
7 | Invacare Corp. | 103 | ||||
4 | Kindred Healthcare, Inc. • | 57 | ||||
18 | Landauer, Inc. | 959 | ||||
— | Magellan Health Services, Inc. • | 12 | ||||
2 | Molina Healthcare, Inc. • | 47 | ||||
4 | NightHawk Radiology Holdings, Inc. • | 15 | ||||
30 | Owens & Minor, Inc. | 1,044 | ||||
3 | Rehabcare Group, Inc. • | 52 | ||||
2 | Skilled Healthcare Group • | 14 | ||||
4 | Universal American Financial Corp. • | 36 | ||||
21 | Young Innovations, Inc. | 321 | ||||
5,308 | ||||||
Household & Personal Products - 2.9% | ||||||
10 | Central Garden & Pet Co. Class A • | 94 | ||||
16 | Chattem, Inc. • | 889 | ||||
3 | Nu Skin Enterprises, Inc. Class A | 35 | ||||
10 | Prestige Brands Holdings, Inc. • | 63 | ||||
34 | WD40 Co | 914 | ||||
1,995 | ||||||
Insurance - 3.2% | ||||||
11 | AMBAC Financial Group, Inc. | 10 | ||||
9 | American Equity Investment Life Holding Co. | 49 | ||||
1 | American Physicians Capital, Inc. | 34 | ||||
1 | Amerisafe, Inc. • | 14 | ||||
3 | Amtrust Financial Services | 29 | ||||
2 | Argo Group International Holdings Ltd. • | 58 | ||||
6 | Aspen Insurance Holdings Ltd. | 150 | ||||
3 | CNA Surety Corp. • | 55 | ||||
5 | Delphi Financial Group Class A | 79 | ||||
5 | Employers Holdings, Inc. | 40 | ||||
3 | FBL Financial Group Class A | 16 | ||||
6 | Flagstone Reinsurance Holdings | 54 | ||||
— | FPIC Insurance Group, Inc. • | 3 | ||||
1 | Greenlight Capital Re Ltd. Class A • | 9 | ||||
1 | Harleysville Group, Inc. | 32 | ||||
46 | Horace Mann Educators Corp. | 401 | ||||
2 | Infinity Property & Casualty Corp. | 62 | ||||
4 | IPC Holdings Ltd. | 103 | ||||
3 | Max Capital Group Ltd. | 45 | ||||
8 | Montpelier Re Holdings Ltd. | 103 | ||||
3 | National Financial Partners Corp. | 19 | ||||
1 | Odyssey Re Holdings Corp. | 19 | ||||
7 | Phoenix Cos. | 11 | ||||
4 | Platinum Underwriters Holdings Ltd. | 114 | ||||
3 | PMA Capital Corp. Class A • | 11 | ||||
3 | ProAssurance Corp. • | 111 | ||||
1 | RLI Corp. | 30 | ||||
1 | Safety Insurance Group, Inc. | 38 | ||||
3 | Seabright Insurance Holdings • | 28 | ||||
26 | Selective Insurance Group | 384 | ||||
— | Tower Group, Inc. | 8 | ||||
2 | Validus Holdings Ltd. | 48 | ||||
— | Zenith National Insurance Corp. | 7 | ||||
2,174 | ||||||
Materials - 2.9% | ||||||
4 | A. Schulman, Inc. | 57 | ||||
1 | Allied Nevada Gold Corp. • | 7 | ||||
17 | Balchem Corp. | 423 | ||||
9 | Buckeye Technologies, Inc. • | 45 | ||||
6 | BWAY Holding Co. • | 57 | ||||
53 | Glatfelter | 470 | ||||
5 | Headwaters, Inc. • | 12 | ||||
7 | Hecla Mining Co. • | 17 | ||||
2 | Horsehead Holding Corp. • | 12 | ||||
3 | Innophos Holdings, Inc. | 37 | ||||
1 | LSB Industries, Inc. • | 17 | ||||
2 | Minerals Technologies, Inc. | 90 | ||||
23 | Neenah Paper, Inc. | 113 | ||||
7 | Olin Corp. | 87 | ||||
2 | OM Group, Inc. • | 69 | ||||
2 | Rock Tenn Co. Class A | 65 | ||||
1 | Rockwood Holdings, Inc. • | 13 | ||||
1 | Royal Gold, Inc. | 48 | ||||
1 | RTI International Metals, Inc. • | 9 | ||||
1 | Schweitzer-Mauduit International, Inc. | 14 | ||||
4 | Sensient Technologies Corp. | 96 | ||||
— | Silgan Holdings, Inc. | 6 | ||||
2 | Solutia, Inc. • | 8 | ||||
8 | Spartech Corp. | 33 | ||||
3 | Stillwater Mining Co. • | 14 | ||||
1 | Universal Stainless & Alloy Products • | 14 | ||||
1 | W.R. Grace & Co. • | 6 | ||||
2 | Wausau Paper Corp. | 19 | ||||
6 | Worthington Industries, Inc. | 82 | ||||
1,940 | ||||||
Media - 0.6% | ||||||
3 | A.H. Belo Corp. Class A | 5 | ||||
3 | Belo Corp. Class A | 6 | ||||
18 | Central European Media Enterprises Ltd. • | 295 | ||||
3 | Crown Media Holdings, Inc. • | 9 | ||||
2 | Harte-Hanks, Inc. | 14 | ||||
5 | Journal Communications, Inc. | 7 | ||||
12 | Mediacom Communications Corp. • | 69 | ||||
10 | RCN Corp. • | 40 | ||||
1 | RHI Entertainment, Inc. • | 4 | ||||
449 | ||||||
Pharmaceuticals, Biotechnology & Life Sciences - 1.0% | ||||||
— | Affymetrix, Inc. • | 1 | ||||
3 | Albany Molecular Research, Inc. • | 30 | ||||
5 | Bio-Rad Laboratories, Inc. Class A • | 373 | ||||
6 | Covance, Inc. • | 244 | ||||
3 | Maxygen, Inc. • | 18 | ||||
1 | Valeant Pharmaceuticals International • | 23 | ||||
8 | ViroPharma, Inc. • | 44 | ||||
733 | ||||||
Real Estate - 4.7% | ||||||
— | Alexander’s, Inc. | 22 | ||||
— | American Campus Communities, Inc. | 9 | ||||
11 | Anworth Mortgage Asset Corp. | 72 | ||||
14 | Ashford Hospitality | 43 | ||||
2 | Associated Estates Realty | 12 | ||||
3 | Biomed Realty Trust, Inc. | 30 | ||||
9 | CapLease, Inc. | 28 | ||||
3 | Capstead Mortgage Corp. | 32 | ||||
5 | Cedar Shopping Court | 18 | ||||
1 | Chimera Investment Corp. | 4 | ||||
4 | Cogdell Spencer, Inc. | 24 | ||||
2 | Colonial Properties Trust | 12 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCKS - 95.2% - (continued) | ||||||
Real Estate - 4.7% - (continued) | ||||||
2 | Corporate Office Properties | $ | 50 | |||
3 | Cousins Properties, Inc. | 26 | ||||
4 | DCT Industrial Trust, Inc. | 19 | ||||
3 | Diamondrock Hospitality | 18 | ||||
1 | DuPont Fabros Technology, Inc. | 5 | ||||
7 | Education Realty Trust, Inc. | 32 | ||||
56 | Entertainment Properties Trust | 1,283 | ||||
1 | Equity Lifestyle Properties, Inc. | 20 | ||||
6 | Extra Space Storage, Inc. | 44 | ||||
6 | Felcor Lodging Trust, Inc. | 13 | ||||
1 | First Industrial Realty Trust, Inc. | 3 | ||||
6 | First Potomac Realty Trust | 57 | ||||
— | Franklin Street Properties Corp. | 4 | ||||
27 | Friedman Billings Ramsey Group, Inc. • | 7 | ||||
3 | Getty Realty Corp. | 62 | ||||
1 | Gramercy Capital Corp. | 3 | ||||
1 | Hatteras Financial Corp. | 17 | ||||
6 | Healthcare Realty Trust, Inc. | 98 | ||||
5 | Highwoods Properties, Inc. | 117 | ||||
2 | Home Properties of New York, Inc. | 72 | ||||
3 | LaSalle Hotel Properties | 39 | ||||
14 | Lexington Realty Trust | 53 | ||||
1 | Maguire Properties, Inc. | 1 | ||||
8 | Medical Properties Trust, Inc. | 41 | ||||
18 | MFA Mortgage Investments, Inc. | 103 | ||||
1 | Mid-America Apartment Communities, Inc. | 24 | ||||
1 | National Health Investors, Inc. | 16 | ||||
7 | National Retail Properties, Inc. | 117 | ||||
1 | Omega Healthcare Investors | 22 | ||||
3 | Parkway Properties, Inc. | 42 | ||||
3 | Penn Real Estate Investment Trust | 22 | ||||
— | Potlatch Corp. | 6 | ||||
2 | PS Business Parks, Inc. | 68 | ||||
9 | RAIT Financial Trust | 13 | ||||
5 | Realty Income Corp. | 112 | ||||
3 | Redwood Trust, Inc. | 52 | ||||
7 | Senior Housing Properties Trust | 116 | ||||
13 | Strategic Hotels & Resorts, Inc. | 11 | ||||
1 | Sun Communities, Inc. | 19 | ||||
11 | Sunstone Hotel Investors, Inc. | 58 | ||||
6 | U-Store-It | 19 | ||||
3,210 | ||||||
Retailing - 3.8% | ||||||
3 | Aaron Rents, Inc. | 103 | ||||
7 | Blockbuster, Inc. Class A • | 6 | ||||
231 | Borders Group, Inc. • | 632 | ||||
2 | Brown Shoe Co., Inc. | 10 | ||||
5 | Build-A-Bear Workshop, Inc. • | 25 | ||||
1 | Cabela’s, Inc. • | 6 | ||||
1 | Cato Corp. | 27 | ||||
2 | Charming Shoppes, Inc. • | 6 | ||||
11 | Chico’s FAS, Inc. • | 82 | ||||
1 | Children’s Place Retail Stores, Inc. • | 31 | ||||
5 | Collective Brands, Inc. • | 71 | ||||
2 | Core-Mark Holding Co, Inc. • | 31 | ||||
4 | Dillard’s, Inc. | 30 | ||||
3 | Dress Barn, Inc. • | 50 | ||||
2 | Genesco, Inc. • | 54 | ||||
21 | Group 1 Automotive, Inc. | 447 | ||||
16 | Gymboree Corp. • | 533 | ||||
6 | Hot Topic, Inc. • | 69 | ||||
1 | Jo-Ann Stores, Inc. • | 11 | ||||
1 | JOS A. Bank Clothiers, Inc. • | 40 | ||||
5 | Marinemax, Inc. • | 24 | ||||
3 | Men’s Wearhouse, Inc. | 52 | ||||
1 | Monroe Muffler, Inc. | 13 | ||||
10 | New York & Co., Inc. • | 59 | ||||
8 | Rent-A-Center, Inc. • | 154 | ||||
9 | Retail Ventures, Inc. • | 24 | ||||
1 | Shoe Carnival, Inc. • | 16 | ||||
1 | Tractor Supply Co. • | 32 | ||||
2,638 | ||||||
Semiconductors & Semiconductor Equipment - 2.0% | ||||||
1 | Actel Corp. • | 9 | ||||
8 | Applied Micro Circuits Corp. • | 43 | ||||
3 | Brooks Automation, Inc. • | 16 | ||||
2 | Cirrus Logic, Inc. • | 11 | ||||
2 | Cymer, Inc. • | 44 | ||||
2 | DSP Group, Inc. • | 14 | ||||
364 | Entegris, Inc. • | 538 | ||||
— | IXYS Corp. | 1 | ||||
5 | MKS Instruments, Inc. • | 81 | ||||
1 | Photronics, Inc. • | 1 | ||||
2 | PMC - Sierra, Inc. • | 13 | ||||
4 | RF Micro Devices, Inc. • | 8 | ||||
1 | Sigma Designs, Inc. • | 15 | ||||
36 | Silicon Storage Technology, Inc. • | 66 | ||||
5 | Skyworks Solutions, Inc. • | 41 | ||||
1 | Standard Microsystems Corp. • | 13 | ||||
2 | TriQuint Semiconductor, Inc. • | 9 | ||||
18 | Varian Semiconductor Equipment Associates, Inc. • | 461 | ||||
1 | Veeco Instruments, Inc. • | 4 | ||||
3 | Zoran Corp. • | 24 | ||||
1,412 | ||||||
Software & Services - 8.0% | ||||||
12 | Acxiom Corp. | 118 | ||||
1 | CACI International, Inc. Class A • | 45 | ||||
8 | Cass Information Systems, Inc. | 277 | ||||
2 | CIBER, Inc. • | 7 | ||||
23 | Computer Services, Inc. | 587 | ||||
5 | CSG Systems International, Inc. • | 67 | ||||
39 | DealerTrack Holdings, Inc. • | 594 | ||||
3 | Fair Isaac, Inc. | 43 | ||||
3 | Global Cash Access, Inc. • | 18 | ||||
4 | Infospace, Inc. • | 27 | ||||
3 | Internap Network Services Corp. • | 9 | ||||
4 | JDA Software Group, Inc. • | 58 | ||||
2 | Limelight Networks, Inc. • | 8 | ||||
— | MAXIMUS, Inc. | 16 | ||||
47 | MSC.Software Corp. • | 289 | ||||
2 | Ness Technologies, Inc. • | 8 | ||||
8 | OpenTV Corp. • | 12 | ||||
1 | Parametric Technology Corp. • | 14 | ||||
— | Perficient, Inc. • | 1 | ||||
7 | Perot Systems Corp. Class A • | 100 | ||||
3 | Progress Software Corp. • | 63 | ||||
6 | Quest Software, Inc. • | 93 |
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||
COMMON STOCKS - 95.2% - (continued) | ||||||
Software & Services - 8.0% - (continued) | ||||||
— | Rackspace Hosting, Inc. • | $ | 2 | |||
14 | Solera Holdings, Inc. • | 308 | ||||
3 | Sybase, Inc. • | 111 | ||||
52 | Syntel, Inc. | 1,433 | ||||
20 | Tibco Software, Inc. • | 129 | ||||
157 | Unisys Corp. • | 191 | ||||
5 | United Online, Inc. • | 26 | ||||
109 | VeriFone Holdings, Inc. • | 815 | ||||
1 | Vignette Corp. • | 5 | ||||
1 | Websense, Inc. • | 16 | ||||
2 | Wright Express Corp. • | 37 | ||||
5,527 | ||||||
Technology Hardware & Equipment - 4.3% | ||||||
44 | 3Com Corp. • | 179 | ||||
1 | Adaptec, Inc. • | 3 | ||||
1 | ADTRAN, Inc. | 23 | ||||
1 | Anaren Microwave, Inc. • | 8 | ||||
10 | Arris Group, Inc. • | 111 | ||||
40 | Avid Technology, Inc. • | 438 | ||||
3 | Avocent Corp. • | 45 | ||||
11 | Benchmark Electronics, Inc. • | 129 | ||||
2 | Black Box Corp. | 54 | ||||
1 | Cogent, Inc. • | 12 | ||||
4 | Coherent, Inc. • | 82 | ||||
3 | CTS Corp. | 18 | ||||
— | Digi International, Inc. • | 4 | ||||
41 | Electronics for Imaging, Inc. • | 402 | ||||
— | EMS Technologies, Inc. • | 6 | ||||
1 | Emulex Corp.• | 8 | ||||
2 | Harmonic, Inc. • | 12 | ||||
8 | Harris Stratex Networks Class A • | 31 | ||||
1 | Hutchinson Technology, Inc. • | 3 | ||||
1 | Hypercom Corp. • | 1 | ||||
6 | Insight Enterprises, Inc. • | 35 | ||||
47 | Jabil Circuit, Inc. | 377 | ||||
6 | Methode Electronics, Inc. | 37 | ||||
— | MTS Systems Corp. | 4 | ||||
2 | Netgear, Inc. • | 38 | ||||
9 | PC-Tel, Inc. | 42 | ||||
23 | Plexus Corp. • | 510 | ||||
2 | Polycom, Inc. • | 41 | ||||
2 | Quantum Corp. • | 2 | ||||
1 | Rackable Systems, Inc. • | 2 | ||||
— | Rimage Corp. • | 4 | ||||
4 | Rogers Corp. • | 89 | ||||
58 | Sanmina-Sci Corp. • | 32 | ||||
1 | Scansource, Inc. • | 22 | ||||
2 | Symmetricom, Inc. • | 7 | ||||
3 | SYNNEX Corp. • | 69 | ||||
6 | Tekelec • | 88 | ||||
1 | TTM Technologies, Inc. • | 6 | ||||
2,974 | ||||||
Telecommunication Services - 1.5% | ||||||
14 | Cincinnati Bell, Inc. • | 38 | ||||
58 | General Communication, Inc. Class A • | 444 | ||||
2 | Global Crossing Ltd • | 16 | ||||
17 | iPCS, Inc. • | 247 | ||||
2 | Premiere Global Services, Inc. • | 25 | ||||
— | Shenandoah Telecommunications Co. | 4 | ||||
3 | Syniverse Holdings, Inc. • | 42 | ||||
9 | TW Telecom, Inc. • | 82 | ||||
9 | USA Mobility, Inc. | 99 | ||||
997 | ||||||
Transportation - 3.7% | ||||||
3 | Alaska Air Group, Inc. • | 45 | ||||
2 | Arkansas Best Corp. | 41 | ||||
2 | Atlas Air Worldwide Holdings, Inc. • | 40 | ||||
1 | Celadon Group, Inc. • | 7 | ||||
24 | Forward Air Corp. | 392 | ||||
— | Genesee & Wyoming, Inc. Class A • | 9 | ||||
4 | Hawaiian Holdings, Inc. • | 19 | ||||
3 | Heartland Express, Inc. • | 40 | ||||
9 | JetBlue Airways Corp. • | 46 | ||||
44 | Landstar System, Inc. | 1,570 | ||||
1 | Marten Transport Ltd. • | 29 | ||||
6 | Pacer International, Inc. | 23 | ||||
1 | Republic Airways Holdings, Inc. • | 9 | ||||
4 | Saia, Inc. • | 59 | ||||
8 | SkyWest, Inc. | 93 | ||||
— | UAL Corp. • | 1 | ||||
5 | US Airways Group, Inc. • | 18 | ||||
6 | Werner Enterprises, Inc. | 93 | ||||
2 | YRC Worldwide, Inc. • | 6 | ||||
2,540 | ||||||
Utilities - 2.4% | ||||||
— | American States Water | 10 | ||||
8 | Avista Corp. | 117 | �� | |||
1 | California Water Service Group | 56 | ||||
1 | CH Energy Group | 22 | ||||
1 | Chesapeake Utilities Corp. | 33 | ||||
1 | Cleco Corp. | 27 | ||||
29 | El Paso Electric Co. • | 402 | ||||
2 | Empire District Electric Co. | 24 | ||||
4 | IDACORP, Inc. | 107 | ||||
1 | Laclede Group, Inc. | 21 | ||||
— | MGE Energy, Inc. | 12 | ||||
— | New Jersey Resources Corp. | 7 | ||||
— | Nicor, Inc. | 7 | ||||
3 | Northwest Natural Gas Co. | 104 | ||||
5 | NorthWestern Corp. | 105 | ||||
1 | Piedmont Natural Gas | 27 | ||||
8 | Portland General Electric Co. | 141 | ||||
2 | South Jersey Industries, Inc. | 64 | ||||
6 | Southwest Gas Corp. | 123 | ||||
1 | UIL Holdings Corp. | 23 | ||||
2 | UniSource Energy Corp. | 60 | ||||
3 | Westar Energy, Inc. | 49 | ||||
4 | WGL Holdings, Inc. | 125 | ||||
1,666 | ||||||
Total common stocks (cost $89,415) | $ | 65,584 | ||||
9
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
PREFERRED STOCKS - 0.3% | ||||||||||||
Banks - 0.3% | ||||||||||||
— | East West Bancorp, Inc., 8.00%۞ ⌂ | $ | 217 | |||||||||
Total preferred stocks (cost $482) | $ | 217 | ||||||||||
Total long-term investments (cost $89,897) | $ | 65,801 | ||||||||||
SHORT-TERM INVESTMENTS - 3.8% | ||||||||||||
Investment Pools and Funds - 3.8% | ||||||||||||
868 | Federated Investors Prime Obligations Fund | $ | 868 | |||||||||
1,731 | State Street Bank Money Market Fund | 1,731 | ||||||||||
2,599 | ||||||||||||
Total short-term investments (cost $2,599) | $ | 2,599 | ||||||||||
Total investments (cost $92,496)▲ | 99.3 | % | $ | 68,400 | ||||||||
Other assets and liabilities | 0.7 | % | 468 | |||||||||
Total net assets | 100.0 | % | $ | 68,868 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $93,263 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 2,342 | ||
Unrealized Depreciation | (27,205 | ) | ||
Net Unrealized Depreciation | $ | (24,863 | ) | |
• | Currently non-income producing. | |
۞ | Convertible security. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||
Acquired | Par | Security | Cost Basis | |||||||
04/2008 | – | East West Bancorp, Inc. , 8.00% | $ | 482 | ||||||
08/2006 - 05/2007 | 35 | Huttig Building Products, Inc. | 200 |
Unrealized | ||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||
Russell 2000 Mini | 10 | Long | Jun 2009 | $ | 57 |
* | The number of contracts does not omit 000’s. Cash of $40 was pledged as initial margin deposit for open futures contracts at April 30, 2009. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 68,183 | ||
Investment in securities — Level 2 | 217 | |||
Total | $ | 68,400 | ||
Other financial instruments — Level 1 * | $ | 57 | ||
Total | $ | 57 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
10
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $92,496) | $ | 68,400 | ||
Cash | 46 | * | ||
Receivables: | ||||
Investment securities sold | 1,746 | |||
Fund shares sold | 16 | |||
Dividends and interest | 69 | |||
Variation margin | 3 | |||
Other assets | 24 | |||
Total assets | 70,304 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,400 | |||
Investment management fees | 11 | |||
Distribution fees | 1 | |||
Variation margin | 5 | |||
Accrued expenses | 19 | |||
Total liabilities | 1,436 | |||
Net assets | $ | 68,868 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 116,486 | |||
Accumulated undistributed net investment income | 196 | |||
Accumulated net realized loss on investments | (23,775 | ) | ||
Unrealized depreciation of investments | (24,039 | ) | ||
Net assets | $ | 68,868 | ||
Shares authorized | 800,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.63/$7.01 | ||
Shares outstanding | 2,106 | |||
Net assets | $ | 13,976 | ||
Class B: Net asset value per share | $ | 6.58 | ||
Shares outstanding | 70 | |||
Net assets | $ | 462 | ||
Class C: Net asset value per share | $ | 6.60 | ||
Shares outstanding | 100 | |||
Net assets | $ | 660 | ||
Class Y: Net asset value per share | $ | 6.63 | ||
Shares outstanding | 8,110 | |||
Net assets | $ | 53,770 | ||
* | Cash of $40 was designated to cover open futures contracts. |
11
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 818 | ||
Interest | 12 | |||
Less: Foreign tax withheld | — | |||
Total investment income | 830 | |||
Expenses: | ||||
Investment management fees | 321 | |||
Transfer agent fees | 11 | |||
Distribution fees | ||||
Class A | 15 | |||
Class B | 2 | |||
Class C | 3 | |||
Custodian fees | 6 | |||
Accounting services | 4 | |||
Registration and filing fees | 17 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 4 | |||
Other expenses | 18 | |||
Total expenses (before waivers and fees paid indirectly) | 402 | |||
Expense waivers | (2 | ) | ||
Transfer agent fee waivers | (1 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (3 | ) | ||
Total expenses, net | 399 | |||
Net investment income | 431 | |||
Net Realized Loss on Investments and Other Financial Instruments: | ||||
Net realized loss on investments in securities | (11,064 | ) | ||
Net realized loss on futures | (208 | ) | ||
Net Realized Loss on Investments and Other Financial Instruments | (11,272 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 3,018 | |||
Net unrealized appreciation of futures | 210 | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 3,228 | |||
Net Loss on Investments and Other Finanical Instruments | (8,044 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (7,613 | ) | |
12
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 431 | $ | 1,103 | ||||
Net realized loss on investments and other financial instruments | (11,272 | ) | (12,620 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 3,228 | (27,686 | ) | |||||
Net decrease in net assets resulting from operations | (7,613 | ) | (39,203 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (150 | ) | (105 | ) | ||||
Class B | (1 | ) | — | |||||
Class C | (1 | ) | — | |||||
Class Y | (888 | ) | (775 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (1,215 | ) | |||||
Class B | — | (38 | ) | |||||
Class C | — | (49 | ) | |||||
Class Y | — | (6,095 | ) | |||||
Total distributions | (1,040 | ) | (8,277 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 977 | 2,992 | ||||||
Class B | 36 | 134 | ||||||
Class C | 46 | 330 | ||||||
Class Y | (2,825 | ) | 11,680 | |||||
Net increase (decrease) from capital share transactions | (1,766 | ) | 15,136 | |||||
Net decrease in net assets | (10,419 | ) | (32,344 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 79,287 | 111,631 | ||||||
End of period | $ | 68,868 | $ | 79,287 | ||||
Accumulated undistributed net investment income | $ | 196 | $ | 805 | ||||
13
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Select SmallCap Value Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. |
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market |
14
Table of Contents
closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. |
15
Table of Contents
Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
f) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
16
Table of Contents
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
h) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
i) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 7,663 | $ | 361 | ||||
Long-Term Capital Gains * | 614 | 12 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 805 | ||
Accumulated Capital Losses* | $ | (11,889 | ) | |
Unrealized Depreciation† | $ | (27,881 | ) | |
Total Accumulated Deficit | $ | (38,965 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $106 and increase accumulated net realized gain by $106. | ||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 11,889 | ||
Total | $ | 11,889 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
19
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Kayne Anderson Rudnick Investment Management, LLC (“KAR”), Metropolitan West Capital Management, LLC (“MetWest Capital”) and SSgA Funds Management, Inc. (“SSgA FM”) for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate KAR, MetWest Capital and SSgA FM. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 1.0000 | % | ||
On next $500 million | 0.9500 | % | ||
On next $4 billion | 0.9000 | % | ||
On next $5 billion | 0.8975 | % | ||
Over $10 billion | 0.8950 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||||||||
1.60% | 2.35 | % | 2.35 | % | 1.20 | % |
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d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||
Six-Month | ||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | |||||||||||||
Ended April | October 31, | October 31, | October 31, | |||||||||||||
30, 2009 | 2008 | 2007 | 2006 | |||||||||||||
Class A Shares | 1.52 | % | 1.41 | % | 1.40 | % | 1.60 | %* | ||||||||
Class B Shares | 2.00 | 2.24 | 2.35 | 2.35 | † | |||||||||||
Class C Shares | 2.05 | 2.26 | 2.32 | 2.35 | ‡ | |||||||||||
Class Y Shares | 1.16 | 1.10 | 1.13 | 1.20 | § |
* | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
‡ | From July 31, 2006 (commencement of operations), through October 31, 2006 | |
§ | From July 31, 2006 (commencement of operations), through October 31, 2006 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $15 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $3. These commissions are in turn paid to sales representatives of the broker/dealers. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $10 for providing such services. These fees are accrued daily and paid monthly. |
6. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class A | 1,574 | |||
Class B | 27 | |||
Class C | 27 |
7. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 15,354 | ||
Sales Proceeds Excluding U.S. Government Obligations | 17,527 |
8. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 262 | 23 | (123 | ) | — | 162 | 293 | 127 | (97 | ) | — | 323 | ||||||||||||||||||||||||||||
Amount | $ | 1,558 | $ | 155 | $ | (736 | ) | $ | — | $ | 977 | $ | 2,539 | $ | 1,316 | $ | (863 | ) | $ | — | $ | 2,992 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 13 | — | (8 | ) | — | 5 | 19 | 4 | (8 | ) | — | 15 | ||||||||||||||||||||||||||||
Amount | $ | 78 | $ | 1 | $ | (43 | ) | $ | — | $ | 36 | $ | 175 | $ | 36 | $ | (77 | ) | $ | — | $ | 134 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 19 | — | (13 | ) | — | 6 | 67 | 5 | (42 | ) | — | 30 | ||||||||||||||||||||||||||||
Amount | $ | 124 | $ | 1 | $ | (79 | ) | $ | — | $ | 46 | $ | 610 | $ | 49 | $ | (329 | ) | $ | — | $ | 330 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 137 | 137 | (734 | ) | — | (460 | ) | 1,452 | 663 | (1,273 | ) | — | 842 | |||||||||||||||||||||||||||
Amount | $ | 757 | $ | 888 | $ | (4,470 | ) | $ | — | $ | (2,825 | ) | $ | 14,128 | $ | 6,870 | $ | (9,318 | ) | $ | — | $ | 11,680 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | — | $ | 1 | |||||
For the Year Ended October 31, 2008 | 1 | $ | 9 |
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9. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
23
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.42 | $ | 0.03 | $ | — | $ | (0.74 | ) | $ | (0.71 | ) | $ | (0.08 | ) | $ | — | $ | — | $ | (0.08 | ) | $ | (0.79 | ) | $ | 6.63 | (9.70 | )%(e) | $ | 13,976 | 1.52 | %(f) | 1.52 | %(f) | 1.52 | %(f) | 1.04 | %(f) | 24 | % | |||||||||||||||||||||||||||||||||
B | 7.31 | 0.02 | — | (0.73 | ) | (0.71 | ) | (0.02 | ) | — | — | (0.02 | ) | (0.73 | ) | 6.58 | (9.81 | ) (e) | 462 | 2.80 | (f) | 2.00 | (f) | 2.00 | (f) | 0.57 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 7.32 | 0.02 | — | (0.73 | ) | (0.71 | ) | (0.01 | ) | — | — | (0.01 | ) | (0.72 | ) | 6.60 | (9.82 | ) (e) | 660 | 2.76 | (f) | 2.05 | (f) | 2.05 | (f) | 0.52 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.43 | 0.04 | — | (0.74 | ) | (0.70 | ) | (0.10 | ) | — | — | (0.10 | ) | (0.80 | ) | 6.63 | (9.33 | ) (e) | 53,770 | 1.16 | (f) | 1.16 | (f) | 1.16 | (f) | 1.43 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.79 | 0.07 | — | (3.63 | ) | (3.56 | ) | (0.06 | ) | (0.75 | ) | — | (0.81 | ) | (4.37 | ) | 7.42 | (32.15 | ) | 14,428 | 1.41 | 1.41 | 1.41 | 0.81 | 51 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 11.65 | — | — | (3.59 | ) | (3.59 | ) | — | (0.75 | ) | — | (0.75 | ) | (4.34 | ) | 7.31 | (32.69 | ) | 476 | 2.51 | 2.24 | 2.24 | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 11.66 | — | — | (3.59 | ) | (3.59 | ) | — | (0.75 | ) | — | (0.75 | ) | (4.34 | ) | 7.32 | (32.66 | ) | 685 | 2.48 | 2.26 | 2.26 | (0.04 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.80 | 0.10 | — | (3.64 | ) | (3.54 | ) | (0.08 | ) | (0.75 | ) | — | (0.83 | ) | (4.37 | ) | 7.43 | (31.93 | ) | 63,698 | 1.10 | 1.10 | 1.10 | 1.11 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.96 | 0.07 | — | 0.78 | 0.85 | — | (0.02 | ) | — | (0.02 | ) | 0.83 | 11.79 | 7.78 | 19,106 | 1.40 | 1.40 | 1.40 | 0.67 | 58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.93 | (0.02 | ) | — | 0.76 | 0.74 | — | (0.02 | ) | — | (0.02 | ) | 0.72 | 11.65 | 6.79 | 587 | 2.38 | 2.35 | 2.35 | (0.25 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.93 | (0.02 | ) | — | 0.77 | 0.75 | — | (0.02 | ) | — | (0.02 | ) | 0.73 | 11.66 | 6.88 | 749 | 2.33 | 2.33 | 2.33 | (0.27 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.97 | 0.10 | — | 0.78 | 0.88 | (0.03 | ) | (0.02 | ) | — | (0.05 | ) | 0.83 | 11.80 | 8.09 | 91,189 | 1.13 | 1.13 | 1.13 | 0.97 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) July 31, 2006, through October 31, 2006 (g) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(h) | 10.00 | 0.02 | — | 0.94 | 0.96 | — | — | — | — | 0.96 | 10.96 | 9.60 | (e) | 15,872 | 1.73 | (f) | 1.60 | (f) | 1.60 | (f) | 0.78 | (f) | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B(i) | 10.00 | — | — | 0.93 | 0.93 | — | — | — | — | 0.93 | 10.93 | 9.30 | (e) | 308 | 2.53 | (f) | 2.35 | (f) | 2.35 | (f) | 0.03 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C(j) | 10.00 | — | — | 0.93 | 0.93 | — | — | — | — | 0.93 | 10.93 | 9.30 | (e) | 280 | 2.51 | (f) | 2.35 | (f) | 2.35 | (f) | 0.03 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y(k) | 10.00 | 0.01 | — | 0.96 | 0.97 | — | — | — | — | 0.97 | 10.97 | 9.70 | (e) | 1,538 | 1.71 | (f) | 1.20 | (f) | 1.20 | (f) | 0.79 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Per share amounts have been calculated using average shares outstanding method. | |
(h) | Commenced operations on July 31, 2006. | |
(i) | Commenced operations on July 31, 2006. | |
(j) | Commenced operations on July 31, 2006. | |
(k) | Commenced operations on July 31, 2006. |
24
Table of Contents
Mr. Birdsong is a private investor. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm. Since 2003, Mr. Birdsong has been an independent director of The Japan Fund. From 2003 to March 2005, Mr. Birdsong was an independent director of the Atlantic Whitehall Funds. From 1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder Investments, an investment management firm. During his employment with Scudder, Mr. Birdsong was an interested director of The Japan Fund.
* | Prior to May 8, 2009, Mr. Birdsong held a beneficial ownership interest in the common stock of Wells Fargo & Company (“Wells Fargo”). On October 3, 2008, Wells Fargo agreed to acquire Wachovia Corporation, a majority shareholder of Metropolitan West Capital Management, LLC (“MetWest Capital”), a sub-adviser to The Hartford Select SmallCap Value Fund. On October 20, 2008, Wells Fargo purchased preferred stock of Wachovia Corporation with a voting interest greater than 25%. On December 31, 2008, the merger was completed. As a result of these transactions, Wells Fargo may be deemed to control MetWest Capital as of October 20, 2008. Because of his prior beneficial ownership interest in Wells Fargo common stock, Mr. Birdsong was not considered to be an independent director with respect to The Hartford Select SmallCap Value Fund from October 20, 2008 to May 8, 2009. |
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was President of Cranbrook Education Community and prior to July 1996, he was President of Macalester College, St. Paul, Minnesota.
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment company. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that serves as sponsor and lead investor in leveraged buyouts of middle market companies.
Ms. Jaffee is Chairman and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions. Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm, from August 2004 to August 2005. From September 1995 to July 2004, Ms. Jaffee served as Executive Vice President at Citigroup, where she was President and Chief Executive Officer of Citibank’s Global Securities Services (1995-2003).
25
Table of Contents
Directors and Officers (Unaudited) — (continued)
In February 2008, Mr. Johnston was elected to the Board of Directors of HCR-ManorCare, Inc. In August 2007, Mr. Johnston was elected to the Board of Directors of LifeCare Holdings, Inc. In July, 2006, Mr. Johnston was elected to the Board of Directors of MultiPlan, Inc. In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity investment firm. In May 2006, Mr. Johnston was elected to the Supervisory Board of Fresenius Medical Care AG & Co. KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr. Johnston joined Renal Care Group in November 2002 as a member of the Board of Directors and served as Chairman of the Board from March 2003 through March 2006. From September 1987 to December 2002, Mr. Johnston was with Equitable Securities Corporation (and its successors, SunTrust Equitable Securities and SunTrust Robinson Humphrey) serving in various investment banking and managerial positions, including Managing Director and Head of Investment Banking, Chief Executive Officer and Vice Chairman.
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
26
Table of Contents
27
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 903.01 | $ | 7.17 | $ | 1,000.00 | $ | 1,017.25 | $ | 7.60 | 1.52 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 901.93 | $ | 9.43 | $ | 1,000.00 | $ | 1,014.87 | $ | 9.99 | 2.00 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 901.75 | $ | 9.66 | $ | 1,000.00 | $ | 1,014.62 | $ | 10.24 | 2.05 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 906.66 | $ | 5.48 | $ | 1,000.00 | $ | 1,019.04 | $ | 5.80 | 1.16 | 181 | 365 |
28
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29
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
10 | ||||
11 | ||||
12 | ||||
13 | ||||
22 | ||||
23 | ||||
25 | ||||
25 | ||||
26 |
Table of Contents
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Short Duration A# | 10/31/02 | -0.98 | % | 1.65 | % | 2.12 | % | |||||||||
Short Duration A## | 10/31/02 | -3.95 | % | 1.03 | % | 1.64 | % | |||||||||
Short Duration B# | 10/31/02 | -1.72 | % | 0.89 | % | 1.37 | % | |||||||||
Short Duration B## | 10/31/02 | -6.50 | % | 0.54 | % | 1.37 | % | |||||||||
Short Duration C# | 10/31/02 | -1.72 | % | 0.91 | % | 1.39 | % | |||||||||
Short Duration C## | 10/31/02 | -2.67 | % | 0.91 | % | 1.39 | % | |||||||||
Short Duration Y# | 11/28/03 | -0.65 | % | 1.92 | % | 2.00 | % |
# | Without sales charge | |
## | With sales charge | |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes B, C and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Robert Crusha, CFA | Brian Dirgins, CFA | |
Vice President | Senior Vice President |
2
Table of Contents
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 31.4 | % | ||
AA | 15.5 | |||
A | 28.8 | |||
BBB | 22.6 | |||
BB | 0.7 | |||
B | 0.3 | |||
CCC | 0.4 | |||
Not Rated | 0.3 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Basic Materials | 1.9 | % | ||
Capital Goods | 2.5 | |||
Consumer Cyclical | 2.0 | |||
Consumer Staples | 3.2 | |||
Energy | 3.5 | |||
Finance | 47.8 | |||
Foreign Governments | 0.5 | |||
Health Care | 5.2 | |||
Services | 4.2 | |||
Technology | 8.3 | |||
Transportation | 1.5 | |||
U.S. Government Agencies | 3.4 | |||
U.S. Government Securities | 7.6 | |||
Utilities | 0.8 | |||
Short-Term Investments | 6.8 | |||
Other Assets and Liabilities | 0.8 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 26.5% | ||||||||
Finance - 26.5% | ||||||||
American Express Credit Account Master Trust | ||||||||
$ | 32 | 0.95%, 02/15/2012 ■Δ | $ | 31 | ||||
AmeriCredit Automobile Receivables Trust | ||||||||
829 | 4.47%, 01/12/2012 | 832 | ||||||
600 | 5.04%, 05/06/2011 | 584 | ||||||
210 | 5.21%, 10/06/2011 ⌂ | 208 | ||||||
575 | 5.42%, 08/08/2011 | 565 | ||||||
Banc of America Securities Automotive Trust | ||||||||
1,500 | 4.49%, 02/18/2013 ⌂ | 1,478 | ||||||
Bayview Commercial Asset Trust | ||||||||
363 | 1.44%, 01/25/2035 ⌂Δ | 178 | ||||||
6,021 | 7.00%, 07/25/2037 ⌂► | 331 | ||||||
10,963 | 7.18%, 01/25/2037 ⌂►† | 926 | ||||||
10,106 | 7.50%, 09/25/2037 ⌂► | 899 | ||||||
Bayview Financial Acquisition Trust | ||||||||
987 | 4.91%, 02/25/2033 ⌂ | 925 | ||||||
2,000 | 5.64%, 11/28/2036 ⌂ | 730 | ||||||
Bear Stearns Asset Backed Securities, Inc. | ||||||||
622 | 5.16%, 09/25/2033 ⌂ | 354 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
18,959 | 4.12%, 11/11/2041 ⌂► | 340 | ||||||
48,676 | 4.65%, 02/11/2041 ⌂► | 361 | ||||||
105,630 | 6.25%, 12/11/2040 ⌂► | 265 | ||||||
Capital Automotive Receivables Asset Trust | ||||||||
800 | 5.55%, 01/18/2011 | 777 | ||||||
200 | 5.77%, 05/20/2010 ⌂ | 197 | ||||||
225 | 6.15%, 04/20/2011 ⌂ | 219 | ||||||
1,000 | 6.35%, 03/17/2014 ⌂ | 657 | ||||||
Capital One Multi-Asset Execution Trust | ||||||||
1,000 | 1.75%, 03/15/2013 Δ | 989 | ||||||
Capital One Prime Automotive Receivables Trust | ||||||||
1,000 | 5.68%, 06/10/2011 ⌂ | 618 | ||||||
Carmax Automotive Owner Trust | ||||||||
1,000 | 6.12%, 07/15/2013 ⌂ | 738 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
18,977 | 5.69%, 12/25/2036 ⌂►† | 741 | ||||||
18,476 | 7.00%, 07/25/2035 - 06/25/2038 ⌂►† | 1,231 | ||||||
10,027 | 9.75%, 01/25/2039 ⌂ ► | 1,003 | ||||||
Chase Commercial Mortgage Securities Corp. | ||||||||
2,105 | 7.63%, 07/15/2032 Δ | 2,146 | ||||||
Citibank Credit Card Issuance Trust | ||||||||
2,000 | 0.70%, 01/09/2012 Δ | 1,844 | ||||||
Citicorp Residential Mortgage Securities | ||||||||
100 | 6.27%, 06/25/2037 Δ | 70 | ||||||
CNH Equipment Trust | ||||||||
750 | 4.93%, 12/17/2012 ⌂ | 656 | ||||||
Commercial Mortgage Pass-Through Certificates | ||||||||
1,500 | 1.01%, 12/15/2020 ⌂Δ | 226 | ||||||
2,352 | 3.59%, 03/10/2039 ⌂► | 33 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
1,500 | 5.57%, 11/25/2035 † | 377 | ||||||
1,000 | 5.71%, 11/25/2035 | 145 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
9,826 | 4.17%, 07/15/2036 ⌂► | 127 | ||||||
DaimlerChrysler Automotive Trust | ||||||||
800 | 4.48%, 08/08/2014 | 636 | ||||||
800 | 5.14%, 09/08/2012 | 756 | ||||||
Equity One ABS, Inc. | ||||||||
20 | 2.94%, 07/25/2034 ⌂Δ | 1 | ||||||
Ford Credit Automotive Owner Trust | ||||||||
657 | 5.07%, 12/15/2010 | 663 | ||||||
2,924 | 5.29%, 04/15/2011 ⌂ | 2,863 | ||||||
750 | 5.48%, 09/15/2011 ⌂ | 727 | ||||||
500 | 5.68%, 06/15/2012 ⌂ | 396 | ||||||
1,000 | 5.69%, 11/15/2012 ⌂ | 777 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
6,573 | 3.76%, 03/10/2040 ■► | 71 | ||||||
GMAC Mortgage Corp. Loan Trust | ||||||||
954 | 4.59%, 04/25/2033 ⌂ | 670 | ||||||
195 | 5.12%, 04/25/2033 ⌂ | 78 | ||||||
715 | 5.75%, 10/25/2036 ⌂ | 413 | ||||||
Goldman Sachs Automotive Loan Trust | ||||||||
4 | 4.98%, 11/15/2013 ⌂ | 3 | ||||||
Goldman Sachs Mortgage Securities Corp. II | ||||||||
1,748 | 4.32%, 10/10/2028 | 1,735 | ||||||
14,833 | 4.38%, 08/10/2038 ⌂► | 92 | ||||||
Green Tree Financial Corp. | ||||||||
3 | 7.30%, 01/15/2026 | 3 | ||||||
Hasco NIM Trust | ||||||||
35 | 6.25%, 12/26/2035 ⌂• | — | ||||||
Hyundai Automotive Receivables Trust | ||||||||
224 | 4.45%, 02/15/2012 ⌂ | 223 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
1,181 | 1.20%, 02/15/2020 ⌂Δ | 293 | ||||||
2,000 | 3.84%, 01/12/2039 | 1,827 | ||||||
11,463 | 4.65%, 10/15/2037 ■► | 99 | ||||||
32,691 | 4.82%, 08/12/2037 ► | 75 | ||||||
939 | 5.34%, 05/12/2045 | 935 | ||||||
LaSalle Commercial Mortgage Securities | ||||||||
15,983 | 6.20%, 09/20/2043 ⌂► | 280 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
79 | 3.63%, 10/15/2029 | 79 | ||||||
1,419 | 4.25%, 12/15/2036 ■► | 16 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
1,014 | 6.77%, 09/27/2036 ⌂† | 234 | ||||||
Long Beach Asset Holdings Corp. | ||||||||
180 | 5.78%, 04/25/2046 ⌂• | — | ||||||
Marlin Leasing Receivables LLC | ||||||||
233 | 5.09%, 08/15/2012 ⌂ | 233 | ||||||
1,600 | 5.33%, 09/16/2013 ■ | 1,575 | ||||||
235 | 5.63%, 09/16/2013 ⌂ | 212 | ||||||
MBNA Credit Card Master Note Trust | ||||||||
550 | 6.80%, 07/15/2014 ⌂ | 419 | ||||||
Merrill Lynch Mortgage Trust | ||||||||
13,344 | 3.81%, 08/12/2039 ⌂► | 215 | ||||||
16,394 | 3.96%, 10/12/2041 ⌂► | 265 | ||||||
22,718 | 4.67%, 09/12/2042 ⌂► | 150 | ||||||
1,470 | 5.53%, 05/12/2039 Δ | 1,469 | ||||||
Morgan Stanley Capital I | ||||||||
1 | 3.96%, 06/15/2040 | 1 | ||||||
Morgan Stanley Dean Witter Capital I | ||||||||
79 | 5.38%, 01/15/2039 | 79 | ||||||
Nationstar Home Equity Loan Trust | ||||||||
13 | 9.97%, 03/25/2037 ⌂Δ | — | ||||||
North Street Referenced Linked Notes | ||||||||
1,000 | 1.74%, 07/27/2010 ⌂Δ | 500 | ||||||
500 | 2.09%, 04/28/2011 ⌂†Δ | 234 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
Ocwen Advance Receivables Backed Notes | ||||||||
1,500 | 5.34%, 11/24/2015 ⌂ | 960 | ||||||
Renaissance Home Equity Loan Trust | ||||||||
675 | 7.00%, 09/25/2037 ⌂ | 31 | ||||||
405 | 7.50%, 04/25/2037 ⌂ | 16 | ||||||
108 | 9.79%, 04/25/2037 ⌂• | 1 | ||||||
Structured Asset Investment Loan Trust | ||||||||
254 | 3.06%, 11/25/2033 ⌂Δ | 77 | ||||||
Structured Asset Securities Corp. | ||||||||
450 | 2.94%, 02/25/2037 ⌂Δ | 8 | ||||||
400 | 2.94%, 01/25/2037 ⌂†Δ | 11 | ||||||
Swift Master Automotive Receivables Trust | ||||||||
1,000 | 1.90%, 10/15/2012 ⌂Δ | 400 | ||||||
USAA Automotive Owner Trust | ||||||||
1,560 | 4.16%, 04/16/2012 | 1,582 | ||||||
860 | 5.07%, 06/15/2013 | 892 | ||||||
1,000 | 5.66%, 03/15/2013 ⌂ | 780 | ||||||
Wachovia Automotive Loan Owner Trust | ||||||||
1,700 | 5.42%, 04/21/2014 ⌂ | 957 | ||||||
1,000 | 5.54%, 12/20/2012 ⌂ | 726 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
17 | 3.48%, 08/15/2041 | 17 | ||||||
Washington Mutual Master Note Trust | ||||||||
1,500 | 0.83%, 10/15/2013 ⌂Δ | 1,287 | ||||||
Washington Mutual, Inc. | ||||||||
17,125 | 7.00%, 11/23/2043 ⌂► | 497 | ||||||
Wells Fargo Home Equity Trust | ||||||||
1,856 | 0.74%, 04/25/2034 Δ | 946 | ||||||
WFS Financial Owner Trust | ||||||||
1,091 | 4.76%, 05/17/2013 ⌂ | 806 | ||||||
51,092 | ||||||||
Total asset & commercial mortgage backed securities (cost $67,296) | $ | 51,092 | ||||||
CERTIFICATES OF DEPOSIT - 0.7% | ||||||||
Finance - 0.7% | ||||||||
Comerica Bank, | ||||||||
$ | 1,350 | 0.53%, 8/7/2009Δ | $ | 1,344 | ||||
Total certificates of deposit (cost $1,348,000) | $ | 1,344 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 54.2% | ||||||||
Basic Materials - 1.9% | ||||||||
Alcan, Inc. | ||||||||
$ | 750 | 6.45%, 03/15/2011 | $ | 730 | ||||
BHP Billiton Finance USA Ltd. | ||||||||
500 | 5.50%, 04/01/2014 | 527 | ||||||
Xstrata Finance Dubai Ltd. | ||||||||
2,500 | 1.58%, 11/13/2009 ■Δ | 2,453 | ||||||
3,710 | ||||||||
Capital Goods - 2.5% | ||||||||
Deere & Co. | ||||||||
534 | 7.85%, 05/15/2010 | 553 | ||||||
Honeywell International, Inc. | ||||||||
1,092 | 4.25%, 03/01/2013 | 1,134 | ||||||
Northrop Grumman Corp. | ||||||||
1,000 | 7.13%, 02/15/2011 | 1,064 | ||||||
United Technologies Corp. | ||||||||
987 | 6.10%, 05/15/2012 | 1,054 | ||||||
Xerox Corp. | ||||||||
1,000 | 7.13%, 06/15/2010 | 1,010 | ||||||
4,815 | ||||||||
Consumer Cyclical - 2.0% | ||||||||
DaimlerChrysler NA Holdings Corp. | ||||||||
600 | 5.88%, 03/15/2011 | 593 | ||||||
Kroger Co. | ||||||||
750 | 7.25%, 06/01/2009 | 752 | ||||||
750 | 8.05%, 02/01/2010 | 774 | ||||||
SABMiller plc | ||||||||
510 | 1.51%, 07/01/2009 ■Δ | 510 | ||||||
Safeway, Inc. | ||||||||
700 | 4.95%, 08/16/2010 | 717 | ||||||
500 | 7.50%, 09/15/2009 | 509 | ||||||
3,855 | ||||||||
Consumer Staples - 3.2% | ||||||||
Altria Group, Inc. | ||||||||
500 | 7.75%, 02/06/2014 | 536 | ||||||
Clorox Co. | ||||||||
1,000 | 6.13%, 02/01/2011 | 1,044 | ||||||
Coca-Cola Co. | ||||||||
1,000 | 3.63%, 03/15/2014 | 1,021 | ||||||
Diageo Capital plc | ||||||||
1,460 | 7.25%, 11/01/2009 | 1,486 | ||||||
PepsiCo, Inc. | ||||||||
1,000 | 3.75%, 03/01/2014 | 1,020 | ||||||
Unilever Capital Corp. | ||||||||
1,000 | 7.13%, 11/01/2010 | 1,074 | ||||||
6,181 | ||||||||
Energy - 3.5% | ||||||||
Anadarko Petroleum Corp. | ||||||||
500 | 1.72%, 09/15/2009 Δ | 499 | ||||||
Chevron Corp. | ||||||||
1,000 | 3.45%, 03/03/2012 | 1,029 | ||||||
Devon Energy Corp. | ||||||||
1,100 | 6.88%, 09/30/2011 | 1,170 | ||||||
Enterprise Products Operating L.P. | ||||||||
1,275 | 7.50%, 02/01/2011 | 1,310 | ||||||
Hess Corp. | ||||||||
500 | 7.00%, 02/15/2014 | 542 | ||||||
Marathon Oil Corp. | ||||||||
267 | 6.50%, 02/15/2014 | 277 | ||||||
Shell International Finance B.V. | ||||||||
1,000 | 4.00%, 03/21/2014 | 1,031 | ||||||
500 | 5.63%, 06/27/2011 | 537 | ||||||
Statoilhydro ASA | ||||||||
391 | 3.88%, 04/15/2014 | 396 | ||||||
6,791 | ||||||||
Finance - 20.6% | ||||||||
Aetna, Inc. | ||||||||
890 | 7.88%, 03/01/2011 | 942 | ||||||
American Express Credit Corp. | ||||||||
1,700 | 0.53%, 11/09/2009 Δ | 1,657 | ||||||
BAE Systems Holdings, Inc. | ||||||||
1,000 | 6.40%, 12/15/2011 ■ | 1,053 | ||||||
BB&T Corp. | ||||||||
500 | 5.70%, 04/30/2014 | 492 | ||||||
Berkshire Hathaway Finance Corp. | ||||||||
1,000 | 4.00%, 04/15/2012 ■ | 1,016 | ||||||
BP Capital Markets plc | ||||||||
1,000 | 3.13%, 03/10/2012 | 1,015 | ||||||
Capital One Financial Corp. | ||||||||
1,000 | 1.57%, 09/10/2009 Δ | 974 | ||||||
Caterpillar Financial Services Corp. | ||||||||
900 | 1.34%, 08/20/2010 Δ | 871 | ||||||
1,000 | 4.15%, 01/15/2010 | 1,014 | ||||||
CIT Group, Inc. | ||||||||
750 | 1.36%, 08/17/2009 Δ | 683 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
Countrywide Financial Corp. | ||||||||
2,000 | 1.68%, 05/07/2012 Δ | 1,651 | ||||||
79 | 4.50%, 06/15/2010 | 76 | ||||||
162 | 5.80%, 06/07/2012 | 149 | ||||||
Countrywide Home Loans, Inc. | ||||||||
98 | 4.00%, 03/22/2011 | 92 | ||||||
Credit Suisse First Boston USA, Inc. | ||||||||
2,000 | 4.13%, 01/15/2010 | 2,019 | ||||||
First Union National Bank Commercial Mortgage | ||||||||
1,500 | 7.80%, 08/18/2010 | 1,534 | ||||||
FleetBoston Financial Corp. | ||||||||
1,500 | 7.38%, 12/01/2009 | 1,515 | ||||||
General Electric Capital Corp. | ||||||||
1,500 | 6.13%, 02/22/2011 | 1,557 | ||||||
Goldman Sachs Group, Inc. | ||||||||
200 | 1.31%, 12/23/2009 Δ | 197 | ||||||
1,270 | 1.32%, 11/16/2009 Δ | 1,253 | ||||||
500 | 1.70%, 03/15/2011 | 504 | ||||||
243 | 6.00%, 05/01/2014 | 243 | ||||||
HSBC Bank USA | ||||||||
2,000 | 3.88%, 09/15/2009 | 1,982 | ||||||
John Deere Capital Corp. | ||||||||
600 | 1.41%, 10/16/2009 Δ | 599 | ||||||
JP Morgan Chase & Co. | ||||||||
810 | 6.75%, 02/01/2011 | 840 | ||||||
Key Bank NA | ||||||||
250 | 1.33%, 11/03/2009 Δ | 247 | ||||||
Merrill Lynch & Co., Inc. | ||||||||
2,000 | 1.33%, 03/23/2010 Δ | 1,900 | ||||||
720 | 1.35%, 12/04/2009 Δ | 698 | ||||||
Morgan Stanley | ||||||||
1,200 | 0.59%, 05/07/2010 Δ | 1,127 | ||||||
375 | 1.34%, 05/07/2010 Δ | 352 | ||||||
National City Bank of Ohio | ||||||||
1,000 | 1.21%, 01/21/2010 Δ | 979 | ||||||
500 | 4.50%, 03/15/2010 | 501 | ||||||
National Westminster Bank | ||||||||
1,130 | 7.38%, 10/01/2009 | 1,106 | ||||||
Prudential Financial, Inc. | ||||||||
1,000 | 5.10%, 12/14/2011 | 874 | ||||||
Sovereign Bancorp, Inc. | ||||||||
2,000 | 1.46%, 03/23/2010 Δ | 1,859 | ||||||
State Street Bank & Trust Co. | ||||||||
500 | 1.85%, 03/15/2011 | 502 | ||||||
SunTrust Banks, Inc. | ||||||||
500 | 7.75%, 05/01/2010 | 505 | ||||||
UnitedHealth Group, Inc. | ||||||||
1,000 | 1.41%, 06/21/2010 Δ | 980 | ||||||
Wellpoint, Inc. | ||||||||
500 | 4.25%, 12/15/2009 | 503 | ||||||
525 | 5.00%, 01/15/2011 | 532 | ||||||
Wells Fargo & Co. | ||||||||
500 | 2.13%, 06/15/2012 | 504 | ||||||
2,673 | 7.55%, 06/21/2010 | 2,758 | ||||||
39,855 | ||||||||
Foreign Governments - 0.5% | ||||||||
Quebec (Province of) | ||||||||
1,000 | 6.13%, 01/22/2011 | 1,062 | ||||||
Health Care - 5.2% | ||||||||
AstraZeneca plc | ||||||||
1,000 | 5.40%, 09/15/2012 | 1,074 | ||||||
Cardinal Health, Inc. | ||||||||
2,000 | 1.46%, 10/02/2009 Δ | 1,970 | ||||||
CVS Caremark Corp. | ||||||||
2,685 | 1.56%, 06/01/2010 Δ | 2,634 | ||||||
Eli Lilly & Co. | ||||||||
1,164 | 3.55%, 03/06/2012 | 1,195 | ||||||
Pfizer, Inc. | ||||||||
1,000 | 4.45%, 03/15/2012 | 1,051 | ||||||
Roche Holdings, Inc. | ||||||||
1,000 | 4.50%, 03/01/2012 ■ | 1,049 | ||||||
Wyeth | ||||||||
1,000 | 6.95%, 03/15/2011 | 1,073 | ||||||
10,046 | ||||||||
Services - 4.2% | ||||||||
Allied Waste North America, Inc. | ||||||||
1,000 | 5.75%, 02/15/2011 | 1,005 | ||||||
Comcast Corp. | ||||||||
1,490 | 1.44%, 07/14/2009 Δ | 1,489 | ||||||
Time Warner, Inc. | ||||||||
2,520 | 1.46%, 11/13/2009 Δ | 2,503 | ||||||
United Parcel Service, Inc. | ||||||||
1,000 | 3.88%, 04/01/2014 | 1,031 | ||||||
Walt Disney Co. | ||||||||
1,120 | 1.19%, 07/16/2010 Δ | 1,120 | ||||||
Waste Management, Inc. | ||||||||
1,000 | 6.88%, 05/15/2009 | 1,001 | ||||||
8,149 | ||||||||
Technology - 8.3% | ||||||||
AT&T, Inc. | ||||||||
684 | 4.13%, 09/15/2009 | 691 | ||||||
1,000 | 5.88%, 02/01/2012 | 1,055 | ||||||
Cisco Systems, Inc. | ||||||||
1,000 | 5.25%, 02/22/2011 | 1,063 | ||||||
Comcast Cable Communications, Inc. | ||||||||
1,000 | 6.75%, 01/30/2011 | 1,053 | ||||||
Deutsche Telekom International Finance B.V. | ||||||||
1,000 | 8.50%, 06/15/2010 Δ | 1,051 | ||||||
Embarq Corp. | ||||||||
1,000 | 6.74%, 06/01/2013 | 965 | ||||||
France Telecom S.A. | ||||||||
1,000 | 7.75%, 03/01/2011 Δ | 1,083 | ||||||
IBM Corp. | ||||||||
1,000 | 4.95%, 03/22/2011 | 1,056 | ||||||
Lockheed Martin Corp. | ||||||||
1,500 | 8.20%, 12/01/2009 | 1,530 | ||||||
Oracle Corp. | ||||||||
1,000 | 5.00%, 01/15/2011 | 1,054 | ||||||
Raytheon Co. | ||||||||
1,000 | 4.85%, 01/15/2011 | 1,034 | ||||||
Telecom Italia Capital | ||||||||
750 | 4.00%, 01/15/2010 | 745 | ||||||
Telefonica Europe B.V. | ||||||||
1,000 | 7.75%, 09/15/2010 | 1,050 | ||||||
Verizon Wireless | ||||||||
1,500 | 5.25%, 02/01/2012 ■ | 1,553 | ||||||
Vodafone Group plc | ||||||||
1,000 | 7.75%, 02/15/2010 | 1,037 | ||||||
16,020 | ||||||||
Transportation - 1.5% | ||||||||
Canadian National Railway Co. | ||||||||
1,379 | 4.25%, 08/01/2009 | 1,379 | ||||||
Norfolk Southern Corp. | ||||||||
365 | 8.63%, 05/15/2010 | 381 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
Union Pacific Corp. | ||||||||||||
500 | 6.65%, 01/15/2011 | 527 | ||||||||||
540 | 7.38%, 09/15/2009 | 549 | ||||||||||
2,836 | ||||||||||||
Utilities - 0.8% | ||||||||||||
Ohio Power Co. | ||||||||||||
1,500 | 1.35%, 04/05/2010 Δ | 1,478 | ||||||||||
Total corporate bonds: investment grade (cost $105,134) | $ | 104,798 | ||||||||||
U.S. GOVERNMENT AGENCIES - 3.4% | ||||||||||||
Federal Home Loan Mortgage Corporation - 1.3% | ||||||||||||
$ | 2,500 | 6.00%, 09/15/2032 | $ | 2,553 | ||||||||
Federal National Mortgage Association - 1.2% | ||||||||||||
2,288 | 5.50%, 05/25/2014 | 2,357 | ||||||||||
Government National Mortgage Association - 0.9% | ||||||||||||
1,610 | 6.50%, 05/16/2031 | 1,734 | ||||||||||
Total U.S. government agencies (cost$6,490) | $ | 6,644 | ||||||||||
U.S. GOVERNMENT SECURITIES - 7.6% | ||||||||||||
U.S. Treasury Notes - 7.6% | ||||||||||||
$ | 5,450 | 1.50%, 10/31/2010 | $ | 5,512 | ||||||||
5,235 | 1.75%, 03/31/2014 | 5,176 | ||||||||||
317 | 1.88%, 02/28/2014 | 316 | ||||||||||
3,555 | 2.00%, 09/30/2010 | 3,622 | ||||||||||
14,626 | ||||||||||||
Total U.S. government securities (cost $14,572) | $ | 14,626 | ||||||||||
Total long-term investments (cost $194,840) | $ | 178,504 | ||||||||||
SHORT-TERM INVESTMENTS - 6.8% | ||||||||||||
Consumer Cyclical - 0.5% | ||||||||||||
Staples, Inc. | ||||||||||||
$ | 851 | 0.83%, 5/27/2009 | $ | 850 | ||||||||
Repurchase Agreements - 6.3% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $9,571, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $9,751) | ||||||||||||
$ | 9,571 | 0.15%, 04/30/2009 | $ | 9,571 | ||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,677, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $2,738) | ||||||||||||
2,677 | 0.13%, 04/30/2009 | 2,677 | ||||||||||
12,248 | ||||||||||||
Total short-term investments (cost $13,098) | $ | 13,098 | ||||||||||
Total investments (cost $207,938)▲ | 99.2 | % | $ | 191,602 | ||||||||
Other assets and liabilities | 0.8 | % | 1,634 | |||||||||
Total net assets | 100 .0 | % | $ | 193,236 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 9.46% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $207,950 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 3,249 | ||
Unrealized Depreciation | (19,597 | ) | ||
Net Unrealized Depreciation | $ | (16,348 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $3,754, which represents 1.94% of total net assets. | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $9,426, which represents 4.88% of total net assets. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at April 30, 2009. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | $ | 210 | AmeriCredit Automobile Receivables Trust, 5.21%, 10/06/2011 | $ | 209 | |||||||
06/2005 | $ | 1,500 | Banc of America Securities Automotive Trust, 4.49%, 02/18/2013 | 1,500 | ||||||||
12/2004 | $ | 363 | Bayview Commercial Asset Trust, 1.44%, 01/25/2035 - 144A | 363 | ||||||||
�� | 05/2007 - 02/2009 | $ | 6,021 | Bayview Commercial Asset Trust, 7.00%, 07/25/2037 - 144A | 846 | |||||||
12/2006 | $ | 10,963 | Bayview Commercial Asset Trust, 7.18%, 01/25/2037 - 144A | 1,085 | ||||||||
08/2007 | $ | 10,106 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | 1,394 | ||||||||
11/2006 | $ | 987 | Bayview Financial Acquisition Trust, 4.91%, 02/25/2033 - 144A | 968 | ||||||||
11/2006 | $ | 2,000 | Bayview Financial Acquisition Trust, 5.64%, 11/28/2036 | 2,000 |
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
08/2006 | $ | 622 | Bear Stearns Asset Backed Securities, Inc., 5.16%, 09/25/2033 | 610 | ||||||||
12/2004 | $ | 18,959 | Bear Stearns Commercial Mortgage Securities, Inc., 4.12%, 11/11/2041 | 352 | ||||||||
03/2005 - 08/2007 | $ | 48,676 | Bear Stearns Commercial Mortgage Securities, Inc., 4.65%, 02/11/2041 | 386 | ||||||||
12/2005 | $ | 105,630 | Bear Stearns Commercial Mortgage Securities, Inc., 6.25%, 12/11/2040 - 144A | 386 | ||||||||
08/2006 | $ | 200 | Capital Automotive Receivables Asset Trust, 5.77%, 05/20/2010 - 144A | 200 | ||||||||
08/2006 | $ | 225 | Capital Automotive Receivables Asset Trust, 6.15%, 04/20/2011 - 144A | 225 | ||||||||
09/2007 | $ | 1,000 | Capital Automotive Receivables Asset Trust, 6.35%, 03/17/2014 - 144A | 1,000 | ||||||||
09/2007 | $ | 1,000 | Capital One Prime Automotive Receivables Trust, 5.68%, 06/10/2011 | 1,000 | ||||||||
09/2007 | $ | 1,000 | Carmax Automotive Owner Trust, 6.12%, 07/15/2013 | 1,000 | ||||||||
10/2007 - 11/2007 | $ | 18,977 | CBA Commercial Small Balance Commercial Mortgage, 5.69%, 12/25/2036 | — | ||||||||
04/2006 | $ | 18,476 | CBA Commercial Small Balance Commercial Mortgage, 7.00%, 07/25/2035 - 06/25/2038 - 144A | 377 | ||||||||
11/2006 - 08/2007 | $ | 10,027 | CBA Commercial Small Balance Commercial Mortgage, 9.75%, 01/25/2039 - 144A | 882 | ||||||||
09/2005 | $ | 750 | CNH Equipment Trust, 4.93%, 12/17/2012 | 750 | ||||||||
10/2006 | $ | 1,500 | Commercial Mortgage Pass-Through Certificates, 1.01%, 12/15/2020 - 144A | 1,500 | ||||||||
03/2004 - 08/2006 | $ | 2,352 | Commercial Mortgage Pass-Through Certificates, 3.59%, 03/10/2039 - 144A | 38 | ||||||||
08/2004 - 08/2006 | $ | 9,826 | CS First Boston Mortgage Securities Corp., 4.17%, 07/15/2036 - 144A | 139 | ||||||||
07/2004 | $ | 20 | Equity One ABS, Inc., 2.94%, 07/25/2034 | 20 | ||||||||
02/2006 - 05/2007 | $ | 2,924 | Ford Credit Automotive Owner Trust, 5.29%, 04/15/2011 | 2,925 | ||||||||
02/2006 | $ | 750 | Ford Credit Automotive Owner Trust, 5.48%, 09/15/2011 | 750 | ||||||||
08/2006 | $ | 500 | Ford Credit Automotive Owner Trust, 5.68%, 06/15/2012 | 500 | ||||||||
10/2007 | $ | 1,000 | Ford Credit Automotive Owner Trust, 5.69%, 11/15/2012 | 1,000 | ||||||||
10/2006 | $ | 954 | GMAC Mortgage Corp. Loan Trust, 4.59%, 04/25/2033 | 941 | ||||||||
03/2007 | $ | 195 | GMAC Mortgage Corp. Loan Trust, 5.12%, 04/25/2033 | 193 | ||||||||
09/2007 | $ | 715 | GMAC Mortgage Corp. Loan Trust, 5.75%, 10/25/2036 | 679 | ||||||||
08/2005 | $ | 4 | Goldman Sachs Automotive Loan Trust, 4.98%, 11/15/2013 | 3 | ||||||||
07/2004 | $ | 14,833 | Goldman Sachs Mortgage Securities Corp. II, 4.38%, 08/10/2038 - 144A | 99 | ||||||||
03/2006 - 03/2009 | $ | 35 | Hasco NIM Trust, 6.25%, 12/26/2035 - 144A | 35 | ||||||||
06/2005 | $ | 224 | Hyundai Automotive Receivables Trust, 4.45%, 02/15/2012 | 224 | ||||||||
03/2006 | $ | 1,181 | JP Morgan Chase Commercial Mortgage Securities Corp., 1.20%, 02/15/2020 - 144A | 1,180 | ||||||||
12/2006 - 08/2007 | $ | 15,983 | LaSalle Commercial Mortgage Securities, 6.20%, 09/20/2043 - 144A | 467 | ||||||||
09/2006 - 07/2007 | $ | 1,014 | Lehman Brothers Small Balance Commercial, 6.77%, 09/27/2036 - 144A | 1,013 | ||||||||
03/2006 | $ | 180 | Long Beach Asset Holdings Corp., 5.78%, 04/25/2046 - 144A | 181 | ||||||||
08/2005 - 12/2006 | $ | 233 | Marlin Leasing Receivables LLC, 5.09%, 08/15/2012 - 144A | 233 | ||||||||
09/2006 | $ | 235 | Marlin Leasing Receivables LLC, 5.63%, 09/16/2013 - 144A | 235 | ||||||||
08/2007 | $ | 550 | MBNA Credit Card Master Note Trust, 6.80%, 07/15/2014 | 555 | ||||||||
09/2004 | $ | 13,344 | Merrill Lynch Mortgage Trust, 3.81%, 08/12/2039 - 144A | 231 | ||||||||
11/2004 - 08/2006 | $ | 16,394 | Merrill Lynch Mortgage Trust, 3.96%, 10/12/2041 - 144A | 304 | ||||||||
03/2005 | $ | 22,718 | Merrill Lynch Mortgage Trust, 4.67%, 09/12/2042 | 134 | ||||||||
04/2007 | $ | 13 | Nationstar Home Equity Loan Trust, 9.97%, 03/25/2037 - 144A | 13 | ||||||||
10/2006 - 11/2006 | $ | 1,000 | North Street Referenced Linked Notes, 1.74%, 07/27/2010 - 144A | 978 | ||||||||
11/2006 | $ | 500 | North Street Referenced Linked Notes, 2.09%, 04/28/2011 - 144A | 472 | ||||||||
11/2006 | $ | 1,500 | Ocwen Advance Receivables Backed Notes, 5.34%, 11/24/2015 - 144A | 1,500 | ||||||||
08/2007 | $ | 675 | Renaissance Home Equity Loan Trust, 7.00%, 09/25/2037 | 479 | ||||||||
03/2007 | $ | 405 | Renaissance Home Equity Loan Trust, 7.50%, 04/25/2037 | 354 | ||||||||
03/2007 | $ | 108 | Renaissance Home Equity Loan Trust, 9.79%, 04/25/2037 - 144A | 108 | ||||||||
06/2005 | $ | 254 | Structured Asset Investment Loan Trust, 3.06%, 11/25/2033 | 257 | ||||||||
03/2007 | $ | 400 | Structured Asset Securities Corp., 2.94%, 01/25/2037 - 144A | 396 | ||||||||
03/2007 | $ | 450 | Structured Asset Securities Corp., 2.94%, 02/25/2037 | 444 | ||||||||
10/2007 | $ | 1,000 | Swift Master Automotive Receivables Trust, 1.90%, 10/15/2012 | 1,000 | ||||||||
08/2006 | $ | 1,000 | USAA Automotive Owner Trust, 5.66%, 03/15/2013 | 1,000 |
8
Table of Contents
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
09/2006 | $ | 1,700 | Wachovia Automotive Loan Owner Trust, 5.42%, 04/21/2014 - 144A | 1,700 | ||||||||
10/2006 | $ | 1,000 | Wachovia Automotive Loan Owner Trust, 5.54%, 12/20/2012 - 144A | 1,000 | ||||||||
11/2006 | $ | 1,500 | Washington Mutual Master Note Trust, 0.83%, 10/15/2013 - 144A | 1,500 | ||||||||
11/2006 | $ | 17,125 | Washington Mutual, Inc., 7.00%, 11/23/2043 - 144A | 717 | ||||||||
07/2005 - 09/2007 | $ | 1,091 | WFS Financial Owner Trust, 4.76%, 05/17/2013 | 1,090 |
The aggregate value of these securities at April 30, 2009 was $29,276 which represents 15.15% of total net assets. As a result of securities being reclassified from liquid to illiquid, the Fund exceeded its 15% illiquid security limitation. Consequently, the Fund is temporarily restricted from purchasing additional illiquid securities. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 2 | 179,062 | |||
Investment in securities — Level 3 | 12,540 | |||
Total | $ | 191,602 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 19,239 | ||
Net realized loss | (1,584 | ) | ||
Change in unrealized depreciation ♦ | (4,106 | ) | ||
Net sales | (255 | ) | ||
Transfers in and /or out of Level 3 | (754 | ) | ||
Balance as of April 30, 2009 | $ | 12,540 | ||
♦ | Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (3,742 | ) | ||||
9
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $207,938) | $ | 191,602 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 202 | |||
Fund shares sold | 1,375 | |||
Dividends and interest | 1,638 | |||
Other assets | 44 | |||
Total assets | 194,862 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 943 | |||
Fund shares redeemed | 580 | |||
Investment management fees | 14 | |||
Dividends | 44 | |||
Distribution fees | 9 | |||
Accrued expenses | 36 | |||
Total liabilities | 1,626 | |||
Net assets | $ | 193,236 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 213,216 | |||
Accumulated undistributed net investment income | 61 | |||
Accumulated net realized loss on investments | (3,705 | ) | ||
Unrealized depreciation of investments | (16,336 | ) | ||
Net assets | $ | 193,236 | ||
Shares authorized | 300,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 9.13/$9.41 | ||
Shares outstanding | 7,151 | |||
Net assets | $ | 65,314 | ||
Class B: Net asset value per share | $ | 9.13 | ||
Shares outstanding | 858 | |||
Net assets | $ | 7,838 | ||
Class C: Net asset value per share | $ | 9.14 | ||
Shares outstanding | 3,352 | |||
Net assets | $ | 30,625 | ||
Class Y: Net asset value per share | $ | 9.12 | ||
Shares outstanding | 9,810 | |||
Net assets | $ | 89,459 | ||
10
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Interest | $ | 4,141 | ||
Total investment income | 4,141 | |||
Expenses: | ||||
Investment management fees | 411 | |||
Transfer agent fees | 65 | |||
Distribution fees | ||||
Class A | 66 | |||
Class B | 33 | |||
Class C | 136 | |||
Custodian fees | 2 | |||
Accounting services | 16 | |||
Registration and filing fees | 28 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 4 | |||
Other expenses | 31 | |||
Total expenses (before waivers and fees paid indirectly) | 794 | |||
Expense waivers | (17 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (17 | ) | ||
Total expenses, net | 777 | |||
Net investment income | 3,364 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (563 | ) | ||
Net Realized Loss on Investments | (563 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (910 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (910 | ) | ||
Net Loss on Investments | (1,473 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 1,891 | ||
11
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,364 | $ | 8,317 | ||||
Net realized loss on investments | (563 | ) | (750 | ) | ||||
Net unrealized depreciation of investments | (910 | ) | (13,330 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 1,891 | (5,763 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (962 | ) | (1,537 | ) | ||||
Class B | (95 | ) | (173 | ) | ||||
Class C | (398 | ) | (771 | ) | ||||
Class Y | (1,953 | ) | (5,747 | ) | ||||
Total distributions | (3,408 | ) | (8,228 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 19,030 | 14,905 | ||||||
Class B | 2,034 | (131 | ) | |||||
Class C | 4,101 | 6,112 | ||||||
Class Y | (17,285 | ) | (25,523 | ) | ||||
Net increase (decrease) from capital share transactions | 7,880 | (4,637 | ) | |||||
Net increase (decrease) in net assets | 6,363 | (18,628 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 186,873 | 205,501 | ||||||
End of period | $ | 193,236 | $ | 186,873 | ||||
Accumulated undistributed net investment income | $ | 61 | $ | 105 | ||||
12
Table of Contents
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Short Duration Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. |
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. |
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Debt securities (other than short-term obligations) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
d) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
e) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
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Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
f) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
g) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had no outstanding when-issued or forward commitments. | ||
h) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
i) | Prepayment Risks ��� Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
j) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value |
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measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods |
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beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 8,250 | $ | 8,826 |
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 148 | ||
Accumulated Capital Losses* | $ | (3,138 | ) | |
Unrealized Depreciation† | $ | (15,438 | ) | |
Total Accumulated Deficit | $ | (18,428 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $2 and increase accumulated net realized gain by $2. |
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d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2011 | $ | 221 | ||
2012 | 295 | |||
2013 | 977 | |||
2014 | 732 | |||
2015 | 162 | |||
2016 | 751 | |||
Total | $ | 3,138 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.45 | % | ||
On next $4.5 billion | 0.40 | % | ||
On next $5 billion | 0.38 | % | ||
Over $10 billion | 0.37 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
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c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class Y | |||
0.90% | 1.65% | 1.65% | 0.65% |
d) | Fees Paid Indirectly — The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.95 | % | ||||||||||||
Class B Shares | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | ||||||||||||||||||
Class C Shares | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 | ||||||||||||||||||
Class Y Shares | 0.54 | 0.58 | 0.64 | 0.65 | 0.65 | 0.60 | * |
* | From November 28, 2003 (commencement of operations), through October 31, 2004 |
e) | Distribution and Service Plan for Class A, B and C Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $194 and contingent deferred sales charges of $20 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. |
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For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $7. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $62 for providing such services. These fees are accrued daily and paid monthly. |
5. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 29,373 | ||
Sales Proceeds Excluding U.S. Government Obligations | 36,052 | |||
Cost of Purchases for U.S. Government Obligations | 15,799 | |||
Sales Proceeds for U.S. Government Obligations | 12,411 |
6. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,348 | 90 | (2,350 | ) | — | 2,088 | 5,432 | 124 | (4,017 | ) | — | 1,539 | ||||||||||||||||||||||||||||
Amount | $ | 39,608 | $ | 824 | $ | (21,402 | ) | $ | — | $ | 19,030 | $ | 52,093 | $ | 1,186 | $ | (38,374 | ) | $ | — | $ | 14,905 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 407 | 9 | (193 | ) | — | 223 | 328 | 15 | (354 | ) | — | (11 | ) | |||||||||||||||||||||||||||
Amount | $ | 3,712 | $ | 83 | $ | (1,761 | ) | $ | — | $ | 2,034 | $ | 3,124 | $ | 145 | $ | (3,400 | ) | $ | — | $ | (131 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,464 | 30 | (1,045 | ) | — | 449 | 2,886 | 49 | (2,304 | ) | — | 631 | ||||||||||||||||||||||||||||
Amount | $ | 13,349 | $ | 273 | $ | (9,521 | ) | $ | — | $ | 4,101 | $ | 27,690 | $ | 470 | $ | (22,048 | ) | $ | — | $ | 6,112 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 215 | 212 | (2,329 | ) | — | (1,902 | ) | 2,212 | 603 | (5,607 | ) | — | (2,792 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,952 | $ | 1,931 | $ | (21,168 | ) | $ | — | $ | (17,285 | ) | $ | 21,156 | $ | 5,768 | $ | (52,447 | ) | $ | — | $ | (25,523 | ) |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 26 | $ | 233 | |||||
For the Year Ended October 31, 2008 | 49 | $ | 471 |
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7. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 9.21 | $ | 0.16 | $ | – | $ | (0.07 | ) | $ | 0.09 | $ | (0.17 | ) | $ | – | $ | – | $ | (0 .17 | ) | $ | (0 .08 | ) | $ | 9 .13 | 0 .94 | %(e) | $ | 65,314 | 0 .93 | %(f) | 0 .90 | %(f) | 0 .90 | %(f) | 3 .62 | %(f) | 27 | % | ||||||||||||||||||||||||||||||||
B | 9 .21 | 0.13 | – | (0.08 | ) | 0.05 | (0.13 | ) | – | – | (0.13 | ) | (0.08 | ) | 9.13 | 0.57 | (e) | 7,838 | 1 .81 | (f) | 1 .65 | (f) | 1 .65 | (f) | 2 .87 | (f) | – | |||||||||||||||||||||||||||||||||||||||||||||
C | 9 .21 | 0.13 | – | (0.07 | ) | 0.06 | (0.13 | ) | – | – | (0.13 | ) | (0.07 | ) | 9.14 | 0.68 | (e) | 30,625 | 1 .67 | (f) | 1 .65 | (f) | 1 .65 | (f) | 2 .88 | (f) | – | |||||||||||||||||||||||||||||||||||||||||||||
Y | 9 .19 | 0.18 | – | (0.07 | ) | 0.11 | (0.18 | ) | – | – | (0.18 | ) | (0.07 | ) | 9.12 | 1.22 | (e) | 89,459 | 0 .54 | (f) | 0 .54 | (f) | 0 .54 | (f) | 3 .99 | (f) | – | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.82 | 0.37 | – | (0.62 | ) | (0.25 | ) | (0.36 | ) | – | – | (0.36 | ) | (0.61 | ) | 9.21 | (2.60 | ) | 46,620 | 0.95 | 0.90 | 0.90 | 3.78 | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.82 | 0.29 | – | (0.61 | ) | (0.32 | ) | (0.29 | ) | – | – | (0.29 | ) | (0.61 | ) | 9.21 | (3.33 | ) | 5,846 | 1.84 | 1.65 | 1.65 | 3.06 | – | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.82 | 0.29 | – | (0.61 | ) | (0.32 | ) | (0.29 | ) | – | – | (0.29 | ) | (0.61 | ) | 9.21 | (3.33 | ) | 26,738 | 1.69 | 1.65 | 1.65 | 3.03 | – | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.81 | 0.40 | – | (0.63 | ) | (0.23 | ) | (0.39 | ) | – | – | (0.39 | ) | (0.62 | ) | 9.19 | (2.40 | ) | 107,669 | 0.58 | 0.58 | 0.58 | 4.11 | – | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.89 | 0.44 | – | (0.07 | ) | 0.37 | (0.44 | ) | – | – | (0.44 | ) | (0.07 | ) | 9.82 | 3.80 | 34,606 | 1.04 | 0.90 | 0.90 | 4.49 | 68 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.90 | 0.37 | – | (0.09 | ) | 0.28 | (0.36 | ) | – | – | (0.36 | ) | (0.08 | ) | 9.82 | 2.91 | 6,349 | 1.90 | 1.65 | 1.65 | 3.73 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.90 | 0.37 | – | (0.09 | ) | 0.28 | (0.36 | ) | – | – | (0.36 | ) | (0.08 | ) | 9.82 | 2.91 | 22,322 | 1.77 | 1.65 | 1.65 | 3.74 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.88 | 0.47 | – | (0.08 | ) | 0.39 | (0.46 | ) | – | – | (0.46 | ) | (0.07 | ) | 9.81 | 4.08 | 142,224 | 0.64 | 0.64 | 0.64 | 4.75 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.85 | 0.35 | – | 0.04 | 0.39 | (0.35 | ) | – | – | (0.35 | ) | 0.04 | 9.89 | 4.02 | 26,726 | 1.10 | 0.90 | 0.90 | 3.53 | 119 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.85 | 0.27 | – | 0.05 | 0.32 | (0.27 | ) | – | – | (0.27 | ) | 0.05 | 9.90 | 3.33 | 6,760 | 1.92 | 1.65 | 1.65 | 2.77 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.85 | 0.27 | – | 0.05 | 0.32 | (0.27 | ) | – | – | (0.27 | ) | 0.05 | 9.90 | 3.33 | 14,382 | 1.83 | 1.65 | 1.65 | 2.76 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.84 | 0.37 | – | 0.04 | 0.41 | (0.37 | ) | – | – | (0.37 | ) | 0.04 | 9.88 | 4.28 | 102,198 | 0.68 | 0.65 | 0.65 | 3.78 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.08 | 0.33 | – | (0.24 | ) | 0.09 | (0.32 | ) | – | – | (0.32 | ) | (0.23 | ) | 9.85 | 0.92 | 29,212 | 1.05 | 0.90 | 0.90 | 3.23 | 123 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.08 | 0.25 | – | (0.23 | ) | 0.02 | (0.25 | ) | – | – | (0.25 | ) | (0.23 | ) | 9.85 | 0.17 | 8,814 | 1.89 | 1.65 | 1.65 | 2.47 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.08 | 0.25 | – | (0.23 | ) | 0.02 | (0.25 | ) | – | – | (0.25 | ) | (0.23 | ) | 9.85 | 0.17 | 22,973 | 1.78 | 1.65 | 1.65 | 2.47 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.07 | 0.35 | – | (0.23 | ) | 0.12 | (0.35 | ) | – | – | (0.35 | ) | (0.23 | ) | 9.84 | 1.18 | 82,439 | 0.67 | 0.65 | 0.65 | 3.53 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.14 | 0.30 | – | (0.06 | ) | 0.24 | (0.30 | ) | – | – | (0.30 | ) | (0.06 | ) | 10.08 | 2.40 | 39,148 | 1.06 | 0.95 | 0.95 | 2.95 | 108 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.14 | 0.23 | – | (0.06 | ) | 0.17 | (0.23 | ) | – | – | (0.23 | ) | (0.06 | ) | 10.08 | 1.68 | 12,267 | 1.84 | 1.65 | 1.65 | 2.26 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.14 | 0.23 | – | (0.06 | ) | 0.17 | (0.23 | ) | – | – | (0.23 | ) | (0.06 | ) | 10.08 | 1.68 | 34,949 | 1.76 | 1.65 | 1.65 | 2.26 | – | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y(g) | 10.11 | 0.30 | – | (0.04 | ) | 0.26 | (0.30 | ) | – | – | (0.30 | ) | (0.04 | ) | 10.07 | 2.62 | (e) | 31,429 | 0.61 | (f) | 0.60 | (f) | 0.60 | (f) | 3.03 | (f) | – |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on November 28, 2003. |
22
Table of Contents
23
Table of Contents
Directors and Officers (Unaudited) — (continued)
24
Table of Contents
25
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,009.42 | $ | 4.48 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,005.66 | $ | 8.20 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,006.76 | $ | 8.20 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,012.22 | $ | 2.69 | $ | 1,000.00 | $ | 1,022.11 | $ | 2.70 | 0.54 | 181 | 365 |
26
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
23 | ||||
25 | ||||
27 | ||||
27 | ||||
28 |
Table of Contents
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Small Company A# | 7/22/96 | -35.10 | % | -0.07 | % | 1.76 | % | 5.46 | % | |||||||||||
Small Company A## | 7/22/96 | -38.67 | % | -1.20 | % | 1.19 | % | 4.99 | % | |||||||||||
Small Company B# | 7/22/96 | -35.42 | % | -0.75 | % | NA* | NA* | |||||||||||||
Small Company B## | 7/22/96 | -38.65 | % | -1.07 | % | NA* | NA* | |||||||||||||
Small Company C# | 7/22/96 | -35.54 | % | -0.81 | % | 1.04 | % | 4.72 | % | |||||||||||
Small Company C## | 7/22/96 | -36.18 | % | -0.81 | % | 1.04 | % | 4.72 | % | |||||||||||
Small Company I# | 7/22/96 | -35.00 | % | 0.06 | % | 1.83 | % | 5.51 | % | |||||||||||
Small Company R3# | 7/22/96 | -35.31 | % | 0.03 | % | 2.05 | % | 5.80 | % | |||||||||||
Small Company R4# | 7/22/96 | -35.09 | % | 0.19 | % | 2.14 | % | 5.87 | % | |||||||||||
Small Company R5# | 7/22/96 | -34.90 | % | 0.32 | % | 2.20 | % | 5.92 | % | |||||||||||
Small Company Y# | 7/22/96 | -34.78 | % | 0.40 | % | 2.24 | % | 5.96 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class I shares commenced operations on 8/31/06. Performance prior to 8/31/06 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Wellington Management Company, LLP | ||
Steven C. Angeli, CFA | Mario E. Abularach, CFA, CMT | |
Senior Vice President, Partner | Vice President | |
Stephen C. Mortimer | ||
Senior Vice President | ||
Hartford Investment Management Company | ||
Hugh Whelan, CFA | ||
Managing Director | ||
Kurt Cubbage, CFA | ||
Vice President |
- -2.75% return of the average fund in the Lipper Small Cap Growth Funds peer group, a group of funds with investment strategies similar to those of the Fund.
2
Table of Contents
Percentage of | ||||
Industry | Net Assets | |||
Automobiles & Components | 0.1 | % | ||
Banks | 0.7 | |||
Capital Goods | 10.5 | |||
Commercial & Professional Services | 2.8 | |||
Consumer Durables & Apparel | 5.2 | |||
Consumer Services | 6.7 | |||
Diversified Financials | 1.2 | |||
Energy | 6.2 | |||
Food & Staples Retailing | 1.3 | |||
Food, Beverage & Tobacco | 2.0 | |||
Health Care Equipment & Services | 9.7 | |||
Household & Personal Products | 0.4 | |||
Insurance | 1.9 | |||
Materials | 2.1 | |||
Media | 2.5 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 9.1 | |||
Real Estate | 1.9 | |||
Retailing | 5.0 | |||
Semiconductors & Semiconductor Equipment | 3.4 | |||
Software & Services | 12.2 | |||
Technology Hardware & Equipment | 7.5 | |||
Telecommunication Services | 2.4 | |||
Transportation | 3.0 | |||
Utilities | 0.2 | |||
Short-Term Investments | 2.1 | |||
Other Assets and Liabilities | (0.1 | ) | ||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 98.0% | ||||||||||||
Automobiles & Components - 0.1% | ||||||||||||
41 | Exide Technologies • | $ | 224 | |||||||||
24 | Fuel Systems Solutions, Inc. • | 371 | ||||||||||
595 | ||||||||||||
Banks - 0.7% | ||||||||||||
38 | Pinnacle Financial Partners, Inc. • | 673 | ||||||||||
122 | Signature Bank • | 3,325 | ||||||||||
3,998 | ||||||||||||
Capital Goods - 10.5% | ||||||||||||
25 | Acuity Brands, Inc. | 716 | ||||||||||
119 | Aecom Technology Corp. • | 3,073 | ||||||||||
29 | American Superconductor Corp. • | 745 | ||||||||||
115 | AMETEK, Inc. | 3,712 | ||||||||||
41 | Apogee Enterprises | 555 | ||||||||||
28 | Applied Signal Technology | 553 | ||||||||||
74 | Beacon Roofing Supply, Inc. • | 1,183 | ||||||||||
88 | Briggs & Stratton Corp. | 1,304 | ||||||||||
59 | Chart Industries, Inc. • | 813 | ||||||||||
25 | Clarcor, Inc. | 766 | ||||||||||
24 | Curtis-Wright Corp. | 767 | ||||||||||
3 | Dynamic Materials Corp. | 51 | ||||||||||
62 | EMCOR Group, Inc. • | 1,298 | ||||||||||
38 | Energy Conversion Devices, Inc. • | 699 | ||||||||||
55 | EnerSys• | 940 | ||||||||||
19 | ESCO Technologies, Inc. • | 796 | ||||||||||
144 | Force Protection, Inc. • | 1,094 | ||||||||||
142 | GrafTech International Ltd. • | 1,252 | ||||||||||
26 | Graham Corp. | 328 | ||||||||||
126 | GT Solar International, Inc. • | 893 | ||||||||||
28 | Heico Corp. | 807 | ||||||||||
34 | II-VI, Inc. • | 808 | ||||||||||
19 | Kaydon Corp. | 620 | ||||||||||
140 | Lennox International, Inc. | 4,456 | ||||||||||
75 | MasTec, Inc. • | 938 | ||||||||||
23 | Michael Baker Corp. • | 782 | ||||||||||
13 | Middleby Corp. • | 564 | ||||||||||
21 | Nordson Corp. | 758 | ||||||||||
84 | Orbital Sciences Corp. • | 1,294 | ||||||||||
28 | Orion Marine Group, Inc. • | 423 | ||||||||||
168 | Pall Corp. | 4,433 | ||||||||||
133 | Pentair, Inc. | 3,548 | ||||||||||
17 | Perini Corp. • | 300 | ||||||||||
49 | Regal-Beloit Corp. | 2,009 | ||||||||||
90 | Sterling Construction Co., Inc. • | 1,681 | ||||||||||
104 | Sunpower Corp. Class B • | 2,627 | ||||||||||
114 | Taser International, Inc. • | 549 | ||||||||||
155 | Teledyne Technologies, Inc. • | 4,936 | ||||||||||
20 | Titan Machinery, Inc. • | 205 | ||||||||||
31 | TransDigm Group, Inc. • | 1,078 | ||||||||||
15 | Trex Co., Inc. • | 168 | ||||||||||
30 | Wabtec Corp. | 1,146 | ||||||||||
23 | Watsco, Inc. | 973 | ||||||||||
64 | WESCO International, Inc. • | 1,668 | ||||||||||
58,309 | ||||||||||||
Commercial & Professional Services - 2.8% | ||||||||||||
16 | Administaff, Inc. | 430 | ||||||||||
67 | CBIZ, Inc. • | 525 | ||||||||||
— | CoStar Group, Inc. • | 10 | ||||||||||
37 | Geo Group, Inc. • | 618 | ||||||||||
43 | Healthcare Services Group, Inc. | 768 | ||||||||||
32 | Herman Miller, Inc. | 483 | ||||||||||
— | Huron Consulting Group, Inc. • | 2 | ||||||||||
88 | Knoll, Inc. | 626 | ||||||||||
10 | McGrath RentCorp. | 209 | ||||||||||
35 | Rollins, Inc. | 638 | ||||||||||
206 | Sykes Enterprises, Inc. • | 4,051 | ||||||||||
48 | Tetra Tech, Inc. • | 1,177 | ||||||||||
165 | Waste Connections, Inc. • | 4,266 | ||||||||||
31 | Watson Wyatt Worldwide, Inc. | 1,619 | ||||||||||
15,422 | ||||||||||||
Consumer Durables & Apparel - 5.2% | ||||||||||||
11 | Deckers Outdoor Corp. • | 611 | ||||||||||
230 | Gildan Activewear, Inc. • | 2,638 | ||||||||||
308 | Hanesbrands, Inc. • | 5,070 | ||||||||||
130 | Iconix Brand Group, Inc. • | 1,847 | ||||||||||
321 | Jarden Corp. • | 6,444 | ||||||||||
18 | Polaris Industries, Inc. | 591 | ||||||||||
87 | Pool Corp. | 1,552 | ||||||||||
80 | Smith & Wesson Holding Corp. • | 573 | ||||||||||
129 | Snap-On, Inc. | 4,359 | ||||||||||
55 | Tempur-Pedic International, Inc. | 705 | ||||||||||
36 | True Religion Apparel, Inc. • | 568 | ||||||||||
51 | Tupperware Brands Corp. | 1,286 | ||||||||||
47 | Warnaco Group, Inc. • | 1,355 | ||||||||||
40 | Wolverine World Wide, Inc. | 835 | ||||||||||
28,434 | ||||||||||||
Consumer Services - 6.7% | ||||||||||||
23 | American Public Education, Inc. • | 838 | ||||||||||
114 | Bally Technologies, Inc. • | 2,994 | ||||||||||
31 | BJ’s Restaurants, Inc. • | 519 | ||||||||||
25 | Buffalo Wild Wings, Inc. • | 980 | ||||||||||
157 | Burger King Holdings, Inc. | 2,568 | ||||||||||
53 | California Pizza Kitchen, Inc. • | 829 | ||||||||||
18 | Capella Education Co. • | 949 | ||||||||||
18 | CEC Entertainment, Inc. • | 553 | ||||||||||
69 | Cheesecake Factory, Inc. • | 1,195 | ||||||||||
68 | CKE Restaurants, Inc. | 647 | ||||||||||
122 | Coinstar, Inc. • | 4,326 | ||||||||||
447 | Corinthian Colleges, Inc. • | 6,880 | ||||||||||
24 | Cracker Barrel Old Country Store, Inc. | 777 | ||||||||||
11 | DineEquity, Inc. | 337 | ||||||||||
37 | Jack in the Box, Inc. • | 921 | ||||||||||
97 | Life Time Fitness, Inc. • | 1,812 | ||||||||||
24 | Lincoln Educational Services Corp. • | 402 | ||||||||||
— | Matthews International Corp. Class A | 8 | ||||||||||
31 | P. F. Chang’s China Bistro, Inc. • | 930 | ||||||||||
26 | Papa John’s International, Inc. • | 688 | ||||||||||
98 | Red Robin Gourmet Burgers, Inc. • | 2,414 | ||||||||||
8 | Steiner Leisure Ltd. • | 242 | ||||||||||
75 | Texas Roadhouse, Inc. • | 850 | ||||||||||
23 | Vail Resorts, Inc. • | 671 | ||||||||||
192 | Wendy’s/Arby’s Group, Inc. | 958 | ||||||||||
81 | WMS Industries, Inc. • | 2,593 | ||||||||||
36,881 | ||||||||||||
Diversified Financials - 1.2% | ||||||||||||
73 | Ezcorp, Inc. • | 906 | ||||||||||
34 | First Cash Financial Services, Inc. • | 559 | ||||||||||
1 | Greenhill & Co., Inc. | 91 | ||||||||||
89 | Knight Capital Group, Inc. • | 1,373 | ||||||||||
45 | Life Partners Holdings, Inc. | 850 | ||||||||||
35 | optionsXpress Holdings, Inc. | 581 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 98.0% — (continued) | ||||||||||||
Diversified Financials - 1.2% - (continued) | ||||||||||||
26 | Riskmetrics Group, Inc. • | $ | 447 | |||||||||
71 | Thinkorswim Group, Inc. • | 675 | ||||||||||
16 | World Acceptance Corp. • | 484 | ||||||||||
5,966 | ||||||||||||
Energy - 6.2% | ||||||||||||
121 | Arena Resources, Inc. • | 3,483 | ||||||||||
4 | ATP Oil & Gas Corp. • | 30 | ||||||||||
138 | Atwood Oceanics, Inc. • | 3,075 | ||||||||||
59 | Basic Energy Services, Inc. • | 601 | ||||||||||
77 | Cabot Oil & Gas Corp. | 2,328 | ||||||||||
36 | Carbo Ceramics, Inc. | 1,108 | ||||||||||
24 | Clayton Williams Energy, Inc. • | 718 | ||||||||||
318 | Complete Production Services, Inc. • | 2,125 | ||||||||||
40 | Comstock Resources, Inc. • | 1,392 | ||||||||||
44 | Concho Resources, Inc. • | 1,214 | ||||||||||
17 | Contango Oil & Gas Co. • | 648 | ||||||||||
33 | Dresser-Rand Group, Inc. • | 804 | ||||||||||
30 | Dril-Quip, Inc. • | 1,025 | ||||||||||
90 | Exco Resources, Inc. • | 1,066 | ||||||||||
30 | Goodrich Petroleum Corp. • | 684 | ||||||||||
74 | Helmerich & Payne, Inc. | 2,267 | ||||||||||
18 | Lufkin Industries, Inc. | 637 | ||||||||||
277 | Lundin Petroleum Ab. • | 1,799 | ||||||||||
67 | Matrix Service Co. • | 640 | ||||||||||
36 | NATCO Group, Inc. • | 871 | ||||||||||
20 | Nordic American Tanker Shipping | 660 | ||||||||||
8 | Penn Virginia Corp. | 106 | ||||||||||
30 | RPC, Inc. | 323 | ||||||||||
103 | St. Mary Land & Exploration Co. | 1,845 | ||||||||||
48 | T-3 Energy Services, Inc. • | 645 | ||||||||||
122 | USEC, Inc. • | 755 | ||||||||||
152 | Vaalco Energy, Inc. • | 723 | ||||||||||
179 | Wellstream Holdings plc | 1,363 | ||||||||||
110 | Willbros Group, Inc. • | 1,258 | ||||||||||
34,193 | ||||||||||||
Food & Staples Retailing - 1.3% | ||||||||||||
149 | BJ’s Wholesale Club, Inc. • | 4,974 | ||||||||||
20 | Pantry, Inc. • | 474 | ||||||||||
52 | Spartan Stores, Inc. | 840 | ||||||||||
76 | Winn-Dixie Stores, Inc. • | 870 | ||||||||||
7,158 | ||||||||||||
Food, Beverage & Tobacco - 2.0% | ||||||||||||
26 | Cal-Maine Foods, Inc. | 681 | ||||||||||
120 | Darling International, Inc. • | 688 | ||||||||||
24 | Diamond Foods, Inc. | 639 | ||||||||||
46 | Flowers Foods, Inc. | 1,056 | ||||||||||
24 | Green Mountain Coffee Roasters • | 1,718 | ||||||||||
29 | Lancaster Colony Corp. | 1,254 | ||||||||||
109 | Pepsi Bottling Group, Inc. • | 3,416 | ||||||||||
15 | Ralcorp Holdings, Inc. • | 873 | ||||||||||
48 | Vector Group Ltd. | 641 | ||||||||||
10,966 | ||||||||||||
Health Care Equipment & Services - 9.7% | ||||||||||||
84 | Align Technology, Inc. • | 1,041 | ||||||||||
160 | Allscripts Misys Healthcare Solution | 1,983 | ||||||||||
25 | Amedisys, Inc. • | 829 | ||||||||||
85 | American Medical Systems Holdings • | 1,055 | ||||||||||
24 | Athenahealth, Inc. • | 763 | ||||||||||
35 | Beckman Coulter, Inc. | 1,861 | ||||||||||
28 | Catalyst Health Solutions • | 641 | ||||||||||
37 | Centene Corp. • | 678 | ||||||||||
35 | Cerner Corp. • | 1,878 | ||||||||||
18 | Chemed Corp. | 757 | ||||||||||
1 | Computer Programs and Systems, Inc. | 31 | ||||||||||
79 | CryoLife, Inc. • | 428 | ||||||||||
58 | Cyberonics, Inc. • | 763 | ||||||||||
210 | Eclipsys Corp. • | 2,778 | ||||||||||
22 | Emergency Medical Services • | 771 | ||||||||||
23 | Genoptix, Inc. • | 671 | ||||||||||
21 | Haemonetics Corp. • | 1,102 | ||||||||||
174 | Health Net, Inc. • | 2,517 | ||||||||||
317 | HealthSouth Corp. • | 2,970 | ||||||||||
39 | HMS Holdings Corp. • | 1,166 | ||||||||||
23 | ICU Medical, Inc. • | 865 | ||||||||||
47 | Immucor, Inc. • | 772 | ||||||||||
158 | Inverness Medical Innovation, Inc. • | 5,106 | ||||||||||
4 | Landauer, Inc. | 194 | ||||||||||
38 | LHC Group, Inc. • | 859 | ||||||||||
55 | Masimo Corp. • | 1,595 | ||||||||||
54 | MedAssets, Inc. • | 929 | ||||||||||
34 | NuVasive, Inc. • | 1,290 | ||||||||||
61 | Omnicare, Inc. | 1,557 | ||||||||||
3 | Owens & Minor, Inc. | 89 | ||||||||||
47 | Phase Forward, Inc. • | 676 | ||||||||||
178 | SSL International plc | 1,251 | ||||||||||
57 | STERIS Corp. | 1,371 | ||||||||||
64 | Thoratec Corp. • | 1,873 | ||||||||||
102 | Varian Medical Systems, Inc. • | 3,396 | ||||||||||
30 | Vnus Medical Technologies • | 667 | ||||||||||
331 | Volcano Corp. • | 4,372 | ||||||||||
135 | Zoll Medical Corp. • | 2,169 | ||||||||||
53,714 | ||||||||||||
Household & Personal Products - 0.4% | ||||||||||||
225 | American Oriental Bioengineering, Inc. • | 953 | ||||||||||
15 | Chattem, Inc. • | 824 | ||||||||||
26 | China Sky One Medical, Inc. • | 363 | ||||||||||
2,140 | ||||||||||||
Insurance - 1.9% | ||||||||||||
85 | Allied World Assurance Holdings Ltd. | 3,148 | ||||||||||
59 | Arch Capital Group Ltd. • | 3,411 | ||||||||||
39 | eHealth, Inc. • | 747 | ||||||||||
5 | Employers Holdings, Inc. | 44 | ||||||||||
311 | Lancashire Holdings Ltd. • | 2,190 | ||||||||||
36 | Tower Group, Inc. | 975 | ||||||||||
10,515 | ||||||||||||
Materials - 2.1% | ||||||||||||
14 | Albemarle Corp. | 376 | ||||||||||
15 | Arch Chemicals, Inc. | 371 | ||||||||||
54 | Calgon Carbon Corp. • | 911 | ||||||||||
13 | Compass Minerals Group, Inc. | 620 | ||||||||||
71 | Eagle Materials, Inc. | 1,984 | ||||||||||
42 | FMC Corp. | 2,027 | ||||||||||
69 | Innophos Holdings, Inc. | 1,023 | ||||||||||
8 | Newmarket Corp. | 513 | ||||||||||
18 | Rock Tenn Co. Class A | 688 | ||||||||||
59 | Scotts Miracle-Gro Co. Class A | 1,996 | ||||||||||
19 | Silgan Holdings, Inc. | 874 | ||||||||||
11,383 | ||||||||||||
Media - 2.5% | ||||||||||||
128 | Discovery Communications, Inc. • | 2,426 |
5
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 98.0% — (continued) | ||||||||||||
Media - 2.5% — (continued) | ||||||||||||
20 | Dolan Media Co. • | $ | 240 | |||||||||
83 | DreamWorks Animation SKG, Inc. • | 1,987 | ||||||||||
142 | Interactive Data Corp. | 3,197 | ||||||||||
166 | Marvel Entertainment, Inc. • | 4,954 | ||||||||||
52 | National Cinemedia, Inc. | 753 | ||||||||||
13,557 | ||||||||||||
Pharmaceuticals, Biotechnology & Life Sciences - 9.1% | ||||||||||||
32 | Albany Molecular Research, Inc. • | 313 | ||||||||||
53 | Alexion Pharmaceuticals, Inc. • | 1,774 | ||||||||||
242 | Alkermes, Inc. • | 1,849 | ||||||||||
61 | Auxilium Pharmaceuticals, Inc. • | 1,407 | ||||||||||
14 | Bio-Rad Laboratories, Inc. Class A • | 991 | ||||||||||
343 | Celera Corp. • | 2,772 | ||||||||||
46 | Cephalon, Inc. • | 3,003 | ||||||||||
83 | Cougar Biotechnology, Inc. • | 2,891 | ||||||||||
176 | Cubist Pharmaceuticals, Inc. • | 2,916 | ||||||||||
37 | Dendreon Corp. • | 792 | ||||||||||
14 | Dionex Corp. • | 894 | ||||||||||
3 | Emergent Biosolutions, Inc. • | 35 | ||||||||||
91 | Enzon, Inc. • | 522 | ||||||||||
121 | eResearch Technology, Inc. • | 614 | ||||||||||
100 | Icon plc ADR • | 1,581 | ||||||||||
66 | Isis Pharmaceuticals, Inc. • | 1,036 | ||||||||||
108 | Life Technologies Corp. • | 4,010 | ||||||||||
1 | Luminex Corp. • | 17 | ||||||||||
74 | Martek Biosciences Corp. | 1,339 | ||||||||||
23 | Maxygen, Inc. • | 135 | ||||||||||
172 | Medicines Co. • | 1,713 | ||||||||||
83 | Medicis Pharmaceutical Corp. Class A | 1,334 | ||||||||||
86 | Myriad Genetics, Inc. • | 3,353 | ||||||||||
60 | NPS Pharmaceuticals, Inc. • | 209 | ||||||||||
98 | Onyx Pharmaceuticals, Inc. • | 2,532 | ||||||||||
114 | OSI Pharmaceuticals, Inc. • | 3,841 | ||||||||||
129 | PAREXEL International Corp. • | 1,279 | ||||||||||
120 | PDL Biopharma, Inc. | 855 | ||||||||||
179 | Questcor Pharmaceuticals • | 804 | ||||||||||
136 | Regeneron Pharmaceuticals, Inc. • | 1,802 | ||||||||||
13 | United Therapeutics Corp. • | 839 | ||||||||||
40 | Valeant Pharmaceuticals International. • | 670 | ||||||||||
58 | Vertex Pharmaceuticals, Inc. • | 1,791 | ||||||||||
49 | VIVUS, Inc. • | 197 | ||||||||||
50,110 | ||||||||||||
Real Estate - 1.9% | ||||||||||||
54 | AMB Property Corp. | 1,028 | ||||||||||
311 | Diamondrock Hospitality | 2,016 | ||||||||||
17 | Equity Lifestyle Properties, Inc. | 684 | ||||||||||
75 | LaSalle Hotel Properties | 893 | ||||||||||
73 | Regency Centers Corp. | 2,751 | ||||||||||
29 | Tanger Factory Outlet Center | 975 | ||||||||||
31 | Washington Real Estate Investment Trust | 652 | ||||||||||
81 | Weingarten Realty Investments | 1,263 | ||||||||||
10,262 | ||||||||||||
Retailing - 5.0% | ||||||||||||
113 | Advance Automotive Parts, Inc. | 4,956 | ||||||||||
232 | Aeropostale, Inc. • | 7,888 | ||||||||||
189 | American Eagle Outfitters, Inc. | 2,796 | ||||||||||
— | Cato Corp. | 8 | ||||||||||
1 | Christopher & Banks Corp. | 6 | ||||||||||
124 | Gymboree Corp. • | 4,272 | ||||||||||
105 | Lumber Liquidators, Inc. • | 1,576 | ||||||||||
33 | Netflix, Inc. • | 1,488 | ||||||||||
92 | OfficeMax, Inc. | 687 | ||||||||||
59 | PetMed Express, Inc. • | 958 | ||||||||||
24 | Tractor Supply Co. • | 973 | ||||||||||
109 | Urban Outfitters, Inc. • | 2,123 | ||||||||||
47 | Wet Seal, Inc. Class A • | 179 | ||||||||||
27,910 | ||||||||||||
Semiconductors & Semiconductor Equipment - 3.4% | ||||||||||||
219 | Atheros Communications, Inc. • | 3,776 | ||||||||||
15 | Cymer, Inc. • | 429 | ||||||||||
28 | Hittite Microwave Corp. • | 1,032 | ||||||||||
39 | Micrel, Inc. | 292 | ||||||||||
78 | Microsemi Corp. • | 1,044 | ||||||||||
29 | Netlogic Microsystems, Inc. • | 932 | ||||||||||
9 | NVE Corp. • | 355 | ||||||||||
901 | ON Semiconductor Corp. • | 4,882 | ||||||||||
155 | PMC — Sierra, Inc. • | 1,226 | ||||||||||
3 | Power Integrations, Inc. | 62 | ||||||||||
767 | RF Micro Devices, Inc. • | 1,618 | ||||||||||
57 | Semtech Corp. • | 828 | ||||||||||
164 | Skyworks Solutions, Inc. • | 1,453 | ||||||||||
37 | Ultratech Stepper, Inc. • | 506 | ||||||||||
18,435 | ||||||||||||
Software & Services - 12.2% | ||||||||||||
59 | ACI Worldwide, Inc. • | 1,021 | ||||||||||
34 | Advent Software, Inc. • | 1,117 | ||||||||||
83 | AsiaInfo Holdings, Inc. • | 1,392 | ||||||||||
28 | Blackbaud, Inc. | 430 | ||||||||||
32 | Blackboard, Inc. • | 1,097 | ||||||||||
39 | Concur Technologies, Inc. • | 1,066 | ||||||||||
42 | CSG Systems International, Inc. • | 606 | ||||||||||
48 | CyberSource Corp. • | 697 | ||||||||||
51 | DealerTrack Holdings, Inc. • | 773 | ||||||||||
26 | Digital River, Inc. • | 980 | ||||||||||
106 | Earthlink, Inc. • | 806 | ||||||||||
1 | EPIQ Systems, Inc. • | 16 | ||||||||||
75 | Equinix, Inc. • | 5,284 | ||||||||||
42 | Factset Research Systems, Inc. | 2,276 | ||||||||||
8 | Forrester Research, Inc. • | 203 | ||||||||||
76 | Gartner, Inc. Class A • | 1,027 | ||||||||||
98 | Informatica Corp. • | 1,555 | ||||||||||
58 | j2 Global Communications, Inc. • | 1,389 | ||||||||||
78 | Jack Henry & Associates, Inc. | 1,399 | ||||||||||
36 | Macrovision Solutions Corp. • | 737 | ||||||||||
41 | Manhattan Associates, Inc. • | 674 | ||||||||||
67 | McAfee, Inc. • | 2,517 | ||||||||||
38 | Mercadolibre, Inc. • | 1,048 | ||||||||||
195 | Micros Systems. • | 4,083 | ||||||||||
59 | Net 1 UEPS Technologies, Inc. • | 981 | ||||||||||
86 | Netscout Systems, Inc. • | 773 | ||||||||||
138 | Omniture, Inc. • | 1,696 | ||||||||||
86 | Parametric Technology Corp. • | 959 | ||||||||||
38 | Pegasystems, Inc. | 658 | ||||||||||
26 | Quality Systems | 1,380 | ||||||||||
266 | Red Hat, Inc. • | 4,590 | ||||||||||
75 | S1 Corp. • | 464 | ||||||||||
158 | Sapient Corp. • | 808 | ||||||||||
216 | Solera Holdings, Inc. • | 4,940 |
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 98.0% — (continued) | ||||||||||||
Software & Services - 12.2% — (continued) | ||||||||||||
1 | SonicWALL, Inc. • | $ | 8 | |||||||||
22 | SPSS, Inc. • | 688 | ||||||||||
59 | Sybase, Inc. • | 2,020 | ||||||||||
34 | Syntel, Inc. | 955 | ||||||||||
45 | Taleo Corp. Class A • | 545 | ||||||||||
137 | TiVo, Inc. • | 1,031 | ||||||||||
41 | Tyler Corp. • | 681 | ||||||||||
128 | VistaPrint Ltd. • | 4,382 | ||||||||||
89 | Vocus, Inc. • | 1,516 | ||||||||||
79 | Websense, Inc. • | 1,406 | ||||||||||
87 | Wind River Systems, Inc. • | 640 | ||||||||||
164 | Wright Express Corp. • | 3,744 | ||||||||||
67,058 | ||||||||||||
Technology Hardware & Equipment - 7.5% | ||||||||||||
35 | ADTRAN, Inc. | 742 | ||||||||||
61 | Bigband Networks, Inc. • | 356 | ||||||||||
84 | Cogent, Inc. • | 956 | ||||||||||
56 | Cognex Corp. | 785 | ||||||||||
51 | Cogo Group, Inc. • | 420 | ||||||||||
25 | Comtech Telecommunications Corp. • | 847 | ||||||||||
60 | Data Domain, Inc. • | 991 | ||||||||||
21 | DG Fastchannel, Inc. • | 498 | ||||||||||
128 | Harmonic, Inc. • | 940 | ||||||||||
6 | Interdigital, Inc. • | 164 | ||||||||||
559 | Jabil Circuit, Inc. | 4,524 | ||||||||||
199 | Logitech International S.A. • | 2,646 | ||||||||||
29 | Netezza Corp. • | 235 | ||||||||||
163 | Nice Systems Ltd. • | 4,187 | ||||||||||
41 | Novatel Wireless, Inc. • | 284 | ||||||||||
18 | Osi Systems, Inc. • | 339 | ||||||||||
233 | Plexus Corp. • | 5,163 | ||||||||||
283 | Polycom, Inc. • | 5,267 | ||||||||||
64 | Riverbed Technology, Inc. • | 1,178 | ||||||||||
31 | Scansource, Inc. • | 772 | ||||||||||
599 | Seagate Technology | 4,886 | ||||||||||
68 | Starent Networks Corp. • | 1,336 | ||||||||||
40 | Synaptics, Inc. • | 1,301 | ||||||||||
90 | Western Digital Corp. • | 2,123 | ||||||||||
40,940 | ||||||||||||
Telecommunication Services - 2.4% | ||||||||||||
39 | Alaska Communication Systems Holdings, Inc. | 237 | ||||||||||
28 | Cbeyond, Inc. • | 565 | ||||||||||
158 | Centennial Cellular Corp. Class A • | 1,306 | ||||||||||
13 | Consolidated Communications Holdings, Inc. | 151 | ||||||||||
69 | Iowa Telecommunications Services, Inc. | 903 | ||||||||||
288 | MetroPCS Communications, Inc. • | 4,924 | ||||||||||
40 | Neutral Tandem, Inc. • | 1,131 | ||||||||||
50 | NTELOS Holdings Corp. | 806 | ||||||||||
60 | Premiere Global Services, Inc. • | 628 | ||||||||||
25 | Shenandoah Telecommunications Co. | 490 | ||||||||||
69 | Syniverse Holdings, Inc. • | 868 | ||||||||||
132 | TW Telecom, Inc. • | 1,213 | ||||||||||
13,222 | ||||||||||||
Transportation - 3.0% | ||||||||||||
68 | Allegiant Travel Co. • | 3,540 | ||||||||||
186 | Heartland Express, Inc. | 2,777 | ||||||||||
181 | Hub Group, Inc. • | 4,157 | ||||||||||
145 | J.B. Hunt Transport Services, Inc. | 4,065 | ||||||||||
49 | Knight Transportation, Inc. | 865 | ||||||||||
33 | Localiza Rent a Car S.A. | 171 | ||||||||||
3 | Old Dominion Freight Line, Inc. • | 94 | ||||||||||
58 | Werner Enterprises, Inc. | 945 | ||||||||||
16,614 | ||||||||||||
Utilities - 0.2% | ||||||||||||
22 | ITC Holdings Corp. | 974 | ||||||||||
Total common stocks (cost $537,097) | $ | 538,756 | ||||||||||
Total long-term investments (cost $537,097) | $ | 538,756 | ||||||||||
SHORT-TERM INVESTMENTS - 2.1% | ||||||||||||
Repurchase Agreements - 2.0% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,165, collateralized by GNMA 4.50% — 6.50%, 2038 — 2039, value of $1,189) | ||||||||||||
$ | 1,165 | 0.18%, 04/30/2009 | $ | 1,165 | ||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $4,693, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $4,782) | �� | |||||||||||
4,693 | 0.15%, 04/30/2009 | 4,693 | ||||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,395, collateralized by FHLMC 4.50% — 6.50%, 2035 — 2039, FNMA 4.50% — 6.50%, 2034 — 2047, value of $1,423) | ||||||||||||
1,395 | 0.17%, 04/30/2009 | 1,395 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,949, collateralized by FHLMC 4.00% — 7.00%, 2021 — 2039, FNMA 6.00% — 7.00%, 2034 — 2038, GNMA 4.50% — 7.00%, 2024 — 2039, value of $1,988) | ||||||||||||
1,949 | 0.17%, 04/30/2009 | 1,949 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $7, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $7) | ||||||||||||
7 | 0.14%, 04/30/2009 | 7 | ||||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,313, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1,342) | ||||||||||||
1,313 | 0.13%, 04/30/2009 | 1,313 |
7
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
SHORT-TERM INVESTMENTS - 2.1% — (continued) | ||||||||||||
Repurchase Agreements - 2.0% — (continued) | ||||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $420, collateralized by FHLMC 8.00% — 15.00%, 2009 — 2021, FNMA 3.50% — 15.50%, 2012 — 2039, value of $429) | ||||||||||||
$ | 420 | 0.16%, 04/30/2009 | $ | 420 | ||||||||
10,942 | ||||||||||||
U.S. Treasury Bills - 0.1% | ||||||||||||
750 | 0.18%, 07/16/2009 ▢o | 750 | ||||||||||
Total short-term investments (cost $11,692) | $ | 11,692 | ||||||||||
Total investments (cost $548,789)▲ | 100.1 | % | $ | 550,448 | ||||||||
Other assets and liabilities | (0.1 | )% | (718 | ) | ||||||||
Total net assets | 100.0 | % | $ | 549,730 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 3.67% of total net assets at April 30, 2009. |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $557,844 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 51,195 | ||
Unrealized Depreciation | (58,591 | ) | ||
Net Unrealized Depreciation | $ | (7,396 | ) | |
• | Currently non-income producing. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
▢ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
Russell 2000 Mini | 78 | Long | Jun 2009 | $ | 393 | |||||||||||
* | The number of contracts does not omit 000’s. |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 532,153 | ||
Investment in securities — Level 2 | 18,295 | |||
Total | $ | 550,448 | ||
Other financial instruments — Level 1 * | $ | 393 | ||
Total | $ | 393 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
8
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $548,789) | $ | 550,448 | ||
Cash | 2,928 | |||
Receivables: | ||||
Investment securities sold | 32,921 | |||
Fund shares sold | 988 | |||
Dividends and interest | 144 | |||
Variation margin | 24 | |||
Other assets | 189 | |||
Total assets | 587,642 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 36,997 | |||
Fund shares redeemed | 588 | |||
Investment management fees | 72 | |||
Distribution fees | 20 | |||
Variation margin | 43 | |||
Accrued expenses | 192 | |||
Total liabilities | 37,912 | |||
Net assets | $ | 549,730 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 824,414 | |||
Accumulated net investment loss | (1,161 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (275,574 | ) | ||
Unrealized appreciation of investments and the translation of assets and liabilities denominated in foreign currency | 2,051 | |||
Net assets | $ | 549,730 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 12.15/$12.85 | ||
Shares outstanding | 20,226 | |||
Net assets | $ | 245,664 | ||
Class B: Net asset value per share | $ | 10.85 | ||
Shares outstanding | 1,535 | |||
Net assets | $ | 16,648 | ||
Class C: Net asset value per share | $ | 10.83 | ||
Shares outstanding | 3,310 | |||
Net assets | $ | 35,835 | ||
Class I: Net asset value per share | $ | 12.24 | ||
Shares outstanding | 880 | |||
Net assets | $ | 10,778 | ||
Class R3: Net asset value per share | $ | 12.86 | ||
Shares outstanding | 655 | |||
Net assets | $ | 8,421 | ||
Class R4: Net asset value per share | $ | 12.97 | ||
Shares outstanding | 2,016 | |||
Net assets | $ | 26,154 | ||
Class R5: Net asset value per share | $ | 13.06 | ||
Shares outstanding | 647 | |||
Net assets | $ | 8,449 | ||
Class Y: Net asset value per share | $ | 13.11 | ||
Shares outstanding | 15,089 | |||
Net assets | $ | 197,781 | ||
9
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 1,815 | ||
Interest | 12 | |||
Securities lending | 49 | |||
Less: Foreign tax withheld | (32 | ) | ||
Total investment income | 1,844 | |||
Expenses: | ||||
Investment management fees | 2,052 | |||
Transfer agent fees | 647 | |||
Distribution fees | ||||
Class A | 287 | |||
Class B | 84 | |||
Class C | 173 | |||
Class R3 | 12 | |||
Class R4 | 26 | |||
Custodian fees | 22 | |||
Accounting services | 40 | |||
Registration and filing fees | 58 | |||
Board of Directors’ fees | 4 | |||
Audit fees | 8 | |||
Other expenses | 119 | |||
Total expenses (before waivers and fees paid indirectly) | 3,532 | |||
Expense waivers | (287 | ) | ||
Transfer agent fee waivers | (199 | ) | ||
Commission recapture | (41 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (527 | ) | ||
Total expenses, net | 3,005 | |||
Net investment loss | (1,161 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (178,369 | ) | ||
Net realized loss on futures | (227 | ) | ||
Net realized loss on foreign currency transactions | (4 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (178,600 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments: | ||||
Net unrealized appreciation of investments | 140,757 | |||
Net unrealized appreciation of futures | 199 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | — | |||
Net Changes in Unrealized Appreciation of Investments and Other Financial Instruments | 140,956 | |||
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (37,644 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (38,805 | ) | |
10
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment loss | $ | (1,161 | ) | $ | (2,066 | ) | ||
Net realized loss on investments, other financial instruments and foreign currency transactions | (178,600 | ) | (94,199 | ) | ||||
Net unrealized appreciation (depreciation) of investments and other financial instruments | 140,956 | (215,903 | ) | |||||
Net decrease in net assets resulting from operations | (38,805 | ) | (312,168 | ) | ||||
Distributions to Shareholders: | ||||||||
From net realized gain on investments | ||||||||
Class A | — | (32,052 | ) | |||||
Class B | — | (6,169 | ) | |||||
Class C | — | (7,503 | ) | |||||
Class I | — | (439 | ) | |||||
Class R3 | — | (20 | ) | |||||
Class R4 | — | (1,013 | ) | |||||
Class R5 | — | (56 | ) | |||||
Class Y | — | (19,626 | ) | |||||
Total distributions | — | (66,878 | ) | |||||
Capital Share Transactions: | ||||||||
Class A | (7,307 | ) | 159,043 | |||||
Class B | (2,551 | ) | (8,767 | ) | ||||
Class C | (1,940 | ) | 12,119 | |||||
Class I | (11 | ) | 13,691 | |||||
Class R3 | 5,269 | 4,087 | ||||||
Class R4 | 8,497 | 18,065 | ||||||
Class R5 | 1,379 | 10,131 | ||||||
Class Y | 41,558 | 89,740 | ||||||
Net increase from capital share transactions | 44,894 | 298,109 | ||||||
Net increase (decrease) in net assets | 6,089 | (80,937 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 543,641 | 624,578 | ||||||
End of period | $ | 549,730 | $ | 543,641 | ||||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | (1,161 | ) | $ | — | |||
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April 30, 2009
(000’s Omitted)
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Small Company Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation - The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
12
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significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”) or Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts - The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the |
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counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | ||
i) | Fund Share Valuation and Dividend Distributions to Shareholders - Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
15
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April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
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Futures and Options Transactions - The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. | |||
At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 43,260 | $ | — | ||||
Long-Term Capital Gains * | 23,618 | 34,670 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Accumulated Capital Losses* | $ | (87,726 | ) | |
Unrealized Depreciation† | $ | (148,153 | ) | |
Total Accumulated Deficit | $ | (235,879 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $2,066, increase accumulated net realized gain by $50, and decrease paid in capital by $2,116. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 87,726 | ||
Total | $ | 87,726 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
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a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management and Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management and Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $250 million | 0.8500 | % | ||
On next $250 million | 0.8000 | % | ||
On next $500 million | 0.7500 | % | ||
On next $500 million | 0.7000 | % | ||
On next $3.5 billion | 0.6500 | % | ||
On next $5 billion | 0.6300 | % | ||
Over $10 billion | 0.6200 | % |
b) | Accounting Services Agreement - Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.016 | % | ||
On next $5 billion | 0.014 | % | ||
Over $10 billion | 0.012 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||||||||||||||||
1.40% | 2.15 | % | 2.15 | % | 1.15 | % | 1.65 | % | 1.35 | % | 1.05 | % | 1.00 | % |
d) | Fees Paid Indirectly - The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.28 | % | 1.38 | % | 1.39 | % | 1.37 | % | 1.35 | % | 1.40 | % | ||||||||||||
Class B Shares | 1.69 | 2.01 | 2.11 | 2.12 | 2.10 | 2.10 | ||||||||||||||||||
Class C Shares | 2.00 | 2.14 | 2.14 | 2.11 | 2.10 | 2.10 | ||||||||||||||||||
Class I Shares | 1.07 | 1.15 | 1.12 | 1.10 | * | |||||||||||||||||||
Class R3 Shares | 1.65 | 1.65 | 1.65 | † | ||||||||||||||||||||
Class R4 Shares | 1.31 | 1.28 | 1.36 | ‡ | ||||||||||||||||||||
Class R5 Shares | 1.05 | 0.99 | 1.10 | § | ||||||||||||||||||||
Class Y Shares | 0.91 | 0.88 | 0.90 | 0.91 | 0.92 | 0.94 |
* | From August 31, 2006 (commencement of operations), through October 31, 2006 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $182 and contingent deferred sales charges of $18 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $10. These commissions are in turn paid to sales representatives of the broker/dealers. |
20
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f) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $499 for providing such services. These fees are accrued daily and paid monthly. |
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | ||||||||||||
Payment from | ||||||||||||
Impact from | Affiliate for | Total Return | ||||||||||
Payment from | Trading | Excluding | ||||||||||
Affiliate for SEC | Reimbursements | Payment from | ||||||||||
Settlement for the | for the | Affiliate for the | ||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||
October 31, 2007 | October 31, 2007 | October 31, 2007 | ||||||||||
Class A | 0.16 | % | 0.22 | % | 23.41 | % | ||||||
Class B | 0.18 | 0.24 | 22.46 | |||||||||
Class C | 0.18 | 0.24 | 22.37 | |||||||||
Class I | 0.16 | 0.22 | 23.81 | |||||||||
Class R3 | — | 0.20 | 17.44 | |||||||||
Class R4 | — | 0.20 | 17.80 | |||||||||
Class R5 | — | 0.20 | 18.07 | |||||||||
Class Y | 0.16 | 0.20 | 23.99 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 522,579 | ||
Sales Proceeds Excluding U.S. Government Obligations | 478,751 |
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April 30, 2009 (Unaudited)
(000’s Omitted)
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 4,513 | — | (5,254 | ) | — | (741 | ) | 11,324 | 1,490 | (4,107 | ) | — | 8,707 | |||||||||||||||||||||||||||
Amount | $ | 51,251 | $ | — | $ | (58,558 | ) | $ | — | $ | (7,307 | ) | $ | 201,298 | $ | 30,285 | $ | (72,540 | ) | $ | — | $ | 159,043 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 82 | — | (341 | ) | — | (259 | ) | 203 | 317 | (1,083 | ) | — | (563 | ) | ||||||||||||||||||||||||||
Amount | $ | 831 | $ | — | $ | (3,382 | ) | $ | — | $ | (2,551 | ) | $ | 3,295 | $ | 5,795 | $ | (17,857 | ) | $ | — | $ | (8,767 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 434 | — | (652 | ) | — | (218 | ) | 1,097 | 366 | (787 | ) | — | 676 | |||||||||||||||||||||||||||
Amount | $ | 4,474 | $ | — | $ | (6,414 | ) | $ | — | $ | (1,940 | ) | $ | 17,871 | $ | 6,702 | $ | (12,454 | ) | $ | — | $ | 12,119 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 329 | — | (353 | ) | — | (24 | ) | 1,008 | 20 | (282 | ) | — | 746 | |||||||||||||||||||||||||||
Amount | $ | 3,822 | $ | — | $ | (3,833 | ) | $ | — | $ | (11 | ) | $ | 17,944 | $ | 406 | $ | (4,659 | ) | $ | — | $ | 13,691 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 592 | — | (152 | ) | — | 440 | 273 | 1 | (66 | ) | — | 208 | ||||||||||||||||||||||||||||
Amount | $ | 7,084 | $ | — | $ | (1,815 | ) | $ | — | $ | 5,269 | $ | 5,284 | $ | 20 | $ | (1,217 | ) | $ | — | $ | 4,087 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 910 | — | (205 | ) | — | 705 | 1,119 | 47 | (234 | ) | — | 932 | ||||||||||||||||||||||||||||
Amount | $ | 11,003 | $ | — | $ | (2,506 | ) | $ | — | $ | 8,497 | $ | 21,464 | $ | 1,013 | $ | (4,412 | ) | $ | — | $ | 18,065 | ||||||||||||||||||
Class R5 | �� | |||||||||||||||||||||||||||||||||||||||
Shares | 216 | — | (103 | ) | — | 113 | 595 | 3 | (87 | ) | — | 511 | ||||||||||||||||||||||||||||
Amount | $ | 2,617 | $ | — | $ | (1,238 | ) | $ | — | $ | 1,379 | $ | 11,698 | $ | 57 | $ | (1,624 | ) | $ | — | $ | 10,131 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 5,029 | — | (1,729 | ) | — | 3,300 | 4,810 | 901 | (1,388 | ) | — | 4,323 | ||||||||||||||||||||||||||||
Amount | $ | 61,795 | $ | (19 | ) | $ | (20,218 | ) | $ | — | $ | 41,558 | $ | 93,771 | $ | 19,626 | $ | (23,657 | ) | $ | — | $ | 89,740 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 116 | $ | 1,297 | |||||
For the Year Ended October 31, 2008 | 456 | $ | 8,432 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
22
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Ratio of Net | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | Investment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 13.09 | $ | (0.03 | ) | $ | — | $ | (0.91 | ) | $ | (0.94 | ) | $ | — | $ | — | $ | — | $ | — | $ | (0.94 | ) | $ | 12.15 | (7.18 | )%(e) | $ | 245,664 | 1.58 | %(f) | 1.29 | %(f) | 1.29 | %(f) | (0.53 | )%(f) | 95 | % | ||||||||||||||||||||||||||||||||
B | 11.71 | (0.05 | ) | — | (0.81 | ) | (0.86 | ) | — | — | — | — | (0.86 | ) | 10.85 | (7.34 | ) (e) | 16,648 | 2.67 | (f) | 1.70 | (f) | 1.70 | (f) | (0.94 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 11.71 | (0.07 | ) | — | (0.81 | ) | (0.88 | ) | — | — | — | — | (0.88 | ) | 10.83 | (7.51 | ) (e) | 35,835 | 2.36 | (f) | 2.01 | (f) | 2.01 | (f) | (1.25 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
I | 13.18 | (0.02 | ) | — | (0.92 | ) | (0.94 | ) | — | — | — | — | (0.94 | ) | 12.24 | (7.13 | ) (e) | 10,778 | 1.30 | (f) | 1.08 | (f) | 1.08 | (f) | (0.32 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R3 | 13.89 | (0.03 | ) | — | (1.00 | ) | (1.03 | ) | — | — | — | — | (1.03 | ) | 12.86 | (7.42 | ) (e) | 8,421 | 1.71 | (f) | 1.66 | (f) | 1.66 | (f) | (0.90 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4 | 13.98 | (0.03 | ) | — | (0.98 | ) | (1.01 | ) | — | — | — | — | (1.01 | ) | 12.97 | (7.22 | ) (e) | 26,154 | 1.32 | (f) | 1.32 | (f) | 1.32 | (f) | (0.56 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 14.06 | (0.02 | ) | — | (0.98 | ) | (1.00 | ) | — | — | — | — | (1.00 | ) | 13.06 | (7.11 | ) (e) | 8,449 | 1.09 | (f) | 1.06 | (f) | 1.06 | (f) | (0.30 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 14.10 | (0.01 | ) | — | (0.98 | ) | (0.99 | ) | — | — | — | — | (0.99 | ) | 13.11 | (6.96 | ) (e) | 197,781 | 0.92 | (f) | 0.92 | (f) | 0.92 | (f) | (0.17 | ) (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 24.46 | (0.06 | ) | — | (8.68 | ) | (8.74 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.37 | ) | 13.09 | (39.57 | ) | 274,412 | 1.39 | 1.39 | 1.39 | (0.39 | ) | 183 | ||||||||||||||||||||||||||||||||||||||||||||||
B | 22.30 | (0.20 | ) | — | (7.76 | ) | (7.96 | ) | — | (2.63 | ) | — | (2.63 | ) | (10.59 | ) | 11.71 | (39.95 | ) | 21,008 | 2.31 | 2.02 | 2.02 | (1.01 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 22.32 | (0.18 | ) | — | (7.80 | ) | (7.98 | ) | — | (2.63 | ) | — | (2.63 | ) | (10.61 | ) | 11.71 | (40.01 | ) | 41,294 | 2.15 | 2.15 | 2.15 | (1.14 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I | 24.55 | (0.02 | ) | — | (8.72 | ) | (8.74 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.37 | ) | 13.18 | (39.41 | ) | 11,912 | 1.19 | 1.15 | 1.15 | (0.15 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 25.83 | (0.07 | ) | — | (9.24 | ) | (9.31 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.94 | ) | 13.89 | (39.69 | ) | 2,990 | 1.66 | 1.65 | 1.65 | (0.68 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 25.91 | (0.03 | ) | — | (9.27 | ) | (9.30 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.93 | ) | 13.98 | (39.51 | ) | 18,332 | 1.29 | 1.29 | 1.29 | (0.29 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 25.97 | — | — | (9.28 | ) | (9.28 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.91 | ) | 14.06 | (39.32 | ) | 7,510 | 1.00 | 1.00 | 1.00 | (0.01 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 26.00 | 0.02 | — | (9.29 | ) | (9.27 | ) | — | (2.63 | ) | — | (2.63 | ) | (11.90 | ) | 14.10 | (39.23 | ) | 166,183 | 0.89 | 0.89 | 0.89 | 0.12 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 21.58 | (0.09 | ) | 0.07 | 4.77 | 4.75 | — | (1.87 | ) | — | (1.87 | ) | 2.88 | 24.46 | 23.88 | (g) | 299,819 | 1.41 | 1.40 | 1.40 | (0.44 | ) | 186 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 19.97 | (0.26 | ) | 0.10 | 4.36 | 4.20 | — | (1.87 | ) | — | (1.87 | ) | 2.33 | 22.30 | 22.97 | (g) | 52,549 | 2.28 | 2.12 | 2.12 | (1.16 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 20.00 | (0.23 | ) | 0.08 | 4.34 | 4.19 | — | (1.87 | ) | — | (1.87 | ) | 2.32 | 22.32 | 22.88 | (g) | 63,650 | 2.15 | 2.15 | 2.15 | (1.19 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 21.59 | (0.01 | ) | — | 4.84 | 4.83 | — | (1.87 | ) | — | (1.87 | ) | 2.96 | 24.55 | 24.28 | (g) | 3,886 | 1.12 | 1.12 | 1.12 | (0.16 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 21.95 | (0.07 | ) | — | 3.95 | 3.88 | — | — | — | — | 3.88 | 25.83 | 17.68 | (e) | 181 | 1.84 | (f) | 1.65 | (f) | 1.65 | (f) | (0.69 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 21.95 | (0.03 | ) | — | 3.99 | 3.96 | — | — | — | — | 3.96 | 25.91 | 18.04 | (e) | 9,809 | 1.34 | (f) | 1.34 | (f) | 1.34 | (f) | (0.54 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 21.95 | (0.01 | ) | — | 4.03 | 4.02 | — | — | — | — | 4.02 | 25.97 | 18.31 | (e) | 588 | 1.07 | (f) | 1.05 | (f) | 1.05 | (f) | (0.38 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 22.73 | 0.02 | 0.06 | 5.06 | 5.14 | — | (1.87 | ) | — | (1.87 | ) | 3.27 | 26.00 | 24.44 | (g) | 194,096 | 0.91 | 0.91 | 0.91 | 0.09 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 18.45 | (0.18 | ) | — | 3.31 | 3.13 | — | — | — | — | 3.13 | 21.58 | 16.96 | 194,656 | 1.48 | 1.40 | 1.40 | (0.87 | ) | 170 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 17.20 | (0.36 | ) | — | 3.13 | 2.77 | — | — | — | — | 2.77 | 19.97 | 16.10 | 52,036 | 2.32 | 2.15 | 2.15 | (1.62 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 17.22 | (0.32 | ) | — | 3.10 | 2.78 | — | — | — | — | 2.78 | 20.00 | 16.14 | 47,744 | 2.23 | 2.15 | 2.15 | (1.62 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
I(k) | 20.70 | (0.01 | ) | — | 0.90 | 0.89 | — | — | — | — | 0.89 | 21.59 | 4.30 | (e) | 69 | 1.38 | (f) | 1.15 | (f) | 1.15 | (f) | (0.58 | ) (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 19.33 | (0.06 | ) | — | 3.46 | 3.40 | — | — | — | — | 3.40 | 22.73 | 17.59 | 108,770 | 0.95 | 0.95 | 0.95 | (0.39 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 15.09 | (0.16 | ) | — | 3.52 | 3.36 | — | — | — | — | 3.36 | 18.45 | 22.27 | 159,577 | 1.57 | 1.40 | 1.40 | (0.88 | ) | 104 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 14.17 | (0.29 | ) | — | 3.32 | 3.03 | — | — | — | — | 3.03 | 17.20 | 21.38 | 56,664 | 2.39 | 2.15 | 2.15 | (1.63 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 14.19 | (0.29 | ) | — | 3.32 | 3.03 | — | — | — | — | 3.03 | 17.22 | 21.35 | 44,564 | 2.30 | 2.15 | 2.15 | (1.63 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 15.74 | (0.07 | ) | — | 3.66 | 3.59 | — | — | — | — | 3.59 | 19.33 | 22.81 | 43,274 | 0.97 | 0.97 | 0.97 | (0.43 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.28 | (0.18 | ) | — | 0.99 | 0.81 | — | — | — | — | 0.81 | 15.09 | 5.67 | 156,278 | 1.62 | 1.45 | 1.45 | (1.15 | ) | 142 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 13.51 | (0.27 | ) | — | 0.93 | 0.66 | — | — | — | — | 0.66 | 14.17 | 4.88 | 58,438 | 2.40 | 2.15 | 2.15 | (1.85 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.52 | (0.28 | ) | — | 0.95 | 0.67 | — | — | — | — | 0.67 | 14.19 | 4.96 | 49,327 | 2.30 | 2.15 | 2.15 | (1.85 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.83 | (0.06 | ) | — | 0.97 | 0.91 | — | — | — | — | 0.91 | 15.74 | 6.14 | 15,731 | 0.99 | 0.99 | 0.99 | (0.71 | ) | — |
23
Table of Contents
April 30, 2009 (Unaudited)
(000’s Omitted)
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on August 31, 2006. |
24
Table of Contents
25
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
26
Table of Contents
27
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 928.18 | $ | 6.16 | $ | 1,000.00 | $ | 1,018.39 | $ | 6.45 | 1.29 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 926.55 | $ | 8.12 | $ | 1,000.00 | $ | 1,016.36 | $ | 8.49 | 1.70 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 924.85 | $ | 9.59 | $ | 1,000.00 | $ | 1,014.82 | $ | 10.04 | 2.01 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 928.67 | $ | 5.16 | $ | 1,000.00 | $ | 1,019.43 | $ | 5.40 | 1.08 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 925.84 | $ | 7.92 | $ | 1,000.00 | $ | 1,016.56 | $ | 8.30 | 1.66 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 927.75 | $ | 6.30 | $ | 1,000.00 | $ | 1,018.24 | $ | 6.60 | 1.32 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 928.87 | $ | 5.06 | $ | 1,000.00 | $ | 1,019.53 | $ | 5.30 | 1.06 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 930.44 | $ | 4.40 | $ | 1,000.00 | $ | 1,020.23 | $ | 4.60 | 0.92 | 181 | 365 |
28
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
21 | ||||
22 | ||||
24 | ||||
24 | ||||
25 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | 10 | Since | ||||||||||||||||
Date | Year | Year | Year | Inception | ||||||||||||||||
Stock A# | 7/22/96 | -36.65 | % | -4.03 | % | -3.78 | % | 3.27 | % | |||||||||||
Stock A## | 7/22/96 | -40.13 | % | -5.11 | % | -4.32 | % | 2.82 | % | |||||||||||
Stock B# | 7/22/96 | -37.31 | % | -4.90 | % | NA* | NA* | |||||||||||||
Stock B## | 7/22/96 | -40.44 | % | -5.28 | % | NA* | NA* | |||||||||||||
Stock C# | 7/22/96 | -37.34 | % | -4.82 | % | -4.48 | % | 2.53 | % | |||||||||||
Stock C## | 7/22/96 | -37.96 | % | -4.82 | % | -4.48 | % | 2.53 | % | |||||||||||
Stock I# | 7/22/96 | -36.58 | % | -4.01 | % | -3.77 | % | 3.28 | % | |||||||||||
Stock R3# | 7/22/96 | -36.99 | % | -3.94 | % | -3.48 | % | 3.63 | % | |||||||||||
Stock R4# | 7/22/96 | -36.79 | % | -3.80 | % | -3.41 | % | 3.69 | % | |||||||||||
Stock R5# | 7/22/96 | -36.59 | % | -3.66 | % | -3.34 | % | 3.74 | % | |||||||||||
Stock Y# | 7/22/96 | -36.57 | % | -3.62 | % | -3.32 | % | 3.76 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable | |
* | 10 year and inception returns are not applicable for Class B because after 8 years Class B converts to Class A. |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. | |
(4) | Class C shares commenced operations on 7/31/98. Performance prior to 7/31/98 reflects Class B performance less Class C sales charges where applicable. Class I shares commenced operations on 5/30/08. Performance prior to 5/30/08 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. |
Portfolio Managers | ||
Steven T. Irons, CFA | Peter I. Higgins, CFA | |
Senior Vice President, Partner | Senior Vice President, Partner |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 3.6 | % | ||
Capital Goods | 7.9 | |||
Commercial & Professional Services | 0.5 | |||
Diversified Financials | 10.5 | |||
Energy | 13.9 | |||
Food & Staples Retailing | 5.2 | |||
Food, Beverage & Tobacco | 3.6 | |||
Health Care Equipment & Services | 3.4 | |||
Household & Personal Products | 1.0 | |||
Insurance | 0.6 | |||
Materials | 1.8 | |||
Media | 4.6 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 8.4 | |||
Real Estate | 0.7 | |||
Retailing | 5.7 | |||
Semiconductors & Semiconductor Equipment | 4.3 | |||
Software & Services | 6.4 | |||
Technology Hardware & Equipment | 9.9 | |||
Telecommunication Services | 1.5 | |||
Transportation | 3.5 | |||
Utilities | 1.3 | |||
Short-Term Investments | 0.2 | |||
Other Assets and Liabilities | 1.5 | |||
Total | 100.0 | % | ||
3
Table of Contents
April 30, 2009 (Unaudited)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.3% | ||||||||
Banks — 3.6% | ||||||||
49 | PNC Financial Services Group, Inc. | $ | 1,961 | |||||
100 | Standard Chartered plc | 1,543 | ||||||
766 | Washington Mutual, Inc. private placement ⌂ † | 76 | ||||||
525 | Wells Fargo & Co. | 10,505 | ||||||
14,085 | ||||||||
Capital Goods — 7.9% | ||||||||
83 | Cummins, Inc. | 2,815 | ||||||
32 | Danaher Corp. | 1,870 | ||||||
92 | Deere & Co. | 3,812 | ||||||
15 | First Solar, Inc.Ÿ | 2,809 | ||||||
513 | General Electric Co. | 6,487 | ||||||
96 | Honeywell International, Inc. | 2,984 | ||||||
113 | Illinois Tool Works, Inc. | 3,697 | ||||||
40 | Lockheed Martin Corp. | 3,149 | ||||||
49 | Siemens AG ADR | 3,286 | ||||||
30,909 | ||||||||
Commercial & Professional Services — 0.5% | ||||||||
139 | Monster Worldwide, Inc.Ÿ | 1,913 | ||||||
Diversified Financials — 10.5% | ||||||||
110 | Ameriprise Financial, Inc. | 2,893 | ||||||
543 | Bank of America Corp. | 4,852 | ||||||
412 | Discover Financial Services, Inc. | 3,353 | ||||||
71 | Goldman Sachs Group, Inc. | 9,098 | ||||||
185 | Invesco Ltd. | 2,730 | ||||||
363 | JP Morgan Chase & Co. | 11,989 | ||||||
428 | UBS AG ADR Ÿ | 5,832 | ||||||
40,747 | ||||||||
Energy — 13.9% | ||||||||
94 | Cameco Corp. | 2,142 | ||||||
25 | Canadian Natural Resources Ltd. ADR | 1,130 | ||||||
20 | Chevron Corp. | 1,348 | ||||||
81 | EOG Resources, Inc. | 5,135 | ||||||
197 | Exxon Mobil Corp. | 13,114 | ||||||
109 | Hess Corp. | 5,950 | ||||||
73 | Marathon Oil Corp. | 2,171 | ||||||
242 | OAO Gazprom Class S ADR | 4,326 | ||||||
58 | Occidental Petroleum Corp. | 3,242 | ||||||
49 | Petro-Canada | 1,536 | ||||||
111 | Petroleo Brasileiro S.A. ADR | 3,709 | ||||||
110 | Schlumberger Ltd. | 5,399 | ||||||
96 | Suncor Energy, Inc. ADR | 2,435 | ||||||
63 | XTO Energy, Inc. | 2,184 | ||||||
53,821 | ||||||||
Food & Staples Retailing — 5.2% | ||||||||
61 | Costco Wholesale Corp. | 2,940 | ||||||
81 | Kroger Co. | 1,743 | ||||||
147 | Safeway, Inc. | 2,897 | ||||||
184 | Supervalu, Inc. | 3,015 | ||||||
141 | Walgreen Co. | 4,425 | ||||||
102 | Wal-Mart Stores, Inc. | 5,141 | ||||||
20,161 | ||||||||
Food, Beverage & Tobacco — 3.6% | ||||||||
58 | General Mills, Inc. | 2,950 | ||||||
191 | PepsiCo, Inc. | 9,499 | ||||||
92 | Unilever N.V. NY Shares ADR | 1,815 | ||||||
14,264 | ||||||||
Health Care Equipment & Services — 3.4% | ||||||||
18 | Intuitive Surgical, Inc.Ÿ | 2,558 | ||||||
121 | Medtronic, Inc. | 3,878 | ||||||
108 | UnitedHealth Group, Inc. | 2,535 | ||||||
61 | Varian Medical Systems, Inc.Ÿ | 2,019 | ||||||
44 | Zimmer Holdings, Inc.Ÿ | 1,936 | ||||||
12,926 | ||||||||
Household & Personal Products — 1.0% | ||||||||
76 | Procter & Gamble Co. | 3,738 | ||||||
Insurance — 0.6% | ||||||||
55 | ACE Ltd. | 2,531 | ||||||
Materials — 1.8% | ||||||||
138 | Cliff’s Natural Resources, Inc. | 3,171 | ||||||
47 | Potash Corp. of Saskatchewan, Inc. | 4,039 | ||||||
7,210 | ||||||||
Media — 4.6% | ||||||||
633 | Comcast Corp. Class A | 9,783 | ||||||
175 | Time Warner, Inc. | 3,814 | ||||||
222 | Viacom, Inc. Class BŸ | 4,278 | ||||||
17,875 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 8.4% | ||||||||
181 | Daiichi Sankyo Co., Ltd. | 3,023 | ||||||
465 | Elan Corp. plc ADR Ÿ | 2,746 | ||||||
84 | Eli Lilly & Co. | 2,765 | ||||||
108 | Merck & Co., Inc. | 2,613 | ||||||
436 | Pfizer, Inc. | 5,820 | ||||||
179 | Schering-Plough Corp. | 4,128 | ||||||
239 | Shionogi & Co., Ltd. | 4,114 | ||||||
66 | UCB S.A. | 1,802 | ||||||
107 | Vertex Pharmaceuticals, Inc.Ÿ | 3,310 | ||||||
58 | Wyeth | 2,459 | ||||||
32,780 | ||||||||
Real Estate — 0.7% | ||||||||
49 | Kimco Realty Corp. | 584 | ||||||
40 | Simon Property Group, Inc. | 2,085 | ||||||
2,669 | ||||||||
Retailing — 5.7% | ||||||||
64 | Best Buy Co., Inc. | 2,472 | ||||||
2,495 | Buck Holdings L.P.⌂Ÿ† | 4,439 | ||||||
55 | Kohl’s Corp.Ÿ | 2,490 | ||||||
241 | Lowe’s Co., Inc. | 5,171 | ||||||
107 | Nordstrom, Inc. | 2,430 | ||||||
256 | Staples, Inc. | 5,274 | ||||||
22,276 | ||||||||
Semiconductors & Semiconductor Equipment — 4.3% | ||||||||
216 | Applied Materials, Inc. | 2,636 | ||||||
84 | Intel Corp. | 1,331 | ||||||
89 | Lam Research Corp.Ÿ | 2,473 | ||||||
396 | Maxim Integrated Products, Inc. | 5,367 | ||||||
271 | Texas Instruments, Inc. | 4,896 | ||||||
16,703 | ||||||||
Software & Services — 6.4% | ||||||||
101 | Accenture Ltd. Class A | 2,972 | ||||||
12 | Google, Inc.Ÿ | 4,791 | ||||||
544 | Microsoft Corp. | 11,029 | ||||||
90 | Oracle Corp.Ÿ | 1,735 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS - 98.3% — (continued) | ||||||||||||
Software & Services - 6.4% — (continued) | ||||||||||||
253 | Western Union Co. | $ | 4,238 | |||||||||
24,765 | ||||||||||||
Technology Hardware & Equipment — 9.9% | ||||||||||||
57 | Apple, Inc.Ÿ | 7,109 | ||||||||||
651 | Cisco Systems, Inc.Ÿ | 12,570 | ||||||||||
130 | Corning, Inc. | 1,899 | ||||||||||
464 | Flextronics International Ltd.Ÿ | 1,800 | ||||||||||
104 | Hewlett-Packard Co. | 3,749 | ||||||||||
145 | NetApp, Inc.Ÿ | 2,650 | ||||||||||
196 | Qualcomm, Inc. | 8,303 | ||||||||||
38,080 | ||||||||||||
Telecommunication Services — 1.5% | ||||||||||||
69 | AT&T, Inc. | 1,755 | ||||||||||
245 | MetroPCS Communications, Inc.Ÿ | 4,192 | ||||||||||
5,947 | ||||||||||||
Transportation — 3.5% | ||||||||||||
652 | Delta Air Lines, Inc.Ÿ | 4,023 | ||||||||||
76 | FedEx Corp. | 4,253 | ||||||||||
104 | United Parcel Service, Inc. Class B | 5,438 | ||||||||||
13,714 | ||||||||||||
Utilities — 1.3% | ||||||||||||
106 | Exelon Corp. | 4,881 | ||||||||||
Total common stocks (cost $484,210) | $ | 381,995 | ||||||||||
WARRANTS - 0.0% | ||||||||||||
Banks 0.0% | ||||||||||||
96 | Washington Mutual, Inc. Private Placement ⌂Ÿ † | $ | — | |||||||||
Total warrants (cost $—) | $ | — | ||||||||||
Total long-term investments (cost $484,210) | $ | 381,995 | ||||||||||
SHORT-TERM INVESTMENTS — 0.2% | ||||||||||||
Repurchase Agreements — 0.2% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $158, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $161) | ||||||||||||
$ | 157 | 0.18%, 04/30/2009 | $ | 157 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $189, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $193) | ||||||||||||
189 | 0.17%, 04/30/2009 | 189 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $264, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $269) | ||||||||||||
264 | 0.17%, 04/30/2009 | 264 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1) | ||||||||||||
1 | 0.14%, 04/30/2009 | 1 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $57, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $58) | ||||||||||||
57 | 0.16%, 04/30/2009 | 57 | ||||||||||
668 | ||||||||||||
Total short-term investments (cost $668) | $ | 668 | ||||||||||
Total investments (cost $484,878) ▲ | 98 .5 | % | $ | 382,663 | ||||||||
Other assets and liabilities | 1.5 | % | 5,958 | |||||||||
Total net assets | 100.0 | % | $ | 388,621 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 11.19% of total net assets at April 30, 2009. | |
Foreign securities that are principally traded on certain foreign markets are adjusted daily pursuant to a third party pricing service methodology approved by the Board of Directors in order to reflect an adjustment for factors occurring after the close of the foreign market but before the close of the New York Stock Exchange. | ||
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $505,728 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 17,288 | ||
Unrealized Depreciation | (140,353 | ) | ||
Net Unrealized Depreciation | $ | (123,065 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $4,515, which represents 1.16% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. |
• | Currently non-income producing. |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
06/2007 | 2,495 | Buck Holdings L.P. | $ | 2,497 | ||||||||
04/2008 | 766 | Washington Mutual, Inc. Private Placement | 6,700 | |||||||||
04/2008 | 96 | Washington Mutual, Inc. Private Placement Warrants | — |
Unrealized | ||||||||||||||
Market | Contract | Delivery | Appreciation/ | |||||||||||
Description | Value ╪ | Amount | Date | (Depreciation) | ||||||||||
British Pound (Sell) | $ | 44 | $ | 44 | 05/06/09 | $ | — | |||||||
Euro (Sell) | 51 | 51 | 05/06/09 | — | ||||||||||
$ | — | |||||||||||||
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 366,998 | ||
Investment in securities — Level 2 | 11,150 | |||
Investment in securities — Level 3 | 4,515 | |||
Total | $ | 382,663 | ||
Assets: | ||||
Securities: | ||||
Balance as of October 31, 2008 | $ | 2,423 | ||
Change in unrealized appreciation w | 2,092 | |||
Balance as of April 30, 2009 | $ | 4,515 | ||
w Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | 2,092 | ||
6
Table of Contents
April 30, 2009
(Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $484,878) | $ | 382,663 | ||
Cash | 1 | |||
Unrealized appreciation on forward foreign currency contracts | — | |||
Receivables: | ||||
Investment securities sold | 12,949 | |||
Dividends and interest | 504 | |||
Other assets | 223 | |||
Total assets | 396,340 | |||
Liabilities: | ||||
Unrealized depreciation on forward foreign currency contracts | — | |||
Bank overdraft — foreign cash | — | |||
Payables: | ||||
Investment securities purchased | 6,643 | |||
Fund shares redeemed | 648 | |||
Investment management fees | 47 | |||
Distribution fees | 27 | |||
Accrued expenses | 354 | |||
Total liabilities | 7,719 | |||
Net assets | $ | 388,621 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 896,854 | |||
Accumulated distribution in excess of net investment income | (1,293 | ) | ||
Accumulated net realized loss on investments and foreign currency transactions | (404,725 | ) | ||
Unrealized depreciation of investments | (102,215 | ) | ||
Net assets | $ | 388,621 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 13.32/$14.09 | ||
Shares outstanding | 20,371 | |||
Net assets | $ | 271,325 | ||
Class B: Net asset value per share | $ | 12.40 | ||
Shares outstanding | 3,455 | |||
Net assets | $ | 42,831 | ||
Class C: Net asset value per share | $ | 12.46 | ||
Shares outstanding | 4,544 | |||
Net assets | $ | 56,615 | ||
Class I: Net asset value per share | $ | 13.25 | ||
Shares outstanding | 10 | |||
Net assets | $ | 131 | ||
Class R3: Net asset value per share | $ | 13.77 | ||
Shares outstanding | 2 | |||
Net assets | $ | 27 | ||
Class R4: Net asset value per share | $ | 13.81 | ||
Shares outstanding | 1 | |||
Net assets | $ | 15 | ||
Class R5: Net asset value per share | $ | 13.82 | ||
Shares outstanding | — | |||
Net assets | $ | 6 | ||
Class Y: Net asset value per share | $ | 13.82 | ||
Shares outstanding | 1,279 | |||
Net assets | $ | 17,671 | ||
7
Table of Contents
For the Six Month Period Ended April 30, 2009 (Unaudited)
Investment Income: | ||||
Dividends | $ | 4,709 | ||
Interest | 1 | |||
Securities lending | 62 | |||
Less: Foreign tax withheld | (89 | ) | ||
Total investment income | 4,683 | |||
Expenses: | ||||
Investment management fees | 1,418 | |||
Transfer agent fees | 1,203 | |||
Distribution fees | ||||
Class A | 320 | |||
Class B | 224 | |||
Class C | 274 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 11 | |||
Accounting services | 27 | |||
Registration and filing fees | 54 | |||
Board of Directors’ fees | 7 | |||
Audit fees | 13 | |||
Other expenses | 123 | |||
Total expenses (before waivers and fees paid indirectly) | 3,674 | |||
Expense waivers | (701 | ) | ||
Transfer agent fee waivers | (672 | ) | ||
Commission recapture | (14 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (1,387 | ) | ||
Total expenses, net | 2,287 | |||
Net investment income | 2,396 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (152,816 | ) | ||
Net realized gain on futures | 463 | |||
Net realized gain on foreign currency transactions | 3,311 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (149,042 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 134,651 | |||
Net unrealized depreciation on translation of other assets and liabilities in foreign currencies | (3,293 | ) | ||
Net Changes in Unrealized Appreciation of Investments and Foreign Currency Transactions | 131,358 | |||
Net Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (17,684 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (15,288 | ) | |
8
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,396 | $ | 2,741 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (149,042 | ) | (106,097 | ) | ||||
Net unrealized appreciation (depreciation) of investments and foreign currency transactions | 131,358 | (311,566 | ) | |||||
Net decrease in net assets resulting from operations | (15,288 | ) | (414,922 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (5,545 | ) | (726 | ) | ||||
Class B | (142 | ) | — | |||||
Class C | (396 | ) | — | |||||
Class I | (4 | ) | — | |||||
Class R3 | — | — | ||||||
Class R4 | (1 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (412 | ) | (469 | ) | ||||
Total distributions | (6,500 | ) | (1,195 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (23,705 | ) | (95,535 | ) | ||||
Class B | (12,101 | ) | (55,794 | ) | ||||
Class C | (7,557 | ) | (24,459 | ) | ||||
Class I | 85 | 100 | ||||||
Class R3 | 6 | (4 | ) | |||||
Class R4 | (14 | ) | 10 | |||||
Class Y | (27,846 | ) | 13,830 | |||||
Net decrease from capital share transactions | (71,132 | ) | (161,852 | ) | ||||
Net decrease in net assets | (92,920 | ) | (577,969 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 481,541 | 1,059,510 | ||||||
End of period | $ | 388,621 | $ | 481,541 | ||||
Accumulated undistributed (distribution in excess of) net investment income | $ | (1,293 | ) | $ | 2,811 | |||
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April 30, 2009 (Unaudited)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Stock Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. |
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The |
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circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. |
c) | Foreign Currency Transactions — The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
d) | Securities Lending — The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | ||
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | |||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. |
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i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
j) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
k) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
m) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
n) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The |
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Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 1,195 | $ | 4,121 |
Amount | ||||
Undistributed Ordinary Income | $ | 6,075 | ||
Accumulated Capital Losses* | $ | (234,833 | ) | |
Unrealized Depreciation† | $ | (257,687 | ) | |
Total Accumulated Deficit | $ | (486,445 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $86 and decrease accumulated net realized loss by $86. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2011 | $ | 138,221 | ||
2016 | 96,612 | |||
Total | $ | 234,833 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment advisory services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.7500 | % | ||
On next $500 million | 0.7000 | % | ||
On next $4 billion | 0.6500 | % | ||
On next $5 billion | 0.6475 | % | ||
Over $10 billion | 0.6450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
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c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||
1.25% | NA | NA | 1.00% | 1.50% | 1.20% | 0.90% | NA |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.87 | % | 1.17 | % | 1.27 | % | 1.26 | % | 1.31 | % | 1.42 | % | ||||||||||||
Class B Shares | 2.17 | 2.08 | 2.10 | 2.10 | 2.21 | 2.18 | ||||||||||||||||||
Class C Shares | 2.17 | 2.05 | 1.97 | 2.01 | 2.07 | 2.03 | ||||||||||||||||||
Class I Shares | 0.91 | 0.76 | * | |||||||||||||||||||||
Class R3 Shares | 1.50 | 1.50 | 1.51 | † | ||||||||||||||||||||
Class R4 Shares | 1.20 | 1.20 | 1.19‡ | |||||||||||||||||||||
Class R5 Shares | 0.90 | 0.88 | 0.92§ | |||||||||||||||||||||
Class Y Shares | 0.86 | 0.78 | 0.75 | 0.76 | 0.82 | 0.80 |
* | From May 30, 2008 (commencement of operations), through October 31, 2008 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $136 and contingent deferred sales charges of $32 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $10. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $655 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Impact from | Total Return | |||||||
Payment from | Excluding | |||||||
Affiliate for SEC | Payment from | |||||||
Settlement for the | Affiliate for the | |||||||
Year Ended | Year Ended | |||||||
October 31, 2007 | October 31, 2007 | |||||||
Class A | 0.13 | % | 16.67 | % | ||||
Class B | 0.14 | 15.72 | ||||||
Class C | 0.14 | 15.86 | ||||||
Class Y | 0.12 | 17.31 |
5. | Affiliate Holdings: |
Shares | ||||
Class I | 5 | |||
Class R3 | — | * | ||
Class R4 | — | * | ||
Class R5 | — | * |
* | Due to the presentation of the financial statements in thousands, the number of shares held round to zero. |
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6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 158,242 | ||
Sales Proceeds Excluding U.S. Government Obligations | 236,082 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,264 | 445 | (3,719 | ) | — | (2,010 | ) | 2,665 | 31 | (7,525 | ) | — | (4,829 | ) | ||||||||||||||||||||||||||
Amount | $ | 15,051 | $ | 5,393 | $ | (44,149 | ) | $ | — | $ | (23,705 | ) | $ | 54,575 | $ | 705 | $ | (150,815 | ) | $ | — | $ | (95,535 | ) | ||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 101 | 12 | (1,214 | ) | — | (1,101 | ) | 158 | — | (3,108 | ) | — | (2,950 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,111 | $ | 138 | $ | (13,350 | ) | $ | — | $ | (12,101 | ) | $ | 2,991 | $ | — | $ | (58,785 | ) | $ | — | $ | (55,794 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 154 | 32 | (870 | ) | — | (684 | ) | 195 | — | (1,503 | ) | — | (1,308 | ) | ||||||||||||||||||||||||||
Amount | $ | 1,738 | $ | 366 | $ | (9,661 | ) | $ | — | $ | (7,557 | ) | $ | 3,508 | $ | — | $ | (27,967 | ) | $ | — | $ | (24,459 | ) | ||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 13 | — | (8 | ) | — | 5 | 5 | — | — | — | 5 | |||||||||||||||||||||||||||||
Amount | $ | 160 | $ | 4 | $ | (79 | ) | $ | — | $ | 85 | $ | 100 | $ | — | $ | — | $ | — | $ | 100 | |||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | — | — | — | 1 | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||||||||
Amount | $ | 6 | $ | — | $ | — | $ | — | $ | 6 | $ | 11 | $ | — | $ | (15 | ) | $ | — | $ | (4 | ) | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | (1 | ) | — | (1 | ) | — | — | — | — | — | ||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | (15 | ) | $ | — | $ | (14 | ) | $ | 10 | $ | — | $ | — | $ | — | $ | 10 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 152 | 33 | (2,348 | ) | — | (2,163 | ) | 903 | 20 | (358 | ) | — | 565 | |||||||||||||||||||||||||||
Amount | $ | 1,980 | $ | 412 | $ | (30,238 | ) | $ | — | $ | (27,846 | ) | $ | 19,420 | $ | 469 | $ | (6,059 | ) | $ | — | $ | 13,830 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 436 | $ | 5,168 | |||||
For the Year Ended October 31, 2008 | 1,152 | $ | 23,840 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
9. | Proposed Reorganization: | |
On May 6, 2009, the Board of Directors (“Board”) of The Hartford Mutual Funds, Inc. (“Company”) approved a Form of Agreement and Plan of Reorganization (“Reorganization Agreement”) that provides for the reorganization of a series of the Company, The Hartford Stock Fund, into another series of the Company, The Hartford Dividend and Growth Fund (“Reorganization”). The Reorganization does not require shareholder approval. | ||
Effective as of the close of business on July 31, 2009, in anticipation of the Reorganization, shares of Classes A, B, C, I, R3, R4, R5 and Y of The Hartford Stock Fund will no longer be sold to new investors or existing shareholders (except through reinvested dividends) or be eligible for exchanges from other Hartford Mutual Funds. | ||
The Board, including all of the Directors who are not “interested persons” of the Company (as that term is defined in the Investment Company Act of 1940, as amended) (“Independent Directors”), carefully considered the proposed Reorganization and have determined that it (1) is in the best interests of The Hartford Stock Fund and The Hartford Dividend and Growth Fund (each, a “Fund” and collectively, the “Funds”) and (2) would not result in a dilution of the interests of shareholders of either Fund. In making these determinations, the Board considered that the Reorganization will provide shareholders of The Hartford Stock Fund with (a) a comparable investment and (b) the enhanced potential to realize economies of scale. | ||
The Reorganization is expected to occur on or about October 2, 2009 or on such later date as the officers of the Company determine (“Closing Date”). As of the close of business on the Closing Date, pursuant to the Reorganization Agreement, each holder of Class A, Class B, Class C, Class I, Class R3, Class R4, Class R5 and Class Y shares of The Hartford Stock Fund will become the owner of corresponding full and fractional shares of The Hartford Dividend and Growth Fund having an aggregate value equal to the aggregate value of his or her shares of The Hartford Stock Fund. While the net asset value per share and number of shares held in such shareholder’s account will differ following the Reorganization, the total value of such shareholder’s account will remain the same. | ||
No sales load, commission or other transactional fee will be imposed as a result of the Reorganization. The Funds’ investment adviser, HIFSCO, has agreed to bear all of the expenses incurred in connection with the Reorganization, except for any brokerage fees and brokerage expenses associated with the Reorganization. In addition, the closing of the Reorganization is contingent upon, among other things, receiving an opinion of counsel that the proposed Reorganization will qualify as a tax-free reorganization for federal income tax purposes. As a result, it is anticipated that shareholders will not recognize any gain or loss in connection with the proposed Reorganization. | ||
Shareholders of The Hartford Stock Fund who determine that they do not wish to become shareholders of The Hartford Dividend and Growth Fund may (1) redeem their shares of The Hartford Stock Fund before the Closing Date or (2) exchange their shares of The Hartford Stock Fund before the Closing Date for shares of another Hartford Mutual Fund by contacting the Company or their broker, financial intermediary, or other financial institution. Please note that a redemption or an exchange of shares of The Hartford Stock Fund will be a taxable event and a shareholder may recognize a gain or loss in connection with that transaction. | ||
10. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
20
Table of Contents
— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Asset at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited)(e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 13.75 | $ | 0.10 | $ | — | $ | (0.27 | ) | $ | (0.17 | ) | $ | (0.26 | ) | $ | — | $ | — | $ | (0.26 | ) | $ | (0.43 | ) | $ | 13.32 | (1.15) | %(f) | $ | 271,325 | 1.80 | %(g) | 0.88 | %(g) | 0.88 | %(g) | 1.59 | %(g) | 41 | % | |||||||||||||||||||||||||||||||
B | 12.65 | 0.02 | — | (0.24 | ) | (0.22 | ) | (0.03 | ) | — | — | (0.03 | ) | (0.25 | ) | 12.40 | (1.76 | ) (f) | 42,831 | 2.77 | (g) | 2.17 | (g) | 2.17 | (g) | 0.31 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 12.76 | 0.02 | — | (0.24 | ) | (0.22 | ) | (0.08 | ) | — | — | (0.08 | ) | (0.30 | ) | 12.46 | (1.76 | ) (f) | 56,615 | 2.36 | (g) | 2.17 | (g) | 2.17 | (g) | 0.30 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 13.77 | 0.10 | — | (0.29 | ) | (0.19 | ) | (0.33 | ) | — | — | (0.33 | ) | (0.52 | ) | 13.25 | (1.18 | ) (f) | 131 | 0.91 | (g) | 0.91 | (g) | 0.91 | (g) | 1.68 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 14.19 | 0.06 | — | (0.28 | ) | (0.22 | ) | (0.20 | ) | — | — | (0.20 | ) | (0.42 | ) | 13.77 | (1.48 | ) (f) | 27 | 1.79 | (g) | 1.50 | (g) | 1.50 | (g) | 0.91 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 14.29 | 0.09 | — | (0.30 | ) | (0.21 | ) | (0.27 | ) | — | — | (0.27 | ) | (0.48 | ) | 13.81 | (1.34 | ) (f) | 15 | 1.44 | (g) | 1.20 | (g) | 1.20 | (g) | 1.47 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 14.32 | 0.10 | — | (0.28 | ) | (0.18 | ) | (0.32 | ) | — | — | (0.32 | ) | (0.50 | ) | 13.82 | (1.15 | ) (f) | 6 | 1.00 | (g) | 0.90 | (g) | 0.90 | (g) | 1.54 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 14.34 | 0.11 | — | (0.30 | ) | (0.19 | ) | (0.33 | ) | — | — | (0.33 | ) | (0.52 | ) | 13.82 | (1.21 | ) (f) | 17,671 | 0.87 | (g) | 0.87 | (g) | 0.87 | (g) | 1.86 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 24.47 | 0.14 | — | (10.83 | ) | (10.69 | ) | (0.03 | ) | — | — | (0.03 | ) | (10.72 | ) | 13.75 | (43.74 | ) | 307,712 | 1.41 | 1.18 | 1.18 | 0.56 | 90 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 22.69 | (0.21 | ) | — | (9.83 | ) | (10.04 | ) | — | — | — | — | (10.04 | ) | 12.65 | (44.24 | ) | 57,627 | 2.27 | 2.09 | 2.09 | (0.36 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 22.89 | (0.10 | ) | — | (10.03 | ) | (10.13 | ) | — | — | — | — | (10.13 | ) | 12.76 | (44.25 | ) | 66,725 | 2.05 | 2.05 | 2.05 | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I(h) | 21.54 | 0.07 | — | (7.84 | ) | (7.77 | ) | — | — | — | — | (7.77 | ) | 13.77 | (36.08 | ) (f) | 64 | 0.76 | (g) | 0.76 | (g) | 0.76 | (g) | 0.91 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 25.40 | 0.03 | — | (11.16 | ) | (11.13 | ) | (0.08 | ) | — | — | (0.08 | ) | (11.21 | ) | 14.19 | (43.95 | ) | 20 | 1.65 | 1.50 | 1.50 | 0.21 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 25.47 | 0.08 | — | (11.21 | ) | (11.13 | ) | (0.05 | ) | — | — | (0.05 | ) | (11.18 | ) | 14.29 | (43.78 | ) | 34 | 1.22 | 1.20 | 1.20 | 0.52 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 25.53 | 0.18 | — | (11.27 | ) | (11.09 | ) | (0.12 | ) | — | — | (0.12 | ) | (11.21 | ) | 14.32 | (43.62 | ) | 6 | 0.89 | 0.89 | 0.89 | 0.85 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 25.56 | 0.14 | — | (11.20 | ) | (11.06 | ) | (0.16 | ) | — | — | (0.16 | ) | (11.22 | ) | 14.34 | (43.53 | ) | 49,353 | 0.79 | 0.79 | 0.79 | 0.95 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 21.04 | 0.07 | 0.03 | 3.43 | 3.53 | (0.10 | ) | — | — | (0.10 | ) | 3.43 | 24.47 | 16.82 | (i) | 665,897 | 1.37 | 1.28 | 1.28 | 0.26 | 96 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 19.58 | (0.19 | ) | 0.04 | 3.26 | 3.11 | — | — | — | — | 3.11 | 22.69 | 15.88 | (i) | 170,341 | 2.20 | 2.11 | 2.11 | (0.57 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 19.73 | (0.12 | ) | 0.03 | 3.25 | 3.16 | — | — | — | — | 3.16 | 22.89 | 16.02 | (i) | 149,640 | 2.03 | 1.98 | 1.98 | (0.44 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(j) | 22.66 | (0.01 | ) | — | 2.75 | 2.74 | — | — | — | — | 2.74 | 25.40 | 12.09 | (f) | 42 | 1.56 | (g) | 1.51 | (g) | 1.51 | (g) | (0.18 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(k) | 22.66 | 0.06 | — | 2.75 | 2.81 | — | — | — | — | 2.81 | 25.47 | 12.40 | (f) | 44 | 1.25 | (g) | 1.20 | (g) | 1.20 | (g) | 0.29 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(l) | 22.66 | 0.12 | — | 2.75 | 2.87 | — | — | — | — | 2.87 | 25.53 | 12.67 | (f) | 11 | 0.97 | (g) | 0.92 | (g) | 0.92 | (g) | 0.57 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 21.95 | 0.43 | 0.06 | 3.32 | 3.81 | (0.20 | ) | — | — | (0.20 | ) | 3.61 | 25.56 | 17.45 | (i) | 73,535 | 0.81 | 0.76 | 0.76 | 0.82 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 18.39 | 0.11 | — | 2.58 | 2.69 | (0.04 | ) | — | — | (0.04 | ) | 2.65 | 21.04 | 14.65 | 684,726 | 1.41 | 1.28 | 1.28 | 0.53 | 110 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 17.23 | (0.05 | ) | — | 2.40 | 2.35 | — | — | — | — | 2.35 | 19.58 | 13.64 | 223,639 | 2.23 | 2.12 | 2.12 | (0.30 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 17.35 | (0.04 | ) | — | 2.42 | 2.38 | — | — | — | — | 2.38 | 19.73 | 13.72 | 161,554 | 2.08 | 2.03 | 2.03 | (0.21 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 19.18 | 0.21 | — | 2.70 | 2.91 | (0.14 | ) | — | — | (0.14 | ) | 2.77 | 21.95 | 15.21 | 131,759 | 0.83 | 0.78 | 0.78 | 1.03 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.76 | 0.16 | — | 1.57 | 1.73 | (0.10 | ) | — | — | (0.10 | ) | 1.63 | 18.39 | 10.36 | 727,492 | 1.42 | 1.33 | 1.33 | 0.89 | 62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.76 | — | — | 1.47 | 1.47 | — | — | — | — | 1.47 | 17.23 | 9.33 | 278,445 | 2.23 | 2.23 | 2.23 | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.84 | 0.04 | — | 1.47 | 1.51 | — | — | — | — | 1.51 | 17.35 | 9.53 | 182,587 | 2.09 | 2.09 | 2.09 | 0.17 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 17.49 | 0.24 | — | 1.66 | 1.90 | (0.21 | ) | — | — | (0.21 | ) | 1.69 | 19.18 | 10.91 | 107,578 | 0.83 | 0.83 | 0.83 | 1.24 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 16.21 | 0.03 | — | 0.52 | 0.55 | — | — | — | — | 0.55 | 16.76 | 3.39 | 952,606 | 1.42 | 1.42 | 1.42 | 0.18 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 15.35 | (0.10 | ) | — | 0.51 | 0.41 | — | — | — | — | 0.41 | 15.76 | 2.67 | 343,148 | 2.18 | 2.18 | 2.18 | (0.59 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 15.41 | (0.08 | ) | — | 0.51 | 0.43 | — | — | — | — | 0.43 | 15.84 | 2.79 | 256,271 | 2.03 | 2.03 | 2.03 | (0.44 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 16.81 | 0.10 | — | 0.58 | 0.68 | — | — | — | — | 0.68 | 17.49 | 4.04 | 80,932 | 0.80 | 0.80 | 0.80 | 0.80 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on May 30, 2008. | |
(i) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on December 22, 2006. |
21
Table of Contents
Mr. Birdsong is a private investor. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm. Since 2003, Mr. Birdsong has been an independent director of The Japan Fund. From 2003 to March 2005, Mr. Birdsong was an independent director of the Atlantic Whitehall Funds. From 1979 to 2002, Mr. Birdsong was a managing director of Zurich Scudder Investments, an investment management firm. During his employment with Scudder, Mr. Birdsong was an interested director of The Japan Fund.
Dr. Gavin is an educational consultant. Prior to September 1, 2001, he was President of Cranbrook Education Community and prior to July 1996, he was President of Macalester College, St. Paul, Minnesota.
Mr. Hill is a Partner of TSG Ventures L.P., a private equity investment company. Mr. Hill is a former partner of TSG Capital Group, a private equity investment firm that serves as sponsor and lead investor in leveraged buyouts of middle market companies.
Ms. Jaffee is Chairman and Chief Executive Officer of Fortent (formerly Searchspace Group), a leading provider of compliance/regulatory technology to financial institutions. Ms. Jaffee served as an Entrepreneur in Residence with Warburg Pincus, a private equity firm, from August 2004 to August 2005. From September 1995 to July 2004, Ms. Jaffee served as Executive Vice President at Citigroup, where she was President and Chief Executive Officer of Citibank’s Global Securities Services (1995-2003).
In February 2008, Mr. Johnston was elected to the Board of Directors of HCR-ManorCare, Inc. In August 2007, Mr. Johnston was elected to the Board of Directors of LifeCare Holdings, Inc. In July, 2006, Mr. Johnston was elected to the Board of Directors of MultiPlan, Inc. In June 2006, Mr. Johnston was appointed as Senior Advisor to The Carlyle Group, a global private equity investment firm. In May 2006, Mr. Johnston was elected to the Supervisory Board of Fresenius Medical Care AG & Co. KGaA, after its acquisition of Renal Care Group, Inc. in March 2006. Mr. Johnston joined Renal Care Group in November 2002 as a member of the Board of Directors and served as Chairman of the Board from March 2003 through March 2006. From September 1987 to December 2002, Mr. Johnston was with Equitable Securities Corporation (and its successors, SunTrust Equitable Securities and SunTrust Robinson Humphrey) serving in various investment banking and managerial positions, including Managing Director and Head of Investment Banking, Chief Executive Officer and Vice Chairman.
22
Table of Contents
Mr. Peterson is a mutual fund industry consultant. He was a partner of KPMG LLP (an accounting firm) until July 1999. Mr. Peterson joined William Blair Funds in February 2007 as a member of the Board of Trustees. From January 2004 to April 2005, Mr. Peterson served as Independent President of the Strong Mutual Funds.
Dr. Senbet is the William E. Mayer Chair Professor of Finance at the University of Maryland, Robert H. Smith School of Business. He was chair of the Finance Department during 1998-2006. Previously he was an endowed professor of finance at the University of Wisconsin-Madison. Also, he was director of the Fortis Funds from March 2000-July 2002. Dr. Senbet served the finance profession in various capacities, including as director of the American Finance Association and President of the Western Finance Association. In 2006, Dr. Senbet was inducted Fellow of Financial Management Association International for his career-long distinguished scholarship and professional service.
Mr. Marra has served as President and Chief Operating Officer of The Hartford Financial Services Group, Inc. (“The Hartford”) since 2007. Mr. Marra currently serves as Director of Hartford Life, Inc. (“HL, Inc.”). Mr. Marra served as Chief Operating Officer of Hartford Life Insurance Company, Inc. (“Hartford Life”) (2000-2008), as President of Hartford Life (2002-2008) and as Director of Hartford Life’s Investment Products Division from 1998 to 2000.
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
Mr. Smith served as Vice Chairman of The Hartford from February 1997 to January 2002, as President and Chief Executive Officer of Hartford Life, Inc. from February 1997 to January 2002, and as President and Chief Operating Officer of The Hartford Life Insurance Companies from January 1989 to January 2002. Mr. Smith serves as a Director of White Mountains Insurance Group, Ltd., One Beacon Insurance, Symetra Financial and as a Managing Director of Whittington Gray Associates.
Mr. Walters currently serves as Chief Executive Officer, President and Director of HL, Inc. Mr. Walters previously served as President of the U.S. Wealth Management Division of Hartford Life, Inc., as Co-Chief Operating Officer of Hartford Life Insurance Company (2007-2008) and as Executive Vice President and Director of its Investment Products Division (2000-2008). Mr. Walters also serves as Chairman of the Board, Chief Executive Officer, President and Director of Hartford Life Insurance Company and as Executive Vice President of The Hartford. In addition, Mr. Walters is Manager of HL Investment Advisors, LLC (“HL Advisors”).
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
Ms. Fagely has been a Vice President of HASCO since 1998 and Chief Financial Officer since 2006. Currently Ms. Fagely is a Vice President of Hartford Life. She served as Assistant Vice President of Hartford Life from December 2001 through March 2005. In addition, Ms. Fagely is Controller and Chief Financial Officer of HIFSCO.
Mr. Ferrell has served as Assistant Vice President and AML Compliance Officer for The Hartford since 2006 and as AML Compliance Officer for HASCO and Hartford Investor Services Company, LLC (“HISC”) since 2008. Prior to joining The Hartford in 2006, Mr. Ferrell held various positions at the U.S. Department of the Treasury, (the “Treasury”), from 2001 to 2006 where he served as Chief Counsel for the Treasury’s Financial Crimes Enforcement Network, (“FinCEN”) from 2005 — 2006.
23
Table of Contents
Directors and Officers (Unaudited) — (continued)
Mr. Jones serves as Chief Compliance Officer for the Hartford Mutual Funds and Vice President and Director of Securities Compliance for The Hartford. He is also Vice President of HIFSCO, HL Advisors, and Hartford Life Insurance Company. Mr. Jones joined The Hartford in 2006 from SEI Investments, where he served as Chief Compliance Officer for its mutual funds and investment advisers. Prior to joining SEI, Mr. Jones was First Vice President and Compliance Director for Merrill Lynch Investment Managers (Americas) (“MLIM”), where he worked from 1992-2004. At MLIM, Mr. Jones was responsible for the compliance oversight of various investment products, including mutual funds, wrap accounts, institutional accounts and alternative investments.
Mr. Macdonald serves as Assistant General Counsel and Assistant Vice President of The Hartford and Chief Legal Officer and Vice President of HIFSCO. He also serves as Vice President and Secretary of HASCO, Assistant Vice President of Hartford Life, and Chief Legal Officer, Secretary and Vice President of HL Advisors. Prior to joining The Hartford in 2005, Mr. Macdonald was Chief Counsel, Investment Management for Prudential Financial (formerly American Skandia Investment Services, Inc.). He joined Prudential in April 1999.
Mr. Meyer serves as Senior Vice President of Hartford Life and as Director of its Investment Advisory Group in the Individual Markets Group segment. He also serves as Senior Vice President of HIFSCO and HL Advisors. Prior to joining The Hartford in 2004, Mr. Meyer was with MassMutual which he joined in 1987.
Mr. Sloane is a Senior Vice President of Hartford Life where he serves as Director of mutual fund product management for The Hartford’s mutual funds and 529 college savings businesses. Additionally, Mr. Sloane currently serves as Senior Vice President of HIFSCO, HL Advisors, and HASCO. Prior to joining The Hartford in 2007, Mr. Sloane was Director of product marketing and led the mutual fund business for Wachovia Securities (“Wachovia”) in their investment products group. Mr. Sloane joined Wachovia in 1995.
Ms. Wolak currently serves as Vice President of Hartford Life. Ms. Wolak joined Hartford Life as Vice President, Retail Product Services in May 2007. She is also Vice President of HASCO. Previously, Ms. Wolak was with Sun Life Financial where she held the position of Vice President, Service Center Operations from 2001 – 2007.
24
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 988.46 | $ | 4.33 | $ | 1,000.00 | $ | 1,020.43 | $ | 4.40 | 0.88 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 982.38 | $ | 10.66 | $ | 1,000.00 | $ | 1,014.03 | $ | 10.83 | 2.17 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 982.41 | $ | 10.66 | $ | 1,000.00 | $ | 1,014.03 | $ | 10.83 | 2.17 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 988.18 | $ | 4.48 | $ | 1,000.00 | $ | 1,020.28 | $ | 4.55 | 0.91 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 985.15 | $ | 7.38 | $ | 1,000.00 | $ | 1,017.35 | $ | 7.50 | 1.50 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 986.56 | $ | 5.91 | $ | 1,000.00 | $ | 1,018.84 | $ | 6.00 | 1.20 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 988.52 | $ | 4.43 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 987.93 | $ | 4.28 | $ | 1,000.00 | $ | 1,020.48 | $ | 4.35 | 0.87 | 181 | 365 |
25
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
12 | ||||
13 | ||||
14 | ||||
15 | ||||
26 | ||||
27 | ||||
29 | ||||
29 | ||||
30 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Strategic Income A# | 5/31/07 | -12.87 | % | -5.76 | % | |||||||
Strategic Income A## | 5/31/07 | -16.79 | % | -8.00 | % | |||||||
Strategic Income B# | 5/31/07 | -13.69 | % | -6.52 | % | |||||||
Strategic Income B## | 5/31/07 | -17.75 | % | -8.26 | % | |||||||
Strategic Income C# | 5/31/07 | -13.49 | % | -6.35 | % | |||||||
Strategic Income C## | 5/31/07 | -14.31 | % | -6.35 | % | |||||||
Strategic Income I# | 5/31/07 | -12.72 | % | -5.42 | % | |||||||
Strategic Income Y# | 8/31/07 | -12.67 | % | -5.43 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, I and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Michael Bacevich | Mark Niland, CFA | Nasri Toutoungi | ||
Managing Director | Managing Director | Managing Director | ||
Michael Gray, CFA | Peter Perrotti, CFA* | Edward Vaimberg* | ||
Managing Director | Executive Vice President | Senior Vice President |
2
Table of Contents
* | Effective June 1, 2009, Peter Perrotti and Edward Vaimberg will no longer be involved in the portfolio management of the Fund. |
as of April 30, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 40.7 | % | ||
AA | 3.7 | |||
A | 11.8 | |||
BBB | 14.6 | |||
BB | 14.4 | |||
B | 12.0 | |||
CCC | 1.7 | |||
D | 0.4 | |||
Not Rated | 0.7 | |||
Total | 100.0 | % | ||
Percentage of | ||||
Industry | Net Assets | |||
Basic Materials | 4.0 | % | ||
Capital Goods | 1.4 | |||
Consumer Cyclical | 3.7 | |||
Consumer Staples | 2.2 | |||
Energy | 5.8 | |||
Finance | 14.3 | |||
Foreign Governments | 6.3 | |||
Health Care | 5.2 | |||
Services | 3.7 | |||
Technology | 9.2 | |||
Transportation | 0.7 | |||
U.S. Government Agencies | 14.4 | |||
U.S. Government Securities | 16.2 | |||
Utilities | 4.3 | |||
Short-Term Investments | 5.9 | |||
Other Assets and Liabilities | 2.7 | |||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
ASSET & COMMERCIAL MORTGAGE BACKED SECURITIES - 4.6% | ||||||||
Finance - 4.6% | ||||||||
Bank of America Credit Card Trust | ||||||||
$ | 500 | 5.17%, 06/15/2019 | $ | 467 | ||||
Bayview Commercial Asset Trust | ||||||||
1,228 | 7.50%, 09/25/2037 ⌂► | 109 | ||||||
Bayview Financial Acquisition Trust | ||||||||
250 | 8.05%, 08/28/2047 ⌂ | 67 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc. | ||||||||
940 | 5.12%, 02/11/2041 Δ | 809 | ||||||
570 | 5.41%, 12/11/2040 | 506 | ||||||
700 | 5.72%, 09/11/2038 Δ | 603 | ||||||
CBA Commercial Small Balance Commercial Mortgage | ||||||||
4,575 | 7.25%, 07/25/2039 ⌂► | 389 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
480 | 5.43%, 10/15/2049 | 394 | ||||||
Credit-Based Asset Servicing and Securitization | ||||||||
86 | 0.71%, 05/25/2036 ⌂Δ | 37 | ||||||
CS First Boston Mortgage Securities Corp. | ||||||||
270 | 5.23%, 12/15/2040 | 231 | ||||||
GE Capital Commercial Mortgage Corp. | ||||||||
580 | 5.05%, 07/10/2045 Δ | 546 | ||||||
GMAC Mortgage Corp. Loan Trust | ||||||||
555 | 6.05%, 12/25/2037 ⌂Δ | 178 | ||||||
Greenwich Capital Commercial Funding Corp. | ||||||||
299 | 1.69%, 11/05/2021 ⌂•Δ | 2 | ||||||
323 | 1.89%, 11/05/2021 ⌂•Δ | 2 | ||||||
470 | 4.80%, 08/10/2042 | 392 | ||||||
3,500 | 5.74%, 12/10/2049 Δ | 2,751 | ||||||
360 | 6.11%, 07/10/2038 Δ | 301 | ||||||
Honda Automotive Receivables Owner Trust | ||||||||
450 | 5.28%, 01/23/2012 | 459 | ||||||
IMPAC Commercial Mortgage Backed Trust | ||||||||
282 | 1.94%, 02/25/2036 ⌂Δ | 68 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | ||||||||
510 | 5.34%, 05/15/2047 | 394 | ||||||
280 | 5.40%, 05/15/2045 | 217 | ||||||
Lehman Brothers Small Balance Commercial | ||||||||
621 | 5.91%, 06/25/2037 ⌂† | 466 | ||||||
MBNA Credit Card Master Note Trust | ||||||||
300 | 6.80%, 07/15/2014 ⌂ | 229 | ||||||
Morgan Stanley Capital I | ||||||||
960 | 4.70%, 07/15/2056 | 841 | ||||||
930 | 5.01%, 01/14/2042 | 853 | ||||||
Renaissance Home Equity Loan Trust, Class M5 | ||||||||
100 | 7.00%, 09/25/2037 ⌂ | 6 | ||||||
Renaissance Home Equity Loan Trust, Class M8 | ||||||||
125 | 7.00%, 09/25/2037 ⌂ | 4 | ||||||
USAA Automotive Owner Trust | ||||||||
312 | 4.63%, 05/15/2012 | 315 | ||||||
Wachovia Bank Commercial Mortgage Trust | ||||||||
585 | 5.31%, 11/15/2048 | 460 | ||||||
Wells Fargo Alternative Loan Trust | ||||||||
597 | 6.25%, 11/25/2037 ⌂ | 322 | ||||||
12,418 | ||||||||
Total asset & commercial mortgage backed securities (cost $14,043) | $ | 12,418 | ||||||
CORPORATE BONDS: INVESTMENT GRADE - 29.1% | ||||||||
Basic Materials - 2.3% | ||||||||
Alcan, Inc. | ||||||||
$ | 255 | 6.13%, 12/15/2033 | $ | 174 | ||||
Anglo American Capital plc | ||||||||
1,324 | 9.38%, 04/08/2014 - 04/08/2019 ■ | 1,367 | ||||||
Barrick Gold Corp. | ||||||||
200 | 6.95%, 04/01/2019 | 212 | ||||||
Consol Energy, Inc. | ||||||||
430 | 7.88%, 03/01/2012 | 432 | ||||||
Kimberly-Clark Corp. | ||||||||
1,620 | 7.50%, 11/01/2018 | 1,894 | ||||||
Rio Tinto Finance USA Ltd. | ||||||||
1,175 | 5.88%, 07/15/2013 | 1,108 | ||||||
320 | 9.00%, 05/01/2019 | 329 | ||||||
Vale Overseas Ltd. | ||||||||
750 | 6.88%, 11/21/2036 | 611 | ||||||
6,127 | ||||||||
Capital Goods - 0.8% | ||||||||
Hutchison Whampoa International Ltd. | ||||||||
400 | 7.63%, 04/09/2019 ■ | 393 | ||||||
Tyco International Ltd. | ||||||||
837 | 8.50%, 01/15/2019 | 896 | ||||||
United Technologies Corp. | ||||||||
647 | 6.13%, 02/01/2019 | 697 | ||||||
Xerox Corp. | ||||||||
170 | 6.35%, 05/15/2018 | 138 | ||||||
2,124 | ||||||||
Consumer Cyclical - 0.6% | ||||||||
CRH America, Inc. | ||||||||
1,340 | 8.13%, 07/15/2018 | 1,117 | ||||||
Safeway, Inc. | ||||||||
470 | 6.25%, 03/15/2014 | 499 | ||||||
1,616 | ||||||||
Consumer Staples - 1.3% | ||||||||
Altria Group, Inc. | ||||||||
931 | 10.20%, 02/06/2039 | 1,025 | ||||||
Anheuser-Busch InBev | ||||||||
1,005 | 7.75%, 01/15/2019 ■ | 1,052 | ||||||
300 | 8.20%, 01/15/2039 ■ | 301 | ||||||
General Mills, Inc. | ||||||||
454 | 5.65%, 02/15/2019 | 463 | ||||||
Unilever Capital Corp. | ||||||||
500 | 4.80%, 02/15/2019 | 505 | ||||||
3,346 | ||||||||
Energy - 3.0% | ||||||||
Chevron Corp. | ||||||||
600 | 4.95%, 03/03/2019 | 613 | ||||||
ConocoPhillips | ||||||||
946 | 6.50%, 02/01/2039 | 937 |
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 29.1% - (continued) | ||||||||
Energy - 3.0% - (continued) | ||||||||
Consumers Energy Co. | ||||||||
$ | 820 | 6.70%, 09/15/2019 | $ | 865 | ||||
Diamond Offshore Drilling, Inc. | ||||||||
191 | 5.88%, 05/01/2019 | 191 | ||||||
EnCana Corp. | ||||||||
136 | 6.50%, 05/15/2019 | 136 | ||||||
Gazprom International S.A. | ||||||||
421 | 7.20%, 02/01/2020 § | 379 | ||||||
Marathon Oil Corp. | ||||||||
307 | 6.50%, 02/15/2014 | 319 | ||||||
Nabors Industries, Inc. | ||||||||
634 | 9.25%, 01/15/2019 ■ | 598 | ||||||
Sempra Energy | ||||||||
523 | 9.80%, 02/15/2019 | 597 | ||||||
Shell International Finance B.V. | ||||||||
520 | 6.38%, 12/15/2038 | 553 | ||||||
Statoilhydro ASA | ||||||||
1,208 | 5.25%, 04/15/2019 | 1,236 | ||||||
TNK-BP Finance S.A. | ||||||||
300 | 7.50%, 07/18/2016 ■ | 221 | ||||||
Valero Energy Corp. | ||||||||
1,320 | 6.63%, 06/15/2037 | 1,045 | ||||||
441 | 9.38%, 03/15/2019 | 492 | ||||||
8,182 | ||||||||
Finance - 7.9% | ||||||||
American Real Estate Partners L.P. | ||||||||
445 | 7.13%, 02/15/2013 | 374 | ||||||
Bank of America Corp. | ||||||||
2,200 | 2.10%, 04/30/2012 | 2,214 | ||||||
565 | 5.65%, 05/01/2018 | 460 | ||||||
BP Capital Markets plc | ||||||||
532 | 5.25%, 11/07/2013 | 574 | ||||||
Citigroup, Inc. | ||||||||
595 | 2.13%, 04/30/2012 | 598 | ||||||
647 | 8.30%, 12/21/2057 Δ | 394 | ||||||
Corpoacion Andina De Fomento | ||||||||
204 | 5.20%, 05/21/2013 | 193 | ||||||
241 | 5.75%, 01/12/2017 | 201 | ||||||
COX Communications, Inc. | ||||||||
371 | 6.25%, 06/01/2018 ■ | 342 | ||||||
325 | 8.38%, 03/01/2039 ■ | 315 | ||||||
ERAC USA Finance Co. | ||||||||
1,176 | 5.60%, 05/01/2015 ■ | 907 | ||||||
Goldman Sachs Capital Trust II | ||||||||
2,077 | 5.79%, 06/01/2012 ♠Δ | 1,027 | ||||||
Goldman Sachs Group, Inc. | ||||||||
476 | 6.00%, 05/01/2014 | 476 | ||||||
International Lease Finance Corp. | ||||||||
1,500 | 6.63%, 11/15/2013 | 937 | ||||||
Jackson National Life Global Funding | ||||||||
975 | 5.38%, 05/08/2013 ■ | 863 | ||||||
JP Morgan Chase & Co. | ||||||||
1,050 | 5.13%, 09/15/2014 | 972 | ||||||
775 | 6.30%, 04/23/2019 | 763 | ||||||
605 | 7.90%, 04/30/2018 ♠ | 460 | ||||||
JP Morgan Chase Capital II | ||||||||
230 | 1.67%, 02/01/2027 Δ | 94 | ||||||
MBNA America Bank N.A. | ||||||||
995 | 7.13%, 11/15/2012 ■ | 907 | ||||||
National City Bank of Ohio | ||||||||
600 | 4.50%, 03/15/2010 | 602 | ||||||
National City Corp. | ||||||||
884 | 12.00%, 12/10/2012 ♠ | 765 | ||||||
Pricoa Global Funding I | ||||||||
500 | 1.14%, 01/30/2012 ■Δ | 375 | ||||||
Progressive Corp. | ||||||||
241 | 6.70%, 06/15/2037 Δ | 119 | ||||||
Prudential Financial, Inc. | ||||||||
424 | 8.88%, 06/15/2038 Δ | 229 | ||||||
State Street Capital Trust III | ||||||||
1,235 | 8.25%, 03/15/2042 Δ | 840 | ||||||
Transcapitalinvest Ltd. | ||||||||
1,200 | 5.67%, 03/05/2014 § | 951 | ||||||
UBS Preferred Funding Trust I | ||||||||
1,250 | 8.62%, 10/01/2010 ♠ | 626 | ||||||
Unicredito Italiano Capital Trust | ||||||||
2,000 | 9.20%, 10/05/2010 ■♠ | 940 | ||||||
UnitedHealth Group, Inc. | ||||||||
1,500 | 6.88%, 02/15/2038 | 1,304 | ||||||
USB Capital IX | ||||||||
1,830 | 6.19%, 04/15/2011 ♠Δ | 1,016 | ||||||
Wells Fargo Bank NA | ||||||||
600 | 1.45%, 05/16/2016 Δ | 408 | ||||||
Wells Fargo Capital XIII | ||||||||
303 | 7.70%, 03/26/2013 ♠Δ | 194 | ||||||
21,440 | ||||||||
Foreign Governments - 3.6% | ||||||||
Brazil (Republic of) | ||||||||
2,150 | 8.00%, 01/15/2018 | 2,322 | ||||||
1,130 | 8.25%, 01/20/2034 | 1,285 | ||||||
Colombia (Republic of) | ||||||||
600 | 7.38%, 03/18/2019 | 631 | ||||||
El Salvador (Republic of) | ||||||||
991 | 7.65%, 06/15/2035 § | 793 | ||||||
Hungary (Republic of) | ||||||||
150 | 4.75%, 02/03/2015 | 130 | ||||||
Malaysian Government | ||||||||
1,360 | 7.50%, 07/15/2011 | 1,483 | ||||||
Peru (Republic of) | ||||||||
800 | 6.55%, 03/14/2037 | 774 | ||||||
Russian Federation Government | ||||||||
732 | 7.50%, 03/31/2030 § | 712 | ||||||
South Africa (Republic of) | ||||||||
300 | 5.88%, 05/30/2022 | 274 | ||||||
United Mexican States | ||||||||
1,256 | 5.95%, 03/19/2019 | 1,250 | ||||||
9,654 | ||||||||
Health Care - 2.6% | ||||||||
Abbott Laboratories | ||||||||
557 | 5.13%, 04/01/2019 | 570 | ||||||
Amgen, Inc. | ||||||||
252 | 6.40%, 02/01/2039 | 254 | ||||||
Covidien International | ||||||||
1,500 | 6.55%, 10/15/2037 | 1,480 | ||||||
CVS Caremark Corp. | ||||||||
1,125 | 6.30%, 06/01/2037 Δ | 731 | ||||||
237 | 6.60%, 03/15/2019 | 251 | ||||||
Eli Lilly & Co. | ||||||||
502 | 4.20%, 03/06/2014 | 521 | ||||||
236 | 5.95%, 11/15/2037 | 230 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: INVESTMENT GRADE - - 29.1% - (continued) | ||||||||
Health Care - 2.6% - (continued) | ||||||||
Pfizer, Inc. | ||||||||
$ | 640 | 5.35%, 03/15/2015 | $ | 688 | ||||
590 | 6.20%, 03/15/2019 | 634 | ||||||
615 | 7.20%, 03/15/2039 | 676 | ||||||
Roche Holdings, Inc. | ||||||||
575 | 5.00%, 03/01/2014 ■ | 603 | ||||||
169 | 6.00%, 03/01/2019 ■ | 176 | ||||||
279 | 7.00%, 03/01/2039 ■ | 303 | ||||||
7,117 | ||||||||
Services - 0.5% | ||||||||
Allied Waste North America, Inc. | ||||||||
500 | 7.13%, 05/15/2016 | 490 | ||||||
Comcast Corp. | ||||||||
620 | 6.30%, 11/15/2017 | 631 | ||||||
President & Fellows of Harvard | ||||||||
336 | 6.00%, 01/15/2019 ■ | 360 | ||||||
1,481 | ||||||||
Technology - 4.5% | ||||||||
AT&T, Inc. | ||||||||
1,150 | 6.55%, 02/15/2039 | 1,106 | ||||||
Cisco Systems, Inc. | ||||||||
1,085 | 5.90%, 02/15/2039 | 1,027 | ||||||
Embarq Corp. | ||||||||
2,700 | 8.00%, 06/01/2036 ‡ | 2,241 | ||||||
Hanaro Telecom, Inc. | ||||||||
460 | 7.00%, 02/01/2012 ■ | 444 | ||||||
Nokia Corp. | ||||||||
242 | 5.38%, 05/15/2019 | 235 | ||||||
222 | 6.63%, 05/15/2039 | 221 | ||||||
Qwest Corp. | ||||||||
500 | 7.25%, 10/15/2035 | 356 | ||||||
Rogers Cable, Inc. | ||||||||
390 | 8.75%, 05/01/2032 | 418 | ||||||
Rogers Communications, Inc. | ||||||||
733 | 7.50%, 03/15/2015 | 775 | ||||||
Telecom Italia Capital | ||||||||
1,104 | 7.72%, 06/04/2038 | 964 | ||||||
Time Warner Cable, Inc. | ||||||||
900 | 8.25%, 04/01/2019 | 995 | ||||||
Verizon Wireless | ||||||||
1,524 | 5.55%, 02/01/2014 ■ | 1,599 | ||||||
1,312 | 8.50%, 11/15/2018 ■ | 1,571 | ||||||
11,952 | ||||||||
Transportation - 0.2% | ||||||||
Canadian Pacific Railway Co. | ||||||||
675 | 5.95%, 05/15/2037 | 453 | ||||||
Utilities - 1.8% | ||||||||
Alabama Power Co. | ||||||||
384 | 6.00%, 03/01/2039 | 381 | ||||||
Duke Energy Corp. | ||||||||
355 | 6.35%, 08/15/2038 | 377 | ||||||
222 | 7.00%, 11/15/2018 | 254 | ||||||
Electricite de France | ||||||||
605 | 6.95%, 01/26/2039 ■ | 638 | ||||||
Pacific Gas & Electric Energy Recovery Funding LLC | ||||||||
629 | 8.25%, 10/15/2018 | 751 | ||||||
Public Service Co. of Colorado | ||||||||
860 | 6.50%, 08/01/2038 | 919 | ||||||
Southern California Edison Co. | ||||||||
665 | 5.75%, 03/15/2014 | 724 | ||||||
TransCanada Pipelines Ltd. | ||||||||
814 | 7.25%, 08/15/2038 | 849 | ||||||
4,893 | ||||||||
Total corporate bonds: investment grade (cost $81,760) | $ | 78,385 | ||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 20.5% | ||||||||
Basic Materials - 0.7% | ||||||||
Cenveo, Inc. | ||||||||
$ | 300 | 10.50%, 08/15/2016 ■ | 201 | |||||
Georgia-Pacific LLC | ||||||||
540 | 8.25%, 05/01/2016 ■ | 540 | ||||||
Goodyear Tire & Rubber Co. | ||||||||
750 | 6.32%, 12/01/2009 Δ | 740 | ||||||
Graham Packaging Co., Inc. | ||||||||
500 | 8.50%, 10/15/2012 | 430 | ||||||
1,911 | ||||||||
Capital Goods - 0.1% | ||||||||
L-3 Communications Corp. | ||||||||
410 | 5.88%, 01/15/2015 | 375 | ||||||
Consumer Cyclical - 2.7% | ||||||||
Aramark Corp. | ||||||||
940 | 5.00%, 06/01/2012 | 834 | ||||||
D.R. Horton, Inc. | ||||||||
945 | 4.88%, 01/15/2010 | 931 | ||||||
Desarrolladora Homes S.A. | ||||||||
521 | 7.50%, 09/28/2015 | 393 | ||||||
Dollarama Group L.P. | ||||||||
700 | 8.88%, 08/15/2012 | 665 | ||||||
ESCO Corp. | ||||||||
640 | 8.63%, 12/15/2013 ■ | 519 | ||||||
KB Home & Broad Home Corp. | ||||||||
450 | 6.38%, 08/15/2011 | 430 | ||||||
Parkson Retail Group Ltd. | ||||||||
1,050 | 7.88%, 11/14/2011 | 992 | ||||||
Pulte Homes, Inc. | ||||||||
850 | 7.88%, 08/01/2011 | 848 | ||||||
SGS International, Inc. | ||||||||
450 | 12.00%, 12/15/2013 | 239 | ||||||
Supervalu, Inc. | ||||||||
900 | 7.50%, 11/15/2014 | 873 | ||||||
170 | 8.00%, 05/01/2016 | 165 | ||||||
United Components, Inc. | ||||||||
425 | 9.38%, 06/15/2013 | 234 | ||||||
7,123 | ||||||||
Consumer Staples - 0.4% | ||||||||
Appleton Papers, Inc. | ||||||||
400 | 8.13%, 06/15/2011 | 240 | ||||||
Constellation Brands, Inc. | ||||||||
905 | 8.38%, 12/15/2014 | 914 | ||||||
1,154 | ||||||||
6
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 20.5% - (continued) | ||||||||
Energy - 1.8% | ||||||||
Chesapeake Energy Corp. | ||||||||
$ | 375 | 7.00%, 08/15/2014 | $ | 346 | ||||
775 | 7.63%, 07/15/2013 | 740 | ||||||
Ferrellgas Partners L.P. | ||||||||
870 | 6.75%, 05/01/2014 ■ | 785 | ||||||
450 | 8.75%, 06/15/2012 | 412 | ||||||
Inergy L.P. | ||||||||
1,000 | 8.25%, 03/01/2016 | 992 | ||||||
Petrohawk Energy Corp. | ||||||||
725 | 9.13%, 07/15/2013 | 711 | ||||||
Plains Exploration & Production Co. | ||||||||
450 | 7.63%, 06/01/2018 | 390 | ||||||
Sonat, Inc. | ||||||||
500 | 7.63%, 07/15/2011 | 495 | ||||||
4,871 | ||||||||
Finance - 1.2% | ||||||||
Drummond Co., Inc. | ||||||||
1,410 | 7.38%, 02/15/2016 ■ | 1,022 | ||||||
Ford Motor Credit Co. | ||||||||
750 | 5.70%, 01/15/2010 | 705 | ||||||
LPL Holdings, Inc. | ||||||||
1,070 | 10.75%, 12/15/2015 ■ | 931 | ||||||
Yankee Acquisition Corp. | ||||||||
725 | 8.50%, 02/15/2015 | 511 | ||||||
3,169 | ||||||||
Foreign Governments - 2.7% | ||||||||
Argentina (Republic of) | ||||||||
1,855 | 7.00%, 10/03/2015 | 517 | ||||||
Indonesia (Republic of) | ||||||||
380 | 6.88%, 01/17/2018 § | 342 | ||||||
1,400 | 7.25%, 04/20/2015 § | 1,326 | ||||||
Islamic Republic of Pakistan | ||||||||
400 | 6.88%, 06/01/2017 § | 212 | ||||||
Panama (Republic of) | ||||||||
800 | 7.13%, 01/29/2026 | 800 | ||||||
Philippines (Republic of) | ||||||||
1,100 | 8.38%, 06/17/2019 | 1,216 | ||||||
Turkey (Republic of) | ||||||||
1,180 | 7.25%, 03/15/2015 | 1,204 | ||||||
Venezuela (Republic of) | ||||||||
2,810 | 5.75%, 02/26/2016 | 1,602 | ||||||
7,219 | ||||||||
Health Care - 2.0% | ||||||||
Biomet, Inc. | ||||||||
700 | 10.38%, 10/15/2017 | 674 | ||||||
HCA, Inc. | ||||||||
500 | 7.88%, 02/01/2011 | 490 | ||||||
305 | 8.50%, 04/15/2019 ■ | 307 | ||||||
750 | 9.25%, 11/15/2016 | 742 | ||||||
IASIS Healthcare Capital Corp. | ||||||||
700 | 8.75%, 06/15/2014 | 688 | ||||||
Invacare Corp. | ||||||||
100 | 9.75%, 02/15/2015 | 101 | ||||||
Multiplan Corp. | ||||||||
375 | 10.38%, 04/15/2016 ■ | 330 | ||||||
Psychiatric Solutions, Inc. | ||||||||
850 | 7.75%, 07/15/2015 | 778 | ||||||
Skilled Healthcare Group, Inc. | ||||||||
600 | 11.00%, 01/15/2014 | 622 | ||||||
Warner Chilcott Corp. | ||||||||
550 | 8.75%, 02/01/2015 | 540 | ||||||
5,272 | ||||||||
Services - 2.0% | ||||||||
Affinion Group, Inc. | ||||||||
1,500 | 11.50%, 10/15/2015 | 1,080 | ||||||
AMC Entertainment, Inc. | ||||||||
500 | 11.00%, 02/01/2016 | 490 | ||||||
DirecTV Holdings LLC | ||||||||
475 | 8.38%, 03/15/2013 | 482 | ||||||
Echostar DBS Corp. | ||||||||
550 | 7.75%, 05/31/2015 | 523 | ||||||
FireKeepers Development Authority | ||||||||
500 | 13.88%, 05/01/2015 ■ | 360 | ||||||
Harland Clarke Holdings | ||||||||
455 | 9.50%, 05/15/2015 | 273 | ||||||
Iron Mountain, Inc. | ||||||||
685 | 8.00%, 06/15/2020 | 661 | ||||||
Pinnacle Entertainment, Inc. | ||||||||
380 | 8.75%, 10/01/2013 | 366 | ||||||
TL Acquisitions, Inc. | ||||||||
485 | 10.50%, 01/15/2015 ■ | 330 | ||||||
Videotron Ltee | ||||||||
625 | 6.88%, 01/15/2014 | 607 | ||||||
Virgin Media, Inc. | ||||||||
390 | 6.50%, 11/15/2016 ۞ ■ | 284 | ||||||
5,456 | ||||||||
Technology - 4.4% | ||||||||
Canwest MediaWorks L.P. | ||||||||
535 | 9.25%, 08/01/2015 ■ | 50 | ||||||
Charter Communications Operating LLC | ||||||||
925 | 10.88%, 09/15/2014 ■ψ | 920 | ||||||
Cricket Communications, Inc. | ||||||||
370 | 9.38%, 11/01/2014 | 366 | ||||||
CSC Holdings, Inc. | ||||||||
1,250 | 7.63%, 04/01/2011 | 1,250 | ||||||
Frontier Communications Corp. | ||||||||
270 | 8.25%, 05/01/2014 | 265 | ||||||
Intelsat Corp. | ||||||||
400 | 9.25%, 06/15/2016 ■ | 386 | ||||||
Intelsat Jackson Holdings Ltd. | ||||||||
370 | 11.50%, 06/15/2016 ■ | 364 | ||||||
Level 3 Financing, Inc. | ||||||||
1,550 | 12.25%, 03/15/2013 | 1,399 | ||||||
Mediacom LLC | ||||||||
1,550 | 7.88%, 02/15/2011 | 1,535 | ||||||
MetroPCS Wireless, Inc. | ||||||||
1,300 | 9.25%, 11/01/2014 | 1,302 | ||||||
Qwest Communications International, Inc. | ||||||||
1,000 | 7.50%, 02/15/2014 | 927 | ||||||
Seagate Technology International | ||||||||
410 | 10.00%, 05/01/2014 ■ | 404 | ||||||
Sprint Capital Corp. | ||||||||
1,400 | 7.63%, 01/30/2011 | 1,349 | ||||||
350 | 8.75%, 03/15/2032 | 266 | ||||||
Windstream Corp. | ||||||||
1,250 | 8.63%, 08/01/2016 | 1,244 | ||||||
12,027 | ||||||||
7
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
CORPORATE BONDS: NON-INVESTMENT GRADE - 20.5% - (continued) | ||||||||
Transportation - 0.5% | ||||||||
Continental Airlines, Inc. | ||||||||
$ | 414 | 7.03%, 06/15/2011 | $ | 340 | ||||
Grupo Senda Autotransporte | ||||||||
1,195 | 10.50%, 10/03/2015 ⌂ | 681 | ||||||
United Air Lines, Inc. | ||||||||
330 | 7.19%, 04/01/2011 | 317 | ||||||
1,338 | ||||||||
Utilities - 2.0% | ||||||||
AES Corp. | ||||||||
725 | 8.00%, 10/15/2017 | 663 | ||||||
AES El Salvador Trust | ||||||||
700 | 6.75%, 02/01/2016 ⌂ | 338 | ||||||
Copano Energy LLC | ||||||||
600 | 8.13%, 03/01/2016 | 546 | ||||||
Kinder Morgan, Inc. | ||||||||
550 | 5.15%, 03/01/2015 | 473 | ||||||
Mirant Mid-Atlantic LLC | ||||||||
626 | 9.13%, 06/30/2017 | 582 | ||||||
NRG Energy, Inc. | ||||||||
1,275 | 7.25%, 02/01/2014 | 1,231 | ||||||
Reliant Energy, Inc. | ||||||||
1,300 | 6.75%, 12/15/2014 | 1,255 | ||||||
Texas Competitive Electric Co. | ||||||||
315 | 10.25%, 11/01/2015 | 179 | ||||||
5,267 | ||||||||
Total corporate bonds: non-investment grade (cost $57,758) | $ | 55,182 | ||||||
SENIOR FLOATING RATE INTERESTS: INVESTMENT GRADE ♦ - 0.2% | ||||||||
Health Care - 0.2% | ||||||||
Pfizer, Inc. | ||||||||
$ | 565 | 0.38%, 12/31/2009 ± | $ | 559 | ||||
Total senior floating rate interests: investment grade (cost $565) | $ | 559 | ||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ - 6.4% | ||||||||
Basic Materials - 1.0% | ||||||||
Arizona Chemical Co. | ||||||||
$ | 250 | 5.93%, 02/27/2014 ± ⌂ | $ | 134 | ||||
Calumet Lubricants Co., L.P. | ||||||||
115 | 1.28%, 12/29/2014 ± | 74 | ||||||
860 | 5.24%, 01/03/2015 ± | 550 | ||||||
Coffeyville Resources | ||||||||
235 | 3.15%, 12/21/2010 ± | 194 | ||||||
755 | 8.75%, 12/21/2013 ± | 624 | ||||||
John Maneely Co. | ||||||||
445 | 4.11%, 12/08/2013 ± | 318 | ||||||
Newpage Corp. | ||||||||
977 | 4.79%, 12/21/2014 ± | 755 | ||||||
2,649 | ||||||||
Capital Goods - 0.5% | ||||||||
MacAndrews Amg Holdings LLC | ||||||||
388 | 6.18%, 04/17/2012 ± ⌂ | 263 | ||||||
WESCO Aircraft Hardware Corp. | ||||||||
500 | 6.18%, 03/28/2014 ± | 348 | ||||||
Yankee Candle Co. | ||||||||
947 | 3.21%, 02/06/2014 ± | 776 | ||||||
1,387 | ||||||||
Consumer Cyclical - 0.4% | ||||||||
Brand Energy & Infrastructure Services | ||||||||
493 | 4.49%, 02/07/2014 ± | 389 | ||||||
Lear Corp. | ||||||||
994 | 3.21%, 04/25/2012 ± | 415 | ||||||
804 | ||||||||
Consumer Staples - 0.5% | ||||||||
Dole Food Co., Inc. | ||||||||
98 | 1.14%, 04/12/2013 ± | 93 | ||||||
173 | 7.96%, 04/12/2013 ± | 163 | ||||||
643 | 7.97%, 04/12/2013 ± | 609 | ||||||
WM Wrigley Jr. Co. | ||||||||
597 | 6.50%, 10/06/2014 ± | 597 | ||||||
1,462 | ||||||||
Energy - 1.0% | ||||||||
Lyondell Chemical Co. | ||||||||
334 | 5.94%, 12/15/2009 ±ψ | 262 | ||||||
1,741 | 9.17%, 12/15/2009 *±ψ | 1,768 | ||||||
Lyondell Chemical Co., Dutch RC | ||||||||
15 | 5.75%, 12/20/2013 ±ψ | 5 | ||||||
Lyondell Chemical Co., Dutch Tranche A | ||||||||
35 | 5.75%, 12/20/2013 ±ψ | 12 | ||||||
Lyondell Chemical Co., German B-1 | ||||||||
43 | 6.00%, 12/20/2014 ±ψ | 14 | ||||||
Lyondell Chemical Co., German B-2 | ||||||||
43 | 6.00%, 12/20/2014 ±ψ | 14 | ||||||
Lyondell Chemical Co., German B-3 | ||||||||
43 | 6.00%, 12/20/2014 ±ψ | 14 | ||||||
Lyondell Chemical Co., Primary RC | ||||||||
56 | 5.75%, 12/20/2013 ±ψ | 19 | ||||||
Lyondell Chemical Co., Term Loan A | ||||||||
107 | 5.75%, 12/20/2013 ±ψ | 36 | ||||||
Lyondell Chemical Co., U.S. B-1 | ||||||||
187 | 7.00%, 12/20/2014 ±ψ | 62 | ||||||
Lyondell Chemical Co., U.S. B-2 | ||||||||
187 | 7.00%, 12/20/2014 ±ψ | 62 | ||||||
Lyondell Chemical Co., U.S. B-3 | ||||||||
187 | 7.00%, 12/20/2014 ±ψ | 62 | ||||||
Turbo Beta Ltd. | ||||||||
1,010 | 14.50%, 03/12/2018 ±⌂† | 444 | ||||||
2,774 | ||||||||
Finance - 0.6% | ||||||||
BNY Convergex Group LLC & EZE Castle Software | ||||||||
1,500 | 3.43%, 08/30/2013 ± | 1,376 | ||||||
Realogy Corp. | ||||||||
104 | 0.35%, 10/05/2013 ± | 66 | ||||||
387 | 4.18%, 10/05/2014 ± | 247 | ||||||
1,689 | ||||||||
Health Care - 0.4% | ||||||||
Generics International, Inc. | ||||||||
988 | 4.72%, 11/19/2014 ±⌂ | 740 |
8
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
SENIOR FLOATING RATE INTERESTS: NON-INVESTMENT GRADE ♦ - 6.4% — (continued) | ||||||||||||
Health Care - 0.4% — (continued) | ||||||||||||
Inverness Medical Innovation, Inc. | ||||||||||||
$ | 438 | 4.74%, 06/26/2015 ± | $ | 381 | ||||||||
1,121 | ||||||||||||
Services - 1.2% | ||||||||||||
Centaur LLC | ||||||||||||
277 | 9.25%, 10/30/2012 ± | 166 | ||||||||||
Emdeon Business Services LLC | ||||||||||||
500 | 5.89%, 05/16/2014 ± | 410 | ||||||||||
Golden Nugget, Inc. | ||||||||||||
250 | 3.69%, 12/31/2014 ±⌂ | 40 | ||||||||||
Greenwood Racing, Inc. | ||||||||||||
1,455 | 2.68%, 11/14/2011 ± | 1,237 | ||||||||||
New World Gaming Partners Ltd. | ||||||||||||
500 | 6.71%, 03/31/2015 ±⌂ | 75 | ||||||||||
Philosophy, Inc. | ||||||||||||
239 | 2.43%, 03/17/2014 ± | 96 | ||||||||||
Telesat Canada | ||||||||||||
455 | 3.55%, 09/01/2014 ± | 420 | ||||||||||
39 | 4.22%, 09/01/2014 ± | 36 | ||||||||||
WideOpenWest Finance LLC | ||||||||||||
275 | 7.49%, 06/29/2015 ± | 104 | ||||||||||
Yonkers Racing Corp. | ||||||||||||
723 | 10.50%, 08/12/2011 ± | 703 | ||||||||||
3,287 | ||||||||||||
Technology - 0.3% | ||||||||||||
Infor Global Solutions, Delayed Draw Term Loan | ||||||||||||
257 | 4.18%, 07/28/2012 ± | 190 | ||||||||||
Infor Global Solutions, U.S. Term Loan | ||||||||||||
493 | 4.18%, 07/28/2012 ± | 365 | ||||||||||
One Communications Corp. | ||||||||||||
459 | 4.53%, 06/30/2012 ± | 285 | ||||||||||
840 | ||||||||||||
Utilities - 0.5% | ||||||||||||
Astoria Generating Co. Acquisitions LLC | ||||||||||||
500 | 4.20%, 08/23/2013 ± | 408 | ||||||||||
Texas Competitive Electric Holdings Co. LLC | ||||||||||||
493 | 3.97%, 10/12/2014 ± | 333 | ||||||||||
Texas Competitive Electric Holdings Co., LLC | ||||||||||||
493 | 3.97%, 10/10/2014 ± | 335 | ||||||||||
TPF Generation Holdings LLC | ||||||||||||
375 | 4.68%, 12/21/2014 ± | 305 | ||||||||||
1,381 | ||||||||||||
Total senior floating rate interests: non-investment grade (cost $22,705) | $ | 17,394 | ||||||||||
U.S. GOVERNMENT AGENCIES - 14.4% | ||||||||||||
Federal Home Loan Mortgage Corporation - 4.5% | ||||||||||||
$ | 1,300 | 4.13%, 09/27/2013 | $ | 1,397 | ||||||||
3,000 | 4.88%, 11/15/2013 | 3,322 | ||||||||||
5,554 | 6.50%, 10/01/2037 - 01/01/2038 | 5,890 | ||||||||||
1,398 | 7.00%, 10/01/2037 | 1,491 | ||||||||||
12,100 | ||||||||||||
Federal National Mortgage Association - 7.7% | ||||||||||||
14,456 | 6.50%, 04/01/2037 - 02/01/2038 | 15,337 | ||||||||||
5,201 | 7.00%, 11/01/2037 - 05/01/2038 | 5,570 | ||||||||||
20,907 | ||||||||||||
Other Government Agencies - 2.2% | ||||||||||||
Small Business Administration Participation Certificates: | ||||||||||||
2,829 | 5.16%, 02/01/2028 | 2,951 | ||||||||||
2,810 | 5.31%, 05/01/2027 | 2,969 | ||||||||||
5,920 | ||||||||||||
Total U.S. government agencies (cost $37,601) | $ | 38,927 | ||||||||||
U.S. GOVERNMENT SECURITIES - 16.2% | ||||||||||||
U.S. Treasury Bonds - 0.9% | ||||||||||||
$ | 2,594 | 3.50%, 02/15/2039 | $ | 2,350 | ||||||||
U.S. Treasury Notes - 15.3% | ||||||||||||
8,173 | 0.88%, 03/31/2011 | 8,173 | ||||||||||
9,670 | 1.50%, 10/31/2010 | 9,780 | ||||||||||
14,328 | 1.75%, 03/31/2014 | 14,167 | ||||||||||
241 | 1.88%, 04/30/2014 | 240 | ||||||||||
9,266 | 2.75%, 02/15/2019 | 8,975 | ||||||||||
43,685 | ||||||||||||
Total U.S. government securities (cost $44,260) | $ | 43,685 | ||||||||||
Total long-term investments (cost $258,692) | $ | 246,550 | ||||||||||
SHORT-TERM INVESTMENTS - 5.9% | ||||||||||||
Investment Pools and Funds - 3.4% | ||||||||||||
4,530 | JP Morgan U.S. Government Money Market Fund | . | $ | 4,530 | ||||||||
— | State Street Bank U.S. Government Money Market Fund | — | ||||||||||
4,501 | Wells Fargo Advantage Government Money Market Fund | 4,501 | ||||||||||
9,031 | ||||||||||||
Repurchase Agreements - 2.2% | ||||||||||||
BNP Paribas Securities Corp. Repurchase Agreement (maturing on 05/01/2009 in the amount of $4,659, collateralized by U.S. Treasury Bond 5.38%, 2031, value of $4,747) | ||||||||||||
$ | 4,659 | 0.15%, 04/30/2009 | 4,659 | |||||||||
UBS Securities, Inc. Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,303, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $1,333) | ||||||||||||
1,303 | 0.13%, 04/30/2009 | 1,303 | ||||||||||
5,962 | ||||||||||||
U.S. Treasury Bills - 0.3% | ||||||||||||
800 | 0.20%, 05/21/2009 □○ | 800 | ||||||||||
Total short-term investments (cost $15,793) | $ | 15,793 | ||||||||||
Total investments (cost $274,485) ▲ | 97.3 | % | $ | 262,343 | ||||||||
Other assets and liabilities | 2.7 | % | 7,224 | |||||||||
Total net assets | 100.0 | % | $ | 269,567 | ||||||||
9
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 13.20% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $274,524 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 6,586 | ||
Unrealized Depreciation | (18,767 | ) | ||
Net Unrealized Depreciation | $ | (12,181 | ) | |
† | The aggregate value of securities valued in good faith at fair value as determined under policies and procedures established by and under the supervision of the Fund’s Board of Directors at April 30, 2009, was $910, which represents 0.34% of total net assets. This calculation excludes securities that are principally traded in certain foreign markets and whose prices were adjusted pursuant to a third party pricing service methodology approved by the Board of Directors. | |
• | Currently non-income producing. For long-term debt securities, items identified are in default as to payment of interest and/or principal. | |
‡ | This security, or a portion of this security, has been segregated to cover funding requirements on investment transactions settling in the future. | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
■ | Securities issued within terms of a private placement memorandum, exempt from registration under Rule 144A under the Securities Act of 1933, as amended, and may be sold only to qualified institutional buyers. Pursuant to guidelines adopted by the Board of Directors, these issues are determined to be liquid. The aggregate value of these securities at April 30, 2009, was $22,008, which represents 8.16% of total net assets. | |
§ | Securities contain some restrictions as to public resale. These securities comply with Regulation S, rules governing offers and sales made outside the United States without registration under the Securities Act of 1933, and are determined to be liquid. At April 30, 2009, the market value of these securities amounted to $4,715 or 1.75% of total net assets. | |
♠ | Perpetual maturity security. Maturity date shown is the first call date. | |
۞ | Convertible security. | |
► | The interest rates disclosed for interest only strips represent effective yields based upon estimated future cash flows at April 30, 2009. | |
○ | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
* | The cost of securities purchased on a when-issued or delayed delivery basis at April 30, 2009 was $111. | |
± | The interest rate disclosed for these securities represents the average coupon as of April 30, 2009. | |
ψ | The company is in bankruptcy. The investment held by the fund is current with respect to interest payments. | |
□ | Security pledged as initial margin deposit for open futures contracts at April 30, 2009. |
Unrealized | ||||||||||||||||
Number of | Expiration | Appreciation/ | ||||||||||||||
Description | Contracts* | Position | Month | (Depreciation) | ||||||||||||
2 Year U.S. Treasury Note | 33 | Long | Jun 2009 | $ | 21 | |||||||||||
5 Year U.S. Treasury Note | 121 | Long | Jun 2009 | $ | (93 | ) | ||||||||||
10 Year U.S. Treasury Note | 9 | Long | Jun 2009 | $ | (24 | ) | ||||||||||
U.S. Long Bond | 47 | Long | Jun 2009 | $ | (309 | ) | ||||||||||
$ | (405 | ) | ||||||||||||||
* | The number of contracts does not omit 000’s. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
04/2008 | $ | 700 | AES El Salvador Trust, 6.75%, 02/01/2016 - Reg S | $ | 653 | |||||||
09/2007 | $ | 250 | Arizona Chemical Co., 5.93%, 02/27/2014 | 232 | ||||||||
08/2007 | $ | 1,228 | Bayview Commercial Asset Trust, 7.50%, 09/25/2037 - 144A | 171 | ||||||||
07/2007 | $ | 250 | Bayview Financial Acquisition Trust, 8.05%, 08/28/2047 | 250 | ||||||||
05/2007 | $ | 4,575 | CBA Commercial Small Balance Commercial Mortgage, 7.25%, 07/25/2039 - 144A | 376 | ||||||||
07/2007 | $ | 86 | Credit-Based Asset Servicing and Securitization, 0.71%, 05/25/2036 - 144A | 84 | ||||||||
11/2007 | $ | 988 | Generics International, Inc., 4.72%, 11/19/2014 | 978 | ||||||||
09/2007 | $ | 555 | GMAC Mortgage Corp. Loan Trust, 6.05%, 12/25/2037 | 531 | ||||||||
06/2007 | $ | 250 | Golden Nugget, Inc., 3.69%, 12/31/2014 | 250 | ||||||||
05/2007 | $ | 299 | Greenwich Capital Commercial Funding Corp., 1.69%, 11/05/2021 - 144A | 290 | ||||||||
05/2007 | $ | 323 | Greenwich Capital Commercial Funding Corp., 1.89%, 11/05/2021 - 144A | 313 | ||||||||
10/2007 - 11/2008 | $ | 1,195 | Grupo Senda Autotransporte, 10.50%, 10/03/2015 - 144A | 1,092 | ||||||||
05/2007 | $ | 282 | IMPAC Commercial Mortgage Backed Trust, 1.94%, 02/25/2036 | 270 |
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Period | Shares/ | |||||||||||
Acquired | Par | Security | Cost Basis | |||||||||
12/2007 | $ | 621 | Lehman Brothers Small Balance Commercial, 5.91%, 06/25/2037 - 144A | $ | 621 | |||||||
09/2007 | $ | 388 | MacAndrews Amg Holdings LLC, 6.18%, 04/17/2012 | 379 | ||||||||
08/2007 | $ | 300 | MBNA Credit Card Master Note Trust, 6.80%, 07/15/2014 | 303 | ||||||||
07/2007 | $ | 500 | New World Gaming Partners Ltd., 6.71%, 03/31/2015 | 500 | ||||||||
08/2007 | $ | 100 | Renaissance Home Equity Loan Trust, Class M5, 7.00%, 09/25/2037 | 76 | ||||||||
08/2007 | $ | 125 | Renaissance Home Equity Loan Trust, Class M8, 7.00%, 09/25/2037 | 70 | ||||||||
06/2008-11/2008 | $ | 1,010 | Turbo Beta Ltd., 14.50%, 03/12/2018 | 1,010 | ||||||||
03/2008 | $ | 597 | Wells Fargo Alternative Loan Trust, 6.25%, 11/25/2037 | 482 |
♦ | Senior floating rate interests in which the Fund invests generally pay interest rates which are periodically adjusted by reference to a base short-term, floating lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as the London Inter-Bank Offered Rate (LIBOR), (ii) the prime rate offered by one or more major United States Banks, or (iii) the bank’s certificate of deposit rate. Senior floating rate interests often require prepayments from excess cash flows or permit the borrower to repay at its election. The rate at which the borrower repays cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. The interest rate is the rate in effect at April 30, 2009. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 20,596 | ||
Investment in securities — Level 2 | 236,433 | |||
Investment in securities — Level 3 | 5,314 | |||
Total | $ | 262,343 | ||
Other financial instruments — Level 1 * | $ | 21 | ||
Total | $ | 21 | ||
Liabilities: | ||||
Other financial instruments — Level 1 * | $ | 426 | ||
Total | $ | 426 | ||
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the investment. |
Assets: | ||||||||
Securities: | ||||||||
Balance as of October 31, 2008 | $ | 4,392 | ||||||
Net realized loss | (1,514 | ) | ||||||
Change in unrealized appreciation ♦ | 794 | |||||||
Net purchases | 105 | |||||||
Transfers in and /or out of Level 3 | 1,537 | |||||||
Balance as of April 30, 2009 | $ | 5,314 | ||||||
♦ | Change in unrealized gains or losses relating to assets still held at April 30, 2009 | $ | (299 | ) | ||||
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Assets: | ||||
Investments in securities, at fair value (cost $274,485) | $ | 262,343 | ||
Cash | 134 | |||
Foreign currency on deposit with custodian (cost $390) | 343 | |||
Receivables: | ||||
Investment securities sold | 2,986 | |||
Fund shares sold | 4,976 | |||
Dividends and interest | 3,461 | |||
Variation margin | 4 | |||
Other assets | 66 | |||
Total assets | 274,313 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 4,006 | |||
Fund shares redeemed | 335 | |||
Investment management fees | 24 | |||
Dividends | 289 | |||
Distribution fees | 21 | |||
Variation margin | 12 | |||
Accrued expenses | 39 | |||
Other liabilities | 20 | |||
Total liabilities | 4,746 | |||
Net assets | $ | 269,567 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 321,347 | |||
Accumulated undistributed net investment income | 280 | |||
Accumulated net realized loss on investments and foreign currency transactions | (39,466 | ) | ||
Unrealized depreciation of investments and the translation of assets and liabilities denominated in foreign currency | (12,594 | ) | ||
Net assets | $ | 269,567 | ||
Shares authorized | 750,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.72/$8.08 | ||
Shares outstanding | 15,567 | |||
Net assets | $ | 120,234 | ||
Class B: Net asset value per share | $ | 7.72 | ||
Shares outstanding | 1,318 | |||
Net assets | $ | 10,179 | ||
Class C: Net asset value per share | $ | 7.74 | ||
Shares outstanding | 11,712 | |||
Net assets | $ | 90,617 | ||
Class I: Net asset value per share | $ | 7.74 | ||
Shares outstanding | 3,716 | |||
Net assets | $ | 28,763 | ||
Class Y: Net asset value per share | $ | 7.72 | ||
Shares outstanding | 2,560 | |||
Net assets | $ | 19,774 | ||
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Investment Income: | ||||
Interest | $ | 8,735 | ||
Total investment income | 8,735 | |||
Expenses: | ||||
Investment management fees | 621 | |||
Transfer agent fees | 110 | |||
Distribution fees | ||||
Class A | 114 | |||
Class B | 38 | |||
Class C | 369 | |||
Custodian fees | 7 | |||
Accounting services | 20 | |||
Registration and filing fees | 43 | |||
Board of Directors’ fees | 2 | |||
Audit fees | 5 | |||
Other expenses | 35 | |||
Total expenses (before fees paid indirectly) | 1,364 | |||
Custodian fee offset | — | |||
Total fees paid indirectly | — | |||
Total expenses, net | 1,364 | |||
Net investment income | 7,371 | |||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net realized loss on investments in securities | (30,564 | ) | ||
Net realized gain on futures and swap contracts | 3,124 | |||
Net realized loss on foreign currency transactions | (441 | ) | ||
Net Realized Loss on Investments, Other Financial Instruments and Foreign Currency Transactions | (27,881 | ) | ||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions: | ||||
Net unrealized appreciation of investments | 39,186 | |||
Net unrealized appreciation of futures | 147 | |||
Net unrealized appreciation on translation of other assets and liabilities in foreign currencies | 363 | |||
Net Changes in Unrealized Appreciation of Investments, Other Financial Instruments and Foreign Currency Transactions | 39,696 | |||
Net Gain on Investments, Other Financial Instruments and Foreign Currency Transactions | 11,815 | |||
Net Increase in Net Assets Resulting from Operations | $ | 19,186 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 7,371 | $ | 14,226 | ||||
Net realized loss on investments, other financial instruments and foreign currency transactions | (27,881 | ) | (11,916 | ) | ||||
Net unrealized appreciation (depreciation) of investments, other financial instruments and foreign currency transactions | 39,696 | (52,134 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 19,186 | (49,824 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (2,998 | ) | (5,814 | ) | ||||
Class B | (216 | ) | (337 | ) | ||||
Class C | (2,169 | ) | (3,800 | ) | ||||
Class I | (811 | ) | (1,913 | ) | ||||
Class Y | (1,079 | ) | (1,949 | ) | ||||
Total distributions | (7,273 | ) | (13,813 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 35,844 | 61,055 | ||||||
Class B | 3,432 | 5,497 | ||||||
Class C | 18,758 | 70,941 | ||||||
Class I | 3,052 | 21,383 | ||||||
Class Y | (18,104 | ) | 34,722 | |||||
Net increase from capital share transactions | 42,982 | 193,598 | ||||||
Net increase in net assets | 54,895 | 129,961 | ||||||
Net Assets: | ||||||||
Beginning of period | 214,672 | 84,711 | ||||||
End of period | $ | 269,567 | $ | 214,672 | ||||
Accumulated undistributed net investment income | $ | 280 | $ | 182 | ||||
14
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Strategic Income Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Trade date for senior floating rate interests purchased in the primary market is considered the date on which the loan allocations are determined. Trade date for senior floating rate loan interests purchased in the secondary market is the date on which the transaction is entered into. | |||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. |
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c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | ||
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | |||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | |||
d) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
e) | Repurchase Agreements - A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | ||
f) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | ||
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | |||
g) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
h) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
i) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had entered into outstanding when-issued or forward commitments with a cost of $111. | ||
j) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
k) | Senior Floating Rate Interests —The Fund, as shown in the Schedule of Investments, may invest in senior floating rate interests. Senior floating rate interests hold the most senior position in the capital structure of a business entity (the “Borrower”), are typically secured by specific collateral and have a claim on the assets and/or stock of the Borrower that is senior to that held by subordinated debtholders and stockholders of the Borrower. Senior floating rate interests are typically structured and administered by a financial institution that acts as the agent of the lenders participating in the senior floating rate interest. Senior floating rate interests are typically rated below-investment-grade, which suggests they are more likely to default and generally pay higher interest rates than investment-grade loans. A default could lead to non-payment of income which would result in a reduction of income to the Fund and there can be no assurance that the liquidation of any collateral would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that such collateral could be readily liquidated. | ||
l) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the |
18
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Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | |||
Senior floating rate interests or debt securities purchased to replace a prepaid loan or a debt security may have lower yields than the yield on the prepaid loan or debt security. Senior floating rate interests generally are subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for the Borrower to repay, prepayments of senior floating rate interests may occur. As a result, the actual remaining maturity of senior floating rate interests held may be substantially less than the stated maturities shown in the Schedule of Investments. | |||
m) | Swaps — The Fund may enter into event linked swaps, including credit default swaps. The credit default swap market allows the Fund to manage credit risk through buying and selling credit protection on a specific issuer, an index, or a basket of issuers. A “buyer” of credit protection agrees to pay a counterparty to assume the credit risk of an issuer upon the occurrence of certain events. The “seller” of the protection receives periodic payments and agrees to assume the credit risk of an issuer upon the occurrence of certain events. A “seller’s” exposure is limited to the total notional amount of the credit default swap contract. A Fund will generally not buy protection on issuers that are not currently held by such Fund. | ||
The Fund may enter into interest rate swaps. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate multiplied by a “notional principal amount,” in return for payments equal to a fixed rate multiplied by the same amount, for a specific period of time. If a swap agreement provides for payments in different currencies, the parties might agree to exchange the notional principal amount as well. Swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. The Fund had no outstanding swaps as of April 30, 2009. | |||
n) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
o) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. | |||
Refer to the valuation hierarchy levels summary and the Level 3 roll forward reconciliation found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
p) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
q) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Futures and Options: |
Futures and Options Transactions — The Fund may invest in futures and options contracts in order to gain exposure to or protect against changes in the market. A futures contract is an agreement between two parties to buy and sell a security at a set price on a future date. When the Fund enters into such futures contracts, it is required to deposit with a futures commission merchant an amount of “initial margin” of cash, commercial paper or U.S. Treasury Bills. Subsequent payments, called variation margin, to and from the broker, are made on a daily basis as the price of the underlying security fluctuates, making the long and short positions in the futures contract more or less valuable (i.e., mark-to-market), which results in an unrealized gain or loss to the Fund. |
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At any time prior to the expiration of the futures contract, the Fund may close the position by taking an opposite position, which would effectively terminate the position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to the Fund and the Fund realizes a gain or loss. | |||
The use of futures contracts involves elements of market risk, which may exceed the amounts recognized in the Statement of Assets and Liabilities. Changes in the value of the futures contracts may decrease the effectiveness of the Fund’s strategy and potentially result in loss. The Fund, as shown on the Schedule of Investments, had outstanding futures contracts as of April 30, 2009. | |||
The premium paid by the Fund for the purchase of a call or put option is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options to reflect the current market value of the option as of the end of the reporting period. | |||
The Fund may write (sell) covered options. “Covered” means that so long as the Fund is obligated as the writer of an option, it will own either the underlying securities or currency or an option to purchase or sell the same underlying securities or currency having an expiration date of the covered option and an exercise price equal to or less than the exercise price of the covered option, or will pledge cash or other liquid securities having a value equal to or greater than the fluctuating market value of the option securities or currencies. The Fund receives a premium for writing a call or put option, which is recorded on the Fund’s Statement of Assets and Liabilities and subsequently “marked-to-market” through net unrealized appreciation (depreciation) of options. There is a risk of loss from a change in the value of such options, which may exceed the related premiums received. As of April 30, 2009, there were no outstanding written options contracts. |
4. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 @ | |||||||
Ordinary Income | $ | 13,558 | $ | 1,168 | ||||
Long-Term Capital Gains * | — | 1 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). | |
@ | For the period May 15, 2007 (commencement of operations) through October 31, 2007. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
As of October 31, 2008, the Fund’s components of distributable earnings (deficit) on a tax basis were as follows: |
Amount | ||||
Undistributed Ordinary Income | $ | 528 | ||
Accumulated Capital Losses* | $ | (12,098 | ) | |
Unrealized Depreciation† | $ | (51,777 | ) | |
Total Accumulated Deficit | $ | (63,347 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $412 and increase accumulated net realized gain by $412. | ||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 12,098 | ||
Total | $ | 12,098 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
5. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.550 | % | ||
On next $500 million | 0.500 | % | ||
On next $4 billion | 0.475 | % | ||
On next $5 billion | 0.455 | % | ||
Over $10 billion | 0.445 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.018 | % | ||
On next $5 billion | 0.016 | % | ||
Over $10 billion | 0.014 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class Y | ||||||||||||
1.15% | 1.90 | % | 1.90 | % | 0.90 | % | 0.90 | % |
d) | Fees Paid Indirectly - The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||
Six-Month | ||||||||||||
Period | Year Ended | Year Ended | ||||||||||
Ended April | October 31, | October 31, | ||||||||||
30, 2009 | 2008 | 2007 | ||||||||||
Class A Shares | 1.01 | % | 0.61 | % | 0.46 | %* | ||||||
Class B Shares | 1.85 | 1.45 | 1.25 | † | ||||||||
Class C Shares | 1.75 | 1.38 | 1.26 | ‡ | ||||||||
Class I Shares | 0.76 | 0.38 | 0.27 | § | ||||||||
Class Y Shares | 0.65 | 0.30 | 0.24 | ** |
* | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
† | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
‡ | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
§ | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
** | From August 31, 2007 (commencement of operations), through October 31, 2007 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $707 and contingent deferred sales charges of $50 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $25. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $108 for providing such services. These fees are accrued daily and paid monthly. |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 94,508 | ||
Sales Proceeds Excluding U.S. Government Obligations | 107,008 | |||
Cost of Purchases for U.S. Government Obligations | 126,083 | |||
Sales Proceeds for U.S. Government Obligations | 87,567 |
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7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,282 | 272 | (2,767 | ) | — | 4,787 | 12,059 | 415 | (6,100 | ) | — | 6,374 | ||||||||||||||||||||||||||||
Amount | $ | 54,274 | $ | 2,025 | $ | (20,455 | ) | $ | — | $ | 35,844 | $ | 111,930 | $ | 3,769 | $ | (54,644 | ) | $ | — | $ | 61,055 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 582 | 20 | (142 | ) | — | 460 | 816 | 24 | (253 | ) | — | 587 | ||||||||||||||||||||||||||||
Amount | $ | 4,343 | $ | 146 | $ | (1,057 | ) | $ | — | $ | 3,432 | $ | 7,570 | $ | 214 | $ | (2,287 | ) | $ | — | $ | 5,497 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 3,784 | 177 | (1,464 | ) | — | 2,497 | 9,710 | 244 | (2,509 | ) | — | 7,445 | ||||||||||||||||||||||||||||
Amount | $ | 28,263 | $ | 1,318 | $ | (10,823 | ) | $ | — | $ | 18,758 | $ | 90,974 | $ | 2,188 | $ | (22,221 | ) | $ | — | $ | 70,941 | ||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,345 | 82 | (1,038 | ) | — | 389 | 4,628 | 156 | (2,605 | ) | — | 2,179 | ||||||||||||||||||||||||||||
Amount | $ | 10,079 | $ | 612 | $ | (7,639 | ) | $ | — | $ | 3,052 | $ | 43,202 | $ | 1,415 | $ | (23,234 | ) | $ | — | $ | 21,383 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 85 | 144 | (2,667 | ) | — | (2,438 | ) | 3,946 | 218 | (256 | ) | — | 3,908 | |||||||||||||||||||||||||||
Amount | $ | 632 | $ | 1,064 | $ | (19,800 | ) | $ | — | $ | (18,104 | ) | $ | 34,952 | $ | 1,964 | $ | (2,194 | ) | $ | — | $ | 34,722 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 6 | $ | 49 | |||||
For the Year Ended October 31, 2008 | 5 | $ | 45 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.35 | $ | 0.24 | $ | — | $ | 0.37 | $ | 0.61 | $ | (0.24 | ) | $ | — | $ | — | $ | (0.24 | ) | $ | 0.37 | $ | 7.72 | 8.54 | %(e) | $ | 120,234 | 1.01 | %(f) | 1.01 | %(f) | 1.01 | %(f) | 6.66 | %(f) | 92 | % | |||||||||||||||||||||||||||||||||||
B | 7.35 | 0.21 | — | 0.37 | 0.58 | (0.21 | ) | — | — | (0.21 | ) | 0.37 | 7.72 | 8.08 | (e) | 10,179 | 1.85 | (f) | 1.85 | (f) | 1.85 | (f) | 5.80 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 7.36 | 0.22 | — | 0.38 | 0.60 | (0.22 | ) | — | — | (0.22 | ) | 0.38 | 7.74 | 8.28 | (e) | 90,617 | 1.75 | (f) | 1.75 | (f) | 1.75 | (f) | 5.96 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 7.37 | 0.26 | — | 0.36 | 0.62 | (0.25 | ) | — | — | (0.25 | ) | 0.37 | 7.74 | 8.79 | (e) | 28,763 | 0.76 | (f) | 0.76 | (f) | 0.76 | (f) | 6.98 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.35 | 0.26 | — | 0.37 | 0.63 | (0.26 | ) | — | — | (0.26 | ) | 0.37 | 7.72 | 8.73 | (e) | 19,774 | 0.65 | (f) | 0.65 | (f) | 0.65 | (f) | 7.32 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.75 | 0.65 | — | (2.39 | ) | (1.74 | ) | (0.66 | ) | — | — | (0.66 | ) | (2.40 | ) | 7.35 | (19.02 | ) | 79,242 | 0.97 | 0.61 | 0.61 | 7.14 | 132 | |||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.75 | 0.58 | — | (2.40 | ) | (1.82 | ) | (0.58 | ) | — | — | (0.58 | ) | (2.40 | ) | 7.35 | (19.66 | ) | 6,308 | 1.81 | 1.45 | 1.45 | 6.33 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.76 | 0.59 | — | (2.40 | ) | (1.81 | ) | (0.59 | ) | — | — | (0.59 | ) | (2.40 | ) | 7.36 | (19.62 | ) | 67,863 | 1.75 | 1.38 | 1.38 | 6.40 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
I | 9.77 | 0.69 | — | (2.41 | ) | (1.72 | ) | (0.68 | ) | — | — | (0.68 | ) | (2.40 | ) | 7.37 | (18.77 | ) | 24,508 | 0.75 | 0.38 | 0.38 | 7.37 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.76 | 0.69 | — | (2.41 | ) | (1.72 | ) | (0.69 | ) | — | — | (0.69 | ) | (2.41 | ) | 7.35 | (18.85 | ) | 36,751 | 0.67 | 0.30 | 0.30 | 7.49 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
From (date shares became available to public) May 31, 2007, through October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(g) | 9.90 | 0.29 | — | (0.14 | ) | 0.15 | (0.30 | ) | — | — | (0.30 | ) | (0.15 | ) | 9.75 | 1.53 | (e) | 42,949 | 1.01 | (f) | 0.46 | (f) | 0.46 | (f) | 7.15 | (f) | 40 | ||||||||||||||||||||||||||||||||||||||||||||||
B(h) | 9.90 | 0.26 | — | (0.15 | ) | 0.11 | (0.26 | ) | — | — | (0.26 | ) | (0.15 | ) | 9.75 | 1.21 | (e) | 2,644 | 1.80 | (f) | 1.25 | (f) | 1.25 | (f) | 6.42 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C(i) | 9.90 | 0.27 | — | (0.15 | ) | 0.12 | (0.26 | ) | — | — | (0.26 | ) | (0.14 | ) | 9.76 | 1.31 | (e) | 17,275 | 1.81 | (f) | 1.26 | (f) | 1.26 | (f) | 6.47 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
I(j) | 9.90 | 0.31 | — | (0.13 | ) | 0.18 | (0.31 | ) | — | — | (0.31 | ) | (0.13 | ) | 9.77 | 1.84 | (e) | 11,212 | 0.82 | (f) | 0.27 | (f) | 0.27 | (f) | 7.49 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y(k) | 9.57 | 0.12 | — | 0.19 | 0.31 | (0.12 | ) | — | — | (0.12 | ) | 0.19 | 9.76 | 3.28 | (e) | 10,631 | 0.80 | (f) | 0.25 | (f) | 0.25 | (f) | 7.73 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on May 31, 2007. | |
(h) | Commenced operations on May 31, 2007. | |
(i) | Commenced operations on May 31, 2007. | |
(j) | Commenced operations on May 31, 2007. | |
(k) | Commenced operations on August 31, 2007. |
26
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27
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Directors and Officers (Unaudited) — (continued)
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
28
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29
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,085.41 | $ | 5.22 | $ | 1,000.00 | $ | 1,019.78 | $ | 5.05 | 1.01 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,080.83 | $ | 9.54 | $ | 1,000.00 | $ | 1,015.62 | $ | 9.24 | 1.85 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,082.75 | $ | 9.03 | $ | 1,000.00 | $ | 1,016.11 | $ | 8.74 | 1.75 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 1,087.91 | $ | 3.93 | $ | 1,000.00 | $ | 1,021.02 | $ | 3.80 | 0.76 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,087.27 | $ | 3.36 | $ | 1,000.00 | $ | 1,021.57 | $ | 3.25 | 0.65 | 181 | 365 |
30
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Target Retirement 2010 A# | 9/30/05 | -24.90 | % | -3.67 | % | |||||||
Target Retirement 2010 A## | 9/30/05 | -29.03 | % | -5.18 | % | |||||||
Target Retirement 2010 B# | 9/30/05 | -25.59 | % | -4.43 | % | |||||||
Target Retirement 2010 B## | 9/30/05 | -29.24 | % | -5.11 | % | |||||||
Target Retirement 2010 C# | 9/30/05 | -25.53 | % | -4.43 | % | |||||||
Target Retirement 2010 C## | 9/30/05 | -26.26 | % | -4.43 | % | |||||||
Target Retirement 2010 R3# | 9/30/05 | -25.21 | % | -3.83 | % | |||||||
Target Retirement 2010 R4# | 9/30/05 | -24.91 | % | -3.59 | % | |||||||
Target Retirement 2010 R5# | 9/30/05 | -24.77 | % | -3.47 | % | |||||||
Target Retirement 2010 Y# | 9/30/05 | -24.87 | % | -3.45 | % |
# | Without sales charge | |
## | With sales charge | |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class R3, R4 and R5 shares commenced operations on 12/22/06. | |
Performance prior to 12/22/06 reflects Class Y performance. | ||
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.7 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 0.7 | |||
SPDR DJ Wilshire REIT ETF | 0.9 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 8.4 | |||
The Hartford Capital Appreciation II Fund, Class Y | 2.7 | |||
The Hartford Disciplined Equity Fund, Class Y | 2.6 | |||
The Hartford Dividend and Growth Fund, Class Y | 4.4 | |||
The Hartford Equity Income Fund, Class Y | 2.6 | |||
The Hartford Floating Rate Fund, Class Y | 3.6 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.8 | |||
The Hartford Global Growth Fund, Class Y | 1.8 | |||
The Hartford Growth Fund, Class Y | 3.4 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.0 | |||
The Hartford High Yield Fund, Class Y | 4.1 | |||
The Hartford Income Fund, Class Y | 5.5 | |||
The Hartford Inflation Plus Fund, Class Y | 9.2 | |||
The Hartford International Opportunities Fund, Class Y | 5.7 | |||
The Hartford International Small Company Fund, Class Y | 3.1 | |||
The Hartford MidCap Fund, Class Y | 2.6 | |||
The Hartford Select SmallCap Value Fund, Class Y | 0.5 | |||
The Hartford Short Duration Fund, Class Y | 2.7 | |||
The Hartford Small Company Fund, Class Y | 2.6 | |||
The Hartford Strategic Income Fund, Class Y | 4.9 | |||
The Hartford Total Return Bond Fund, Class Y | 11.8 | |||
The Hartford Value Fund, Class Y | 12.3 | |||
Other Assets and Liabilities | 0.4 | |||
Total | 100.0 | % | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES — 97.3% | ||||||||||||
EQUITY FUNDS — 55.5% | ||||||||||||
53 | The Hartford Capital Appreciation Fund, Class Y | $ | 1,311 | |||||||||
47 | The Hartford Capital Appreciation II Fund, Class Y • | 420 | ||||||||||
44 | The Hartford Disciplined Equity Fund, Class Y | 401 | ||||||||||
50 | The Hartford Dividend and Growth Fund, Class Y | 684 | ||||||||||
44 | The Hartford Equity Income Fund, Class Y | 400 | ||||||||||
16 | The Hartford Fundamental Growth Fund, Class Y • | 120 | ||||||||||
26 | The Hartford Global Growth Fund, Class Y • | 281 | ||||||||||
44 | The Hartford Growth Fund, Class Y • | 528 | ||||||||||
17 | The Hartford Growth Opportunities Fund, Class Y • | 309 | ||||||||||
88 | The Hartford International Opportunities Fund, Class Y | 891 | ||||||||||
62 | The Hartford International Small Company Fund, Class Y | 481 | ||||||||||
26 | The Hartford MidCap Fund, Class Y • | 409 | ||||||||||
12 | The Hartford Select SmallCap Value Fund, Class Y | 80 | ||||||||||
31 | The Hartford Small Company Fund, Class Y • | 412 | ||||||||||
239 | The Hartford Value Fund, Class Y | 1,924 | ||||||||||
Total equity funds (cost $10,686) | $ | 8,651 | ||||||||||
FIXED INCOME FUNDS — 41.8% | ||||||||||||
77 | The Hartford Floating Rate Fund, Class Y | $ | 559 | |||||||||
113 | The Hartford High Yield Fund, Class Y | 645 | ||||||||||
100 | The Hartford Income Fund, Class Y | 859 | ||||||||||
134 | The Hartford Inflation Plus Fund, Class Y | 1,433 | ||||||||||
47 | The Hartford Short Duration Fund, Class Y | 427 | ||||||||||
99 | The Hartford Strategic Income Fund, Class Y | 764 | ||||||||||
192 | The Hartford Total Return Bond Fund, Class Y | 1,845 | ||||||||||
Total fixed income funds (cost $6,867) | $ | 6,532 | ||||||||||
Total investments in affiliated investment companies (cost $17,553) | $ | 15,183 | ||||||||||
EXCHANGE TRADED FUNDS — 2.3% | ||||||||||||
4 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 102 | |||||||||
4 | SPDR DJ Wilshire International Real Estate ETF | 111 | ||||||||||
4 | SPDR DJ Wilshire REIT ETF | 142 | ||||||||||
Total exchange traded funds (cost $549) | $ | 355 | ||||||||||
Total long-term investments (cost $18,102) | $ | 15,538 | ||||||||||
SHORT-TERM INVESTMENTS — 0.0% | ||||||||||||
1 | State Street Bank Money Market Fund | $ | 1 | |||||||||
Total short-term investments (cost $1) | $ | 1 | ||||||||||
Total investments (cost $18,103) ▲ | 99 .6 | % | $ | 15,539 | ||||||||
Other assets and liabilities | 0 .4 | % | 63 | |||||||||
Total net assets | 100.0 | % | $ | 15,602 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $18,302 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 174 | ||
Unrealized Depreciation | (2,937 | ) | ||
Net Unrealized Depreciation | $ | (2,763 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 15,539 | ||
Total | $ | 15,539 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $550) | $ | 356 | ||
Investments in underlying affiliated funds, at fair value (cost $17,553) | 15,183 | |||
Receivables: | ||||
Investment securities sold | 9 | |||
Fund shares sold | 4 | |||
Dividends and interest | 21 | |||
Other assets | 48 | |||
Total assets | 15,621 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 14 | |||
Investment management fees | — | |||
Distribution fees | 1 | |||
Accrued expenses | 4 | |||
Total liabilities | 19 | |||
Net assets | $ | 15,602 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 20,736 | |||
Accumulated undistributed net investment income | 93 | |||
Accumulated net realized loss on investments | (2,663 | ) | ||
Unrealized depreciation of investments | (2,564 | ) | ||
Net assets | $ | 15,602 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.20/$7.61 | ||
Shares outstanding | 919 | |||
Net assets | $ | 6,614 | ||
Class B: Net asset value per share | $ | 7.17 | ||
Shares outstanding | 55 | |||
Net assets | $ | 392 | ||
Class C: Net asset value per share | $ | 7.17 | ||
Shares outstanding | 74 | |||
Net assets | $ | 532 | ||
Class R3: Net asset value per share | $ | 7.18 | ||
Shares outstanding | 17 | |||
Net assets | $ | 125 | ||
Class R4: Net asset value per share | $ | 7.20 | ||
Shares outstanding | 904 | |||
Net assets | $ | 6,510 | ||
Class R5: Net asset value per share | $ | 7.20 | ||
Shares outstanding | 183 | |||
Net assets | $ | 1,317 | ||
Class Y: Net asset value per share | $ | 7.19 | ||
Shares outstanding | 16 | |||
Net assets | $ | 112 | ||
5
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For the Six Month Period Ended April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 6 | ||
Dividends from underlying affiliated funds | 271 | |||
Total investment income | 277 | |||
Expenses: | ||||
Investment management fees | 11 | |||
Transfer agent fees | 3 | |||
Distribution fees | ||||
Class A | 8 | |||
Class B | 2 | |||
Class C | 3 | |||
Class R3 | — | |||
Class R4 | 6 | |||
Custodian fees | — | |||
Accounting services | 1 | |||
Registration and filing fees | 32 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 9 | |||
Total expenses (before waivers) | 79 | |||
Expense waivers | (64 | ) | ||
Total waivers | (64 | ) | ||
Total expenses, net | 15 | |||
Net investment income | 262 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (1,546 | ) | ||
Net Realized Loss on Investments | (1,546 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 1,496 | |||
Net Changes in Unrealized Appreciation of Investments | 1,496 | |||
Net Loss on Investments | (50 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 212 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 262 | $ | 358 | ||||
Net realized loss on investments | (1,546 | ) | (946 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 1,496 | (4,566 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 212 | (5,154 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (101 | ) | (343 | ) | ||||
Class B | (5 | ) | (20 | ) | ||||
Class C | (9 | ) | (18 | ) | ||||
Class R3 | (2 | ) | — | |||||
Class R4 | (81 | ) | (89 | ) | ||||
Class R5 | (17 | ) | (22 | ) | ||||
Class Y | (2 | ) | (6 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (154 | ) | |||||
Class B | — | (10 | ) | |||||
Class C | — | (15 | ) | |||||
Class R4 | — | (9 | ) | |||||
Class Y | — | (3 | ) | |||||
Total distributions | (217 | ) | (689 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 204 | 2,108 | ||||||
Class B | (12 | ) | 95 | |||||
Class C | (49 | ) | 82 | |||||
Class R3 | 111 | 1 | ||||||
Class R4 | 1,584 | 6,073 | ||||||
Class R5 | 175 | 1,626 | ||||||
Class Y | 2 | 10 | ||||||
Net increase from capital share transactions | 2,015 | 9,995 | ||||||
Net increase in net assets | 2,010 | 4,152 | ||||||
Net Assets: | ||||||||
Beginning of period | 13,592 | 9,440 | ||||||
End of period | $ | 15,602 | $ | 13,592 | ||||
Accumulated undistributed net investment income | $ | 93 | $ | 48 | ||||
7
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2010 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary |
8
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markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial |
10
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statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 607 | $ | 148 | ||||
Long-Term Capital Gains * | 82 | — |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 47 | ||
Accumulated Capital Losses* | $ | (918 | ) | |
Unrealized Depreciation† | $ | (4,258 | ) | |
Total Accumulated Deficit | $ | (5,129 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital |
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accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $168 and decrease accumulated net realized loss by $168. |
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 918 | ||
Total | $ | 918 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement - Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month |
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April 30, 2009 (Unaudited)
(000’s Omitted)
period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||
1.00% | 1.75% | 1.75% | 1.15% | 0.85% | 0.80% | 0.80% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $8 and contingent deferred sales charges of $2 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $3 for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class B | 15 | |||
Class C | 15 | |||
Class R3 | 1 | |||
Class Y | 16 |
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6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 5,441 | ||
Sales Proceeds Excluding U.S. Government Obligations | 3,364 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 311 | 15 | (308 | ) | — | 18 | 544 | 50 | (401 | ) | — | 193 | ||||||||||||||||||||||||||||
Amount | $ | 2,112 | $ | 100 | $ | (2,008 | ) | $ | — | $ | 204 | $ | 5,204 | $ | 496 | $ | (3,592 | ) | $ | — | $ | 2,108 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | 1 | (4 | ) | — | (1 | ) | 24 | 3 | (21 | ) | — | 6 | |||||||||||||||||||||||||||
Amount | $ | 13 | $ | 3 | $ | (28 | ) | $ | — | $ | (12 | ) | $ | 235 | $ | 31 | $ | (171 | ) | $ | — | $ | 95 | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 23 | 1 | (32 | ) | — | (8 | ) | 47 | 3 | (38 | ) | — | 12 | |||||||||||||||||||||||||||
Amount | $ | 153 | $ | 8 | $ | (210 | ) | $ | — | $ | (49 | ) | $ | 420 | $ | 32 | $ | (370 | ) | $ | — | $ | 82 | |||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 16 | — | — | — | 16 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | 110 | $ | 2 | $ | (1 | ) | $ | — | $ | 111 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 303 | 12 | (78 | ) | — | 237 | 780 | 11 | (165 | ) | — | 626 | ||||||||||||||||||||||||||||
Amount | $ | 2,038 | $ | 81 | $ | (535 | ) | $ | — | $ | 1,584 | $ | 7,414 | $ | 98 | $ | (1,439 | ) | $ | — | $ | 6,073 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 62 | 3 | (38 | ) | — | 27 | 232 | 2 | (79 | ) | — | 155 | ||||||||||||||||||||||||||||
Amount | $ | 416 | $ | 17 | $ | (258 | ) | $ | — | $ | 175 | $ | 2,189 | $ | 23 | $ | (586 | ) | $ | — | $ | 1,626 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | 1 | — | — | 1 | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 2 | $ | — | $ | — | $ | 2 | $ | — | $ | 10 | $ | — | $ | — | $ | 10 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||
For the Six-Month Period Ended April 30, 2009 | — | $ | 1 | |||
For the Year Ended October 31, 2008 | — | $ | 5 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
9. | Proposed Reclassifications: | |
At a meeting held on February 4, 2009, the Board of Directors of the Fund approved a transaction under which Class B shares and Class C shares of the Fund would become Class A shares of the Fund. Following the transaction, each shareholder owning Class B shares will own Class A shares equal to the aggregate value of their Class B shares and each shareholder owning Class C shares will own Class A shares equal to the aggregate value of their Class C shares (the “Reclassification”). | ||
Effective February 13, 2009, Class B shares and Class C shares of the Fund are no longer sold to new investors or existing shareholders (except through reinvested dividends) nor are they eligible for exchanges from other Hartford Mutual Funds. | ||
Shareholders of Class B and Class C shares are required to approve the Reclassifications. The Board of Directors of the Fund has called for a Special Joint Meeting of Shareholders of the Funds to be held on or about July 16, 2009, for the purpose of seeking the approval of the Reclassifications by the Class B and Class C shareholders of the Fund. | ||
If the Reclassifications are approved, sales charges will not be charged shareholders of Class B and Class C shares; contingent deferred sales charges for Class B and Class C shares will be waived; and distribution and service (12b-1) fees on shares classified as Class B and Class C shares before the Reclassifications will be reduced from 1.00% to 0.25% after the Reclassifications. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.24 | $ | 0.13 | $ | — | $ | (0.06 | ) | $ | 0.07 | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.04 | ) | $ | 7.20 | 1 .18 | %(e) | $ | 6,614 | 1 .04 | %(f) | 0 .23 | %(f) | 0 .23 | %(f) | 3 .73 | %(f) | 24 | % | |||||||||||||||||||||||||||||||||
B | 7.22 | 0.10 | — | (0.06 | ) | 0.04 | (0.09 | ) | — | — | (0.09 | ) | (0.05 | ) | 7.17 | 0 .70 | (e) | 392 | 1 .97 | (f) | 0 .98 | (f) | 0 .98 | (f) | 3 .08 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C | 7.23 | 0.10 | — | (0.06 | ) | 0.04 | (0.10 | ) | — | — | (0.10 | ) | (0.06 | ) | 7.17 | 0 .74 | (e) | 532 | 1 .96 | (f) | 0 .98 | (f) | 0 .98 | (f) | 3 .19 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.23 | 0.08 | — | (0.02 | ) | 0.06 | (0.11 | ) | — | — | (0.11 | ) | (0.05 | ) | 7.18 | 0 .96 | (e) | 125 | 1 .51 | (f) | 0 .38 | (f) | 0 .38 | (f) | 3 .93 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.23 | 0.13 | — | (0.05 | ) | 0.08 | (0.11 | ) | — | — | (0.11 | ) | (0.03 | ) | 7.20 | 1 .17 | (e) | 6,510 | 1 .14 | (f) | 0 .08 | (f) | 0 .08 | (f) | 3 .92 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.24 | 0.14 | — | (0.07 | ) | 0.07 | (0.11 | ) | — | — | (0.11 | ) | (0.04 | ) | 7.20 | 1 .23 | (e) | 1,317 | 0 .85 | (f) | 0 .03 | (f) | 0 .03 | (f) | 3 .84 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y | 7.23 | 0.13 | — | (0.06 | ) | 0.07 | (0.11 | ) | — | — | (0.11 | ) | (0.04 | ) | 7.19 | 1 .13 | (e) | 112 | 0 .75 | (f) | 0 .03 | (f) | 0 .03 | (f) | 3 .98 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.66 | 0.30 | — | (3.10 | ) | (2.80 | ) | (0.41 | ) | (0.21 | ) | — | (0.62 | ) | (3.42 | ) | 7.24 | (27.74 | ) | 6,520 | 1.02 | 0.42 | 0.42 | 2.87 | 68 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.64 | 0.18 | — | (3.06 | ) | (2.88 | ) | (0.33 | ) | (0.21 | ) | — | (0.54 | ) | (3.42 | ) | 7.22 | (28.36 | ) | 406 | 1.88 | 1.25 | 1.25 | 1.83 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.64 | 0.28 | — | (3.16 | ) | (2.88 | ) | (0.32 | ) | (0.21 | ) | — | (0.53 | ) | (3.41 | ) | 7.23 | (28.31 | ) | 593 | 1.93 | 1.25 | 1.25 | 2.39 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.66 | 0.26 | — | (3.11 | ) | (2.85 | ) | (0.37 | ) | (0.21 | ) | — | (0.58 | ) | (3.43 | ) | 7.23 | (28.14 | ) | 8 | 1.47 | 0.87 | 0.87 | 2.70 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.66 | 0.36 | — | (3.17 | ) | (2.81 | ) | (0.41 | ) | (0.21 | ) | — | (0.62 | ) | (3.43 | ) | 7.23 | (27.84 | ) | 4,823 | 1.04 | 0.45 | 0.45 | 1.67 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.67 | 0.37 | — | (3.16 | ) | (2.79 | ) | (0.43 | ) | (0.21 | ) | — | (0.64 | ) | (3.43 | ) | 7.24 | (27.64 | ) | 1,131 | 0.71 | 0.11 | 0.11 | 1.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.66 | 0.33 | — | (3.11 | ) | (2.78 | ) | (0.44 | ) | (0.21 | ) | — | (0.65 | ) | (3.43 | ) | 7.23 | (27.60 | ) | 111 | 0.76 | 0.16 | 0.16 | 3.40 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.65 | 0.28 | — | 1.01 | 1.29 | (0.28 | ) | — | — | (0.28 | ) | 1.01 | 10.66 | 13.55 | 7,547 | 1.81 | 0.50 | 0.50 | 2.46 | 56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.65 | 0.21 | — | 0.99 | 1.20 | (0.21 | ) | — | — | (0.21 | ) | 0.99 | 10.64 | 12.61 | 533 | 2.66 | 1.25 | 1.25 | 1.91 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.64 | 0.21 | — | 1.00 | 1.21 | (0.21 | ) | — | — | (0.21 | ) | 1.00 | 10.64 | 12.68 | 743 | 2.59 | 1.25 | 1.25 | 2.08 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 9.76 | 0.14 | — | 0.89 | 1.03 | (0.13 | ) | — | — | (0.13 | ) | 0.90 | 10.66 | 10 .56 | (e) | 11 | 2 .32 | (f) | 0 .90 | (f) | 0 .90 | (f) | 1 .62 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 9.76 | 0.16 | — | 0.89 | 1.05 | (0.15 | ) | — | — | (0.15 | ) | 0.90 | 10.66 | 10 .88 | (e) | 442 | 1 .97 | (f) | 0 .60 | (f) | 0 .60 | (f) | 2 .03 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 9.76 | 0.19 | — | 0.89 | 1.08 | (0.17 | ) | — | — | (0.17 | ) | 0.91 | 10.67 | 11 .15 | (e) | 11 | 1 .72 | (f) | 0 .30 | (f) | 0 .30 | (f) | 2 .23 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.65 | 0.32 | — | 0.99 | 1.31 | (0.30 | ) | — | — | (0.30 | ) | 1.01 | 10.66 | 13.83 | 153 | 1.54 | 0.20 | 0.20 | 3.21 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.82 | 0.47 | — | 0.22 | 0.69 | (0.50 | ) | — | (0.36 | ) | (0.86 | ) | (0.17 | ) | 9.65 | 7.43 | 1,618 | 8.32 | 0.54 | 0.54 | 2.01 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.82 | 0.34 | — | 0.27 | 0.61 | (0.42 | ) | — | (0.36 | ) | (0.78 | ) | (0.17 | ) | 9.65 | 6.58 | 226 | 9.17 | 1.29 | 1.29 | 1.24 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.82 | 0.40 | — | 0.21 | 0.61 | (0.43 | ) | — | (0.36 | ) | (0.79 | ) | (0.18 | ) | 9.64 | 6.53 | 475 | 9.13 | 1.30 | 1.30 | 1.63 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.83 | 0.50 | — | 0.21 | 0.71 | (0.53 | ) | — | (0.36 | ) | (0.89 | ) | (0.18 | ) | 9.65 | 7.62 | 135 | 8.02 | 0.23 | 0.23 | 2.31 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) September 30, 2005, through October 31, 2005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(j) | 10.00 | 0.02 | — | (0.20 | ) | (0.18 | ) | — | — | — | — | (0.18 | ) | 9.82 | (1 .80 | ) (e) | 11 | 0 .65 | (f) | 0 .49 | (f) | 0 .49 | (f) | 2 .53 | (f) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
B(k) | 10.00 | 0.01 | — | (0.19 | ) | (0.18 | ) | — | — | — | — | (0.18 | ) | 9.82 | (1 .80 | ) (e) | 10 | 1 .41 | (f) | 1 .26 | (f) | 1 .26 | (f) | 1 .61 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
C(l) | 10.00 | 0.01 | — | (0.19 | ) | (0.18 | ) | — | — | — | — | (0.18 | ) | 9.82 | (1 .80 | ) (e) | 10 | 1 .41 | (f) | 1 .27 | (f) | 1 .27 | (f) | 1 .60 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y(m) | 10.00 | 0.02 | — | (0.19 | ) | (0.17 | ) | — | — | — | — | (0.17 | ) | 9.83 | (1 .70 | ) (e) | 10 | 0 .32 | (f) | 0 .21 | (f) | 0 .21 | (f) | 2 .65 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Expense ratios do not include expenses of the underlying funds. | |
(c) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(d) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(e) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on September 30, 2005. | |
(l) | Commenced operations on September 30, 2005. | |
(m) | Commenced operations on September 30, 2005. | |
(n) | Commenced operations on September 30, 2005. |
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18
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
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Directors and Officers (Unaudited) — (continued)
20
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,011.82 | $ | 1.14 | $ | 1,000.00 | $ | 1,023.65 | $ | 1.15 | 0.23 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,006.96 | $ | 4.87 | $ | 1,000.00 | $ | 1,019.93 | $ | 4.90 | 0.98 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,007.42 | $ | 4.87 | $ | 1,000.00 | $ | 1,019.93 | $ | 4.90 | 0.98 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,009.63 | $ | 1.89 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,011.68 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.39 | $ | 0.40 | 0.08 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,012.31 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,011.33 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
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(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class R3
Inception | Since | |||||||
Date | Inception | |||||||
Target Retirement 2015 R3 | 10/31/08 | 0.01 | % | |||||
Target Retirement 2015 R4 | 10/31/08 | 0.16 | % | |||||
Target Retirement 2015 R5 | 10/31/08 | 0.17 | % |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.0 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 1.5 | |||
SPDR DJ Wilshire REIT ETF | 1.4 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 10.6 | |||
The Hartford Capital Appreciation II Fund, Class Y | 5.8 | |||
The Hartford Disciplined Equity Fund, Class Y | 4.3 | |||
The Hartford Dividend and Growth Fund, Class Y | 4.1 | |||
The Hartford Floating Rate Fund, Class Y | 3.3 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.9 | |||
The Hartford Global Growth Fund, Class Y | 2.0 | |||
The Hartford Growth Fund, Class Y | 1.5 | |||
The Hartford High Yield Fund, Class Y | 0.8 | |||
The Hartford Inflation Plus Fund, Class Y | 6.7 | |||
The Hartford International Opportunities Fund, Class Y | 5.3 | |||
The Hartford International Small Company Fund, Class Y | 3.3 | |||
The Hartford MidCap Fund, Class Y | 2.3 | |||
The Hartford Select SmallCap Value Fund, Class Y | 0.0 | |||
The Hartford Short Duration Fund, Class Y | 5.2 | |||
The Hartford Small Company Fund, Class Y | 3.3 | |||
The Hartford Strategic Income Fund, Class Y | 7.2 | |||
The Hartford Total Return Bond Fund, Class Y | 10.9 | |||
The Hartford Value Fund, Class Y | 15.6 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 96.1% | ||||||||||||
EQUITY FUNDS - 62.0% | ||||||||||||
14 | The Hartford Capital Appreciation Fund, Class Y | $ | 337 | |||||||||
21 | The Hartford Capital Appreciation II Fund, Class Y• | 185 | ||||||||||
15 | The Hartford Disciplined Equity Fund, Class Y | 136 | ||||||||||
10 | The Hartford Dividend and Growth Fund, Class Y | 132 | ||||||||||
16 | The Hartford Fundamental Growth Fund, Class Y• | 125 | ||||||||||
6 | The Hartford Global Growth Fund, Class Y• | 64 | ||||||||||
4 | The Hartford Growth Fund, Class Y• | 49 | ||||||||||
17 | The Hartford International Opportunities Fund, Class Y | 168 | ||||||||||
14 | The Hartford International Small Company Fund, Class Y | 107 | ||||||||||
5 | The Hartford MidCap Fund, Class Y• | 73 | ||||||||||
— | The Hartford Select SmallCap Value Fund, Class Y | 1 | ||||||||||
8 | The Hartford Small Company Fund, Class Y• | 106 | ||||||||||
62 | The Hartford Value Fund, Class Y | 499 | ||||||||||
Total equity funds (cost $1,987) | $ | 1,982 | ||||||||||
FIXED INCOME FUNDS - 34.1% | ||||||||||||
14 | The Hartford Floating Rate Fund, Class Y | $ | 105 | |||||||||
5 | The Hartford High Yield Fund, Class Y | 26 | ||||||||||
20 | The Hartford Inflation Plus Fund, Class Y | 215 | ||||||||||
18 | The Hartford Short Duration Fund, Class Y | 165 | ||||||||||
30 | The Hartford Strategic Income Fund, Class Y | 229 | ||||||||||
36 | The Hartford Total Return Bond Fund, Class Y | 347 | ||||||||||
Total fixed income funds (cost $1,047) | $ | 1,087 | ||||||||||
Total investments in affiliated investment companies (cost $3,034) | $ | 3,069 | ||||||||||
EXCHANGE TRADED FUNDS - 2.9% | ||||||||||||
— | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 1 | |||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | 46 | ||||||||||
1 | SPDR DJ Wilshire REIT ETF | 44 | ||||||||||
Total exchange traded funds (cost $103) | $ | 91 | ||||||||||
Total long-term investments (cost $3,137) | $ | 3,160 | ||||||||||
SHORT-TERM INVESTMENTS - —% | ||||||||||||
— | State Street Bank Money Market Fund | $ | — | |||||||||
Total short-term investments (cost $—) | $ | — | ||||||||||
Total investments (cost $3,137) ▲ | 99.0 | % | $ | 3,160 | ||||||||
Other assets and liabilities | 1.0 | % | 32 | |||||||||
Total net assets | 100.0 | % | $ | 3,192 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $3,137 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 70 | ||
Unrealized Depreciation | (47 | ) | ||
Net Unrealized Appreciation | $ | 23 | ||
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 3,160 | ||
Total | $ | 3,160 | ||
4
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Assets: | ||||
Investments in securities, at fair value (cost $103) | $ | 91 | ||
Investments in underlying affiliated funds, at fair value (cost $3,034) | 3,069 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | 3 | |||
Other assets | 32 | |||
Total assets | 3,195 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 3,192 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,198 | |||
Accumulated undistributed net investment income | 15 | |||
Accumulated net realized loss on investments | (44 | ) | ||
Unrealized appreciation of investments | 23 | |||
Net assets | $ | 3,192 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.88 | ||
Shares outstanding | 120 | |||
Net assets | $ | 1,189 | ||
Class R4: Net asset value per share | $ | 9.89 | ||
Shares outstanding | 101 | |||
Net assets | $ | 1,001 | ||
Class R5: Net asset value per share | $ | 9.89 | ||
Shares outstanding | 101 | |||
Net assets | $ | 1,002 | ||
5
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Investment Income: | ||||
Dividends | $ | 2 | ||
Dividends from underlying affiliated funds | 50 | |||
Total investment income | 52 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | — | |||
Accounting services | — | |||
Registration and filing fees | 17 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 29 | |||
Expense waivers | (27 | ) | ||
Total waivers | (27 | ) | ||
Total expenses, net | 2 | |||
Net investment income | 50 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (44 | ) | ||
Net Realized Loss on Investments | (44 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 23 | |||
Net Changes in Unrealized Appreciation of Investments | 23 | |||
Net Loss on Investments | (21 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 29 | ||
6
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For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 50 | ||
Net realized loss on investments | (44 | ) | ||
Net unrealized appreciation of investments | 23 | |||
Net increase in net assets resulting from operations | 29 | |||
Distributions to Shareholders: | ||||
From net investment income | ||||
Class R3 | (11 | ) | ||
Class R4 | (12 | ) | ||
Class R5 | (12 | ) | ||
Total distributions | (35 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,174 | |||
Class R4 | 1,012 | |||
Class R5 | 1,012 | |||
Net increase from capital share transactions | 3,198 | |||
Net increase in net assets | 3,192 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 3,192 | ||
Accumulated undistributed net investment income | $ | 15 | ||
** | Commencement of operations. |
7
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April 30, 2009 (Unaudited)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2015 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to |
8
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the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and |
9
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, |
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“Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||
1.15% | 0.85% | 0.80% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
(“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,630 | ||
Sales Proceeds Excluding U.S. Government Obligations | 449 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 129 | 1 | (10 | ) | — | 120 | ||||||||||||||
Amount | $ | 1,260 | $ | 11 | $ | (97 | ) | $ | — | $ | 1,174 | |||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.15 | $ | — | $ | (0.16 | ) | $ | (0.01 | ) | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.12 | ) | $ | 9.88 | 0.01 | %(e) | $ | 1,189 | 2.41 | %(f) | 0.38 | %(f) | 0.38 | %(f) | 3.27 | %(f) | 18 | % | |||||||||||||||||||||||||||||||
R4 | 10.00 | 0.17 | — | (0.16 | ) | 0.01 | (0.12 | ) | — | — | (0.12 | ) | (0.11 | ) | 9.89 | 0.16 | (e) | 1,001 | 2.09 | (f) | 0.08 | (f) | 0.08 | (f) | 3.68 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.17 | — | (0.16 | ) | 0.01 | (0.12 | ) | — | — | (0.12 | ) | (0.11 | ) | 9.89 | 0.17 | (e) | 1,002 | 1.79 | (f) | 0.03 | (f) | 0.03 | (f) | 3.73 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
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Directors and Officers (Unaudited) — (continued)
888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 1,000.06 | $ | 1.88 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,001.62 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.39 | $ | 0.40 | 0.08 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,001.70 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
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(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Target Retirement 2020 A# | 9/30/05 | -28.45 | % | -4.64 | % | |||||||
Target Retirement 2020 A## | 9/30/05 | -32.39 | % | -6.14 | % | |||||||
Target Retirement 2020 B# | 9/30/05 | -28.96 | % | -5.35 | % | |||||||
Target Retirement 2020 B## | 9/30/05 | -32.46 | % | -6.07 | % | |||||||
Target Retirement 2020 C# | 9/30/05 | -29.05 | % | -5.38 | % | |||||||
Target Retirement 2020 C## | 9/30/05 | -29.75 | % | -5.38 | % | |||||||
Target Retirement 2020 R3# | 9/30/05 | -28.77 | % | -4.81 | % | |||||||
Target Retirement 2020 R4# | 9/30/05 | -28.50 | % | -4.61 | % | |||||||
Target Retirement 2020 R5# | 9/30/05 | -28.33 | % | -4.45 | % | |||||||
Target Retirement 2020 Y# | 9/30/05 | -28.31 | % | -4.38 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
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6-month period. U.S. Real-Estate Investment Trusts (REITS) led the way lower during the period, while growth stocks continued to outperform value stocks across all market capitalization levels. International stocks outperformed U.S. stocks.
as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
Powershares Emerging Markets Sovereign Debt Portfolio ETF | 0.0 | % | ||
SPDR DJ Wilshire International Real Estate ETF | 0.7 | |||
SPDR DJ Wilshire REIT ETF | 1.0 | |||
State Street Bank Money Market Fund | 0.0 | |||
The Hartford Capital Appreciation Fund, Class Y | 14.8 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.0 | |||
The Hartford Disciplined Equity Fund, Class Y | 2.8 | |||
The Hartford Dividend and Growth Fund, Class Y | 3.0 | |||
The Hartford Equity Income Fund, Class Y | 2.9 | |||
The Hartford Floating Rate Fund, Class Y | 0.6 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.6 | |||
The Hartford Global Growth Fund, Class Y | 2.4 | |||
The Hartford Growth Fund, Class Y | 4.7 | |||
The Hartford Growth Opportunities Fund, Class Y | 3.3 | |||
The Hartford High Yield Fund, Class Y | 3.6 | |||
The Hartford Income Fund, Class Y | 0.3 | |||
The Hartford Inflation Plus Fund, Class Y | 7.3 | |||
The Hartford International Opportunities Fund, Class Y | 4.5 | |||
The Hartford International Small Company Fund, Class Y | 4.7 | |||
The Hartford MidCap Fund, Class Y | 0.9 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.2 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.6 | |||
The Hartford Short Duration Fund, Class Y | 2.9 | |||
The Hartford Small Company Fund, Class Y | 1.9 | |||
The Hartford Strategic Income Fund, Class Y | 7.6 | |||
The Hartford Total Return Bond Fund, Class Y | 7.4 | |||
The Hartford Value Fund, Class Y | 14.1 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 98.1% | ||||||||||||
EQUITY FUNDS - 68.4% | ||||||||||||
198 | The Hartford Capital Appreciation Fund, Class Y | $ | 4,896 | |||||||||
112 | The Hartford Capital Appreciation II Fund, Class Y • | 999 | ||||||||||
102 | The Hartford Disciplined Equity Fund, Class Y | 926 | ||||||||||
71 | The Hartford Dividend and Growth Fund, Class Y | 973 | ||||||||||
105 | The Hartford Equity Income Fund, Class Y | 945 | ||||||||||
27 | The Hartford Fundamental Growth Fund, Class Y • | 203 | ||||||||||
72 | The Hartford Global Growth Fund, Class Y • | 787 | ||||||||||
129 | The Hartford Growth Fund, Class Y | 1,559 | ||||||||||
61 | The Hartford Growth Opportunities Fund, Class Y • | 1,094 | ||||||||||
147 | The Hartford International Opportunities Fund, Class Y | 1,491 | ||||||||||
196 | The Hartford International Small Company Fund, Class Y | 1,532 | ||||||||||
19 | The Hartford MidCap Fund, Class Y • | 290 | ||||||||||
61 | The Hartford Select MidCap Value Fund, Class Y | 386 | ||||||||||
180 | The Hartford Select SmallCap Value Fund, Class Y | 1,193 | ||||||||||
47 | The Hartford Small Company Fund, Class Y • | 611 | ||||||||||
578 | The Hartford Value Fund, Class Y | 4,656 | ||||||||||
Total equity funds (cost $30,392) | $ | 22,541 | ||||||||||
FIXED INCOME FUNDS - 29.7% | ||||||||||||
27 | The Hartford Floating Rate Fund, Class Y | $ | 199 | |||||||||
208 | The Hartford High Yield Fund, Class Y | 1,188 | ||||||||||
12 | The Hartford Income Fund, Class Y | 101 | ||||||||||
225 | The Hartford Inflation Plus Fund, Class Y | 2,414 | ||||||||||
106 | The Hartford Short Duration Fund, Class Y | 963 | ||||||||||
326 | The Hartford Strategic Income Fund, Class Y | 2,517 | ||||||||||
252 | The Hartford Total Return Bond Fund, Class Y | 2,424 | ||||||||||
Total fixed income funds (cost $10,299) | $ | 9,806 | ||||||||||
Total investments in affiliated investment companies (cost $40,691) | $ | 32,347 | ||||||||||
EXCHANGE TRADED FUNDS - 1.7% | ||||||||||||
1 | Powershares Emerging Markets Sovereign Debt Portfolio ETF | $ | 12 | |||||||||
9 | SPDR DJ Wilshire International Real Estate ETF | 219 | ||||||||||
9 | SPDR DJ Wilshire REIT ETF | 330 | ||||||||||
Total exchange traded funds (cost $648) | $ | 561 | ||||||||||
Total long-term investments (cost $41,339) | $ | 32,908 | ||||||||||
SHORT - TERM INVESTMENT - —% | ||||||||||||
— | State Street Bank Money Market Fund | $ | — | |||||||||
Total short-term investments (cost $—) | $ | — | ||||||||||
Total investments (cost $41,339) ▲ | 99.8 | % | $ | 32,908 | ||||||||
Other assets and liabilities | 0.2 | % | 76 | |||||||||
Total net assets | 100.0 | % | $ | 32,984 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $41,564 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 372 | ||
Unrealized Depreciation | (9,028 | ) | ||
Net Unrealized Depreciation | $ | (8,656 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 32,908 | ||
Total | $ | 32,908 | ||
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Assets: | ||||
Investments in securities, at fair value (cost $648) | $ | 561 | ||
Investments in underlying affiliated funds, at fair value (cost $40,691) | 32,347 | |||
Receivables: | ||||
Fund shares sold | 50 | |||
Dividends and interest | 31 | |||
Other assets | 54 | |||
Total assets | 33,043 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 47 | |||
Fund shares redeemed | 4 | |||
Investment management fees | 1 | |||
Distribution fees | 1 | |||
Accrued expenses | 6 | |||
Total liabilities | 59 | |||
Net assets | $ | 32,984 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 45,130 | |||
Accumulated undistributed net investment income | 131 | |||
Accumulated net realized loss on investments | (3,846 | ) | ||
Unrealized depreciation of investments | (8,431 | ) | ||
Net assets | $ | 32,984 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 7.45/$7.88 | ||
Shares outstanding | 1,724 | |||
Net assets | $ | 12,839 | ||
Class B: Net asset value per share | $ | 7.44 | ||
Shares outstanding | 87 | |||
Net assets | $ | 648 | ||
Class C: Net asset value per share | $ | 7.42 | ||
Shares outstanding | 133 | |||
Net assets | $ | 989 | ||
Class R3: Net asset value per share | $ | 7.43 | ||
Shares outstanding | 61 | |||
Net assets | $ | 450 | ||
Class R4: Net asset value per share | $ | 7.44 | ||
Shares outstanding | 1,506 | |||
Net assets | $ | 11,208 | ||
Class R5: Net asset value per share | $ | 7.45 | ||
Shares outstanding | 918 | |||
Net assets | $ | 6,841 | ||
Class Y: Net asset value per share | $ | 7.45 | ||
Shares outstanding | 1 | |||
Net assets | $ | 9 | ||
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Investment Income: | ||||
Dividends | $ | 11 | ||
Dividends from underlying affiliated funds | 507 | |||
Total investment income | 518 | |||
Expenses: | ||||
Investment management fees | 22 | |||
Transfer agent fees | 8 | |||
Distribution fees | ||||
Class A | 15 | |||
Class B | 3 | |||
Class C | 5 | |||
Class R3 | — | |||
Class R4 | 11 | |||
Custodian fees | — | |||
Accounting services | 2 | |||
Registration and filing fees | 33 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 16 | |||
Total expenses (before waivers) | 119 | |||
Expense waivers | (90 | ) | ||
Transfer agent fee waivers | — | |||
Total waivers | (90 | ) | ||
Total expenses, net | 29 | |||
Net investment income | 489 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (2,106 | ) | ||
Net Realized Loss on Investments | (2,106 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 1,879 | |||
Net Changes in Unrealized Appreciation of Investments | 1,879 | |||
Net Loss on Investments | (227 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 262 | ||
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For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 489 | $ | 536 | ||||
Net realized loss on investments | (2,106 | ) | (1,289 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 1,879 | (11,548 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 262 | (12,301 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (184 | ) | (697 | ) | ||||
Class B | (8 | ) | (25 | ) | ||||
Class C | (12 | ) | (21 | ) | ||||
Class R3 | (1 | ) | (1 | ) | ||||
Class R4 | (125 | ) | (124 | ) | ||||
Class R5 | (92 | ) | (76 | ) | ||||
Class Y | — | (1 | ) | |||||
From net realized gain on investments | ||||||||
Class A | — | (138 | ) | |||||
Class B | — | (6 | ) | |||||
Class C | — | (5 | ) | |||||
Class R4 | — | (13 | ) | |||||
Total distributions | (422 | ) | (1,107 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (393 | ) | 2,912 | |||||
Class B | 50 | 209 | ||||||
Class C | 169 | 561 | ||||||
Class R3 | 344 | 73 | ||||||
Class R4 | 2,801 | 10,259 | ||||||
Class R5 | 712 | 8,615 | ||||||
Class Y | — | 1 | ||||||
Net increase from capital share transactions | 3,683 | 22,630 | ||||||
Net increase in net assets | 3,523 | 9,222 | ||||||
Net Assets: | ||||||||
Beginning of period | 29,461 | 20,239 | ||||||
End of period | $ | 32,984 | $ | 29,461 | ||||
Accumulated undistributed net investment income | $ | 131 | $ | 64 | ||||
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2020 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation — Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary |
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markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial |
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statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 1,016 | $ | 188 | ||||
Long-Term Capital Gains * | 91 | 3 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 64 | ||
Accumulated Capital Losses* | $ | (1,515 | ) | |
Unrealized Depreciation† | $ | (10,535 | ) | |
Total Accumulated Deficit | $ | (11,986 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital |
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accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $448 and decrease accumulated net realized loss by $448. | |||
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 1,515 | ||
Total | $ | 1,515 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||||||||||||||
1.05% | 1.80 | % | 1.80 | % | 1.20 | % | 0.90 | % | 0.85 | % | 0.85 | % |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $17 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $2. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $8 for providing such services. These fees are accrued daily and paid monthly. |
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5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 8,738 | ||
Sales Proceeds Excluding U.S. Government Obligations | 4,968 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 245 | 26 | (331 | ) | — | (60 | ) | 689 | 78 | (499 | ) | — | 268 | |||||||||||||||||||||||||||
Amount | $ | 1,707 | $ | 184 | $ | (2,284 | ) | $ | — | $ | (393 | ) | $ | 7,073 | $ | 834 | $ | (4,995 | ) | $ | — | $ | 2,912 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 17 | 1 | (11 | ) | — | 7 | 50 | 3 | (34 | ) | — | 19 | ||||||||||||||||||||||||||||
Amount | $ | 114 | $ | 8 | $ | (72 | ) | $ | — | $ | 50 | $ | 511 | $ | 29 | $ | (331 | ) | $ | — | $ | 209 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 39 | 1 | (18 | ) | — | 22 | 73 | 2 | (20 | ) | — | 55 | ||||||||||||||||||||||||||||
Amount | $ | 278 | $ | 12 | $ | (121 | ) | $ | — | $ | 169 | $ | 708 | $ | 26 | $ | (173 | ) | $ | — | $ | 561 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 55 | — | (3 | ) | — | 52 | 8 | — | — | — | 8 | |||||||||||||||||||||||||||||
Amount | $ | 365 | $ | 1 | $ | (22 | ) | $ | — | $ | 344 | $ | 72 | $ | 1 | $ | — | $ | — | $ | 73 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 491 | 18 | (100 | ) | — | 409 | 1,212 | 14 | (226 | ) | — | 1,000 | ||||||||||||||||||||||||||||
Amount | $ | 3,362 | $ | 125 | $ | (686 | ) | $ | — | $ | 2,801 | $ | 12,434 | $ | 137 | $ | (2,312 | ) | $ | — | $ | 10,259 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 193 | 13 | (103 | ) | — | 103 | 964 | 8 | (158 | ) | — | 814 | ||||||||||||||||||||||||||||
Amount | $ | 1,335 | $ | 92 | $ | (715 | ) | $ | — | $ | 712 | $ | 10,004 | $ | 76 | $ | (1,465 | ) | $ | — | $ | 8,615 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 7 | $ | 49 | |||||
For the Year Ended October 31, 2008 | 2 | $ | 20 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Proposed Reclassifications: | |
At a meeting held on February 4, 2009, the Board of Directors of the Fund approved a transaction under which Class B shares and Class C shares of the Fund would become Class A shares of the Fund. Following the transaction, each shareholder owning Class B shares will own Class A shares equal to the aggregate value of their Class B shares and each shareholder owning Class C shares will own Class A shares equal to the aggregate value of their Class C shares (the “Reclassification”). | ||
Effective February 13, 2009, Class B shares and Class C shares of the Fund are no longer sold to new investors or existing shareholders (except through reinvested dividends) nor are they eligible for exchanges from other Hartford Mutual Funds. | ||
Shareholders of Class B and Class C shares are required to approve the Reclassifications. The Board of Directors of the Fund has called for a Special Joint Meeting of Shareholders of the Funds to be held on or about July 16, 2009, for the purpose of seeking the approval of the Reclassifications by the Class B and Class C shareholders of the Fund. | ||
If the Reclassifications are approved, sales charges will not be charged shareholders of Class B and Class C shares; contingent deferred sales charges for Class B and Class C shares will be waived; and distribution and service (12b-1) fees on shares classified as Class B and Class C shares before the Reclassifications will be reduced from 1.00% to 0.25% after the Reclassifications. |
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2
- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 7.56 | $ | 0.12 | $ | — | $ | (0.12 | ) | $ | — | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.11 | ) | $ | 7.45 | 0.04% | (e) | $ | 12,839 | 0.80 | %(f) | 0.25 | %(f) | 0.25 | %(f) | 3.42 | %(f) | 17 | % | ||||||||||||||||||||||||||||||||
B | 7.56 | 0.10 | — | (0.13 | ) | (0.03 | ) | (0.09 | ) | — | — | (0.09 | ) | (0.12 | ) | 7.44 | (0.27 | ) (e) | 648 | 1.88 | (f) | 0.88 | (f) | 0.88 | (f) | 2.80 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 7.55 | 0.09 | — | (0.13 | ) | (0.04 | ) | (0.09 | ) | — | — | (0.09 | ) | (0.13 | ) | 7.42 | (0.40 | ) (e) | 989 | 1.77 | (f) | 0.99 | (f) | 0.99 | (f) | 2.60 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 7.55 | 0.11 | — | (0.13 | ) | (0.02 | ) | (0.10 | ) | — | — | (0.10 | ) | (0.12 | ) | 7.43 | (0.03 | ) (e) | 450 | 1.28 | (f) | 0.40 | (f) | 0.40 | (f) | 2.11 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 7.55 | 0.12 | — | (0.12 | ) | — | (0.11 | ) | — | — | (0.11 | ) | (0.11 | ) | 7.44 | 0.03 | (e) | 11,208 | 0.86 | (f) | 0.10 | (f) | 0.10 | (f) | 3.43 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 7.56 | 0.13 | — | (0.13 | ) | — | (0.11 | ) | — | — | (0.11 | ) | (0.11 | ) | 7.45 | 0.10 | (e) | 6,841 | 0.56 | (f) | 0.05 | (f) | 0.05 | (f) | 3.57 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
Y | 7.56 | 0.13 | — | (0.13 | ) | — | (0.11 | ) | — | — | (0.11 | ) | (0.11 | ) | 7.45 | 0.14 | (e) | 9 | 0.48 | (f) | 0.05 | (f) | 0.05 | (f) | 3.63 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 11.68 | 0.26 | — | (3.86 | ) | (3.60 | ) | (0.43 | ) | (0.09 | ) | — | (0.52 | ) | (4.12 | ) | 7.56 | (32.13 | ) | 13,495 | 0.77 | 0.48 | 0.48 | 2.30 | 51 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 11.68 | 0.16 | — | (3.84 | ) | (3.68 | ) | (0.35 | ) | (0.09 | ) | — | (0.44 | ) | (4.12 | ) | 7.56 | (32.64 | ) | 604 | 1.76 | 1.26 | 1.26 | 1.34 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 11.67 | 0.24 | — | (3.92 | ) | (3.68 | ) | (0.35 | ) | (0.09 | ) | — | (0.44 | ) | (4.12 | ) | 7.55 | (32.64 | ) | 837 | 1.71 | 1.25 | 1.25 | 1.20 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 11.67 | 0.35 | — | (3.99 | ) | (3.64 | ) | (0.39 | ) | (0.09 | ) | — | (0.48 | ) | (4.12 | ) | 7.55 | (32.37 | ) | 70 | 1.21 | 0.91 | 0.91 | 1.00 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 11.67 | 0.37 | — | (3.98 | ) | (3.61 | ) | (0.42 | ) | (0.09 | ) | — | (0.51 | ) | (4.12 | ) | 7.55 | (32.18 | ) | 8,281 | 0.83 | 0.55 | 0.55 | 1.12 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 11.68 | 0.39 | — | (3.97 | ) | (3.58 | ) | (0.45 | ) | (0.09 | ) | — | (0.54 | ) | (4.12 | ) | 7.56 | (31.98 | ) | 6,165 | 0.53 | 0.23 | 0.23 | 0.96 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 11.68 | 0.29 | — | (3.86 | ) | (3.57 | ) | (0.46 | ) | (0.09 | ) | — | (0.55 | ) | (4.12 | ) | 7.56 | (31.89 | ) | 9 | 0.46 | 0.17 | 0.17 | 2.74 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.43 | 0.24 | — | 1.29 | 1.53 | (0.24 | ) | (0.04 | ) | — | (0.28 | ) | 1.25 | 11.68 | 14.95 | 17,710 | 1.25 | 0.51 | 0.51 | 1.64 | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.42 | 0.18 | — | 1.27 | 1.45 | (0.15 | ) | (0.04 | ) | — | (0.19 | ) | 1.26 | 11.68 | 14.09 | 717 | 2.25 | 1.26 | 1.26 | 1.38 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.42 | 0.17 | — | 1.28 | 1.45 | (0.16 | ) | (0.04 | ) | — | (0.20 | ) | 1.25 | 11.67 | 14.10 | 649 | 2.07 | 1.26 | 1.26 | 1.47 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(g) | 10.55 | 0.08 | — | 1.11 | 1.19 | (0.07 | ) | — | — | (0.07 | ) | 1.12 | 11.67 | 11.32 | (e) | 11 | 1.72 | (f) | 0.91 | (f) | 0.91 | (f) | 0.86 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4(h) | 10.55 | 0.10 | — | 1.12 | 1.22 | (0.10 | ) | — | — | (0.10 | ) | 1.12 | 11.67 | 11.64 | (e) | 1,129 | 1.35 | (f) | 0.61 | (f) | 0.61 | (f) | 1.23 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5(i) | 10.55 | 0.14 | — | 1.11 | 1.25 | (0.12 | ) | — | — | (0.12 | ) | 1.13 | 11.68 | 11.91 | (e) | 11 | 1.12 | (f) | 0.31 | (f) | 0.31 | (f) | 1.46 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.43 | 0.30 | — | 1.25 | 1.55 | (0.26 | ) | (0.04 | ) | — | (0.30 | ) | 1.25 | 11.68 | 15.20 | 12 | 0.94 | 0.21 | 0.21 | 2.71 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.79 | 0.13 | — | 0.86 | 0.99 | (0.35 | ) | — | — | (0.35 | ) | 0.64 | 10.43 | 10.37 | 2,125 | 9.85 | 0.53 | 0.53 | 1.35 | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.78 | 0.04 | — | 0.88 | 0.92 | (0.28 | ) | — | — | (0.28 | ) | 0.64 | 10.42 | 9.56 | 291 | 10.69 | 1.29 | 1.29 | 0.39 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.78 | 0.04 | — | 0.88 | 0.92 | (0.28 | ) | — | — | (0.28 | ) | 0.64 | 10.42 | 9.58 | 337 | 10.62 | 1.30 | 1.30 | 0.41 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.79 | 0.27 | — | 0.75 | 1.02 | (0.38 | ) | — | — | (0.38 | ) | 0.64 | 10.43 | 10.70 | 11 | 9.41 | 0.22 | 0.22 | 2.73 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) September 30, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10.00 | 0.01 | — | (0.22 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 9.79 | (2.10 | ) (e) | 144 | 0.66 | (f) | 0.51 | (f) | 0.51 | (f) | 2.77 | (f) | 28 | ||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10.00 | 0.01 | — | (0.23 | ) | (0.22 | ) | — | — | — | — | (0.22 | ) | 9.78 | (2.20 | ) (e) | 10 | 1.37 | (f) | 1.25 | (f) | 1.25 | (f) | 0.86 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10.00 | 0.01 | — | (0.23 | ) | (0.22 | ) | — | — | — | — | (0.22 | ) | 9.78 | (2.20 | ) (e) | 10 | 1.37 | (f) | 1.26 | (f) | 1.26 | (f) | 0.85 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.01 | — | (0.22 | ) | (0.21 | ) | — | — | — | — | (0.21 | ) | 9.79 | (2.10 | ) (e) | 10 | 0.29 | (f) | 0.20 | (f) | 0.20 | (f) | 1.91 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. | |
(g) | Commenced operations on December 22, 2006. | |
(h) | Commenced operations on December 22, 2006. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Per share amounts have been calculated using average shares outstanding method. | |
(k) | Commenced operations on September 30, 2005. | |
(l) | Commenced operations on September 30, 2005. | |
(m) | Commenced operations on September 30, 2005. | |
(n) | Commenced operations on September 30, 2005. |
17
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18
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
19
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888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov.
20
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,000.43 | $ | 1.24 | $ | 1,000.00 | $ | 1,023.55 | $ | 1.25 | 0.25 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 997.27 | $ | 4.35 | $ | 1,000.00 | $ | 1,020.43 | $ | 4.40 | 0.88 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 995.98 | $ | 4.89 | $ | 1,000.00 | $ | 1,019.88 | $ | 4.95 | 0.99 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 999.71 | $ | 1.98 | $ | 1,000.00 | $ | 1,022.81 | $ | 2.00 | 0.40 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 1,000.30 | $ | 0.49 | $ | 1,000.00 | $ | 1,024.29 | $ | 0.50 | 0.10 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 1,001.02 | $ | 0.24 | $ | 1,000.00 | $ | 1,024.54 | $ | 0.25 | 0.05 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 1,001.43 | $ | 0.24 | $ | 1,000.00 | $ | 1,024.54 | $ | 0.25 | 0.05 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
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Growth of a $10,000 investment in Class R3
You cannot invest directly in an index.
Inception | Since | |||||||
Date | Inception | |||||||
The Hartford Target Retirement 2025 Fund R3 | 10/31/08 | -1.29 | % | |||||
The Hartford Target Retirement 2025 Fund R4 | 10/31/08 | -1.24 | % | |||||
The Hartford Target Retirement 2025 Fund R5 | 10/31/08 | -1.13 | % |
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. | ||
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
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6-month period. U.S. Real-Estate Investment Trusts (REITS) led the way lower during the period, while growth stocks continued to outperform value stocks across all market capitalization levels. International stocks outperformed U.S. stocks.
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.7 | % | ||
SPDR DJ Wilshire REIT ETF | 1.5 | |||
The Hartford Capital Appreciation Fund, Class Y | 18.7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.5 | |||
The Hartford Dividend and Growth Fund, Class Y | 5.4 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.6 | |||
The Hartford Global Growth Fund, Class Y | 3.2 | |||
The Hartford Growth Fund, Class Y | 3.8 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.4 | |||
The Hartford Inflation Plus Fund, Class Y | 5.4 | |||
The Hartford International Opportunities Fund, Class Y | 6.2 | |||
The Hartford International Small Company Fund, Class Y | 3.7 | |||
The Hartford Short Duration Fund, Class Y | 3.6 | |||
The Hartford Small Company Fund, Class Y | 4.4 | |||
The Hartford Total Return Bond Fund, Class Y | 13.1 | |||
The Hartford Value Fund, Class Y | 18.8 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.8% | ||||||||||||
EQUITY FUNDS - 73.7% | ||||||||||||
23 | The Hartford Capital Appreciation Fund, Class Y | $ | 558 | |||||||||
11 | The Hartford Capital Appreciation II Fund, Class Y• | 103 | ||||||||||
12 | The Hartford Dividend and Growth Fund, Class Y | 162 | ||||||||||
14 | The Hartford Fundamental Growth Fund, Class Y• | 107 | ||||||||||
9 | The Hartford Global Growth Fund, Class Y• | 95 | ||||||||||
9 | The Hartford Growth Fund, Class Y• | 114 | ||||||||||
4 | The Hartford Growth Opportunities Fund, Class Y• | 71 | ||||||||||
18 | The Hartford International Opportunities Fund, Class Y | 186 | ||||||||||
14 | The Hartford International Small Company Fund, Class Y | 110 | ||||||||||
10 | The Hartford Small Company Fund, Class Y • | 131 | ||||||||||
69 | The Hartford Value Fund, Class Y | 560 | ||||||||||
Total equity funds (cost $2,243) | $ | 2,197 | ||||||||||
FIXED INCOME FUNDS - 22.1% | ||||||||||||
15 | The Hartford Inflation Plus Fund, Class Y | $ | 161 | |||||||||
12 | The Hartford Short Duration Fund, Class Y | 108 | ||||||||||
40 | The Hartford Total Return Bond Fund, Class Y | 389 | ||||||||||
Total fixed income funds (cost $637) | $ | 658 | ||||||||||
Total investments in affiliated investment companies (cost $2,880) | $ | 2,855 | ||||||||||
EXCHANGE TRADED FUNDS - 3.2% | ||||||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 52 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 44 | ||||||||||
Total exchange traded funds (cost $113) | $ | 96 | ||||||||||
Total long-term investments (cost $2,993) | $ | 2,951 | ||||||||||
Total investments (cost $2,993) ▲ | 99.0 | % | $ | 2,951 | ||||||||
Other assets and liabilities | 1.0 | % | 30 | |||||||||
Total net assets | 100.0 | % | $ | 2,981 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,993 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 43 | ||
Unrealized Depreciation | (85 | ) | ||
Net Unrealized Depreciation | $ | (42 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,951 | ||
Total | $ | 2,951 |
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Assets: | ||||
Investments in securities, at fair value (cost $113) | $ | 96 | ||
Investments in underlying affiliated funds, at fair value (cost $2,880) | 2,855 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | 1 | |||
Other assets | 32 | |||
Total assets | 2,984 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 2,981 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,052 | |||
Accumulated undistributed net investment income | 7 | |||
Accumulated net realized loss on investments | (36 | ) | ||
Unrealized depreciation of investments | (42 | ) | ||
Net assets | $ | 2,981 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.75 | ||
Shares outstanding | 103 | |||
Net assets | $ | 1,005 | ||
Class R4: Net asset value per share | $ | 9.75 | ||
Shares outstanding | 101 | |||
Net assets | $ | 988 | ||
Class R5: Net asset value per share | $ | 9.76 | ||
Shares outstanding | 101 | |||
Net assets | $ | 988 | ||
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Investment Income: | ||||
Dividends | $ | 2 | ||
Dividends from underlying affiliated funds | 44 | |||
Total investment income | 46 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | — | |||
Accounting services | — | |||
Registration and filing fees | 18 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 29 | |||
Expense waivers | (26 | ) | ||
Total waivers | (26 | ) | ||
Total expenses, net | 3 | |||
Net investment income | 43 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (36 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (36 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (42 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (42 | ) | ||
Net Loss on Investments | (78 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (35 | ) | |
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For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 43 | ||
Net realized loss on investments | (36 | ) | ||
Net unrealized depreciation of investments | (42 | ) | ||
Net decrease in net assets resulting from operations | (35 | ) | ||
Distributions to Shareholders: | ||||
From net investment income | ||||
Class R3 | (12 | ) | ||
Class R4 | (12 | ) | ||
Class R5 | (12 | ) | ||
Total distributions | (36 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,028 | |||
Class R4 | 1,012 | |||
Class R5 | 1,012 | |||
Net increase from capital share transactions | 3,052 | |||
Net increase in net assets | 2,981 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 2,981 | ||
Accumulated undistributed net investment income | $ | 7 | ||
** | Commencement of operations. |
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2025 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the |
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Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. |
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Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to |
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transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||||||
1.20% | 0.90 | % | 0.85 | % |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
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5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,365 | ||
Sales Proceeds Excluding U.S. Government Obligations | 336 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 104 | 1 | (2 | ) | — | 103 | ||||||||||||||
Amount | $ | 1,033 | $ | 12 | $ | (17 | ) | $ | — | $ | 1,028 | |||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.13 | $ | — | $ | (0.26 | ) | $ | (0.13 | ) | $ | (0.12 | ) | $ | — | $ | — | $ | (0.12 | ) | $ | (0.25 | ) | $ | 9.75 | (1.29) | %(e) | $ | 1,005 | 2.46 | %(f) | 0.42 | %(f) | 0.42 | %(f) | 2.97 | %(f) | 14 | % | |||||||||||||||||||||||||||||||||
R4 | 10.00 | 0.15 | — | (0.28 | ) | (0.13 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.25 | ) | 9.75 | (1.24 | ) (e) | 988 | 2.16 | (f) | 0.12 | (f) | 0.12 | (f) | 3.28 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.15 | — | (0.27 | ) | (0.12 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.24 | ) | 9.76 | (1.13 | ) (e) | 988 | 1.86 | (f) | 0.07 | (f) | 0.07 | (f) | 3.33 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 987.09 | $ | 2.06 | $ | 1,000.00 | $ | 1,022.71 | $ | 2.10 | 0.42 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 987.63 | $ | 0.59 | $ | 1,000.00 | $ | 1,024.19 | $ | 0.60 | 0.12 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 988.72 | $ | 0.34 | $ | 1,000.00 | $ | 1,024.44 | $ | 0.35 | 0.07 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
21 |
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Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | Since | ||||||||||
Date | Year | Inception | ||||||||||
Target Retirement 2030 A# | 9/30/05 | -31.25 | % | -5.62 | % | |||||||
Target Retirement 2030 A## | 9/30/05 | -35.03 | % | -7.10 | % | |||||||
Target Retirement 2030 B# | 9/30/05 | -31.60 | % | -6.20 | % | |||||||
Target Retirement 2030 B## | 9/30/05 | -34.97 | % | -6.86 | % | |||||||
Target Retirement 2030 C# | 9/30/05 | -31.67 | % | -6.25 | % | |||||||
Target Retirement 2030 C## | 9/30/05 | -32.34 | % | -6.25 | % | |||||||
Target Retirement 2030 R3# | 9/30/05 | -31.44 | % | -5.76 | % | |||||||
Target Retirement 2030 R4# | 9/30/05 | -31.24 | % | -5.58 | % | |||||||
Target Retirement 2030 R5# | 9/30/05 | -31.15 | % | -5.49 | % | |||||||
Target Retirement 2030 Y# | 9/30/05 | -31.10 | % | -5.35 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B, C, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class Y performance. | |
(3) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 1.1 | % | ||
SPDR DJ Wilshire REIT ETF | 1.2 | |||
The Hartford Capital Appreciation Fund, Class Y | 15.4 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.2 | |||
The Hartford Disciplined Equity Fund, Class Y | 5.2 | |||
The Hartford Dividend and Growth Fund, Class Y | 4.5 | |||
The Hartford Equity Income Fund, Class Y | 3.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 0.5 | |||
The Hartford Global Growth Fund, Class Y | 3.5 | |||
The Hartford Growth Fund, Class Y | 4.8 | |||
The Hartford Growth Opportunities Fund, Class Y | 3.5 | |||
The Hartford Inflation Plus Fund, Class Y | 4.9 | |||
The Hartford International Opportunities Fund, Class Y | 4.6 | |||
The Hartford International Small Company Fund, Class Y | 4.6 | |||
The Hartford MidCap Fund, Class Y | 1.3 | |||
The Hartford MidCap Value Fund, Class Y | 0.1 | |||
The Hartford Select MidCap Value Fund, Class Y | 1.2 | |||
The Hartford Select SmallCap Value Fund, Class Y | 4.1 | |||
The Hartford Small Company Fund, Class Y | 3.3 | |||
The Hartford Total Return Bond Fund, Class Y | 14.1 | |||
The Hartford Value Fund, Class Y | 15.7 | |||
Other Assets and Liabilities | 0.2 | |||
Total | 100.0 | % | ||
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(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 97.5% | ||||||||||||
EQUITY FUNDS - 78.5% | ||||||||||||
196 | The Hartford Capital Appreciation Fund, Class Y | $ | 4,853 | |||||||||
113 | The Hartford Capital Appreciation II Fund, Class Y • | 1,011 | ||||||||||
182 | The Hartford Disciplined Equity Fund, Class Y | 1,647 | ||||||||||
105 | The Hartford Dividend and Growth Fund, Class Y | 1,431 | ||||||||||
104 | The Hartford Equity Income Fund, Class Y | 940 | ||||||||||
20 | The Hartford Fundamental Growth Fund, Class Y • | 155 | ||||||||||
101 | The Hartford Global Growth Fund, Class Y • | 1,104 | ||||||||||
125 | The Hartford Growth Fund, Class Y • | 1,506 | ||||||||||
62 | The Hartford Growth Opportunities Fund, Class Y | 1,110 | ||||||||||
144 | The Hartford International Opportunities Fund, Class Y | 1,459 | ||||||||||
185 | The Hartford International Small Company Fund, Class Y | 1,441 | ||||||||||
26 | The Hartford MidCap Fund, Class Y • | 411 | ||||||||||
3 | The Hartford MidCap Value Fund, Class Y | 24 | ||||||||||
63 | The Hartford Select MidCap Value Fund, Class Y | 394 | ||||||||||
196 | The Hartford Select SmallCap Value Fund, Class Y | 1,300 | ||||||||||
80 | The Hartford Small Company Fund, Class Y • | 1,048 | ||||||||||
615 | The Hartford Value Fund, Class Y | 4,959 | ||||||||||
Total equity funds (cost $33,403) | $ | 24,793 | ||||||||||
FIXED INCOME FUNDS - 19.0% | ||||||||||||
146 | The Hartford Inflation Plus Fund, Class Y | $ | 1,563 | |||||||||
464 | The Hartford Total Return Bond Fund, Class Y | 4,457 | ||||||||||
Total fixed income funds (cost $6,205) | $ | 6,020 | ||||||||||
Total investments in affiliated investment companies (cost $39,608) | $ | 30,813 | ||||||||||
EXCHANGE TRADED FUNDS - 2.3% | ||||||||||||
14 | SPDR DJ Wilshire International Real Estate ETF | $ | 337 | |||||||||
11 | SPDR DJ Wilshire REIT ETF | 383 | ||||||||||
Total exchange traded funds (cost $949) | $ | 720 | ||||||||||
Total long-term investments (cost $40,557) | $ | 31,533 | ||||||||||
Total investments (cost $40,557) ▲ | 99.8 | % | $ | 31,533 | ||||||||
Other assets and liabilities | 0.2 | % | 58 | |||||||||
Total net assets | 100.0 | % | $ | 31,591 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $40,720 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 190 | ||
Unrealized Depreciation | (9,377 | ) | ||
Net Unrealized Depreciation | $ | (9,187 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 31,533 | ||
Total | $ | 31,533 | ||
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(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $949) | $ | 720 | ||
Investments in underlying affiliated funds, at fair value (cost $39,608) | 30,813 | |||
Receivables: | ||||
Fund shares sold | 40 | |||
Dividends and interest | 13 | |||
Other assets | 54 | |||
Total assets | 31,640 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 40 | |||
Fund shares redeemed | 1 | |||
Investment management fees | 1 | |||
Distribution fees | 1 | |||
Accrued expenses | 6 | |||
Total liabilities | 49 | |||
Net assets | $ | 31,591 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 42,338 | |||
Accumulated undistributed net investment income | 69 | |||
Accumulated net realized loss on investments | (1,792 | ) | ||
Unrealized depreciation of investments | (9,024 | ) | ||
Net assets | $ | 31,591 | ||
Shares authorized | 950,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 6.56/$6.94 | ||
Shares outstanding | 1,939 | |||
Net assets | $ | 12,711 | ||
Class B: Net asset value per share | $ | 6.56 | ||
Shares outstanding | 103 | |||
Net assets | $ | 673 | ||
Class C: Net asset value per share | $ | 6.55 | ||
Shares outstanding | 119 | |||
Net assets | $ | 778 | ||
Class R3: Net asset value per share | $ | 6.51 | ||
Shares outstanding | 181 | |||
Net assets | $ | 1,178 | ||
Class R4: Net asset value per share | $ | 6.54 | ||
Shares outstanding | 1,861 | |||
Net assets | $ | 12,176 | ||
Class R5: Net asset value per share | $ | 6.55 | ||
Shares outstanding | 618 | |||
Net assets | $ | 4,051 | ||
Class Y: Net asset value per share | $ | 6.57 | ||
Shares outstanding | 4 | |||
Net assets | $ | 24 | ||
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(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 14 | ||
Dividends from underlying affiliated funds | 392 | |||
Total investment income | 406 | |||
Expenses: | ||||
Investment management fees | 20 | |||
Transfer agent fees | 12 | |||
Distribution fees | ||||
Class A | 14 | |||
Class B | 3 | |||
Class C | 4 | |||
Class R3 | 3 | |||
Class R4 | 11 | |||
Custodian fees | — | |||
Accounting services | 2 | |||
Registration and filing fees | 33 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 15 | |||
Total expenses (before waivers) | 121 | |||
Expense waivers | (94 | ) | ||
Transfer agent fee waivers | (2 | ) | ||
Total waivers | (96 | ) | ||
Total expenses, net | 25 | |||
Net investment income | 381 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (1,251 | ) | ||
Net Realized Loss on Investments | (1,251 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 765 | |||
Net Changes in Unrealized Appreciation of Investments | 765 | |||
Net Loss on Investments | (486 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (105 | ) | |
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(000’s Omitted)
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 381 | $ | 238 | ||||
Net realized loss on investments | (1,251 | ) | (69 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 765 | (11,227 | ) | |||||
Net decrease in net assets resulting from operations | (105 | ) | (11,058 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (211 | ) | (531 | ) | ||||
Class B | (9 | ) | (17 | ) | ||||
Class C | (11 | ) | (15 | ) | ||||
Class R3 | (22 | ) | — | |||||
Class R4 | (157 | ) | (34 | ) | ||||
Class R5 | (60 | ) | — | |||||
Class Y | — | (1 | ) | |||||
From net realized gain on investments | ||||||||
Class A | — | (147 | ) | |||||
Class B | — | (5 | ) | |||||
Class C | — | (4 | ) | |||||
Class R4 | — | (7 | ) | |||||
Total distributions | (470 | ) | (761 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | 535 | 4,442 | ||||||
Class B | 89 | 392 | ||||||
Class C | 50 | 727 | ||||||
Class R3 | 135 | 1,285 | ||||||
Class R4 | 4,599 | 9,923 | ||||||
Class R5 | 1,507 | 3,411 | ||||||
Class Y | 1 | 2 | ||||||
Net increase from capital share transactions | 6,916 | 20,182 | ||||||
Net increase in net assets | 6,341 | 8,363 | ||||||
Net Assets: | ||||||||
Beginning of period | 25,250 | 16,887 | ||||||
End of period | $ | 31,591 | $ | 25,250 | ||||
Accumulated undistributed net investment income | $ | 69 | $ | 158 | ||||
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(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2030 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation – Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary |
8
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markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. |
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Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial |
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statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging |
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Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 684 | $ | 44 | ||||
Long-Term Capital Gains * | 77 | 1 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
Amount | ||||
Undistributed Ordinary Income | $ | 158 | ||
Accumulated Capital Losses* | $ | (378 | ) | |
Unrealized Depreciation† | $ | (9,952 | ) | |
Total Accumulated Deficit | $ | (10,172 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital |
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accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to increase undistributed net investment income by $470 and decrease accumulated net realized loss by $470. | |||
d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $ | 378 | ||
Total | $ | 378 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 – 2008) and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
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c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class R3 | Class R4 | Class R5 | Class Y | ||||||
1.05% | 1.80% | 1.80% | 1.20% | 0.90% | 0.85% | 0.85% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $41 and contingent deferred sales charges of $1 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $5. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $12 for providing such services. These fees are accrued daily and paid monthly. |
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5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class Y | 4 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 10,701 | ||
Sales Proceeds Excluding U.S. Government Obligations | 3,864 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 365 | 34 | (326 | ) | — | 73 | 722 | 67 | (321 | ) | — | 468 | ||||||||||||||||||||||||||||
Amount | $ | 2,245 | $ | 211 | $ | (1,921 | ) | $ | — | $ | 535 | $ | 6,668 | $ | 677 | $ | (2,903 | ) | $ | — | $ | 4,442 | ||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 22 | 1 | (9 | ) | — | 14 | 52 | 2 | (13 | ) | — | 41 | ||||||||||||||||||||||||||||
Amount | $ | 139 | $ | 9 | $ | (59 | ) | $ | — | $ | 89 | $ | 482 | $ | 22 | $ | (112 | ) | $ | — | $ | 392 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 53 | 2 | (48 | ) | — | 7 | 94 | 2 | (21 | ) | — | 75 | ||||||||||||||||||||||||||||
Amount | $ | 334 | $ | 11 | $ | (295 | ) | $ | — | $ | 50 | $ | 883 | $ | 19 | $ | (175 | ) | $ | — | $ | 727 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 29 | 3 | (9 | ) | — | 23 | 158 | — | (1 | ) | — | 157 | ||||||||||||||||||||||||||||
Amount | $ | 173 | $ | 22 | $ | (60 | ) | $ | — | $ | 135 | $ | 1,297 | $ | — | $ | (12 | ) | $ | — | $ | 1,285 | ||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 750 | 25 | (32 | ) | — | 743 | 1,267 | 4 | (212 | ) | — | 1,059 | ||||||||||||||||||||||||||||
Amount | $ | 4,642 | $ | 157 | $ | (200 | ) | $ | — | $ | 4,599 | $ | 11,848 | $ | 41 | $ | (1,966 | ) | $ | — | $ | 9,923 | ||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | 252 | 9 | (15 | ) | — | 246 | 401 | — | (30 | ) | — | 371 | ||||||||||||||||||||||||||||
Amount | $ | 1,542 | $ | 59 | $ | (94 | ) | $ | — | $ | 1,507 | $ | 3,674 | $ | 1 | $ | (264 | ) | $ | — | $ | 3,411 | ||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | $ | — | $ | 2 | $ | — | $ | — | $ | 2 |
The following reflects the conversion of Class B Shares into Class A Shares (reflected as Class A Shares issued and Class B shares redeemed) for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 1 | $ | 9 | |||||
For the Year Ended October 31, 2008 | – | $ | – |
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8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Proposed Reclassifications: | |
At a meeting held on February 4, 2009, the Board of Directors of the Fund approved a transaction under which Class B shares and Class C shares of the Fund would become Class A shares of the Fund. Following the transaction, each shareholder owning Class B shares will own Class A shares equal to the aggregate value of their Class B shares and each shareholder owning Class C shares will own Class A shares equal to the aggregate value of their Class C shares (the “Reclassification”). | ||
Effective February 13, 2009, Class B shares and Class C shares of the Fund are no longer sold to new investors or existing shareholders (except through reinvested dividends) nor are they eligible for exchanges from other Hartford Mutual Funds. | ||
Shareholders of Class B and Class C shares are required to approve the Reclassifications. The Board of Directors of the Fund has called for a Special Joint Meeting of Shareholders of the Funds to be held on or about July 16, 2009, for the purpose of seeking the approval of the Reclassifications by the Class B and Class C shareholders of the Fund. | ||
If the Reclassifications are approved, sales charges will not be charged shareholders of Class B and Class C shares; contingent deferred sales charges for Class B and Class C shares will be waived; and distribution and service (12b-1) fees on shares classified as Class B and Class C shares before the Reclassifications will be reduced from 1.00% to 0.25% after the Reclassifications. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 6.80 | $ | 0.09 | $ | — | $ | (0.21 | ) | $ | (0.12 | ) | $ | (0.12 | ) | $ | — | $ | — | $ | (0.12 | ) | $ | (0.24 | ) | $ | 6.56 | (1.59) | %(f) | $ | 12,711 | 0.88 | %(g) | 0.23 | %(g) | 0.23 | %(g) | 2.94 | %(g) | 14 | % | |||||||||||||||||||||||||||||||
B | 6.78 | 0.08 | — | (0.21 | ) | (0.13 | ) | (0.09 | ) | — | — | (0.09 | ) | (0.22 | ) | 6.56 | (1.84 | ) (f) | 673 | 2.15 | (g) | 0.61 | (g) | 0.61 | (g) | 2.59 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 6.78 | 0.08 | — | (0.23 | ) | (0.15 | ) | (0.08 | ) | — | — | (0.08 | ) | (0.23 | ) | 6.55 | (2.14 | ) (f) | 778 | 1.92 | (g) | 0.84 | (g) | 0.84 | (g) | 2.52 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 6.77 | 0.08 | — | (0.20 | ) | (0.12 | ) | (0.14 | ) | — | — | (0.14 | ) | (0.26 | ) | 6.51 | (1.67 | ) (f) | 1,178 | 1.20 | (g) | 0.38 | (g) | 0.38 | (g) | 2.77 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 6.78 | 0.09 | — | (0.21 | ) | (0.12 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.24 | ) | 6.54 | (1.58 | ) (f) | 12,176 | 0.88 | (g) | 0.08 | (g) | 0.08 | (g) | 2.89 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 6.80 | 0.09 | — | (0.21 | ) | (0.12 | ) | (0.13 | ) | — | — | (0.13 | ) | (0.25 | ) | 6.55 | (1.68 | ) (f) | 4,051 | 0.58 | (g) | 0.03 | (g) | 0.03 | (g) | 3.04 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 6.82 | 0.10 | — | (0.21 | ) | (0.11 | ) | (0.14 | ) | — | — | (0.14 | ) | (0.25 | ) | 6.57 | (1.51 | ) (f) | 24 | 0.49 | (g) | 0.03 | (g) | 0.03 | (g) | 3.21 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.92 | 0.13 | — | (3.78 | ) | (3.65 | ) | (0.37 | ) | (0.10 | ) | — | (0.47 | ) | (4.12 | ) | 6.80 | (34.83 | ) | 12,679 | 0.86 | 0.51 | 0.51 | 1.43 | 35 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 10.90 | 0.01 | — | (3.71 | ) | (3.70 | ) | (0.32 | ) | (0.10 | ) | — | (0.42 | ) | (4.12 | ) | 6.78 | (35.23 | ) | 607 | 2.07 | 1.01 | 1.01 | 0.62 | — | |||||||||||||||||||||||||||||||||||||||||||||||
C | 10.89 | 0.01 | — | (3.70 | ) | (3.69 | ) | (0.32 | ) | (0.10 | ) | — | (0.42 | ) | (4.11 | ) | 6.78 | (35.17 | ) | 761 | 1.86 | 1.22 | 1.22 | 0.12 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 10.88 | (0.01 | ) | — | (3.68 | ) | (3.69 | ) | (0.32 | ) | (0.10 | ) | — | (0.42 | ) | (4.11 | ) | 6.77 | (35.18 | ) | 1,070 | 1.25 | 0.86 | 0.86 | (0.10 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
R4 | 10.91 | 0.02 | — | (3.67 | ) | (3.65 | ) | (0.38 | ) | (0.10 | ) | — | (0.48 | ) | (4.13 | ) | 6.78 | (34.87 | ) | 7,578 | 0.89 | 0.54 | 0.54 | 0.17 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.93 | 0.03 | — | (3.68 | ) | (3.65 | ) | (0.38 | ) | (0.10 | ) | — | (0.48 | ) | (4.13 | ) | 6.80 | (34.82 | ) | 2,530 | 0.58 | 0.22 | 0.22 | 0.33 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.95 | 0.18 | — | (3.82 | ) | (3.64 | ) | (0.39 | ) | (0.10 | ) | — | (0.49 | ) | (4.13 | ) | 6.82 | (34.69 | ) | 25 | 0.54 | 0.19 | 0.19 | 1.89 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.36 | 0.15 | — | 1.55 | 1.70 | (0.13 | ) | (0.01 | ) | — | (0.14 | ) | 1.56 | 10.92 | 18.34 | 15,260 | 1.45 | 0.54 | 0.54 | 0.75 | 23 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.36 | 0.08 | — | 1.55 | 1.63 | (0.08 | ) | (0.01 | ) | — | (0.09 | ) | 1.54 | 10.90 | 17.53 | 522 | 2.58 | 1.17 | 1.17 | 0.83 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.37 | 0.07 | — | 1.55 | 1.62 | (0.09 | ) | (0.01 | ) | — | (0.10 | ) | 1.52 | 10.89 | 17.44 | 405 | 2.48 | 1.26 | 1.26 | 0.21 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
R3(h) | 9.53 | (0.01 | ) | — | 1.36 | 1.35 | — | — | — | — | 1.35 | 10.88 | 14.17 | (f) | 11 | 1.90 | (g) | 0.94 | (g) | 0.94 | (g) | (0.06 | ) (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
R4(i) | 9.53 | — | — | 1.38 | 1.38 | — | — | — | — | 1.38 | 10.91 | 14.48 | (f) | 640 | 1.54 | (g) | 0.64 | (g) | 0.64 | (g) | 0.29 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(j) | 9.53 | 0.05 | — | 1.35 | 1.40 | — | — | — | — | 1.40 | 10.93 | 14.69 | (f) | 11 | 1.30 | (g) | 0.34 | (g) | 0.34 | (g) | 0.54 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.36 | 0.19 | — | 1.54 | 1.73 | (0.13 | ) | (0.01 | ) | — | (0.14 | ) | 1.59 | 10.95 | 18.60 | 38 | 1.12 | 0.24 | 0.24 | 1.90 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.75 | 0.03 | — | 0.87 | 0.90 | (0.49 | ) | — | (0.80 | ) | (1.29 | ) | (0.39 | ) | 9.36 | 10.00 | 1,857 | 14.20 | 0.53 | 0.53 | 0.37 | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.74 | (0.02 | ) | — | 0.86 | 0.84 | (0.42 | ) | — | (0.80 | ) | (1.22 | ) | (0.38 | ) | 9.36 | 9.22 | 305 | 15.05 | 1.24 | 1.24 | (0.28 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.74 | — | — | 0.85 | 0.85 | (0.42 | ) | — | (0.80 | ) | (1.22 | ) | (0.37 | ) | 9.37 | 9.35 | 81 | 15.18 | 1.10 | 1.10 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.75 | 0.10 | — | 0.84 | 0.94 | (0.53 | ) | — | (0.80 | ) | (1.33 | ) | (0.39 | ) | 9.36 | 10.40 | 32 | 13.67 | 0.21 | 0.21 | 1.10 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) September 30, 2005, through October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A(k) | 10.00 | 0.01 | — | (0.26 | ) | (0.25 | ) | — | — | — | — | (0.25 | ) | 9.75 | (2.50 | ) (f) | 10 | 0.69 | (g) | 0.48 | (g) | 0.48 | (g) | 0.76 | (g) | 14 | ||||||||||||||||||||||||||||||||||||||||||||||
B(l) | 10.00 | — | — | (0.26 | ) | (0.26 | ) | — | — | — | — | (0.26 | ) | 9.74 | (2.60 | ) (f) | 10 | 1.39 | (g) | 1.24 | (g) | 1.24 | (g) | — | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
C(m) | 10.00 | — | — | (0.26 | ) | (0.26 | ) | — | — | — | — | (0.26 | ) | 9.74 | (2.60 | ) (f) | 9 | 1.39 | (g) | 1.24 | (g) | 1.24 | (g) | — | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Y(n) | 10.00 | 0.01 | — | (0.26 | ) | (0.25 | ) | — | — | — | — | (0.25 | ) | 9.75 | (2.50 | ) (f) | 10 | 0.34 | (g) | 0.19 | (g) | 0.19 | (g) | 1.05 | (g) | — |
(a) | Expense ratios do not include expenses of the underlying funds. | |
(b) | Information presented relates to a share outstanding throughout the indicated period. | |
(c) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(d) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(e) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(f) | Per share amounts have been calculated using average shares outstanding method. | |
(g) | Not annualized. | |
(h) | Annualized. | |
(i) | Commenced operations on December 22, 2006. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on September 30, 2005. | |
(m) | Commenced operations on September 30, 2005. | |
(n) | Commenced operations on September 30, 2005. | |
(o) | Commenced operations on September 30, 2005. |
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18
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 984.14 | $ | 1.13 | $ | 1,000.00 | $ | 1,023.65 | $ | 1.15 | 0.23 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 981.62 | $ | 2.99 | $ | 1,000.00 | $ | 1,021.76 | $ | 3.05 | 0.61 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 978.63 | $ | 4.12 | $ | 1,000.00 | $ | 1,020.62 | $ | 4.20 | 0.84 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 983.32 | $ | 1.86 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 984.16 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.39 | $ | 0.40 | 0.08 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 983.20 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 984.94 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 |
21
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
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Growth of a $10,000 investment in Class R3
Inception | Since | |||
Date | Inception | |||
Target Retirement 2035 R3 | 10/31/08 | -2.42% | ||
Target Retirement 2035 R4 | 10/31/08 | -2.27% | ||
Target Retirement 2035 R5 | 10/31/08 | -2.26% |
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.0 | % | ||
SPDR DJ Wilshire REIT ETF | 1.6 | |||
The Hartford Capital Appreciation Fund, Class Y | 18.0 | |||
The Hartford Capital Appreciation II Fund, Class Y | 5.5 | |||
The Hartford Disciplined Equity Fund, Class Y | 3.4 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.5 | |||
The Hartford Equity Income Fund, Class Y | 3.1 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.9 | |||
The Hartford Global Growth Fund, Class Y | 3.1 | |||
The Hartford Growth Fund, Class Y | 3.8 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.2 | |||
The Hartford Inflation Plus Fund, Class Y | 5.4 | |||
The Hartford International Opportunities Fund, Class Y | 6.9 | |||
The Hartford International Small Company Fund, Class Y | 4.5 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.1 | |||
The Hartford Small Company Fund, Class Y | 5.5 | |||
The Hartford Total Return Bond Fund, Class Y | 7.0 | |||
The Hartford Value Fund, Class Y | 18.5 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.4% | ||||||||||||
EQUITY FUNDS - 83.0% | ||||||||||||
22 | The Hartford Capital Appreciation Fund, Class Y | $ | 532 | |||||||||
18 | The Hartford Capital Appreciation II Fund, Class Y• | 163 | ||||||||||
11 | The Hartford Disciplined Equity Fund, Class Y | 101 | ||||||||||
3 | The Hartford Dividend and Growth Fund, Class Y | 45 | ||||||||||
10 | The Hartford Equity Income Fund, Class Y. | 90 | ||||||||||
15 | The Hartford Fundamental Growth Fund, Class Y• | 116 | ||||||||||
8 | The Hartford Global Growth Fund, Class Y• | 90 | ||||||||||
9 | The Hartford Growth Fund, Class Y• | 112 | ||||||||||
4 | The Hartford Growth Opportunities Fund, Class Y• | 65 | ||||||||||
20 | The Hartford International Opportunities Fund, Class Y | 205 | ||||||||||
17 | The Hartford International Small Company Fund, Class Y | 132 | ||||||||||
14 | The Hartford Select SmallCap Value Fund, Class Y | 92 | ||||||||||
12 | The Hartford Small Company Fund, Class Y• | 163 | ||||||||||
68 | The Hartford Value Fund, Class Y | 548 | ||||||||||
Total equity funds (cost $2,512) | $ | 2,454 | ||||||||||
FIXED INCOME FUNDS - 12.4% | ||||||||||||
15 | The Hartford Inflation Plus Fund, Class Y | $ | 160 | |||||||||
21 | The Hartford Total Return Bond Fund, Class Y | 206 | ||||||||||
Total fixed income funds (cost $349) | $ | 366 | ||||||||||
Total investments in affiliated investment companies (cost $2,861) | $ | 2,820 | ||||||||||
EXCHANGE TRADED FUNDS - 3.6% | ||||||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 57 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 48 | ||||||||||
Total exchange traded funds (cost $124) | $ | 105 | ||||||||||
Total long-term investments (cost $2,985) | $ | 2,925 | ||||||||||
Total investments (cost $2,985)▲ | 99.0 | % | $ | 2,925 | ||||||||
Other assets and liabilities | 1.0 | % | 31 | |||||||||
Total net assets | 100.0 | % | $ | 2,956 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,985 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 49 | ||
Unrealized Depreciation | (109 | ) | ||
Net Unrealized Depreciation | $ | (60 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,925 | ||
Total | $ | 2,925 | ||
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Assets: | ||||
Investments in securities, at fair value (cost $124) | $ | 105 | ||
Investments in underlying affiliated funds, at fair value (cost $2,861) | 2,820 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | 1 | |||
Other assets | 33 | |||
Total assets | 2,959 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 2,956 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,056 | |||
Accumulated undistributed net investment income | 5 | |||
Accumulated net realized loss on investments | (45 | ) | ||
Unrealized depreciation of investments | (60 | ) | ||
Net assets | $ | 2,956 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.64 | ||
Shares outstanding | 104 | |||
Net assets | $ | 1,000 | ||
Class R4: Net asset value per share | $ | 9.65 | ||
Shares outstanding | 101 | |||
Net assets | $ | 978 | ||
Class R5: Net asset value per share | $ | 9.65 | ||
Shares outstanding | 101 | |||
Net assets | $ | 978 | ||
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Investment Income: | ||||
Dividends | $ | 3 | ||
Dividends from underlying affiliated funds | 39 | |||
Total investment income | 42 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | — | |||
Accounting services | — | |||
Registration and filing fees | 18 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 29 | |||
Expense waivers | (27 | ) | ||
Total waivers | (27 | ) | ||
Total expenses, net | 2 | |||
Net investment income | 40 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (45 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (45 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (60 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (60 | ) | ||
Net Loss on Investments | (105 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (65 | ) | |
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For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 40 | ||
Net realized loss on investments | (45 | ) | ||
Net unrealized depreciation of investments | (60 | ) | ||
Net decrease in net assets resulting from operations | (65 | ) | ||
Distributions to Shareholders: | ||||
From net investment income | (11 | ) | ||
Class R3 | (11 | ) | ||
Class R4 | (12 | ) | ||
Class R5 | (12 | ) | ||
Total distributions | (35 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,032 | |||
Class R4 | 1,012 | |||
Class R5 | 1,012 | |||
Net increase from capital share transactions | 3,056 | |||
Net increase in net assets | 2,956 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 2,956 | ||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 5 | ||
** | Commencement of operations. |
7
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Notes to Financial Statements
April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2035 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated Underlying Funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to |
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the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
�� | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and |
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Notes to Financial Statements -(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, |
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establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (��FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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Notes to Financial Statements - (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
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b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||
1.20% | 0.90% | 0.85% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
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Notes to Financial Statements -(continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,397 | ||
Sales Proceeds Excluding U.S. Government Obligations | 367 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 103 | 1 | — | — | 104 | |||||||||||||||
Amount | $ | 1,021 | $ | 11 | $ | — | $ | — | $ | 1,032 | ||||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.12 | $ | — | $ | (0.37 | ) | $ | (0.25 | ) | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.36 | ) | $ | 9.64 | (2.42) | %(e) | $ | 1,000 | 2.48 | %(f) | 0.36 | %(f) | 0.36 | %(f) | 2.72 | %(f) | 16 | % | ||||||||||||||||||||||||||||||||
R4 | 10.00 | 0.14 | — | (0.37 | ) | (0.23 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.35 | ) | 9.65 | (2.27 | ) (e) | 978 | 2.18 | (f) | 0.06 | (f) | 0.06 | (f) | 3.03 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.14 | — | (0.37 | ) | (0.23 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.35 | ) | 9.65 | (2.26 | ) (e) | 978 | 1.88 | (f) | 0.01 | (f) | 0.01 | (f) | 3.08 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
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Directors and Officers (Unaudited)
16
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
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Directors and Officers (Unaudited) — (continued)
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 975.78 | $ | 1.76 | $ | 1,000.00 | $ | 1,023.00 | $ | 1.80 | 0.36 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 977.32 | $ | 0.29 | $ | 1,000.00 | $ | 1,024.49 | $ | 0.30 | 0.06 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 977.40 | $ | 0.04 | $ | 1,000.00 | $ | 1,024.74 | $ | 0.05 | 0.01 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
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(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class R3
Inception | Since | |||||||
Date | Inception | |||||||
Target Retirement 2040 R3 | 10/31/08 | -2.91 | % | |||||
Target Retirement 2040 R4 | 10/31/08 | -2.87 | % | |||||
Target Retirement 2040 R5 | 10/31/08 | -2.76 | % |
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.1 | % | ||
SPDR DJ Wilshire REIT ETF | 1.6 | |||
The Hartford Capital Appreciation Fund, Class Y | 17.7 | |||
The Hartford Capital Appreciation II Fund, Class Y | 5.5 | |||
The Hartford Dividend and Growth Fund, Class Y | 1.5 | |||
The Hartford Equity Income Fund, Class Y | 3.0 | |||
The Hartford Fundamental Growth Fund, Class Y | 3.9 | |||
The Hartford Global Growth Fund, Class Y | 3.1 | |||
The Hartford Growth Fund, Class Y | 6.6 | |||
The Hartford Growth Opportunities Fund, Class Y | 2.5 | |||
The Hartford Inflation Plus Fund, Class Y | 3.3 | |||
The Hartford International Opportunities Fund, Class Y | 7.6 | |||
The Hartford International Small Company Fund, Class Y | 4.6 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.3 | |||
The Hartford Small Company Fund, Class Y | 6.3 | |||
The Hartford Total Return Bond Fund, Class Y | 4.6 | |||
The Hartford Value Fund, Class Y | 21.8 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.3% | ||||||||||||
EQUITY FUNDS - 87.4% | ||||||||||||
21 | The Hartford Capital Appreciation Fund, Class Y | $ | 516 | |||||||||
18 | The Hartford Capital Appreciation II Fund, Class Y• | 159 | ||||||||||
3 | The Hartford Dividend and Growth Fund, Class Y | 44 | ||||||||||
10 | The Hartford Equity Income Fund, Class Y | 88 | ||||||||||
15 | The Hartford Fundamental Growth Fund, Class Y• | 114 | ||||||||||
8 | The Hartford Global Growth Fund, Class Y• | 90 | ||||||||||
16 | The Hartford Growth Fund, Class Y• | 193 | ||||||||||
4 | The Hartford Growth Opportunities Fund, Class Y• | 72 | ||||||||||
22 | The Hartford International Opportunities Fund, Class Y | 222 | ||||||||||
17 | The Hartford International Small Company Fund, Class Y | 135 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 97 | ||||||||||
14 | The Hartford Small Company Fund, Class Y• | 185 | ||||||||||
79 | The Hartford Value Fund, Class Y | 636 | ||||||||||
Total equity funds (cost $2,618) | $ | 2,551 | ||||||||||
FIXED INCOME FUNDS - 7.9% | ||||||||||||
9 | The Hartford Inflation Plus Fund, Class Y | $ | 96 | |||||||||
14 | The Hartford Total Return Bond Fund, Class Y | 133 | ||||||||||
Total fixed income funds (cost $218) | $ | 229 | ||||||||||
Total investments in affiliated investment companies (cost $2,836) | $ | 2,780 | ||||||||||
EXCHANGE TRADED FUNDS - 3.7% | ||||||||||||
2 | SPDR DJ Wilshire International Real Estate ETF | $ | 60 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 48 | ||||||||||
Total exchange traded funds (cost $129) | $ | 108 | ||||||||||
Total long-term investments (cost $2,965) | $ | 2,888 | ||||||||||
Total investments (cost $2,965) ▲ | 99.0 | % | $ | 2,888 | ||||||||
Other assets and liabilities | 1.0 | % | 30 | |||||||||
Total net assets | 100.0 | % | $ | 2,918 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,965 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 42 | ||
Unrealized Depreciation | (119 | ) | ||
Net Unrealized Depreciation | $ | (77 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,888 | ||
Total | $ | 2,888 | ||
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Assets: | ||||
Investments in securities, at fair value (cost $129) | $ | 108 | ||
Investments in underlying affiliated funds, at fair value (cost $2,836) | 2,780 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | — | |||
Other assets | 33 | |||
Total assets | 2,921 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 2,918 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,039 | |||
Accumulated undistributed net investment income | 3 | |||
Accumulated net realized loss on investments | (47 | ) | ||
Unrealized depreciation of investments | (77 | ) | ||
Net assets | $ | 2,918 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.59 | ||
Shares outstanding | 102 | |||
Net assets | $ | 974 | ||
Class R4: Net asset value per share | $ | 9.59 | ||
Shares outstanding | 101 | |||
Net assets | $ | 972 | ||
Class R5: Net asset value per share | $ | 9.60 | ||
Shares outstanding | 101 | |||
Net assets | $ | 972 | ||
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Investment Income: | ||||
Dividends | $ | 3 | ||
Dividends from underlying affiliated funds | 37 | |||
Total investment income | 40 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | — | |||
Accounting services | — | |||
Registration and filing fees | 18 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 3 | |||
Total expenses (before waivers) | 29 | |||
Expense waivers | (27 | ) | ||
Total waivers | (27 | ) | ||
Total expenses, net | 2 | |||
Net investment income | 38 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (47 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (47 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (77 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (77 | ) | ||
Net Loss on Investments | (124 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (86 | ) | |
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For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 38 | ||
Net realized loss on investments | (47 | ) | ||
Net unrealized depreciation of investments | (77 | ) | ||
Net decrease in net assets resulting from operations | (86 | ) | ||
Distributions to Shareholders: | ||||
From net investment income | ||||
Class R3 | (11 | ) | ||
Class R4 | (12 | ) | ||
Class R5 | (12 | ) | ||
Total distributions | (35 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,015 | |||
Class R4 | 1,012 | |||
Class R5 | 1,012 | |||
Net increase from capital share transactions | 3,039 | |||
Net increase in net assets | 2,918 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 2,918 | ||
Accumulated undistributed (distribution in excess of) net investment income (loss) | $ | 3 | ||
** | Commencement of operations. |
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1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2040 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated underlying funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation – Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to |
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the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and |
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forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities – The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 – Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, |
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establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 – Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 – Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 – In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 – In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 – On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements – Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement – Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||
1.20% | 0.90% | 0.85% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions – Certain officers of the Fund are directors and/or officers of HIFSCO, and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), a wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
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5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,328 | ||
Sales Proceeds Excluding U.S. Government Obligations | 316 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 101 | 1 | — | — | 102 | |||||||||||||||
Amount | $ | 1,004 | $ | 11 | $ | — | $ | — | $ | 1,015 | ||||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 12 | $ | — | $ | — | $ | 1,012 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000's) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.12 | $ | — | $ | (0.42 | ) | $ | (0.30 | ) | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.41 | ) | $ | 9.59 | (2.91) | %(e) | $ | 974 | 2.50 | %(f) | 0.34 | %(f) | 0.34 | %(f) | 2.67 | %(f) | 14 | % | ||||||||||||||||||||||||||||||||
R4 | 10.00 | 0.13 | — | (0.42 | ) | (0.29 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.41 | ) | 9.59 | (2.87 | ) (e) | 972 | 2.20 | (f) | 0.04 | (f) | 0.04 | (f) | 2.97 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.13 | — | (0.41 | ) | (0.28 | ) | (0.12 | ) | — | — | (0.12 | ) | (0.40 | ) | 9.60 | (2.76 | ) (e) | 972 | 1.90 | (f) | 0.00 | (f) | 0.00 | (f) | 3.01 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 – 2009). |
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18
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | �� | during the period | the | Days | |||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 970.87 | $ | 1.66 | $ | 1,000.00 | $ | 1,023.10 | $ | 1.70 | 0.34 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 971.34 | $ | 0.19 | $ | 1,000.00 | $ | 1,024.59 | $ | 0.20 | 0.04 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 972.43 | $ | — | $ | 1,000.00 | $ | 1,024.79 | $ | — | — | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
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(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class R3
Inception | Since | |||||||
Date | Inception | |||||||
Target Retirement 2045 R3 | 10/31/08 | -3.26 | % | |||||
Target Retirement 2045 R4 | 10/31/08 | -3.11 | % | |||||
Target Retirement 2045 R5 | 10/31/08 | -3.10 | % |
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.2 | % | ||
SPDR DJ Wilshire REIT ETF | 1.5 | |||
The Hartford Capital Appreciation Fund, Class Y | 20.6 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.4 | |||
The Hartford Fundamental Growth Fund, Class Y | 5.5 | |||
The Hartford Global Growth Fund, Class Y | 3.3 | |||
The Hartford Growth Fund, Class Y | 9.1 | |||
The Hartford Growth Opportunities Fund, Class Y | 3.1 | |||
The Hartford Inflation Plus Fund, Class Y | 4.3 | |||
The Hartford International Opportunities Fund, Class Y | 7.5 | |||
The Hartford International Small Company Fund, Class Y | 5.2 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.5 | |||
The Hartford Small Company Fund, Class Y | 8.1 | |||
The Hartford Total Return Bond Fund, Class Y | 0.8 | |||
The Hartford Value Fund, Class Y | 20.9 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.3% | ||||||||||||
EQUITY FUNDS - 90.2% | ||||||||||||
24 | The Hartford Capital Appreciation Fund, Class Y | $ | 598 | |||||||||
11 | The Hartford Capital Appreciation II Fund, Class Y • | 99 | ||||||||||
21 | The Hartford Fundamental Growth Fund, Class Y • | 160 | ||||||||||
9 | The Hartford Global Growth Fund, Class Y • | 95 | ||||||||||
22 | The Hartford Growth Fund, Class Y • | 263 | ||||||||||
5 | The Hartford Growth Opportunities Fund, Class Y • | 90 | ||||||||||
22 | The Hartford International Opportunities Fund, Class Y | 219 | ||||||||||
19 | The Hartford International Small Company Fund, Class Y | 151 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 102 | ||||||||||
18 | The Hartford Small Company Fund, Class Y • | 235 | ||||||||||
75 | The Hartford Value Fund, Class Y | 608 | ||||||||||
Total equity funds (cost $2,731) | $ | 2,620 | ||||||||||
FIXED INCOME FUNDS - 5.1% | ||||||||||||
12 | The Hartford Inflation Plus Fund, Class Y | $ | 124 | |||||||||
2 | The Hartford Total Return Bond Fund, Class Y | 24 | ||||||||||
Total fixed income funds (cost $137) | $ | 148 | ||||||||||
Total investments in affiliated investment companies (cost $2,868) | $ | 2,768 | ||||||||||
EXCHANGE TRADED FUNDS - 3.7% | ||||||||||||
3 | SPDR DJ Wilshire International Real Estate ETF | $ | 65 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 43 | ||||||||||
Total exchange traded funds (cost $131) | $ | 108 | ||||||||||
Total long-term investments (cost $2,999) | $ | 2,876 | ||||||||||
Total investments (cost $2,999) ▲ | 99.0 | % | $ | 2,876 | ||||||||
Other assets and liabilities | 1.0 | % | 29 | |||||||||
Total net assets | 100.0 | % | $ | 2,905 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,999 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 17 | ||
Unrealized Depreciation | (140 | ) | ||
Net Unrealized Depreciation | $ | (123 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,876 | ||
Total | $ | 2,876 | ||
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April 30, 2009 (Unaudited)
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $131) | $ | 108 | ||
Investments in underlying affiliated funds, at fair value (cost $2,868) | 2,768 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | — | |||
Other assets | 32 | |||
Total assets | 2,908 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 2,905 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,033 | |||
Accumulated undistributed net investment income | — | |||
Accumulated net realized loss on investments | (5 | ) | ||
Unrealized depreciation of investments | (123 | ) | ||
Net assets | $ | 2,905 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.56 | ||
Shares outstanding | 101 | |||
Net assets | $ | 967 | ||
Class R4: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 101 | |||
Net assets | $ | 969 | ||
Class R5: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 101 | |||
Net assets | $ | 969 | ||
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From (commencement of operations) October 31, 2008 through April 30, 2009 (Unaudited)
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 3 | ||
Dividends from underlying affiliated funds | 33 | |||
Total investment income | 36 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | — | |||
Accounting services | — | |||
Registration and filing fees | 18 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 30 | |||
Expense waivers | (27 | ) | ||
Total waivers | (27 | ) | ||
Total expenses, net | 3 | |||
Net investment income | 33 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (5 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (5 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (123 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (123 | ) | ||
Net Loss on Investments | (128 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (95 | ) | |
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(000’s Omitted)
For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 33 | ||
Net realized loss on investments | (5 | ) | ||
Net unrealized depreciation of investments | (123 | ) | ||
Net decrease in net assets resulting from operations | (95 | ) | ||
Distributions to Shareholders: | ||||
From net investment income | ||||
Class R3 | (11 | ) | ||
Class R4 | (11 | ) | ||
Class R5 | (11 | ) | ||
Total distributions | (33 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,011 | |||
Class R4 | 1,011 | |||
Class R5 | 1,011 | |||
Net increase from capital share transactions | 3,033 | |||
Net increase in net assets | 2,905 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 2,905 | ||
Accumulated undistributed net investment income | $ | — | ||
** | Commencement of operations. |
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April 30, 2009 (Unaudited)
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2045 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). |
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated underlying funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to |
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the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. |
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another over-the-counter market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | |||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. |
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f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | ||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | |||
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. |
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Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||
1.25% | 0.95% | 0.90% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO, and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), a wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,199 | ||
Sales Proceeds Excluding U.S. Government Obligations | 195 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 | ||||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.10 | $ | — | $ | (0.43 | ) | $ | (0.33 | ) | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.44 | ) | $ | 9.56 | (3.26 | )%(e) | $ | 967 | 2.50 | %(f) | 0.38 | %(f) | 0.38 | %(f) | 2.37 | %(f) | 9 | % | |||||||||||||||||||||||||||||||
R4 | 10.00 | 0.12 | — | (0.44 | ) | (0.32 | ) | (0.11 | ) | — | — | (0.11 | ) | (0.43 | ) | 9.57 | (3.11 | ) (e) | 969 | 2.20 | (f) | 0.08 | (f) | 0.08 | (f) | 2.67 | (f) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.12 | — | (0.44 | ) | (0.32 | ) | (0.11 | ) | — | — | (0.11 | ) | (0.43 | ) | 9.57 | (3.10 | ) (e) | 969 | 1.91 | (f) | 0.03 | (f) | 0.03 | (f) | 2.72 | (f) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
15
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16
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
17
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Directors and Officers (Unaudited) — (continued)
18
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 967.42 | $ | 1.85 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 968.90 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.39 | $ | 0.40 | 0.08 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 968.98 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
15 | ||||
16 | ||||
18 | ||||
18 | ||||
19 |
Table of Contents
(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class R3
Inception | Since | |||||||
Date | Inception | |||||||
Target Retirement 2050 R3 | 10/31/08 | -3.26 | % | |||||
Target Retirement 2050 R4 | 10/31/08 | -3.11 | % | |||||
Target Retirement 2050 R5 | 10/31/08 | -3.10 | % |
(1) | Growth of a $10,000 investment in Classes R4 and R5 shares will vary from results seen above due to differences in the expenses charged to these classes. | |
(2) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Hugh Whelan, CFA | Edward C. Caputo, CFA | |
Managing Director | Vice President |
2
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as of April 30, 2009
Percentage of Net | ||||
Fund Name | Assets | |||
SPDR DJ Wilshire International Real Estate ETF | 2.2 | % | ||
SPDR DJ Wilshire REIT ETF | 1.5 | |||
The Hartford Capital Appreciation Fund, Class Y | 20.6 | |||
The Hartford Capital Appreciation II Fund, Class Y | 3.4 | |||
The Hartford Fundamental Growth Fund, Class Y | 5.5 | |||
The Hartford Global Growth Fund, Class Y | 3.3 | |||
The Hartford Growth Fund, Class Y | 9.1 | |||
The Hartford Growth Opportunities Fund, Class Y | 3.1 | |||
The Hartford Inflation Plus Fund, Class Y | 4.3 | |||
The Hartford International Opportunities Fund, Class Y | 7.5 | |||
The Hartford International Small Company Fund, Class Y | 5.2 | |||
The Hartford Select SmallCap Value Fund, Class Y | 3.5 | |||
The Hartford Small Company Fund, Class Y | 8.1 | |||
The Hartford Total Return Bond Fund, Class Y | 0.8 | |||
The Hartford Value Fund, Class Y | 20.9 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
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(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
AFFILIATED INVESTMENT COMPANIES - 95.3% | ||||||||||||
EQUITY FUNDS - 90.2% | ||||||||||||
24 | The Hartford Capital Appreciation Fund, Class Y | $ | 598 | |||||||||
11 | The Hartford Capital Appreciation II Fund, Class Y • | 99 | ||||||||||
21 | The Hartford Fundamental Growth Fund, Class Y • | 160 | ||||||||||
9 | The Hartford Global Growth Fund, Class Y • | 95 | ||||||||||
22 | The Hartford Growth Fund, Class Y • | 263 | ||||||||||
5 | The Hartford Growth Opportunities Fund, Class Y • | 90 | ||||||||||
22 | The Hartford International Opportunities Fund, Class Y | 219 | ||||||||||
19 | The Hartford International Small Company Fund, Class Y | 151 | ||||||||||
15 | The Hartford Select SmallCap Value Fund, Class Y | 102 | ||||||||||
18 | The Hartford Small Company Fund, Class Y • | 235 | ||||||||||
75 | The Hartford Value Fund, Class Y | 608 | ||||||||||
Total equity funds (cost$2,731) | $ | 2,620 | ||||||||||
FIXED INCOME FUNDS - 5.1% | ||||||||||||
12 | The Hartford Inflation Plus Fund, Class Y | $ | 124 | |||||||||
2 | The Hartford Total Return Bond Fund, Class Y | 24 | ||||||||||
Total fixed income funds (cost$137) | $ | 148 | ||||||||||
Total investments in affiliated investment companies (cost$2,868) | $ | 2,768 | ||||||||||
EXCHANGE TRADED FUNDS - 3.7% | ||||||||||||
3 | SPDR DJ Wilshire International Real Estate ETF | $ | 65 | |||||||||
1 | SPDR DJ Wilshire REIT ETF | 43 | ||||||||||
Total exchange traded funds (cost$131) | $ | 108 | ||||||||||
Total long-term investments (cost$2,999 | $ | 2,876 | ||||||||||
Total investments (cost$2,999)▲ | 99.0 | % | $ | 2,876 | ||||||||
Other assets and liabilities | 1.0 | % | 29 | |||||||||
Total net assets | 100.0 | % | $ | 2,905 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $2,999 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 17 | ||
Unrealized Depreciation | (140 | ) | ||
Net Unrealized Depreciation | $ | (123 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,876 | ||
Total | $ | 2,876 | ||
4
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(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $131) | $ | 108 | ||
Investments in underlying affiliated funds, at fair value (cost $2,868) | 2,768 | |||
Receivables: | ||||
Fund shares sold | — | |||
Dividends and interest | — | |||
Other assets | 32 | |||
Total assets | 2,908 | |||
Liabilities: | ||||
Payables: | ||||
Investment management fees | — | |||
Distribution fees | — | |||
Accrued expenses | 3 | |||
Total liabilities | 3 | |||
Net assets | $ | 2,905 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 3,033 | |||
Accumulated undistributed net investment income | — | |||
Accumulated net realized loss on investments | (5 | ) | ||
Unrealized depreciation of investments | (123 | ) | ||
Net assets | $ | 2,905 | ||
Shares authorized | 150,000 | |||
Par value | $ | 0.001 | ||
Class R3: Net asset value per share | $ | 9.56 | ||
Shares outstanding | 101 | |||
Net assets | $ | 967 | ||
Class R4: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 101 | |||
Net assets | $ | 969 | ||
Class R5: Net asset value per share | $ | 9.57 | ||
Shares outstanding | 101 | |||
Net assets | $ | 969 | ||
5
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(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 3 | ||
Dividends from underlying affiliated funds | 33 | |||
Total investment income | 36 | |||
Expenses: | ||||
Investment management fees | 2 | |||
Transfer agent fees | — | |||
Distribution fees | ||||
Class R3 | 2 | |||
Class R4 | 1 | |||
Custodian fees | 1 | |||
Accounting services | — | |||
Registration and filing fees | 17 | |||
Board of Directors’ fees | — | |||
Audit fees | 3 | |||
Other expenses | 4 | |||
Total expenses (before waivers) | 30 | |||
Expense waivers | (27 | ) | ||
Total waivers | (27 | ) | ||
Total expenses, net | 3 | |||
Net investment income | 33 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in underlying affiliated funds | (5 | ) | ||
Net realized gain on investments in securities | — | |||
Net Realized Loss on Investments | (5 | ) | ||
Net Changes in Unrealized Depreciation of Investments: | ||||
Net unrealized depreciation of investments | (123 | ) | ||
Net Changes in Unrealized Depreciation of Investments | (123 | ) | ||
Net Loss on Investments | (128 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (95 | ) | |
6
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For the Period | ||||
October 31, 2008** | ||||
through | ||||
April 30, 2009 | ||||
Operations: | ||||
Net investment income | $ | 33 | ||
Net realized loss on investments | (5 | ) | ||
Net unrealized depreciation of investments | (123 | ) | ||
Net decrease in net assets resulting from operations | (95 | ) | ||
Distributions to Shareholders: | ||||
From net investment income | ||||
Class R3 | (11 | ) | ||
Class R4 | (11 | ) | ||
Class R5 | (11 | ) | ||
Total distributions | (33 | ) | ||
Capital Share Transactions: | ||||
Class R3 | 1,011 | |||
Class R4 | 1,011 | |||
Class R5 | 1,011 | |||
Net increase from capital share transactions | 3,033 | |||
Net increase in net assets | 2,905 | |||
Net Assets: | ||||
Beginning of period | — | |||
End of period | $ | 2,905 | ||
Accumulated undistributed net investment income | $ | — | ||
** | Commencement of operations. |
7
Table of Contents
(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Target Retirement 2050 Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance. | ||
The Fund, as a “Fund of Funds”, invests the majority of its assets in Class Y shares of other Hartford mutual funds (“Underlying Funds”) as well as certain exchange-traded funds (“ETFs”). The Fund seeks its investment goals through implementation of a strategic asset allocation recommendation provided by Hartford Investment Management Company (“Hartford Investment Management”), a wholly-owned subsidiary of The Hartford Financial Services Group, Inc. (“The Hartford”). | ||
2. | Significant Accounting Policies: | |
The accounting policies of the affiliated underlying funds are outlined in the shareholder reports for such funds, available (1) without charge, upon request, by calling 888-843-7824 and (2) on the Securities and Exchange Commission’s website at http://www.sec.gov. The reports may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The affiliated underlying funds are not covered by this report. | ||
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date. Income and capital gain distributions from Underlying Funds are recorded on the ex-dividend date. | |||
b) | Security Valuation - Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | ||
The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to |
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the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | |||
Debt securities (other than short-term obligations and senior floating rate interests) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Senior floating rate interests generally trade in over-the-counter markets and are priced through an independent pricing service utilizing independent market quotations from loan dealers or financial institutions. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Exchange traded equity securities shall be valued at the last reported sale price on the exchange or market on which the security is primarily traded (the “Primary Market”) at the Valuation Time. If the security did not trade on the Primary Market, it may be valued at the Valuation Time at the last reported sale price on another exchange where it trades. The value of an equity security not traded on any exchange but traded on the Nasdaq Stock Market, Inc. (“Nasdaq”) or another OTC market shall be valued at the last reported sale price or official closing price on the exchange or market on which the security is traded as of the Valuation Time. If it is not possible to determine the last reported sale price or official closing price on the relevant exchange or market at the Valuation Time, the value of the security shall be taken to be the most recent mean between bid and asked prices on such exchange or market at the Valuation Time. | |||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | |||
Options contracts on securities, currencies, indexes, futures contracts, commodities and other instruments shall be valued at their most recent sales price at the Valuation Time on the Primary Market on which the instrument is primarily traded. If the instrument did not trade on the Primary Market, it may be valued at the most recent sales price at the Valuation Time on another exchange or market where it did trade. | |||
Futures contracts are valued at the most recent settlement price reported by an exchange on which, over time, they are traded most extensively. If a settlement price is not available, futures contracts will be valued at the most recent trade price as of the Valuation Time. If there were no trades, the contract shall be valued at the mean of the closing bid/ask prices as of the Valuation Time. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
A forward currency contract shall be valued based on the price of the underlying currency at the prevailing interpolated exchange rate, which is a combination of the spot currency rate and the forward currency rate. Spot currency rates and |
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Notes to Financial Statements - (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
�� | forward currency rates are obtained from an independent pricing service on a daily basis not more than one hour before the Valuation Time. | ||
Swaps are valued based on custom valuations furnished by an independent pricing service. Swaps for which prices are not available from an independent pricing service are valued in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
c) | Indexed Securities - The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had investments in indexed securities as of April 30, 2009, as shown on the Schedule of Investments under Exchange Traded Funds. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income of the Fund are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Long-term capital gains distributions received from underlying funds are distributed at least annually, when required. Unless shareholders specify otherwise, all dividends and distributions will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | |||
e) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
f) | Financial Accounting Standards Board Financial Accounting Standards No. 157 - Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, |
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establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |||
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
FASB Staff Position No. 157-4 - In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
g) | Financial Accounting Standards Board Financial Accounting Standards No. 161 - In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. |
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Notes to Financial Statements - (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
h) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
3. | Federal Income Taxes: |
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund may record reclassifications in its capital accounts. These reclassifications have no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. Reclassifications are made at fiscal year end and therefore, no reclassifications were made during the six-month period ended April 30, 2009. | ||
c) | Financial Accounting Standards Board Interpretation No. 48 - On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund has adopted FIN 48. Management has evaluated the implications of FIN 48 for the Fund and has determined there is no impact to the Fund’s financial statements. |
4. | Expenses: |
a) | Investment Management Agreements - Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.15 | % | ||
On next $4.5 billion | 0.10 | % | ||
On next $5 billion | 0.08 | % | ||
Over $10 billion | 0.07 | % |
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b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.012 | % | ||
Over $5 billion | 0.010 | % |
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class R3 | Class R4 | Class R5 | ||
1.25% | 0.95% | 0.90% |
Voluntary limitations for total operating expenses include expenses incurred as the result of investing in other investment companies. Amounts incurred which exceed the above limits are deducted from expenses and are reported as waivers on the accompanying Statement of Operations. | |||
d) | Distribution and Service Plan for Class R3 and R4 Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class R3 shares provides for a distribution fee of 0.50%. The Rule 12b-1 plan applicable to Class R4 shares provides for a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares rounds to zero. These commissions are in turn paid to sales representatives of the broker/dealers. | |||
e) | Other Related Party Transactions - Certain officers of the Fund are directors and/or officers of HIFSCO, and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), a wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated an amount, which rounds to zero, for providing such services. These fees are accrued daily and paid monthly. |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R3 | 101 | |||
Class R4 | 101 | |||
Class R5 | 101 |
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Notes to Financial Statements - (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 3,199 | ||
Sales Proceeds Excluding U.S. Government Obligations | 195 |
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009. |
For the Six-Month Period Ended 4/30/2009 | ||||||||||||||||||||
Shares | Shares | |||||||||||||||||||
Issued for | Issued | Net Increase | ||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | ||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | ||||||||||||||||
Class R3 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 | ||||||||||
Class R4 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 | ||||||||||
Class R5 | ||||||||||||||||||||
Shares | 100 | 1 | — | — | 101 | |||||||||||||||
Amount | $ | 1,000 | $ | 11 | $ | — | $ | — | $ | 1,011 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. |
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- Selected Per-Share Data - (a) | - Ratios and Supplemental Data - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | Net | ments and | ments and | ments and | Net Invest- | Port- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Assets at | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From (commencement of operations) October 31, 2008, through April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R3 | $ | 10.00 | $ | 0.12 | $ | — | $ | (0.45 | ) | $ | (0.33 | ) | $ | (0.11 | ) | $ | — | $ | — | $ | (0.11 | ) | $ | (0.44 | ) | $ | 9.56 | (3.26) | %(f) | $ | 967 | 2.49 | %(g) | 0.38 | %(g) | 0.38 | %(g) | 2.37 | %(g) | 9 | % | |||||||||||||||||||||||||||||||||
R4 | 10.00 | 0.13 | — | (0.45 | ) | (0.32 | ) | (0.11 | ) | — | — | (0.11 | ) | (0.43 | ) | 9.57 | (3.11 | ) (f) | 969 | 2.19 | (g) | 0.08 | (g) | 0.08 | (g) | 2.67 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||||
R5 | 10.00 | 0.14 | — | (0.46 | ) | (0.32 | ) | (0.11 | ) | — | — | (0.11 | ) | (0.43 | ) | 9.57 | (3.10 | ) (f) | 969 | 1.89 | (g) | 0.03 | (g) | 0.03 | (g) | 2.72 | (g) | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Expense ratios do not include expenses of the underlying funds. | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. |
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* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
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Directors and Officers (Unaudited) — (continued)
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 967.42 | $ | 1.85 | $ | 1,000.00 | $ | 1,022.91 | $ | 1.90 | 0.38 | % | 181 | 365 | |||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 968.90 | $ | 0.39 | $ | 1,000.00 | $ | 1,024.39 | $ | 0.40 | 0.08 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 968.98 | $ | 0.14 | $ | 1,000.00 | $ | 1,024.64 | $ | 0.15 | 0.03 | 181 | 365 |
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Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
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(subadvised by Hartford Investment Management Company)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Tax-Free California A# | 10/31/02 | -11.27 | % | 0.03 | % | 0.76 | % | |||||||||
Tax-Free California A## | 10/31/02 | -15.26 | % | -0.89 | % | 0.05 | % | |||||||||
Tax-Free California B# | 10/31/02 | -11.86 | % | -0.72 | % | 0.00 | % | |||||||||
Tax-Free California B## | 10/31/02 | -16.09 | % | -1.06 | % | 0.00 | % | |||||||||
Tax-Free California C# | 10/31/02 | -11.93 | % | -0.74 | % | 0.03 | % | |||||||||
Tax-Free California C## | 10/31/02 | -12.77 | % | -0.74 | % | 0.03 | % |
# | Without sales charge | |
## | With sales charge |
(1) | Growth of a $10,000 investment in Classes B and C shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||
Charles Grande* | Christopher Bade | |
Executive Vice President | Vice President |
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* | Effective June 26, 2009, Charles Grande will no longer manage assets for the Fund. |
as of April 30, 2009
Percentage of | ||||
Long Term | ||||
Rating | Holdings | |||
AAA | 3.1 | % | ||
AA | 30.3 | |||
A | 29.2 | |||
BBB | 16.3 | |||
BB | 1.2 | |||
Not Rated | 19.9 | |||
Total | 100.0 | % | ||
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Airport Revenues | 2.3 | % | ||
General Obligations | 11.6 | |||
Health Care/Services | 16.0 | |||
Higher Education (Univ., Dorms, etc.) | 13.6 | |||
Housing (HFA’S, etc.) | 3.2 | |||
Industrial | 3.6 | |||
Miscellaneous | 2.2 | |||
Public Facilities | 2.2 | |||
Refunded With U.S. Government Securities | 3.3 | |||
Special Tax Assessment | 11.0 | |||
Tax Allocation | 9.2 | |||
Utilities — Electric | 7.0 | |||
Utilities — Water and Sewer | 6.6 | |||
Short-Term Investments | 7.2 | |||
Other Assets and Liabilities | 1.0 | |||
Total | 100.0 | % | ||
3
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 91.8% | ||||||||
Airport Revenues - 2.3% | ||||||||
San Jose, CA, Airport Rev AMT, | ||||||||
$ | 1,000 | 5.00%, 03/01/2037 | $ | 800 | ||||
General Obligations - 11.6% | ||||||||
California State, | ||||||||
525 | 6.50%, 04/01/2033 | 565 | ||||||
Chabot-Las Positas, CA, Community College Dist, | ||||||||
1,895 | 5.05%, 08/01/2033 o | 378 | ||||||
Los Alamitos California University, | ||||||||
500 | 5.50%, 08/01/2033 | 517 | ||||||
Los Angeles, CA, Community College Dist, | ||||||||
1,000 | 5.00%, 08/01/2033 | 981 | ||||||
Puerto Rico Commonwealth, | ||||||||
500 | 5.50%, 07/01/2032 | 440 | ||||||
San Bernardino Community College Dist, | ||||||||
500 | 6.38%, 08/01/2026 | 564 | ||||||
Torrance USD, | ||||||||
500 | 5.50%, 08/01/2025 | 533 | ||||||
3,978 | ||||||||
Health Care/Services - 16.0% | ||||||||
California ABAG FA for Non-Profit Corps, San Diego Hospital Assoc, | ||||||||
200 | 5.38%, 03/01/2021 | 182 | ||||||
California Health Fac FA, Catholic Healthcare West, | ||||||||
250 | 5.25%, 07/01/2023 | 238 | ||||||
1,000 | 5.63%, 07/01/2032 | 952 | ||||||
California Statewide Community DA, Enloe Medical Center, | ||||||||
500 | 5.50%, 08/15/2023 | 500 | ||||||
California Statewide Community DA, Health Services Rev, | ||||||||
250 | 6.00%, 10/01/2023 | 254 | ||||||
California Statewide Community DA, St. Joseph Health System, | ||||||||
1,500 | 5.13%, 07/01/2024 | 1,462 | ||||||
Rancho Mirage, CA, Joint Powers FA Rev, Eisenhower Medical Center, | ||||||||
500 | 5.00%, 07/01/2038 | 400 | ||||||
Sierra View, CA, Local Health Care Dist, | ||||||||
1,000 | 5.25%, 07/01/2032 | 805 | ||||||
Turlock, CA, Health Fac Rev, Emanuel Medical Center, | ||||||||
500 | 5.13%, 10/15/2037 | 337 | ||||||
Washington Township, CA, Health Care Dist Rev, | ||||||||
500 | 5.00%, 07/01/2037 | 391 | ||||||
5,521 | ||||||||
Higher Education (Univ., Dorms, etc.) - 13.6% | ||||||||
California Educational Fac Auth, Dominican University, | ||||||||
300 | 5.00%, 12/01/2025 | 236 | ||||||
California Educational Fac Auth, Golden Gate University, | ||||||||
455 | 5.00%, 10/01/2025 | 321 | ||||||
California Educational Fac Auth, La Verne University, | ||||||||
180 | 5.00%, 06/01/2031 | 126 | ||||||
California Educational Fac Auth, Pitzer College, | ||||||||
630 | 5.00%, 04/01/2030 | 559 | ||||||
California Educational Fac Auth, University of Southern California, | ||||||||
500 | 5.25%, 10/01/2038 | 513 | ||||||
California Educational Fac Auth, Woodbury University, | ||||||||
200 | 5.00%, 01/01/2025 | 143 | ||||||
California Municipal FA, University Students Coop Assoc, | ||||||||
250 | 4.75%, 04/01/2027 | 174 | ||||||
California Statewide Community DA, California Baptist University, | ||||||||
1,000 | 5.50%, 11/01/2038 | 604 | ||||||
California Statewide Community DA, CHF- Irvine, LLC, | ||||||||
700 | 5.75%, 05/15/2032 | 565 | ||||||
California Statewide Community DA, Drew School, | ||||||||
750 | 5.30%, 10/01/2037 | 470 | ||||||
California Statewide Community DA, Huntington Park Rev, | ||||||||
600 | 5.15%, 07/01/2030 | 401 | ||||||
California Statewide Community DA, Thomas Jefferson School of Law, | ||||||||
500 | 7.25%, 10/01/2032 | 389 | ||||||
California Statewide Community DA, Windrush School, | ||||||||
250 | 5.50%, 07/01/2037 | 166 | ||||||
4,667 | ||||||||
Housing (HFA’S, etc.) - 3.2% | ||||||||
Monterey County, CA, Certificate of Participation, | ||||||||
500 | 4.50%, 08/01/2037 | 421 | ||||||
Puerto Rico Housing FA, | ||||||||
665 | 5.13%, 12/01/2027 | 680 | ||||||
1,101 | ||||||||
Industrial - 3.6% | ||||||||
California State Enterprise Auth, Sewer FA Rev AMT, | ||||||||
500 | 5.30%, 09/01/2047 | 351 | ||||||
Chula Vista, CA, IDR Daily San Diego Gas, | ||||||||
300 | 5.30%, 07/01/2021 | 290 | ||||||
Sacramento, CA, Pollution Control FA AMT, | ||||||||
500 | 4.75%, 12/01/2023 | 460 | ||||||
Virgin Islands Public FA Rev AMT, | ||||||||
250 | 4.70%, 07/01/2022 | 154 | ||||||
1,255 | ||||||||
Miscellaneous - 2.2% | ||||||||
Kern County, CA, Tobacco Securitization Agency, | ||||||||
1,000 | 6.00%, 06/01/2029 | 756 | ||||||
Public Facilities - 2.2% | ||||||||
California Public Works Board, Dept of Health Services Richmond Lab, | ||||||||
300 | 5.00%, 11/01/2030 | 261 |
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Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||
MUNICIPAL BONDS - 91.8% — (continued) | ||||||||
Public Facilities - 2.2% — (continued) | ||||||||
California Public Works Board, Dept of Mental Health Patton, | ||||||||
$ | 200 | 5.38%, 04/01/2028 | $ | 188 | ||||
Sacramento, CA, FA Lease Rev MBIA AMT, | ||||||||
345 | 0.97%, 07/15/2027 Δ | 300 | ||||||
749 | ||||||||
Refunded With U.S. Government Securities - 3.3% | ||||||||
Beaumont, CA, FA Local Agency Rev Ser A, | ||||||||
50 | 7.25%, 09/01/2020 | 55 | ||||||
California Statewide Community DA, Thomas Jefferson School of Law, | ||||||||
175 | 4.88%, 10/01/2035 | 194 | ||||||
Contra Costa County, CA, Public FA Tax Allocation, | ||||||||
330 | 5.63%, 08/01/2033 | 383 | ||||||
Oakland, CA, Redev Agency Tax Allocation, Colliseum Area Redev, | ||||||||
250 | 5.25%, 09/01/2033 | 285 | ||||||
Santa Margarita, CA, Water Dist Special Tax Community Fac Dist, | ||||||||
200 | 6.00%, 09/01/2030 | 234 | ||||||
1,151 | ||||||||
Special Tax Assessment - 11.0% | ||||||||
Aliso Viejo, CA, Community Fac Dist Special Tax, | ||||||||
500 | 6.00%, 09/01/2038 | 361 | ||||||
Beaumont, CA, FA Improvement Area #8, | ||||||||
250 | 5.05%, 09/01/2037 ⌂ | 155 | ||||||
Carlsbad, CA, Special Tax, | ||||||||
260 | 6.05%, 09/01/2028 | 210 | ||||||
Hemet, CA, USD Community Fac Dist Special Tax #2005-1, | ||||||||
250 | 5.13%, 09/01/2036 | 176 | ||||||
Hemet, CA, USD Community Fac Dist Special Tax #2005-3, | ||||||||
500 | 5.75%, 09/01/2039 | 317 | ||||||
Imperial, CA, Special Tax Community Fac, | ||||||||
325 | 5.00%, 09/01/2026 ⌂ | 220 | ||||||
Indio, CA, Public Improvement Act Special Assessment #2002-3 GO, | ||||||||
57 | 6.35%, 09/02/2027 | 47 | ||||||
Irvine, CA, Improvement Bond Act 1915, | ||||||||
300 | 5.00%, 09/02/2030 ⌂ | 206 | ||||||
Lake Elsinore, CA, Special Tax Community Fac Dist #2005-1A, | ||||||||
200 | 5.35%, 09/01/2036 ⌂ | 132 | ||||||
Lake Elsinore, CA, Special Tax Community Fac Dist #2005-6, | ||||||||
150 | 5.00%, 09/01/2030 ⌂ | 100 | ||||||
Lake Elsinore, CA, Special Tax Community Fac Dist #2-A, | ||||||||
100 | 5.85%, 09/01/2024 ⌂ | 80 | ||||||
Lee Lake, CA, Water Dist Community Fac Dist #3 Special Tax Retreat, | ||||||||
150 | 5.75%, 09/01/2023 ⌂ | 121 | ||||||
Perris, CA, Public FA Local Agency Rev, | ||||||||
1,000 | 5.80%, 09/01/2038 ⌂ | 712 | ||||||
Roseville, CA, FA Special Tax Rev, | ||||||||
500 | 5.00%, 09/01/2033 | 326 | ||||||
Roseville, CA, Special Tax Dist Westpark, | ||||||||
200 | 5.25%, 09/01/2025 | 142 | ||||||
Val Verde, CA, USD FA Special Tax Rev Jr Lien, | ||||||||
200 | 6.00%, 10/01/2021 | 172 | ||||||
William S Hart USD Special Tax, | ||||||||
300 | 5.25%, 09/01/2026 | 207 | ||||||
125 | 5.85%, 09/01/2022 | 104 | ||||||
3,788 | ||||||||
Tax Allocation - 9.2% | ||||||||
Burbank, CA, FA Rev South San Fernando Redev Proj, | ||||||||
350 | 5.50%, 12/01/2023 | 287 | ||||||
Contra Costa County, CA, Public FA Tax Allocation, | ||||||||
70 | 5.63%, 08/01/2033 | 56 | ||||||
Corona, CA, Redev Agency Tax Allocation, | ||||||||
300 | 4.50%, 11/01/2032 | 243 | ||||||
Fontana, CA, Redev Agency Tax Allocation Ref, Jurupa Hills Redev Proj, | ||||||||
400 | 5.50%, 10/01/2027 | 390 | ||||||
Huntington Park, CA, Public FA Rev Ref, | ||||||||
400 | 5.25%, 09/01/2019 | 417 | ||||||
Madera, CA, Redev Agency Tax Rev, | ||||||||
750 | 5.25%, 09/01/2030 | 635 | ||||||
Oceanside, CA, Community Development Committee, Downtown Redev Proj, | ||||||||
300 | 5.70%, 09/01/2025 | 261 | ||||||
Riverside County, CA, Public FA Tax Allocation, Jurupa Desert & Interstate 215, | ||||||||
200 | 4.50%, 10/01/2037 | 135 | ||||||
San Diego, CA, Redev Agency Tax Allocation, North Park Redev Proj, | ||||||||
175 | 5.30%, 09/01/2016 | 176 | ||||||
San Diego, CA, Redev Agency, Centre City Sub Pkg, | ||||||||
200 | 5.25%, 09/01/2026 | 173 | ||||||
Temecula, CA, Redev Agency Tax Allocation Rev, | ||||||||
250 | 5.63%, 12/15/2038 | 189 | ||||||
Virgin Islands Public FA Rev, | ||||||||
300 | 4.25%, 10/01/2029 | 221 | ||||||
3,183 | ||||||||
Utilities — Electric - 7.0% | ||||||||
California State Dept of Water Resources Supply Rev, | ||||||||
500 | 5.00%, 05/01/2022 | 526 | ||||||
Imperial, CA, Irrigation Dist Electric Rev, | ||||||||
900 | 5.00%, 11/01/2033 | 871 | ||||||
Modesto, CA, Irrigation Dist, | ||||||||
500 | 5.50%, 07/01/2035 | 475 | ||||||
Southern California Public Power Auth, | ||||||||
500 | 5.00%, 07/01/2023 | 521 | ||||||
2,393 | ||||||||
Utilities — Water and Sewer - 6.6% | ||||||||
Big Bear Municipal Water Dist, Ref Lake Improvements, | ||||||||
250 | 5.00%, 11/01/2024 | 211 | ||||||
California State Public Works Board, | ||||||||
170 | 6.13%, 04/01/2029 | 172 |
5
Table of Contents
Schedule of Investments — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||||||
MUNICIPAL BONDS - 91.8% — (continued) | ||||||||||||
Utilities — Water and Sewer - 6.6% — (continued) | ||||||||||||
El Dorado Irrigation Dist, | ||||||||||||
$ | 300 | 5.38%, 08/01/2024 | $ | 306 | ||||||||
Lathrop, CA, FA Rev Water Supply Proj, | ||||||||||||
250 | 6.00%, 06/01/2035 | 191 | ||||||||||
Los Angeles Dept of Water & Power Waterworks, | ||||||||||||
500 | 5.00%, 07/01/2025 | 518 | ||||||||||
San Diego Public Fac FA Water Rev, | ||||||||||||
500 | 5.25%, 08/01/2038 | 496 | ||||||||||
Stockton, CA, Wastewater System Proj MBIA, | ||||||||||||
375 | 5.20%, 09/01/2029 | 361 | ||||||||||
2,255 | ||||||||||||
Total municipal bonds (cost $36,889) | $ | 31,597 | ||||||||||
Total long-term investments (cost $36,889) | $ | 31,597 | ||||||||||
SHORT-TERM INVESTMENTS - 7.2% | ||||||||||||
Investment Pools and Funds - 7.2% | ||||||||||||
2,486 | Dreyfus Basic California Municipal Money Market Fund | $ | 2,486 | |||||||||
Total short-term investments (cost $2,486) | $ | 2,486 | ||||||||||
Total investments (cost $39,375) ▲ | 99.0 | % | $ | 34,083 | ||||||||
Other assets and liabilities | 1.0 | % | 348 | |||||||||
Total net assets | 100.0 | % | $ | 34,431 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $39,375 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 355 | ||
Unrealized Depreciation | (5,647 | ) | ||
Net Unrealized Depreciation | $ | (5,292 | ) | |
Δ | Variable rate securities; the rate reported is the coupon rate in effect at April 30, 2009. | |
o | The interest rate disclosed for these securities represents the effective yield on the date of the acquisition. | |
⌂ | The following securities are considered illiquid. Illiquid securities are often purchased in private placement transactions, are often not registered under the Securities Act of 1933 and may have contractual restrictions on resale. A security may also be considered illiquid if the security lacks a readily available market or if its valuation has not changed for a certain period of time. |
Period | Shares/ | Cost | ||||||
Acquired | Par | Security | Basis | |||||
11/2006 | $ | 250 | Beaumont, CA, FA Improvement Area #8, 5.05%, 09/01/2037 | $250 | ||||
11/2006 | $ | 325 | Imperial, CA, Special Tax Community Fac, 5.00%, 09/01/2026 | 325 | ||||
06/2007 | $ | 300 | Irvine, CA, Improvement Bond Act 1915, 5.00%, 09/02/2030 | 296 | ||||
01/2006 | $ | 200 | Lake Elsinore, CA, Special Tax Community Fac Dist #2005-1A, 5.35%, 09/01/2036 | 200 | ||||
04/2007 | $ | 150 | Lake Elsinore, CA, Special Tax Community Fac Dist #2005-6, 5.00%, 09/01/2030 | 150 | ||||
02/2004 | $ | 100 | Lake Elsinore, CA, Special Tax Community Fac Dist #2-A, 5.85%, 09/01/2024 | 100 | ||||
02/2004 | $ | 150 | Lee Lake, CA, Water Dist Community Fac Dist #3 Special Tax Retreat, 5.75%, 09/01/2023 | 150 | ||||
11/2007 | $ | 1,000 | Perris, CA, Public FA Local Agency Rev, 5.80%, 09/01/2038 | 1,000 |
AMT | - | Alternative Minimum Tax | ||
DA | - | Development Authority | ||
FA | - | Finance Authority | ||
GO | - | General Obligations | ||
IDR | - | Industrial Development Revenue Bond | ||
MBIA | - | Municipal Bond Insurance Association | ||
USD | - | United School District |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 2,486 | ||
Investment in securities — Level 2 | 31,597 | |||
Total | $ | 34,083 | ||
6
Table of Contents
Assets: | ||||
Investments in securities, at fair value (cost $39,375) | $ | 34,083 | ||
Receivables: | ||||
Fund shares sold | 2 | |||
Dividends and interest | 492 | |||
Other asset | 7 | |||
Total assets | 34,584 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares redeemed | 98 | |||
Investment management fees | 3 | |||
Dividends | 41 | |||
Distribution fees | 3 | |||
Accrued expenses | 8 | |||
Total liabilities | 153 | |||
Net assets | $ | 34,431 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 44,945 | |||
Accumulated undistributed net investment income | 23 | |||
Accumulated net realized loss on investments | (5,245 | ) | ||
Unrealized depreciation of investments | (5,292 | ) | ||
Net assets | $ | 34,431 | ||
Shares authorized | 250,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.09/$8.47 | ||
Shares outstanding | 3,322 | |||
Net assets | $ | 26,877 | ||
Class B: Net asset value per share | $ | 8.08 | ||
Shares outstanding | 134 | |||
Net assets | $ | 1,081 | ||
Class C: Net asset value per share | $ | 8.10 | ||
Shares outstanding | 799 | |||
Net assets | $ | 6,473 | ||
7
Table of Contents
Investment Income: | ||||
Interest | $ | 1,040 | ||
Total investment income | 1,040 | |||
Expenses: | ||||
Investment management fees | 88 | |||
Transfer agent fees | 6 | |||
Distribution fees | ||||
Class A | 35 | |||
Class B | 6 | |||
Class C | 31 | |||
Custodian fees | 2 | |||
Accounting services | 2 | |||
Registration and filing fees | 3 | |||
Board of Directors’ fees | 1 | |||
Audit fees | 3 | |||
Other expenses | 7 | |||
Total expenses (before waivers and fees paid indirectly) | 184 | |||
Expense waivers | (6 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (6 | ) | ||
Total expenses, net | 178 | |||
Net investment income | 862 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (3,216 | ) | ||
Net Realized Loss on Investments | (3,216 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 2,744 | |||
Net Changes in Unrealized Appreciation of Investments | 2,744 | |||
Net Loss on Investments | (472 | ) | ||
Net Increase in Net Assets Resulting from Operations | $ | 390 | ||
8
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 862 | $ | 1,913 | ||||
Net realized loss on investments | (3,216 | ) | (1,757 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 2,744 | (7,734 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 390 | (7,578 | ) | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (712 | ) | (1,620 | ) | ||||
Class B | (25 | ) | (64 | ) | ||||
Class C | (134 | ) | (211 | ) | ||||
Total distributions | (871 | ) | (1,895 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (3,235 | ) | 754 | |||||
Class B | (238 | ) | (253 | ) | ||||
Class C | 778 | 1,848 | ||||||
Net increase (decrease) from capital share transactions | (2,695 | ) | 2,349 | |||||
Net decrease in net assets | (3,176 | ) | (7,124 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 37,607 | 44,731 | ||||||
End of period | $ | 34,431 | $ | 37,607 | ||||
Accumulated undistributed net investment income | $ | 23 | $ | 32 | ||||
9
Table of Contents
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Tax-Free California Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a non-diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 4.50%. Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income - Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. |
10
Table of Contents
Debt securities (other than short-term obligations) held by the Fund are valued on the basis of valuations furnished by an independent pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in the securities in accordance with procedures established by the Fund’s Board of Directors. Generally, the Fund may use fair valuation in regard to debt securities when the Fund holds defaulted or distressed securities or securities in a company in which a reorganization is pending. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that mature in 60 days or less are valued at amortized cost, which approximates market value. | |||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | |||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | |||
Investments in open-end mutual funds are valued at the respective NAV of each open-end mutual fund on the valuation date. | |||
c) | Joint Trading Account - Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Hartford Investment Management Company (“Hartford Investment Management”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | ||
d) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | ||
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared daily and paid monthly. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | |||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
e) | Illiquid and Restricted Securities — The Fund is permitted to invest up to 15% of its net assets in illiquid securities. “Illiquid Securities” are those that may not be sold or disposed of in the ordinary course of business within seven days, at approximately the price used to determine the Fund’s NAV. The Fund may not be able to sell illiquid securities or other investments when its sub-adviser considers it desirable to do so or may have to sell such securities or investments at a price that is lower than the price that could be obtained if the securities or investments were more liquid. A sale of illiquid securities or other investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities and investments also may be more difficult to value, due to the unavailability of reliable market quotations for such securities or investments, and investment in them may have an adverse impact on the Fund’s NAV. The Fund may also purchase certain restricted securities, commonly known as Rule 144A securities, that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Fund’s Board of Directors. The Fund, as shown in the Schedule of Investments, had illiquid or restricted securities as of April 30, 2009. | ||
f) | Securities Purchased on a When-Issued or Delayed-Delivery Basis — Delivery and payment for securities that have been purchased by the Fund on a forward commitment, or when-issued or delayed-delivery basis take place beyond the customary settlement period. During this period, such securities are subject to market fluctuations, and the Fund identifies securities segregated in its records with value at least equal to the amount of the commitment. As of April 30, 2009, the Fund had no outstanding when-issued or forward commitments. | ||
g) | Credit Risk — Credit risk depends largely on the perceived financial health of bond issuers. In general, the credit rating is inversely related to the credit risk of the issuer. Higher rated bonds generally are deemed to have less credit risk, while lower or unrated bonds are deemed to have higher risk of default. The share price, yield and total return of a Fund which holds securities with higher credit risk may fluctuate more than with less aggressive bond funds. | ||
h) | Prepayment Risks — Most senior floating rate interests and certain debt securities allow for prepayment of principal without penalty. Senior floating rate interests and securities subject to prepayment risk generally offer less potential for gains when interest rates decline, and may offer a greater potential for loss when interest rates rise. In addition, with respect to securities, rising interest rates may cause prepayments to occur at a slower than expected rate, thereby effectively lengthening the maturity of the security and making the security more sensitive to interest rate changes. Prepayment risk is a major risk of mortgage-backed securities and certain asset-backed securities. Accordingly, the potential for the value of a senior floating rate interest or debt security to increase in response to interest rate declines is limited. For certain asset-backed securities, the actual maturity may be less than the stated maturity shown in the Schedule of Investments. As a result, the timing of income recognition relating to these securities may vary based upon the actual maturity. | ||
i) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | ||
j) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. |
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Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
Individual securities within any of the above mentioned asset classes may be assigned a different hierarchical level than those presented above, as individual circumstances dictate. | |||
FAS 157 also requires that a roll forward reconciliation be shown for all Level 3 securities from the beginning of the reporting period to the end of the reporting period. Part of this reconciliation includes transfers in and/or out of Level 3. For purposes of this reconciliation, transfers in are shown at the end of period fair value and transfers out are shown at the beginning of period fair value. During the six-month period ended April 30, 2009, the Fund held no Level 3 securities. | |||
Refer to the valuation hierarchy levels summary found following the Schedule of Investments. | |||
FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
k) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
l) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
a) | Federal Income Taxes - For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Tax Exempt Income † | $ | 1,845 | $ | 1,337 | ||||
Ordinary Income | 14 | — |
† | The Fund designates these distributions as exempt interest pursuant to IRC Sec. 852(b)(5). |
Amount | ||||
Undistributed Ordinary Income | $ | 98 | ||
Accumulated Capital Losses* | $ | (2,029 | ) | |
Unrealized Depreciation† | $ | (8,036 | ) | |
Total Accumulated Deficit | $ | (9,967 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts - In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund had no reclassifications. |
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d) | Capital Loss Carryforward - At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2014 | $ | 5 | ||
2015 | 267 | |||
2016 | 1,757 | |||
Total | $ | 2,029 | ||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Hartford Investment Management for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Hartford Investment Management. | ||
The schedule below reflects the rates of compensation paid to HIFSCO for investment management services rendered during the six-month period ended April 30, 2009; the rates are accrued daily and paid monthly: |
Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.50 | % | ||
On next $4.5 billion | 0.45 | % | ||
On next $5 billion | 0.43 | % | ||
Over $10 billion | 0.42 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
c) | Operating Expenses - Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | ||||||
0.85% | 1.60 | % | 1.60 | % |
d) | Fees Paid Indirectly - The Fund’s custodian bank has agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, this amount is included in the Statement of Operations. | ||
The ratio of expenses to average net assets in the accompanying financial highlights excludes the reduction in expenses related to fees paid indirectly. Had the fees paid indirectly been included, the annualized expense ratio for the periods listed below would have been as follows: |
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
�� | Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 0.85 | % | 0.85 | % | 0.85 | % | 0.89 | % | 0.89 | % | 0.95 | % | ||||||||||||
Class B Shares | 1.60 | 1.60 | 1.60 | 1.64 | 1.64 | 1.65 | ||||||||||||||||||
Class C Shares | 1.60 | 1.60 | 1.60 | 1.64 | 1.64 | 1.65 |
e) | Distribution and Service Plan for Class A, B and C Shares - HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $70 and contingent deferred sales charges of $82 from the Fund. | ||
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B and C shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the Distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | |||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $1. These commissions are in turn paid to sales representatives of the broker/dealers. |
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f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in an amount, which rounds to zero. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $6 for providing such services. These fees are accrued daily and paid monthly. |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class A | 540 |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 6,086 | ||
Sales Proceeds Excluding U.S. Government Obligations | 8,349 |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 399 | 64 | (881 | ) | — | (418 | ) | 2,757 | 127 | (2,849 | ) | — | 35 | |||||||||||||||||||||||||||
Amount | $ | 3,107 | $ | 506 | $ | (6,848 | ) | $ | — | $ | (3,235 | ) | $ | 25,926 | $ | 1,192 | $ | (26,364 | ) | $ | — | $ | 754 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 1 | 2 | (33 | ) | — | (30 | ) | 38 | 5 | (69 | ) | — | (26 | ) | ||||||||||||||||||||||||||
Amount | $ | 3 | $ | 19 | $ | (260 | ) | $ | — | $ | (238 | ) | $ | 357 | $ | 46 | $ | (656 | ) | $ | — | $ | (253 | ) | ||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 141 | 10 | (53 | ) | — | 98 | 443 | 14 | (262 | ) | — | 195 | ||||||||||||||||||||||||||||
Amount | $ | 1,117 | $ | 78 | $ | (417 | ) | $ | — | $ | 778 | $ | 4,219 | $ | 133 | $ | (2,504 | ) | $ | — | $ | 1,848 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | — | $ | — | |||||
For the Year Ended October 31, 2008 | 6 | $ | 60 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Proposed Reorganization: | |
At a meeting held on February 4, 2009, the Board of Directors of The Hartford Mutual Funds, Inc. approved on behalf of The Hartford Tax-Free California Fund (the “Acquired Fund”) and the Board of Directors of The Hartford Mutual Funds II, Inc. approved on behalf of The Hartford Tax-Free National Fund (the “Acquiring Fund”), the reorganization of the Acquired Fund with and into the Acquiring Fund (the “Reorganization”). | ||
Since the close of business on February 13, 2009, shares of the Acquired Fund are no longer being sold to new investors or existing shareholders (except through reinvested dividends) nor are they eligible for exchanges from other Hartford Mutual Funds. | ||
The Board of Directors of The Hartford Mutual Funds has called for a Special Meeting of Shareholders of the Acquired Fund (the “Meeting”) to be held on or about July 16, 2009, for the purpose of seeking the approval of the Agreement and Plan of Reorganization (the “Reorganization Agreement”) by the shareholders of the Acquired Fund. | ||
If the Reorganization Agreement is approved by the shareholders of the Acquired Fund, the Reorganization Agreement contemplates: (1) the transfer of all of the assets of the Acquired Fund to the Acquiring Fund in exchange for shares of the Acquiring Fund having an aggregate value equal to the net assets of the Acquired Fund; (2) the assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund; and (3) the distribution of shares of the Acquiring Fund to the shareholders of the Acquired Fund in complete liquidation of the Acquired Fund. Each shareholder of the Acquired Fund would receive shares of the Acquiring Fund equal in value to the shares of the Acquired Fund held by that shareholder as of the closing date of the Reorganization. |
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.17 | $ | 0.20 | $ | — | $ | (0.08 | ) | $ | 0.12 | $ | (0.20 | ) | $ | — | $ | — | $ | (0.20 | ) | $ | (0.08 | ) | $ | 8.09 | 1.52 | %(e) | $ | 26,877 | 0.88 | %(f) | 0.85 | %(f) | 0.85 | %(f) | 5.03 | %(f) | 19 | % | ||||||||||||||||||||||||||||||||
B | 8.15 | 0.17 | — | (0.07 | ) | 0.10 | (0.17 | ) | — | — | (0.17 | ) | (0.07 | ) | 8.08 | 1.27 | (e) | 1,081 | 1.68 | (f) | 1.60 | (f) | 1.60 | (f) | 4.28 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
C | 8.18 | 0.17 | — | (0.08 | ) | 0.09 | (0.17 | ) | — | — | (0.17 | ) | (0.08 | ) | 8.10 | 1.14 | (e) | 6,473 | 1.65 | (f) | 1.60 | (f) | 1.60 | (f) | 4.28 | (f) | — | |||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.16 | 0.44 | — | (1.99 | ) | (1.55 | ) | (0.44 | ) | — | — | (0.44 | ) | (1.99 | ) | 8.17 | (15.78 | ) | 30,538 | 0.91 | 0.85 | 0.85 | 4.59 | 71 | ||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.15 | 0.37 | — | (2.01 | ) | (1.64 | ) | (0.36 | ) | — | — | (0.36 | ) | (2.00 | ) | 8.15 | (16.54 | ) | 1,338 | 1.70 | 1.60 | 1.60 | 3.81 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.17 | 0.37 | — | (2.00 | ) | (1.63 | ) | (0.36 | ) | — | — | (0.36 | ) | (1.99 | ) | 8.18 | (16.41 | ) | 5,731 | 1.69 | 1.60 | 1.60 | 3.86 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.55 | 0.41 | — | (0.39 | ) | 0.02 | (0.41 | ) | — | — | (0.41 | ) | (0.39 | ) | 10.16 | 0.16 | 37,646 | 0.92 | 0.85 | 0.85 | 3.96 | 35 | ||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.54 | 0.33 | — | (0.39 | ) | (0.06 | ) | (0.33 | ) | — | — | (0.33 | ) | (0.39 | ) | 10.15 | (0.58 | ) | 1,932 | 1.70 | 1.60 | 1.60 | 3.20 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.56 | 0.33 | — | (0.39 | ) | (0.06 | ) | (0.33 | ) | — | — | (0.33 | ) | (0.39 | ) | 10.17 | (0.58 | ) | 5,153 | 1.70 | 1.60 | 1.60 | 3.21 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.32 | 0.38 | — | 0.24 | 0.62 | (0.38 | ) | (0.01 | ) | — | (0.39 | ) | 0.23 | 10.55 | 6.13 | 24,796 | 0.99 | 0.90 | 0.90 | 3.71 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.31 | 0.30 | — | 0.24 | 0.54 | (0.30 | ) | (0.01 | ) | — | (0.31 | ) | 0.23 | 10.54 | 5.34 | 1,571 | 1.77 | 1.65 | 1.65 | 2.96 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.33 | 0.30 | — | 0.24 | 0.54 | (0.30 | ) | (0.01 | ) | — | (0.31 | ) | 0.23 | 10.56 | 5.33 | 3,435 | 1.78 | 1.65 | 1.65 | 2.95 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.32 | 0.38 | — | — | 0.38 | (0.38 | ) | — | — | (0.38 | ) | — | 10.32 | 3.69 | 15,601 | 1.02 | 0.90 | 0.90 | 3.64 | 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.31 | 0.29 | — | 0.01 | 0.30 | (0.30 | ) | — | — | (0.30 | ) | — | 10.31 | 2.92 | 1,305 | 1.80 | 1.65 | 1.65 | 2.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.33 | 0.29 | — | 0.01 | 0.30 | (0.30 | ) | — | — | (0.30 | ) | — | 10.33 | 2.91 | 1,937 | 1.80 | 1.65 | 1.65 | 2.90 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.93 | 0.38 | — | 0.41 | 0.79 | (0.40 | ) | — | — | (0.40 | ) | 0.39 | 10.32 | 8.15 | 14,846 | 1.03 | 0.95 | 0.95 | 3.85 | 41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.92 | 0.34 | — | 0.38 | 0.72 | (0.33 | ) | — | — | (0.33 | ) | 0.39 | 10.31 | 7.40 | 1,017 | 1.84 | 1.65 | 1.65 | 3.12 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.93 | 0.32 | — | 0.41 | 0.73 | (0.33 | ) | — | — | (0.33 | ) | 0.40 | 10.33 | 7.49 | 1,448 | 1.85 | 1.65 | 1.65 | 3.06 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Not annualized. | |
(f) | Annualized. |
19
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20
Table of Contents
* | On February 24, 2009, The Hartford and Mr. Marra determined to enter into a mutually agreed separation whereby Mr. Marra will retire, and his role as an executive officer and employee of The Hartford will terminate, effective July 3, 2009. Mr. Marra will resign his position as a Director of the Fund effective June 25, 2009. |
* | Mr. Walters previously served as President and Chief Executive Officer of the Fund (2007 — 2009). |
Mr. Arena serves as Executive Vice President of Hartford Life Insurance Company, (“Hartford Life”). Additionally, Mr. Arena is Director and Senior Vice President of Hartford Administrative Services Company, (“HASCO”), Manager, Chief Executive Officer and President of Hartford Investment Financial Services, LLC (“HIFSCO”) and HL Advisors. Prior to joining The Hartford in 2004, he was Senior Vice President in charge of Product Management for American Skandia/Prudential in the individual annuities division. Mr. Arena joined American Skandia in 1996.
21
Table of Contents
Directors and Officers (Unaudited) — (continued)
22
Table of Contents
Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,015.15 | $ | 4.24 | $ | 1,000.00 | $ | 1,020.57 | $ | 4.25 | 0.85 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 1,012.65 | $ | 7.98 | $ | 1,000.00 | $ | 1,016.86 | $ | 8.00 | 1.60 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 1,011.36 | $ | 7.97 | $ | 1,000.00 | $ | 1,016.86 | $ | 8.00 | 1.60 | 181 | 365 |
23
Table of Contents
Manager Discussions (Unaudited) | 2 | |||
Financial Statements | ||||
4 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
19 | ||||
20 | ||||
22 | ||||
22 | ||||
23 |
Table of Contents
(subadvised by Wellington Management Company, LLP)
Growth of a $10,000 investment in Class A which includes Sales Charge
Inception | 1 | 5 | Since | |||||||||||||
Date | Year | Year | Inception | |||||||||||||
Value A# | 4/30/01 | -33.76 | % | -0.04 | % | -0.51 | % | |||||||||
Value A## | 4/30/01 | -37.40 | % | -1.16 | % | -1.21 | % | |||||||||
Value B# | 4/30/01 | -34.02 | % | -0.73 | % | -1.21 | % | |||||||||
Value B## | 4/30/01 | -37.30 | % | -1.08 | % | -1.21 | % | |||||||||
Value C# | 4/30/01 | -34.21 | % | -0.76 | % | -1.24 | % | |||||||||
Value C## | 4/30/01 | -34.86 | % | -0.76 | % | -1.24 | % | |||||||||
Value I# | 4/30/01 | -33.46 | % | 0.13 | % | -0.41 | % | |||||||||
Value R3# | 4/30/01 | -33.94 | % | 0.00 | % | -0.36 | % | |||||||||
Value R4# | 4/30/01 | -33.74 | % | 0.15 | % | -0.27 | % | |||||||||
Value R5# | 4/30/01 | -33.48 | % | 0.31 | % | -0.17 | % | |||||||||
Value Y# | 4/30/01 | -33.44 | % | 0.36 | % | -0.14 | % |
# | Without sales charge | |
## | With sales charge | |
NA | Not Applicable |
(1) | Growth of a $10,000 investment in Classes B, C, I, R3, R4, R5 and Y shares will vary from results seen above due to differences in the expenses charged to these share classes. | |
(2) | The initial investment in Class A shares reflects the maximum sales charge and Classes B and C reflect CDSC. | |
(3) | Class I shares commenced operations on 5/31/07. Performance prior to 5/31/07 reflects Class A performance. Class R3, R4 and R5 shares commenced operations on 12/22/06. Performance prior to 12/22/06 reflects Class A performance. | |
(4) | Total returns presented above were calculated using the Fund’s net asset value available to shareholders for sale or redemption of Fund shares on April 30, 2009, which excludes investment transactions as of this date. |
Portfolio Managers | ||||
Karen H. Grimes, CFA | Ian R. Link, CFA | W. Michael Reckmeyer, III, CFA | ||
Senior Vice President | Vice President | Senior Vice President |
2
Table of Contents
as of April 30, 2009
Percentage of | ||||
Industry | Net Assets | |||
Banks | 3.9 | % | ||
Capital Goods | 8.3 | |||
Commercial & Professional Services | 1.1 | |||
Consumer Durables & Apparel | 2.2 | |||
Diversified Financials | 8.5 | |||
Energy | 16.7 | |||
Food & Staples Retailing | 3.9 | |||
Food, Beverage & Tobacco | 4.2 | |||
Health Care Equipment & Services | 4.7 | |||
Household & Personal Products | 0.8 | |||
Insurance | 6.2 | |||
Materials | 5.6 | |||
Media | 2.3 | |||
Pharmaceuticals, Biotechnology & Life Sciences | 6.3 | |||
Real Estate | 1.0 | |||
Retailing | 4.0 | |||
Semiconductors & Semiconductor Equipment | 2.6 | |||
Software & Services | 1.6 | |||
Technology Hardware & Equipment | 4.7 | |||
Telecommunication Services | 4.1 | |||
Transportation | 0.8 | |||
Utilities | 4.6 | |||
Short-Term Investments | 1.9 | |||
Other Assets and Liabilities | — | |||
Total | 100.0 | % | ||
3
Table of Contents
(000’s Omitted)
Shares or Principal Amount | Market Value ╪ | |||||||
COMMON STOCKS — 98.1% | ||||||||
Banks — 3.9% | ||||||||
115 | PNC Financial Services Group, Inc. | $ | 4,581 | |||||
389 | Wells Fargo & Co. | 7,774 | ||||||
12,355 | ||||||||
Capital Goods — 8.3% | ||||||||
138 | Cummins, Inc. | 4,685 | ||||||
38 | Deere & Co. | 1,584 | ||||||
449 | General Electric Co. | 5,681 | ||||||
74 | Illinois Tool Works, Inc. | 2,437 | ||||||
80 | Ingersoll-Rand Co. Class A | 1,742 | ||||||
41 | Lockheed Martin Corp. | 3,181 | ||||||
84 | PACCAR, Inc. | 2,970 | ||||||
57 | Precision Castparts Corp. | 4,252 | ||||||
26,532 | ||||||||
Commercial & Professional Services — 1.1% | ||||||||
127 | Waste Management, Inc. | 3,379 | ||||||
Consumer Durables & Apparel — 2.2% | ||||||||
83 | Coach, Inc. • | 2,024 | ||||||
107 | Mattel, Inc. | 1,595 | ||||||
91 | Stanley Works | 3,442 | ||||||
7,061 | ||||||||
Diversified Financials — 8.5% | ||||||||
339 | Bank of America Corp. | 3,031 | ||||||
132 | Bank of New York Mellon Corp. | 3,352 | ||||||
71 | Goldman Sachs Group, Inc. | 9,110 | ||||||
351 | JP Morgan Chase & Co. | 11,587 | ||||||
27,080 | ||||||||
Energy — 16.7% | ||||||||
47 | Apache Corp. | 3,410 | ||||||
128 | Chevron Corp. | 8,487 | ||||||
23 | EOG Resources, Inc. | 1,473 | ||||||
225 | Exxon Mobil Corp. | 15,021 | ||||||
189 | Marathon Oil Corp. | 5,625 | ||||||
114 | Newfield Exploration Co. • | 3,554 | ||||||
111 | Occidental Petroleum Corp. | 6,265 | ||||||
101 | Total S.A. ADR | 5,022 | ||||||
120 | XTO Energy, Inc. | 4,160 | ||||||
53,017 | ||||||||
Food & Staples Retailing — 3.9% | ||||||||
135 | CVS/Caremark Corp. | 4,287 | ||||||
122 | Kroger Co. | 2,629 | ||||||
130 | Safeway, Inc. | 2,571 | ||||||
124 | Sysco Corp. | 2,884 | ||||||
12,371 | ||||||||
Food, Beverage & Tobacco — 4.2% | ||||||||
187 | Altria Group, Inc. | 3,047 | ||||||
109 | Nestle S.A. ADR | 3,548 | ||||||
73 | PepsiCo, Inc. | 3,628 | ||||||
89 | Philip Morris International, Inc. | 3,229 | ||||||
13,452 | ||||||||
Health Care Equipment & Services — 4.7% | ||||||||
117 | Aetna, Inc. | 2,579 | ||||||
83 | Baxter International, Inc. | 4,040 | ||||||
92 | Cardinal Health, Inc. | 3,095 | ||||||
124 | UnitedHealth Group, Inc. | 2,905 | ||||||
51 | Zimmer Holdings, Inc. • | 2,261 | ||||||
14,880 | ||||||||
Household & Personal Products — 0.8% | ||||||||
53 | Kimberly-Clark Corp. | 2,619 | ||||||
Insurance — 6.2% | ||||||||
176 | ACE Ltd. | 8,162 | ||||||
95 | AON Corp. | 4,009 | ||||||
108 | Chubb Corp. | 4,195 | ||||||
197 | Unum Group | 3,217 | ||||||
19,583 | ||||||||
Materials — 5.6% | ||||||||
89 | Agrium U.S., Inc. | 3,833 | ||||||
62 | ArcelorMittal ADR | 1,450 | ||||||
178 | Celanese Corp. | 3,718 | ||||||
109 | Cliff’s Natural Resources, Inc. | 2,504 | ||||||
116 | E.I. DuPont de Nemours & Co. | 3,231 | ||||||
71 | Mosaic Co. | 2,872 | ||||||
17,608 | ||||||||
Media — 2.3% | ||||||||
363 | Comcast Corp. Class A | 5,608 | ||||||
82 | Viacom, Inc. Class B • | 1,572 | ||||||
7,180 | ||||||||
Pharmaceuticals, Biotechnology & Life Sciences — 6.3% | ||||||||
82 | Abbott Laboratories | 3,432 | ||||||
59 | Johnson & Johnson | 3,084 | ||||||
485 | Pfizer, Inc. | 6,473 | ||||||
176 | Schering-Plough Corp. | 4,054 | ||||||
33 | Teva Pharmaceutical Industries Ltd. ADR | 1,461 | ||||||
37 | Wyeth | 1,548 | ||||||
20,052 | ||||||||
Real Estate — 1.0% | ||||||||
52 | Host Hotels & Resorts, Inc. | 401 | ||||||
116 | Kimco Realty Corp. | 1,398 | ||||||
38 | Regency Centers Corp. | 1,431 | ||||||
3,230 | ||||||||
Retailing — 4.0% | ||||||||
86 | Gap, Inc. | 1,336 | ||||||
75 | Home Depot, Inc. | 1,977 | ||||||
73 | Kohl’s Corp. • | 3,329 | ||||||
98 | Nordstrom, Inc. | 2,213 | ||||||
172 | Staples, Inc. | 3,538 | ||||||
12,393 | ||||||||
Semiconductors & Semiconductor Equipment — 2.6% | ||||||||
323 | Intel Corp. | 5,099 | ||||||
176 | Texas Instruments, Inc. | 3,173 | ||||||
8,272 | ||||||||
Software & Services — 1.6% | ||||||||
248 | Microsoft Corp. | 5,024 | ||||||
Technology Hardware & Equipment — 4.7% | ||||||||
266 | Cisco Systems, Inc. • | 5,147 | ||||||
238 | Dell, Inc. • | 2,769 | ||||||
97 | Hewlett-Packard Co. | 3,487 | ||||||
233 | Ingram Micro, Inc.• | 3,379 | ||||||
14,782 | ||||||||
Telecommunication Services — 4.1% | ||||||||
370 | AT&T, Inc. | 9,486 | ||||||
114 | Verizon Communications, Inc. | 3,471 | ||||||
12,957 | ||||||||
4
Table of Contents
Shares or Principal Amount | Market Value ╪ | |||||||||||
COMMON STOCKS — 98.1% — (continued) | ||||||||||||
Transportation — 0.8% | ||||||||||||
51 | United Parcel Service, Inc. Class B | $ | 2,685 | |||||||||
Utilities — 4.6% | ||||||||||||
76 | Edison International | 2,152 | ||||||||||
55 | Entergy Corp. | 3,530 | ||||||||||
42 | Exelon Corp. | 1,947 | ||||||||||
74 | FPL Group, Inc. | 3,991 | ||||||||||
45 | NRG Energy, Inc. • | 800 | ||||||||||
63 | SCANA Corp. | 1,901 | ||||||||||
14,321 | ||||||||||||
Total common stocks (cost $363,843) | $ | 310,833 | ||||||||||
Total long-term investments (cost $363,843) | $ | 310,833 | ||||||||||
SHORT-TERM INVESTMENTS — 1.9% | ||||||||||||
Repurchase Agreements — 1.9% | ||||||||||||
Banc of America Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,446, collateralized by GNMA 4.50% - 6.50%, 2038 - 2039, value of $1,475) | ||||||||||||
$ | 1,446 | 0.18%, 04/30/2009 | $ | 1,446 | ||||||||
BNP Paribas Securities Corp. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $1,730, collateralized by FHLMC 4.50% - 6.50%, 2035 - 2039, FNMA 4.50% - 6.50%, 2034 - 2047, value of $1,765) | ||||||||||||
1,730 | 0.17%, 04/30/2009 | 1,730 | ||||||||||
Deutsche Bank Securities TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $2,418, collateralized by FHLMC 4.00% - 7.00%, 2021 - 2039, FNMA 6.00% - 7.00%, 2034 - 2038, GNMA 4.50% - 7.00%, 2024 - 2039, value of $2,466) | ||||||||||||
2,418 | 0.17%, 04/30/2009 | 2,418 | ||||||||||
UBS Securities, Inc. Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $8, collateralized by U.S. Treasury Bond 7.50%, 2024, value of $8) | ||||||||||||
8 | 0.14%, 04/30/2009 | 8 | ||||||||||
UBS Securities, Inc. TriParty Joint Repurchase Agreement (maturing on 05/01/2009 in the amount of $521, collateralized by FHLMC 8.00% - 15.00%, 2009 - 2021, FNMA 3.50% - 15.50%, 2012 - 2039, value of $532) | ||||||||||||
521 | 0.16%, 04/30/2009 | 521 | ||||||||||
6,123 | ||||||||||||
Total short-term investments (cost $6,123) | $ | 6,123 | ||||||||||
Total investments (cost $369,966) ▲ | 100.0 | % | $ | 316,956 | ||||||||
Other assets and liabilities. | — | % | 16 | |||||||||
Total net assets | 100.0 | % | $ | 316,972 | ||||||||
Note: | Percentage of investments as shown is the ratio of the total market value to total net assets. Market value of investments in foreign securities represents 4.83% of total net assets at April 30, 2009. | |
▲ | At April 30, 2009, the cost of securities for federal income tax purposes was $373,394 and the aggregate gross unrealized appreciation and depreciation based on that cost were: |
Unrealized Appreciation | $ | 9,398 | ||
Unrealized Depreciation | (65,836 | ) | ||
Net Unrealized Depreciation | $ | (56,438 | ) | |
• | Currently non-income producing. | |
╪ | See Significant Accounting Policies of accompanying Notes to Financial Statements regarding valuation of securities. |
Assets: | ||||
Investment in securities — Level 1 | $ | 310,833 | ||
Investment in securities — Level 2 | 6,123 | |||
Total | $ | 316,956 | ||
5
Table of Contents
(000’s Omitted)
Assets: | ||||
Investments in securities, at fair value (cost $369,966) | $ | 316,956 | ||
Cash | 1 | |||
Receivables: | ||||
Investment securities sold | 969 | |||
Fund shares sold | 23 | |||
Dividends and interest | 506 | |||
Other assets | 72 | |||
Total assets | 318,527 | |||
Liabilities: | ||||
Payables: | ||||
Investment securities purchased | 1,401 | |||
Fund shares redeemed | 31 | |||
Investment management fees | 41 | |||
Distribution fees | 5 | |||
Accrued expenses | 77 | |||
Total liabilities | 1,555 | |||
Net assets | $ | 316,972 | ||
Summary of Net Assets: | ||||
Capital stock and paid-in-capital | 430,312 | |||
Accumulated undistributed net investment income | 1,874 | |||
Accumulated net realized loss on investments | (62,204 | ) | ||
Unrealized depreciation of investments | (53,010 | ) | ||
Net assets | $ | 316,972 | ||
Shares authorized | 500,000 | |||
Par value | $ | 0.001 | ||
Class A: Net asset value per share/Maximum offering price per share | $ | 8.11/$8.58 | ||
Shares outstanding | 5,996 | |||
Net assets | $ | 48,655 | ||
Class B: Net asset value per share | $ | 7.98 | ||
Shares outstanding | 837 | |||
Net assets | $ | 6,680 | ||
Class C: Net asset value per share | $ | 7.96 | ||
Shares outstanding | 1,032 | |||
Net assets | $ | 8,214 | ||
Class I: Net asset value per share | $ | 8.10 | ||
Shares outstanding | 80 | |||
Net assets | $ | 649 | ||
Class R3: Net asset value per share | $ | 7.99 | ||
Shares outstanding | 15 | |||
Net assets | $ | 116 | ||
Class R4: Net asset value per share | $ | 8.03 | ||
Shares outstanding | 18 | |||
Net assets | $ | 143 | ||
Class R5: Net asset value per share | $ | 8.06 | ||
Shares outstanding | 1 | |||
Net assets | $ | 7 | ||
Class Y: Net asset value per share | $ | 8.06 | ||
Shares outstanding | 31,310 | |||
Net assets | $ | 252,508 | ||
6
Table of Contents
(000’s Omitted)
Investment Income: | ||||
Dividends | $ | 4,535 | ||
Interest | 7 | |||
Securities lending | — | |||
Less: Foreign tax withheld | (13 | ) | ||
Total investment income | 4,529 | |||
Expenses: | ||||
Investment management fees | 1,134 | |||
Transfer agent fees | 113 | |||
Distribution fees | ||||
Class A | 61 | |||
Class B | 32 | |||
Class C | 40 | |||
Class R3 | — | |||
Class R4 | — | |||
Custodian fees | 4 | |||
Accounting services | 20 | |||
Registration and filing fees | 43 | |||
Board of Directors’ fees | 4 | |||
Audit fees | 6 | |||
Other expenses | 67 | |||
Total expenses (before waivers and fees paid indirectly) | 1,524 | |||
Expense waivers | (29 | ) | ||
Transfer agent fee waivers | (13 | ) | ||
Commission recapture | (7 | ) | ||
Custodian fee offset | — | |||
Total waivers and fees paid indirectly | (49 | ) | ||
Total expenses, net | 1,475 | |||
Net investment income | 3,054 | |||
Net Realized Loss on Investments: | ||||
Net realized loss on investments in securities | (41,057 | ) | ||
Net Realized Loss on Investments | (41,057 | ) | ||
Net Changes in Unrealized Appreciation of Investments: | ||||
Net unrealized appreciation of investments | 17,982 | |||
Net Changes in Unrealized Appreciation of Investments | 17,982 | |||
Net Loss on Investments | (23,075 | ) | ||
Net Decrease in Net Assets Resulting from Operations | $ | (20,021 | ) | |
7
Table of Contents
For the Six-Month | ||||||||
Period Ended | For the | |||||||
April 30, 2009 | Year Ended | |||||||
(Unaudited) | October 31, 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,054 | $ | 6,268 | ||||
Net realized loss on investments | (41,057 | ) | (21,083 | ) | ||||
Net unrealized appreciation (depreciation) of investments | 17,982 | (132,595 | ) | |||||
Net decrease in net assets resulting from operations | (20,021 | ) | (147,410 | ) | ||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Class A | (934 | ) | (680 | ) | ||||
Class B | (46 | ) | — | |||||
Class C | (62 | ) | (2 | ) | ||||
Class I | (12 | ) | (1 | ) | ||||
Class R3 | (2 | ) | — | |||||
Class R4 | (3 | ) | — | |||||
Class R5 | — | — | ||||||
Class Y | (5,541 | ) | (3,717 | ) | ||||
From net realized gain on investments | ||||||||
Class A | — | (4,006 | ) | |||||
Class B | — | (600 | ) | |||||
Class C | — | (630 | ) | |||||
Class I | — | (2 | ) | |||||
Class R3 | — | — | ||||||
Class R4 | — | — | ||||||
Class R5 | — | (1 | ) | |||||
Class Y | — | (13,683 | ) | |||||
Total distributions | (6,600 | ) | (23,322 | ) | ||||
Capital Share Transactions: | ||||||||
Class A | (2,137 | ) | 1,477 | |||||
Class B | 136 | (1,181 | ) | |||||
Class C | (88 | ) | 728 | |||||
Class I | 85 | 678 | ||||||
Class R3 | 5 | 123 | ||||||
Class R4 | (5 | ) | 205 | |||||
Class R5 | — | 1 | ||||||
Class Y | 60,102 | 36,595 | ||||||
Net increase from capital share transactions | 58,098 | 38,626 | ||||||
Net increase (decrease) in net assets | 31,477 | (132,106 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 285,495 | 417,601 | ||||||
End of period | $ | 316,972 | $ | 285,495 | ||||
Accumulated undistributed net investment income | $ | 1,874 | $ | 5,420 | ||||
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(000’s Omitted)
1. | Organization: | |
The Hartford Mutual Funds, Inc. (“Company”) is an open-end management investment company comprised of fifty-two portfolios. Financial statements for The Hartford Value Fund (the “Fund”), a series of the Company, are included in this report. | ||
The Company is organized under the laws of the State of Maryland and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (“1940 Act”). The Fund is a diversified open-end management investment company. | ||
Class A shares are sold with a front-end sales charge of up to 5.50% Class B shares are sold with a contingent deferred sales charge which is assessed on the lesser of the per share net asset value (“NAV”) of the shares at the time of redemption or the original purchase price, and declines from up to 5.00% to zero depending on the period of time the shares are held. Class C shares are sold with a contingent deferred sales charge of up to 1.00% on shares redeemed within twelve months of purchase. Class I shares are sold without sales charges to certain eligible investors through advisory fee-based wrap programs. Classes R3, R4, R5 shares, which are offered to employer-sponsored retirement plans, and Class Y shares, which are sold to certain eligible institutional investors, are sold without a sales charge. All classes of shares have identical voting, redemption, dividend, liquidation and other rights and the same terms and conditions, with the exceptions that each class may have different expenses, which may affect performance, and except that Class B shares automatically convert to Class A shares after 8 years. | ||
Effective at the close of business on September 30, 2009 (the “Close Date”), no new or additional investments will be allowed in Class B shares of The Hartford Mutual Funds (including investments through any systematic investment plan). After the Close Date, existing shareholders of Class B shares may continue to hold their Class B shares, exchange their Class B shares for Class B shares of another Hartford Mutual Fund (as permitted by existing exchange privileges), and redeem their Class B shares as described in the Fund’s prospectus. Reinstatement privileges with respect to Class B shares will continue under the current policy. If you have chosen to reinvest capital gains and dividends, any such capital gains or dividends on Class B shares will continue to be reinvested in Class B shares of the Fund. For Class B shares outstanding as of the Close Date, all Class B share attributes, including the 12b-1 fee, contingent deferred sales charge schedule, and conversion to Class A shares remain unchanged. | ||
2. | Significant Accounting Policies: | |
The following is a summary of significant accounting policies of the Fund, which are in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). |
a) | Security Transactions and Investment Income — Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Security gains and losses are determined on the basis of identified cost. | ||
Dividend income is accrued as of the ex-dividend date, except that certain dividends for foreign securities where the ex-dividend date may have passed are recorded as soon as the Fund is informed of the dividend in the exercise of reasonable diligence. Interest income, including amortization of premium and accretion of discounts, is accrued on a daily basis. | |||
b) | Security Valuation — The Fund generally uses market prices in valuing portfolio securities. If market prices are not readily available or are deemed unreliable, the Fund will use the fair value of the security as determined in good faith under policies and procedures established by and under the supervision of the Fund’s Board of Directors. Market prices may be deemed unreliable, for example, if a security is thinly traded or if an event has occurred after the close of the security’s primary markets, but before the close of the New York Stock Exchange (the “Exchange”) (normally 4:00 p.m. Eastern Time, referred to as the “Valuation Time”) that is expected to affect the value of the portfolio security. The circumstances in which the Fund may use fair value pricing include, among others: (i) the occurrence of events that are significant to a particular issuer, such as mergers, restructuring or defaults; (ii) the occurrence of events that are |
9
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
significant to an entire market, such as natural disasters in a particular region or governmental actions; (iii) trading restrictions on securities; (iv) thinly traded securities and (v) market events such as trading halts and early market closings. In addition, with respect to the valuation of stocks primarily traded on foreign markets, the Fund uses a fair value pricing service approved by the Fund’s Board of Directors, which employs quantitative models that evaluate changes in the value of foreign market proxies (e.g., futures contracts, ADR’s, exchange traded funds (“ETF’s”)) after the close of the foreign markets but before the close of the Exchange. Securities that are primarily traded on foreign markets may trade on days that are not business days of the Fund. The value of the foreign securities in which the Fund invests may change on days when a shareholder will not be able to purchase or redeem shares of the Fund. Fair value pricing is subjective in nature and the use of fair value pricing by the Fund may cause the NAV of its shares to differ significantly from the NAV that would have been calculated using market prices at the close of the exchange on which a portfolio security is primarily traded but before the close of the Exchange. There can be no assurance that the Fund could obtain the fair value assigned to a security if the Fund were to sell the security at approximately the time at which the Fund determines its NAV. | ||
Securities of foreign issuers and non-dollar securities are translated from the local currency into U.S. dollars using prevailing exchange rates. | ||
Financial instruments for which prices are not available from an independent pricing service are valued using market quotations obtained from one or more dealers that make markets in securities in accordance with procedures established by the Fund’s Board of Directors. | ||
Other derivative or contractual type instruments shall be valued using market prices if such instruments trade on an exchange or market. If such instruments do not trade on an exchange or market, such instruments shall be valued at a price at which the counterparty to such contract would repurchase the instrument. In the event that the counterparty cannot provide a price, such valuation may be determined in accordance with procedures established by the Fund’s Board of Directors. | ||
c) | Foreign Currency Transactions - The accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities initially expressed in foreign currencies are converted into U.S. dollars at the prevailing exchange rates. Purchases and sales of investment securities, dividend and interest income and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. | |
The Fund does not isolate that portion of portfolio security valuation resulting from fluctuations in the foreign currency exchange rates on portfolio securities from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments in the accompanying financial statements. | ||
Net realized foreign exchange gains or losses arise from sales of foreign currencies and the difference between asset and liability amounts initially stated in foreign currencies and the U.S. dollar value of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of other assets and liabilities at the end of the reporting period, resulting from changes in the exchange rates. | ||
d) | Securities Lending - The Fund may lend its securities to certain qualified brokers who pay the Fund negotiated lender fees. The loans are fully collateralized at all times with cash and/or U.S. Government Securities and/or repurchase agreements. The cash collateral is then invested in short-term money market instruments. The repurchase agreements are fully collateralized by U.S. Government Securities. The adequacy of the collateral for securities on loan is monitored on a daily basis. For instances where the market value of collateral falls below the market value of the securities out on loan, such collateral is supplemented on the following business day. | |
While securities are on loan, the Fund is subject to the following risks: 1) that the borrower may default on the loan and that the collateral could be inadequate in the event the borrower defaults, 2) that the earnings on the collateral invested |
10
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may not be sufficient to pay fees incurred in connection with the loan, 3) that the principal value of the collateral invested may decline and may not be sufficient to pay back the borrower for the amount of the collateral posted, 4) that the borrower may use the loaned securities to cover a short sale which may place downward pressure on the market prices of the loaned securities, 5) that return of loaned securities could be delayed and could interfere with portfolio management decisions and 6) that any efforts to recall the securities for purposes of voting a proxy may not be effective. The Fund had no securities out on loan as of April 30, 2009. | ||
e) | Joint Trading Account — Pursuant to an exemptive order issued by the SEC, the Fund may transfer uninvested cash balances into a joint trading account managed by Wellington Management Company, LLP (“Wellington”). These balances may be invested in one or more repurchase agreements and/or short-term money market instruments. | |
f) | Repurchase Agreements — A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. At the time the Fund enters into a repurchase agreement, the value of the underlying collateral security(ies), including accrued interest, will be equal to or exceed the value of the repurchase agreement. Securities that serve to collateralize the repurchase agreement are held by the Fund’s custodian in book entry or physical form in the custodial account of the Fund or in a third party custodial account. Repurchase agreements are valued at cost plus accrued interest. The Fund, as shown on the Schedule of Investments, had outstanding repurchase agreements as of April 30, 2009. | |
g) | Forward Foreign Currency Contracts — The Fund may enter into forward foreign currency contracts that obligate the Fund to repurchase/replace or sell currencies at specified future dates. Forward foreign currency contracts may be used to hedge against adverse fluctuations in exchange rates between currencies. | |
Forward foreign currency contracts involve elements of market risk in excess of the amount reflected in the Statement of Assets and Liabilities. In addition, risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of the contracts and from unanticipated movements in the value of the foreign currencies relative to the U.S. dollar. | ||
h) | Indexed Securities — The Fund may invest in indexed securities whose values are linked to changes in interest rates, indices, or other underlying instruments. The Fund uses these securities to increase or decrease its exposure to different underlying instruments and to gain exposure to markets that might be difficult to invest in using conventional securities. Indexed securities may be more volatile than their underlying instruments, but any loss is limited to the amount of the original investment and there may be a limit to the potential appreciation of the investment. The Fund had no investments in indexed securities as of April 30, 2009. | |
i) | Fund Share Valuation and Dividend Distributions to Shareholders — Orders for the Fund’s shares are executed in accordance with the investment instructions of the shareholders. The NAV of the Fund’s shares is determined as of the close of each business day of the Exchange. The NAV is determined separately for each class of the Fund by dividing the Fund’s net assets attributable to that class by the number of shares of the class outstanding. Orders for the purchase of the Fund’s shares prior to the close of the Exchange on any day on which the Exchange is open for business are priced at the NAV determined as of the close of the Exchange. Orders after the close of the Exchange, or on a day on which the Exchange and/or the Fund is not open for business, are priced at the next determined NAV. | |
The Fund intends to distribute substantially all of its net investment income and net realized capital gains to shareholders no less frequently than once a year. Normally, dividends from net investment income are declared and paid annually. Dividends are paid on shares beginning on the business day after the day when the funds used to purchase the shares are collected by the transfer agent for the Fund. Unless shareholders specify otherwise, all dividends will be automatically reinvested in additional full or fractional shares of the Fund. | ||
Distributions from net investment income, realized capital gains and capital are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP with respect to character and timing. These differences include but are not limited to foreign currency gains and losses, losses deferred due to wash sales adjustments, |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
adjustments related to Passive Foreign Investment Companies and certain derivatives, and excise tax regulations. Permanent book and federal income tax basis differences relating to shareholder distributions will result in reclassifications to certain of the Fund’s capital accounts (see Federal Income Taxes: Reclassification of Capital Accounts footnote). | ||
j) | Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. Operating results in the future could vary from the amounts derived from management’s estimates. | |
k) | Financial Accounting Standards Board Financial Accounting Standards No. 157 — Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. Fair value is defined under FAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Under FAS 157, a fair value measurement should reflect all of the assumptions that market participants would use in pricing the asset or liability, including assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. | |
Various inputs are used in determining the value of the Fund’s investment. These inputs are summarized, per FAS 157, into three broad hierarchy levels. This hierarchy is based on whether the valuation inputs are observable or unobservable. These levels are: |
• | Level 1 — Quoted prices in active markets for identical securities. Level 1 includes exchange-traded instruments such as domestic equities, some foreign equities, options, futures, mutual funds, ETF’s, and rights and warrants. | ||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar securities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the security. Level 2 includes debt securities that are traded less frequently than exchange-traded instruments and that are valued using third party pricing services and foreign equities, whose value is determined using a multi-factor regression model with inputs that are observable in the market; and money market instruments, which are carried at amortized cost. | ||
• | Level 3 — Significant unobservable inputs that are supported by little or no market activity. Level 3 includes financial instruments whose values are determined using broker quotes and require significant management judgment or estimation. This category includes broker quoted securities, long dated OTC options and securities where trading has been halted or there are certain restrictions on trading. While these securities are priced using unobservable inputs, the valuation of these securities reflects the best available data and management believes the prices are a good representation of exit price. |
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FASB Staff Position No. 157-4 — In April 2009, FASB released FASB Staff Position No. 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed when measuring fair value under FAS 157. The FSP also requires additional disclosure detail on debt and equity securities by major investment categories. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009. At this time, management is evaluating the implications of FSP FAS 157-4 and does not believe it will impact valuation but will require additional disclosure. This additional disclosure has not yet been implemented. | |||
l) | Financial Accounting Standards Board Financial Accounting Standards No. 161 — In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires companies to disclose information detailing the objectives and strategies for using derivative instruments, the level of derivative activity entered into by the company and any credit risk-related contingent features of the agreements. The application of FAS 161 is required for fiscal years and interim periods beginning after November 15, 2008. At this time, management is evaluating the implications of FAS 161 and has not yet implemented the new disclosure standard. | ||
m) | Indemnifications: Under the Company’s organizational documents, the Company shall indemnify its officers and directors to the full extent required or permitted under Maryland General Corporation Law and the federal securities law. In addition, the Company, on behalf of the Fund, may enter into contracts that contain a variety of indemnifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. |
a) | Federal Income Taxes — For federal income tax purposes, the Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (“IRC”) by distributing substantially all of its taxable net investment income and net realized capital gains to its shareholders and otherwise complying with the requirements of regulated investment companies. The Fund has distributed substantially all of its income and capital gains in prior years and the Fund intends to distribute substantially all of its income and gains during the calendar year ending December 31, 2009. Accordingly, no provision for federal income or excise taxes has been made in the accompanying financial statements. Distributions from short-term capital gains are treated as ordinary income distributions for federal income tax purposes. | ||
b) | The tax character of distributions paid by the Fund for the periods indicated is as follows (as adjusted for dividends payable): |
For the Year Ended | For the Year Ended | |||||||
October 31, 2008 | October 31, 2007 | |||||||
Ordinary Income | $ | 13,907 | $ | 2,008 | ||||
Long-Term Capital Gains * | 9,415 | 15,191 |
* | The Fund designates these distributions as long-term capital gain dividends pursuant to IRC code Sec. 852(b)(3)(C). |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Amount | ||||
Undistributed Ordinary Income | $ | 5,420 | ||
Accumulated Capital Losses* | $ | (17,720 | ) | |
Unrealized Depreciation† | $ | (74,419 | ) | |
Total Accumulated Deficit | $ | (86,719 | ) | |
* | The Fund has capital loss carryforwards that are identified in the Capital Loss Carryforward note that follows. | |
† | The differences between book-basis and tax-basis unrealized appreciation (depreciation) are attributable to the tax deferral of wash sales losses, the mark-to-market adjustment for certain derivatives in accordance with IRC Sec. 1256, the mark to market for Passive Foreign Investment Companies and basis differences in real estate investment trusts. |
c) | Reclassification of Capital Accounts — In accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-2, Determination, Disclosure, and Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies, the Fund has recorded reclassifications in its capital accounts. These reclassifications had no impact on the NAV of the Fund. The reclassifications are a result of permanent differences between GAAP and tax accounting for such items as net operating losses that reduce distribution requirements. Adjustments are made to reflect the impact these items have on current and future distributions to shareholders. Therefore, the source of the Fund’s distributions may be shown in the accompanying Statement of Changes in Net Assets as from net investment income, from net realized gains on investments or from capital depending on the type of book and tax differences that exist. As of October 31, 2008, the Fund recorded reclassifications to decrease undistributed net investment income by $19 and increase accumulated net realized gain by $21. | |
d) | Capital Loss Carryforward — At October 31, 2008 (tax-year-end), the Fund had capital loss carryforwards for U.S. federal income tax purposes of approximately: |
Year | Amount | |||
2016 | $17,720 | |||
Total | $17,720 | |||
e) | Financial Accounting Standards Board Interpretation No. 48 — On July 13, 2006, the FASB released FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. The Fund adopted FIN 48 for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 for all open tax years (tax years ended October 31, 2006 — 2008) and has determined there is no impact to the Fund’s financial statements. |
a) | Investment Management Agreements — Hartford Investment Financial Services, LLC (“HIFSCO”) serves as investment manager to the Fund pursuant to an Investment Management Agreement with The Hartford Mutual Funds, Inc. As investment manager, HIFSCO has overall investment supervisory responsibility for the Fund. In addition, HIFSCO provides administrative personnel, services, equipment, facilities and office space for proper operation of the Fund. HIFSCO has contracted with Wellington for the provision of day-to-day investment management services to the Fund in accordance with the Fund’s investment objective and policies. The Fund pays a fee to HIFSCO, a portion of which may be used to compensate Wellington. |
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Average Daily Net Assets | Annual Fee | |||
On first $500 million | 0.8000 | % | ||
On next $500 million | 0.7000 | % | ||
On next $4 billion | 0.6500 | % | ||
On next $5 billion | 0.6475 | % | ||
Over $10 billion | 0.6450 | % |
b) | Accounting Services Agreement — Pursuant to the Fund Accounting Agreement between Hartford Life Insurance Company (“HLIC”) and the Fund, HLIC provides accounting services to the Fund and receives monthly compensation on the Fund’s average net assets. The Fund’s accounting service fees are accrued daily and paid monthly. |
Average Daily Net Assets | Annual Fee | |||
On first $5 billion | 0.014 | % | ||
On next $5 billion | 0.012 | % | ||
Over $10 billion | 0.010 | % |
c) | Operating Expenses — Allocable expenses incurred by the Company are allocated to each Fund and allocated to classes within the Fund in proportion to the average daily net assets of the Fund and each class, except where allocation of certain expenses is more fairly made directly to the Fund or to specific classes within a Fund. During the six-month period ended April 30, 2009, HIFSCO has contractually limited the total operating expenses of this Fund, exclusive of taxes, interest expense, brokerage commissions, certain distribution expenses and extraordinary expenses as follows: |
Class A | Class B | Class C | Class I | Class R3 | Class R4 | Class R5 | Class Y | |||||||||||||||||||||||||
1.40 | % | 2.15 | % | 2.15 | % | 1.15 | % | 1.65 | % | 1.35 | % | 1.05 | % | 1.00 | % |
d) | Fees Paid Indirectly — The Fund has entered into agreements with State Street Global Markets, LLC and Russell Implementation Services Inc. to partially recapture non-discounted trade commissions. Such rebates are used to pay a portion of the Fund’s expenses. In addition, the Fund’s custodian bank has also agreed to reduce its fees when the Fund maintains cash on deposit in the non-interest-bearing custody account. For the six-month period ended April 30, 2009, these amounts are included in the Statement of Operations. |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
Annualized | ||||||||||||||||||||||||
Six-Month | ||||||||||||||||||||||||
Period | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||||||||
Ended April | October 31, | October 31, | October 31, | October 31, | October 31, | |||||||||||||||||||
30, 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
Class A Shares | 1.39 | % | 1.32 | % | 1.32 | % | 1.37 | % | 1.39 | % | 1.44 | % | ||||||||||||
Class B Shares | 1.82 | 2.06 | 2.15 | 2.12 | 2.14 | 2.14 | ||||||||||||||||||
Class C Shares | 2.11 | 2.09 | 2.09 | 2.14 | 2.14 | 2.14 | ||||||||||||||||||
Class I Shares | 0.99 | 0.95 | 1.00 | * | ||||||||||||||||||||
Class R3 Shares | 1.65 | 1.65 | 1.65 | † | ||||||||||||||||||||
Class R4 Shares | 1.31 | 1.30 | 1.35 | ‡ | ||||||||||||||||||||
Class R5 Shares | 1.02 | 0.98 | 1.05 | § | ||||||||||||||||||||
Class Y Shares | 0.90 | 0.87 | 0.88 | 0.91 | 0.92 | 0.90 |
* | From May 31, 2007 (commencement of operations), through October 31, 2007 | |
† | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
‡ | From December 22, 2006 (commencement of operations), through October 31, 2007 | |
§ | From December 22, 2006 (commencement of operations), through October 31, 2007 |
e) | Distribution and Service Plan for Class A, B, C, R3 and R4 Shares — HIFSCO is the principal underwriter and distributor of the Fund. HIFSCO is engaged in distribution activities, which include marketing and distribution of shares through broker-dealers, financing distribution costs and maintaining financial books and records. For the six-month period ended April 30, 2009, HIFSCO received front-end load sales charges of $80 and contingent deferred sales charges of $9 from the Fund. | |
The Fund has adopted Distribution and Service Plans in accordance with Rule 12b-1 of the Investment Company Act of 1940, as amended, to compensate the distributor (HIFSCO) for activities intended to result in the sale and distribution of Classes A, B, C, R3 and R4 shares and for providing services for shareholders. The Rule 12b-1 plan applicable to Class A shares of the Funds provides for payment of a Rule 12b-1 fee of up to 0.35% of average daily net assets; however, the Board of Directors has currently authorized 12b-1 payments of only up to 0.25%. Some or all of the fee may be used for shareholder servicing expenses with the remainder used for distribution expenses. Some or the entire Rule 12b-1 fee for Class B shares may be remitted to broker-dealers for distribution and/or shareholder account services. Under the Class B Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class B shares that are outstanding for 8 years or less, 0.25% of which is a fee for services provided to existing shareholders with the remainder used for distribution expenses. After eight years, Class B shares convert to Class A shares. Upon conversion to Class A shares, the Class A plan described above will apply to those shares. Under the Class C Plan, the Fund pays the distributor 1.00% of the average daily net assets of Class C shares outstanding, 0.25% of which is intended as a fee for services provided to existing shareholders with the remainder used for distribution expenses. For Class C shares, some or the entire fee may be remitted to broker-dealers for distribution and/or shareholder account services. Class R3 shares have a distribution fee of 0.50% and Class R4 shares have a distribution fee of 0.25%. For Classes R3 and R4 shares, some or the entire fee may be remitted to broker dealers for distribution and/or shareholder account services. The Fund’s 12b-1 fees are accrued daily and paid monthly. | ||
For the six-month period ended April 30, 2009, total sales commissions paid to affiliated brokers/dealers of The Hartford for distributing the Fund’s shares were $3. These commissions are in turn paid to sales representatives of the broker/dealers. |
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f) | Other Related Party Transactions — Certain officers of the Fund are directors and/or officers of HIFSCO and/or The Hartford or its subsidiaries. For the six-month period ended April 30, 2009, a portion of the Fund’s chief compliance officer’s salary was paid by the Fund in the amount of $1. Hartford Administrative Services Company (“HASCO”), an indirect wholly owned subsidiary of The Hartford, provides transfer agent services to the Fund. HASCO was compensated $103 for providing such services. These fees are accrued daily and paid monthly. | ||
g) | Payments from Affiliate: | ||
The total return in the accompanying financial highlights includes payment from affiliates. Had the payment from affiliates been excluded, the total return for the periods listed below would have been as follows: |
Total Return | ||||
Excluding | ||||
Payment from | ||||
Affiliate for the | ||||
Year Ended | ||||
October 31, 2007 | ||||
Class A | 16.60 | % | ||
Class B | 15.62 | |||
Class C | 15.62 | |||
Class Y | 17.06 |
5. | Affiliate Holdings: | |
As of April 30, 2009, affiliates of The Hartford had ownership of shares in the Fund as follows: |
Shares | ||||
Class R5 | 1 |
6. | Investment Transactions: | |
For the six-month period ended April 30, 2009, the Fund’s aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: |
Amount | ||||
Cost of Purchases Excluding U.S. Government Obligations | $ | 142,707 | ||
Sales Proceeds Excluding U.S. Government Obligations | 83,391 |
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Notes to Financial Statements — (continued)
April 30, 2009 (Unaudited)
(000’s Omitted)
7. | Capital Share Transactions: | |
The following information is for the six-month period ended April 30, 2009 and the year ended October 31, 2008: |
For the Six-Month Period Ended April 30, 2009 | For the Year Ended October 31, 2008 | |||||||||||||||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | |||||||||||||||||||||||||||||||||||||
Issued for | Issued | Net Increase | Issued for | Issued | Net Increase | |||||||||||||||||||||||||||||||||||
Shares | Reinvested | Shares | from | (Decrease) of | Shares | Reinvested | Shares | from | (Decrease) of | |||||||||||||||||||||||||||||||
Sold | Dividends | Redeemed | Merger | Shares | Sold | Dividends | Redeemed | Merger | Shares | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||
Shares | 1,290 | 108 | (1,753 | ) | — | (355 | ) | 1,461 | 353 | (1,764 | ) | — | 50 | |||||||||||||||||||||||||||
Amount | $ | 10,217 | $ | 862 | $ | (13,216 | ) | $ | — | $ | (2,137 | ) | $ | 16,895 | $ | 4,549 | $ | (19,967 | ) | $ | — | $ | 1,477 | |||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||
Shares | 142 | 5 | (136 | ) | — | 11 | 161 | 45 | (322 | ) | — | (116 | ) | |||||||||||||||||||||||||||
Amount | $ | 1,088 | $ | 44 | $ | (996 | ) | $ | — | $ | 136 | $ | 1,825 | $ | 568 | $ | (3,574 | ) | $ | — | $ | (1,181 | ) | |||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||
Shares | 181 | 7 | (206 | ) | — | (18 | ) | 243 | 46 | (234 | ) | — | 55 | |||||||||||||||||||||||||||
Amount | $ | 1,390 | $ | 57 | $ | (1,535 | ) | $ | — | $ | (88 | ) | $ | 2,762 | $ | 586 | $ | (2,620 | ) | $ | — | $ | 728 | |||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||
Shares | 41 | 1 | (29 | ) | — | 13 | 74 | — | (11 | ) | — | 63 | ||||||||||||||||||||||||||||
Amount | $ | 302 | $ | 11 | $ | (228 | ) | $ | — | $ | 85 | $ | 805 | $ | 3 | $ | (130 | ) | $ | — | $ | 678 | ||||||||||||||||||
Class R3 | ||||||||||||||||||||||||||||||||||||||||
Shares | 2 | — | (1 | ) | — | 1 | 13 | 1 | — | — | 14 | |||||||||||||||||||||||||||||
Amount | $ | 10 | $ | 2 | $ | (7 | ) | $ | — | $ | 5 | $ | 122 | $ | 1 | $ | — | $ | — | $ | 123 | |||||||||||||||||||
Class R4 | ||||||||||||||||||||||||||||||||||||||||
Shares | 3 | — | (4 | ) | — | (1 | ) | 20 | — | (2 | ) | — | 18 | |||||||||||||||||||||||||||
Amount | $ | 26 | $ | 3 | $ | (34 | ) | $ | — | $ | (5 | ) | $ | 222 | $ | — | $ | (17 | ) | $ | — | $ | 205 | |||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||
Shares | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Amount | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||
Shares | 7,607 | 698 | (664 | ) | — | 7,641 | 4,179 | 1,356 | (3,282 | ) | — | 2,253 | ||||||||||||||||||||||||||||
Amount | $ | 59,645 | $ | 5,540 | $ | (5,083 | ) | $ | — | $ | 60,102 | $ | 48,573 | $ | 17,400 | $ | (29,378 | ) | $ | — | $ | 36,595 |
Shares | Dollars | |||||||
For the Six-Month Period Ended April 30, 2009 | 8 | $ | 62 | |||||
For the Year Ended October 31, 2008 | 31 | $ | 366 |
8. | Line of Credit: | |
The Fund is one of several Hartford Funds that participate in a $500 million committed revolving line of credit facility. The facility is to be used for temporary or emergency purposes. Under the arrangement, the Fund is required to own securities having a market value in excess of 300% of the total bank borrowings. The interest rate on borrowings varies depending on the nature of the loan. The facility also requires a fee to be paid based on the amount of the commitment. During the six-month period ended April 30, 2009, the Fund did not have any borrowings under this facility. | ||
9. | Industry Classifications: | |
Other than the industry classifications “Other Investment Pools and Funds” and “Exchange Traded Funds”, equity industry classifications used in this report are the Global Industry Classification Standard, which was developed by and is the exclusive property and service mark of MSCI, Inc. and Standard & Poor’s. |
18
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— Selected Per-Share Data — (a) | — Ratios and Supplemental Data — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses | Expenses | Expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to Average | to Average | to Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Assets | Net Assets | Net Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Waivers | Waivers | Waivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized | and | and | and | Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Un- | Distrib- | Net | Reimburse- | Reimburse- | Reimburse- | Net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Pay- | realized | Dividends | utions | Increase | Net | ments and | ments and | ments and | Invest- | Port- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset | Invest- | ments | Gain | �� | from Net | from | Distri- | (Decrease) | Asset | Net Assets | Including | Including | Excluding | ment | folio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Value at | ment | from | (Loss) on | Total from | Invest- | Realized | butions | Total | in Net | Value at | at End of | Expenses | Expenses | Expenses | Income to | Turn- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning | Income | (to) | Invest- | Investment | ment | Capital | from | Distri- | Asset | End of | Total | Period | not Subject | not Subject | not Subject | Average | over | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class | of Period | (Loss) | Affiliate | ments | Operations | Income | Gains | Capital | butions | Value | Period | Return(b) | (000’s) | to Cap(c) | to Cap(c) | to Cap(c) | Net Assets | Rate(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Six-Month Period Ended April 30, 2009 (Unaudited) (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | $ | 8.95 | $ | 0.07 | $ | — | $ | (0.77 | ) | $ | (0.70 | ) | $ | (0.14 | ) | $ | — | $ | — | $ | (0.14 | ) | $ | (0.84 | ) | $ | 8.11 | (7.78 | )%(f) | $ | 48,655 | 1.46 | %(g) | 1.40 | %(g) | 1.40 | %(g) | 1.84 | %(g) | 30 | % | |||||||||||||||||||||||||||||||
B | 8.73 | 0.05 | — | (0.74 | ) | (0.69 | ) | (0.06 | ) | — | — | (0.06 | ) | (0.75 | ) | 7.98 | (7.94 | ) (f) | 6,680 | 2.53 | (g) | 1.82 | (g) | 1.82 | (g) | 1.40 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
C | 8.72 | 0.04 | — | (0.74 | ) | (0.70 | ) | (0.06 | ) | — | — | (0.06 | ) | (0.76 | ) | 7.96 | (8.03 | ) (f) | 8,214 | 2.24 | (g) | 2.11 | (g) | 2.11 | (g) | 1.12 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
I | 8.97 | 0.08 | — | (0.76 | ) | (0.68 | ) | (0.19 | ) | — | — | (0.19 | ) | (0.87 | ) | 8.10 | (7.57 | ) (f) | 649 | 0.99 | (g) | 0.99 | (g) | 0.99 | (g) | 2.17 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R3 | 8.87 | 0.06 | — | (0.77 | ) | (0.71 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.88 | ) | 7.99 | (7.95 | ) (f) | 116 | 1.68 | (g) | 1.65 | (g) | 1.65 | (g) | 1.56 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R4 | 8.89 | 0.07 | — | (0.76 | ) | (0.69 | ) | (0.17 | ) | — | — | (0.17 | ) | (0.86 | ) | 8.03 | (7.73 | ) (f) | 143 | 1.31 | (g) | 1.31 | (g) | 1.31 | (g) | 1.91 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
R5 | 8.92 | 0.08 | — | (0.76 | ) | (0.68 | ) | (0.18 | ) | — | — | (0.18 | ) | (0.86 | ) | 8.06 | (7.60 | ) (f) | 7 | 1.02 | (g) | 1.02 | (g) | 1.02 | (g) | 2.19 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
Y | 8.93 | 0.09 | — | (0.77 | ) | (0.68 | ) | (0.19 | ) | — | — | (0.19 | ) | (0.87 | ) | 8.06 | (7.57 | ) (f) | 252,508 | 0.90 | (g) | 0.90 | (g) | 0.90 | (g) | 2.28 | (g) | — | ||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 14.13 | 0.16 | — | (4.60 | ) | (4.44 | ) | (0.10 | ) | (0.64 | ) | — | (0.74 | ) | (5.18 | ) | 8.95 | (33.00 | ) | 56,864 | 1.32 | 1.32 | 1.32 | 1.32 | 57 | |||||||||||||||||||||||||||||||||||||||||||||||
B | 13.78 | 0.08 | — | (4.49 | ) | (4.41 | ) | — | (0.64 | ) | — | (0.64 | ) | (5.05 | ) | 8.73 | (33.43 | ) | 7,211 | 2.27 | 2.06 | 2.06 | 0.57 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
C | 13.78 | 0.06 | — | (4.48 | ) | (4.42 | ) | — | (0.64 | ) | — | (0.64 | ) | (5.06 | ) | 8.72 | (33.50 | ) | 9,160 | 2.10 | 2.10 | 2.10 | 0.54 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
I | 14.15 | 0.17 | — | (4.56 | ) | (4.39 | ) | (0.15 | ) | (0.64 | ) | — | (0.79 | ) | (5.18 | ) | 8.97 | (32.67 | ) | 598 | 0.96 | 0.96 | 0.96 | 1.66 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R3 | 14.00 | 0.03 | — | (4.46 | ) | (4.43 | ) | (0.06 | ) | (0.64 | ) | — | (0.70 | ) | (5.13 | ) | 8.87 | (33.14 | ) | 122 | 1.73 | 1.65 | 1.65 | 0.87 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R4 | 14.03 | 0.08 | — | (4.48 | ) | (4.40 | ) | (0.10 | ) | (0.64 | ) | — | (0.74 | ) | (5.14 | ) | 8.89 | (32.93 | ) | 166 | 1.31 | 1.31 | 1.31 | 1.29 | — | |||||||||||||||||||||||||||||||||||||||||||||||
R5 | 14.07 | 0.19 | — | (4.56 | ) | (4.37 | ) | (0.14 | ) | (0.64 | ) | — | (0.78 | ) | (5.15 | ) | 8.92 | (32.71 | ) | 8 | 0.98 | 0.98 | 0.98 | 1.65 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Y | 14.09 | 0.21 | — | (4.57 | ) | (4.36 | ) | (0.16 | ) | (0.64 | ) | — | (0.80 | ) | (5.16 | ) | 8.93 | (32.65 | ) | 211,366 | 0.88 | 0.88 | 0.88 | 1.76 | — | |||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 12.91 | 0.12 | — | 1.89 | 2.01 | — | (0.79 | ) | — | (0.79 | ) | 1.22 | 14.13 | 16.61 | (h) | 89,023 | 1.32 | 1.32 | 1.32 | 0.89 | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||||
B | 12.71 | 0.01 | — | 1.85 | 1.86 | — | (0.79 | ) | — | (0.79 | ) | 1.07 | 13.78 | 15.63 | (h) | 12,976 | 2.23 | 2.15 | 2.15 | 0.07 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
C | 12.71 | 0.02 | — | 1.84 | 1.86 | — | (0.79 | ) | — | (0.79 | ) | 1.07 | 13.78 | 15.63 | (h) | 13,710 | 2.09 | 2.09 | 2.09 | 0.13 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
I(i) | 13.85 | 0.03 | — | 0.27 | 0.30 | — | — | — | — | 0.30 | 14.15 | 2.17 | (f) | 46 | 1.00 | (g) | 1.00 | (g) | 1.00 | (g) | 1.00 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R3(j) | 12.51 | 0.05 | — | 1.44 | 1.49 | — | — | — | — | 1.49 | 14.00 | 11.91 | (f) | 11 | 1.65 | (g) | 1.65 | (g) | 1.65 | (g) | 0.47 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R4(k) | 12.51 | 0.09 | — | 1.43 | 1.52 | — | — | — | — | 1.52 | 14.03 | 12.15 | (f) | 11 | 1.35 | (g) | 1.35 | (g) | 1.35 | (g) | 0.78 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
R5(l) | 12.51 | 0.12 | — | 1.44 | 1.56 | — | — | — | — | 1.56 | 14.07 | 12.47 | (f) | 11 | 1.05 | (g) | 1.05 | (g) | 1.05 | (g) | 1.07 | (g) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Y | 12.91 | 0.09 | — | 1.97 | 2.06 | (0.09 | ) | (0.79 | ) | — | (0.88 | ) | 1.18 | 14.09 | 17.07 | (h) | 301,813 | 0.89 | 0.89 | 0.89 | 1.30 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 10.79 | 0.09 | — | 2.11 | 2.20 | (0.08 | ) | — | — | (0.08 | ) | 2.12 | 12.91 | 20.52 | 79,476 | 1.38 | 1.38 | 1.38 | 0.89 | 50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 10.62 | 0.01 | — | 2.08 | 2.09 | — | — | — | — | 2.09 | 12.71 | 19.68 | 11,957 | 2.29 | 2.13 | 2.13 | 0.15 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 10.62 | 0.01 | — | 2.08 | 2.09 | — | — | — | — | 2.09 | 12.71 | 19.68 | 12,943 | 2.15 | 2.15 | 2.15 | 0.12 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 10.79 | 0.15 | — | 2.10 | 2.25 | (0.13 | ) | — | — | (0.13 | ) | 2.12 | 12.91 | 21.07 | 72,054 | 0.92 | 0.92 | 0.92 | 1.36 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 9.71 | 0.08 | — | 1.04 | 1.12 | (0.04 | ) | — | — | (0.04 | ) | 1.08 | 10.79 | 11.50 | 63,417 | 1.41 | 1.40 | 1.40 | 0.76 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 9.60 | — | — | 1.02 | 1.02 | — | — | — | — | 1.02 | 10.62 | 10.62 | 10,091 | 2.34 | 2.15 | 2.15 | 0.01 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 9.60 | — | — | 1.02 | 1.02 | — | — | — | — | 1.02 | 10.62 | 10.62 | 10,238 | 2.19 | 2.15 | 2.15 | 0.02 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 9.71 | 0.12 | — | 1.05 | 1.17 | (0.09 | ) | — | — | (0.09 | ) | 1.08 | 10.79 | 12.06 | 60,218 | 0.93 | 0.93 | 0.93 | 1.19 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year Ended October 31, 2004 (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A | 8.92 | 0.07 | — | 0.79 | 0.86 | (0.07 | ) | — | — | (0.07 | ) | 0.79 | 9.71 | 9.70 | 56,845 | 1.46 | 1.45 | 1.45 | 0.76 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
B | 8.83 | 0.01 | — | 0.78 | 0.79 | (0.02 | ) | — | — | (0.02 | ) | 0.77 | 9.60 | 8.91 | 8,948 | 2.36 | 2.15 | 2.15 | 0.06 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
C | 8.83 | 0.01 | — | 0.78 | 0.79 | (0.02 | ) | — | — | (0.02 | ) | 0.77 | 9.60 | 8.91 | 10,838 | 2.17 | 2.15 | 2.15 | 0.06 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Y | 8.95 | 0.10 | — | 0.77 | 0.87 | (0.11 | ) | — | — | (0.11 | ) | 0.76 | 9.71 | 9.76 | 21,373 | 0.91 | 0.91 | 0.91 | 1.32 | — |
(a) | Information presented relates to a share outstanding throughout the indicated period. | |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period and no sales charge. Total return would be reduced if sales charges were taken into account. | |
(c) | Ratios do not include fees paid indirectly (See Expenses in the accompanying Notes to Financial Statements). | |
(d) | Portfolio turnover rate is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares issued. | |
(e) | Per share amounts have been calculated using average shares outstanding method. | |
(f) | Not annualized. | |
(g) | Annualized. | |
(h) | Total return without the inclusion of the Payments from (to) Affiliate, as noted on the Statement of Operations, can be found in Expenses in the accompanying Notes to Financial Statements. | |
(i) | Commenced operations on May 31, 2007. | |
(j) | Commenced operations on December 22, 2006. | |
(k) | Commenced operations on December 22, 2006. | |
(l) | Commenced operations on December 22, 2006. |
19
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20
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21
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Directors and Officers (Unaudited) — (continued)
22
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Actual return | Hypothetical (5% return before expenses) | ||||||||||||||||||||||||||||||||||||
Expenses paid | Expenses paid | Days in | |||||||||||||||||||||||||||||||||||
during the period | during the period | the | Days | ||||||||||||||||||||||||||||||||||
Beginning | Ending Account | October 31, 2008 | Beginning | Ending Account | October 31, | Annualized | current | in the | |||||||||||||||||||||||||||||
Account Value | Value | through | Account Value | Value | 2008 through | expense | 1/2 | full | |||||||||||||||||||||||||||||
October 31, 2008 | April 30, 2009 | April 30, 2009 | October 31, 2008 | April 30, 2009 | April 30, 2009 | ratio | year | year | |||||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 922.20 | $ | 6.67 | $ | 1,000.00 | $ | 1,017.85 | $ | 7.00 | 1.40 | % | 181 | 365 | |||||||||||||||||||||
Class B | $ | 1,000.00 | $ | 920.55 | $ | 8.66 | $ | 1,000.00 | $ | 1,015.76 | $ | 9.09 | 1.82 | 181 | 365 | ||||||||||||||||||||||
Class C | $ | 1,000.00 | $ | 919.67 | $ | 10.04 | $ | 1,000.00 | $ | 1,014.33 | $ | 10.53 | 2.11 | 181 | 365 | ||||||||||||||||||||||
Class I | $ | 1,000.00 | $ | 924.27 | $ | 4.72 | $ | 1,000.00 | $ | 1,019.88 | $ | 4.95 | 0.99 | 181 | 365 | ||||||||||||||||||||||
Class R3 | $ | 1,000.00 | $ | 920.52 | $ | 7.85 | $ | 1,000.00 | $ | 1,016.61 | $ | 8.25 | 1.65 | 181 | 365 | ||||||||||||||||||||||
Class R4 | $ | 1,000.00 | $ | 922.65 | $ | 6.24 | $ | 1,000.00 | $ | 1,018.29 | $ | 6.55 | 1.31 | 181 | 365 | ||||||||||||||||||||||
Class R5 | $ | 1,000.00 | $ | 924.01 | $ | 4.86 | $ | 1,000.00 | $ | 1,019.73 | $ | 5.10 | 1.02 | 181 | 365 | ||||||||||||||||||||||
Class Y | $ | 1,000.00 | $ | 924.27 | $ | 4.29 | $ | 1,000.00 | $ | 1,020.33 | $ | 4.50 | 0.90 | 181 | 365 |
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(a) | Based on an evaluation of the Registrant’s Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report, the Disclosure Controls and Procedures are effectively designed to ensure that information required to be disclosed by the Registrant is recorded, processed, summarized and reported by the date of this report, including ensuring that information required to be disclosed in the report is accumulated and communicated to the Registrant’s management, including the Registrant’s officers, as appropriate, to allow timely decisions regarding required disclosure. |
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(b) | There was no change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal half year that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
11(a) (2) | Section 302 certifications of the principal executive officer and principal financial officer of Registrant. |
(b) | Section 906 certification. |
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THE HARTFORD MUTUAL FUNDS, INC. | ||||
Date: June 16, 2009 | By: | /s/ John C. Walters | ||
John C. Walters | ||||
Its: President | ||||
Date: June 16, 2009 | By: | /s/ John C. Walters | ||
John C. Walters | ||||
Its: President | ||||
Date: June 16, 2009 | By: | /s/ Tamara L. Fagely | ||
Tamara L. Fagely | ||||
Its: Vice President, Controller and Treasurer | ||||